PacWest Sells Construction Loans to Raise Cash

PacWest Bank

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Key Takeaways

  • PacWest sold real estate construction loans to raise cash.
  • Kennedy-Wilson Holdings paid a discount price of $2.4 billion for the PacWest loans.
  • PacWest will sell additional loans worth $363 million to Kennedy-Wilson.

Struggling regional bank PacWest Bancorp (PACW) sold 74 real estate construction loans valued at $2.6 billion to real estate investment holding company Kennedy-Wilson Holdings (KW), as it continues to shore up its finances.

Kennedy-Wilson agreed to pay $2.4 billion for the portfolio. 

PacWest indicated it will also sell Kennedy-Wilson an additional six real estate construction loans with an aggregate principal balance of about $363 million.

The bank explained that the transaction is expected to close in multiple tranches during the second quarter and early part of the third quarter.

Many regional banks like PacWest were overexposed to real estate-related debt. First Republic Bank, which was taken over by regulators before being sold to JPMorgan Chase, had 60% of its $173 billion in loans in single-family real estate, 13% in multifamily, and 6% in unspecified commercial real estate loans, according to a JPMorgan investor presentation.

PacWest is among several regional banks that have been negatively impacted by the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank earlier this year. Two weeks ago, PacWest said that it was exploring “strategic options,” including holding talks with several potential partners and investors, and slashed its dividend to improve cash flow.  

Shares of PacWest soared close to 20% following the news on Monday. Kennedy-Wilson shares also advanced 3%. 

PacW chrt


Article Sources
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  1. PacWest Bancorp. “Form 8-K.”

  2. JPMorgan Chase. “Investor Day 2023.”

  3. PacWest Bancorp. “Pacific Western Bank Issues Update.”

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