Credit Suisse Selling to Apollo

Credit Suisse Group AG (ADR) (NYSE:CS) is selling a $2.8B portfolio of soured commercial-property loans to Apollo Management for $1.2B (a whopping 57% discount), sources say. This will mark one of the largest bank sales of distressed mortgages since the financial crisis began.

(Wall Street Journal) - The properties backed by the loans include apartment buildings in Germany and hotels in Denmark, Sweden and France, many of them of lower quality and in hard-hit locales, the people say.

Real-estate investors are watching loan sales closely.

Ever since the 2008 financial crisis, expectations of a world-wide wave of defaults by landlords and fire sales by banks have tantalized private-equity firms. In the early 1990s, some of these same firms generated handsome profits after buying big loan portfolios from the government as it took over failing U.S. savings-and-loans.

This time around, fire sales by banks have been few and far between. Banks have been wary of taking big losses on their boom-time loans while regulators have encouraged banks to restructure many of their commercial mortgages rather than simply foreclose.

Now some buyers say the spigot is starting to open.

More at Wall Street Journal…