Updated from 9:44 a.m. EDT.
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
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
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
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.