Las Vegas-baed Axos Financial Inc. (NYSE: AX) announced that its wholly-owned subsidiary Axos Bank has completed the acquisition of two performing commercial real estate loan portfolios from the Federal Deposit Insurance Corp. (FDIC) at a purchase price equal to approximately 63% of par value, resulting in an approximate discount to par value for the purchased loans of $463.7 million.
Axos Bank paid cash for the acquired loans, which included commercial real estate loans with an unpaid principal balance of $578.6 million and multifamily loans with an unpaid principal balance of $674.6 million.
“We believe that we purchased these performing loans at an attractive valuation that will be accretive to our net interest margin and net interest income,” said Greg Garrabrants, president and CEO of Axos. “We performed extensive due diligence and valuation analysis on each of the properties in the acquired loan pools. The most recent appraisals received from the FDIC indicated that the weighted average loan-to-value is approximately 59%. All 58 loans are current on principal and interest payments. The transaction value was enhanced by the inclusion of a series of back-to-back interest rate swaps that allow the borrowers to pay an average fixed rate of 3.8%, while Axos receives a primarily variable note rate of 6.9%.”