JPMorgan Chase has announced that it has purchased a $3.5 billion portfolio of multifamily and commercial real estate loans from Citibank. Terms were not disclosed. The portfolio, which includes approximately 3,800 loans that are primarily multifamily real estate loans for properties located in California, New York and Illinois, is a strategic addition to Chase's Commercial Term Lending business. The business, which is part of Chase Commercial Banking, specializes in providing loans for moderately priced apartment buildings in stable markets. About 80 percent of Commercial Term Lending's existing $36 billion portfolio is multifamily loans. The purchased loan portfolio contains only performing loans on properties that have shown strong credit performance.
"This highly desirable loan portfolio adds strong earning assets in markets we currently serve and valuable relationships that will provide new origination opportunities," said Al Brooks, head of Commercial Term Lending. "The portfolio mirrors Chase Commercial Term Lending's focus on excellent borrowers in stable markets."
"We are excited about the opportunity to provide additional credit for multifamily properties in our core markets and broaden our relationship with these new clients," said Todd Maclin, chief executive officer of Chase Commercial Banking. "We know how important rental apartments are to the health of a community."
This transaction will reduce GAAP assets by $3.5 billion in Citi Holdings, Citigroup's portfolio of non-core operating businesses and assets, demonstrating Citi's continued progress in reducing assets in Citi Holdings in an economically rational manner while working to generate long-term profitability and growth from Citicorp, which comprises Citi's core franchise. As of the end of the second quarter, Citi Holdings assets were less than 25% of Citi's total balance sheet. Citi will continue to pursue divestiture opportunities in a manner that creates the most value for shareholders.
The transaction closes immediately, and will be reflected in JPMorgan Chase's third quarter financial statements. The transaction is not expected to have a material impact on Citi's net income.