The FDIC has closed on the first sales in its small investor programme (SIP). The pilot SIP involved two competitive sales of equity interests in two limited liability companies, each formed by the FDIC in its receivership capacity to hold certain assets of FirsTier Bank that failed on 28 January 28.

The assets transferred by the FirsTier receivership to the LLCs consist of 213 loans pooled by loan type. A pool of performing and non-performing commercial real estate loans and commercial acquisition and development and construction loans and credit facilities (the CRE/CADC assets) were transferred to one LLC and a pool of performing and non-performing residential acquisition, development and construction loans and credit facilities (the RADC assets) were transferred to the other LLC.

The purchaser of the private owner interest in the LLC holding the CRE/CADC assets was Acorn Loan Portfolio Private Owner IV, which is owned by Calista Corporation, FACP Mortgage Investments and entities controlled by Oaktree Capital Group Holdings. The purchaser of the private owner interest in the LLC holding the RADC assets was HRC SVC Pool II Acquisition, an entity controlled by Hudson Realty Capital.

Acorn paid a total of approximately US$25.6m in cash for its initial 25% equity stake in the LLC holding the CRE/CADC assets; its bid valued the CRE/CADC assets at approximately 65% of the aggregate unpaid principal balance (UPB) of such assets. The CRE/CADC assets comprise 116 loans with an aggregate UPB of approximately US$158m, with the highest concentration in Colorado (96%).

HRC paid a total of approximately US$14.9m in cash for its initial 25% equity stake in the LLC holding the RADC assets; its winning bid valued the RADC assets at approximately 43% of the aggregate UPB of such assets. The RADC assets comprise 97 loans with an aggregate UPB of approximately US$139m with the highest concentration in Colorado (95%).

Acorn and HRC will provide for the management, servicing and ultimate disposition of the LLCs' assets.

The pilot SIP sales were conducted on a competitive basis, offering bidders the option to bid on either or both a leveraged structure (for a 50% equity interest) and an unleveraged structure (for an initial 25% equity interest). A total of 13 groups submitted bids to purchase an equity interest in one or both of the newly-formed LLCs.

The FirsTier receivership will hold the remaining 75% equity interest until all equity is returned. After the return of equity, the receivership's interest in each LLC will decrease to 50% and the private owner interest will correspondingly increase to 50%.

The FDIC says the pilot programme offers smaller sized asset pools and unique structural features to make it more accessible for smaller investors and increase participation in structured sales while maintaining a level playing field for all investors.