Bank of America Strikes $2.9 Billion Deal with WaFd for Multi-Family Loan Portfolio

Washington Federal Bank to Reduce Risk Exposure by Offloading Commercial Real Estate Loans

May 17, 2024 - 10:21
May 17, 2024 - 10:22
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Bank of America Strikes $2.9 Billion Deal with WaFd for Multi-Family Loan Portfolio
Bank of America Strikes $2.9 Billion Deal with WaFd for Multi-Family Loan Portfolio

Washington Federal Bank has reached an agreement to sell a portfolio of commercial multi-family real estate loans to Bank of America for a staggering $2.9 billion. This strategic decision aims to help the regional lender mitigate its exposure to the challenging commercial real estate (CRE) market.

The CRE sector has faced considerable challenges lately, grappling with higher borrowing costs and decreased occupancy rates. These issues have raised concerns among investors and have prompted heightened regulatory scrutiny for regional lenders like Washington Federal Bank.

According to a regulatory filing by its parent company, WaFd, the portfolio being sold comprises a total of 2,000 commercial multi-family real estate loans, with an aggregate unpaid principal balance of $3.2 billion.

Following the completion of this deal, Washington Federal Bank has revealed that Bank of America plans to enter into a structured transaction or loan sale with one or more funds of Pacific Investment Management.

While the news of this transaction has had a marginal impact on WaFd shares, leading to slight gains in morning trading on Friday, the stock has experienced a year-to-date decline of approximately 9%.

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