Struggling PacWest Offloads Real-Estate Lending Business To Roc360: Here's Why

PacWest Bancorp PACW has reportedly sold its Civic Financial Services unit, which specializes in lending money to landlords and investors, to Roc360, a real estate lending firm.

PacWest has unrealized losses on its holdings of bonds and loans. When banks have to sell underwater assets to meet deposit withdrawals, they must record the losses, a prospect that makes investors nervous.

Some investors have also grown concerned about PacWest’s commercial real-est loans concentration.

Citing Maksim Stavinsky, Roc360’s co-founder and president, Wall Street Journal reported that the deal closed Tuesday, but the terms were not disclosed.

“We view this as an opportunity to acquire prized brands and assets being sold at a discount due to the current market dislocation,” Stavinsky said. “It is also an opportunity to continue to consolidate a highly fragmented space, which should help pricing power.”

Monday, Pacific Western Bank agreed with a Kennedy-Wilson Holdings, Inc subsidiary to sell a portfolio of 74 real estate construction loans with an approximate principal balance of $2.6 billion. 

Kennedy Wilson will also assume all remaining funding obligations under the acquired loans.

In January, the bank announced the restructuring of Civic, a lending subsidiary, to improve its profitability and risk profile. 

Founded in 2014, Civic Financial Services was acquired by Pacific Western Bank in February 2021. Since its inception, CIVIC has funded more than 10,000 loans to real estate investors for more than $4.4 billion, the company said at the time of acquisition.

The Wall Street Journal reported that Roc360 would take on the company’s business operations—its data, intellectual property, brand, and workforce, but not Civic’s previously extended loans or loan-servicing operations.

Price Action: PACW shares are up 0.14% at $7.39 during the premarket session on the last check Wednesday.