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Wachovia Sells Land, Construction Loans

The loans were part of a portfolio the Charlotte, N.C., bank had been shopping since earlier this year, the Wall Street Journal reported.

Updated from 9:44 a.m. EDT.


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is selling roughly one-tenth of the land and construction loans the troubled lender put up for sale earlier this year, according to media reports.

The Wall Street Journal

is reporting that the Charlotte, N.C.-based bank is selling $40 million of the total $350 million land and construction assets it put up for sale to a joint venture headed by LandCap Partners, run by real estate veteran Jeffrey Gault. The Los Angeles-based private real estate company provides capital for residential land transactions through options contracts, conventional and participating loans and joint- venture equity investment, according to its Web site.

Wachovia will be a minority partner in the venture, according to the article.

The venture will purchase the assets, which have a book value between $75 million and $80 million, the


said, citing a person familiar with the matter. The loans were made to residential home developers and collateralized by 2,900 home lots in states where the housing market has dropped considerably, including California, Arizona and Florida, as well as Illinois. Many of the loans are in "distress" due to delinquencies or decreasing values in the collateral, the



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Wachovia has roughly $24 billion of these loans still on its balance sheet. About 9% are delinquent, the article said. The bank in June reportedly hired

Goldman Sachs

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advise it

on its options with its troubled loan portfolio.

Wachovia has become one of the more troubled banks as a result of its 2006 purchase of residential real estate lender Golden West. The bank is furiously retooling its mortgage businesses and looking for ways to

raise capital

without going to the public markets. Wachovia raised roughly $7 billion after issuing a common stock offering in April. Among other moves, it has also cut its dividend twice this year.

Gault plans to buy more loans from Wachovia in the future, according to the



Wachovia declined to comment. Shares were up 3.2% to $14.75 in recent trading.