WaFd (Nasdaq: WAFD) announced June 21 that it closed on selling about $2.8 billion of multifamily commercial real estate (CRE) loans to Bank of America.
The high-finance move allows the Seattle-based bank to gain “more liquidity,” as in cash on hand, to pay down debt, make new loans, conduct stock buybacks or a combination of sorts, spokesman Brad Goode reported Monday.
Banks have discussed this trend in recent quarterly reports, as they navigate a prolonged high-interest rate environment.
Still, as WaFd CEO Brent Beardall pointed out on a virtual conference call with CNBC the following Monday, commercial real estate remains a good investment. CRE loans encompass multifamily, industrial, hospitality, storage and office buildings.
“I’ve been telling the world fears in CRE are overblown,” he said on the call. Further, he estimated that about 45% of WaFd’s loan portfolio consists of CRE loans.
To Beardall: “It comes down to credit quality.”
Moreover, Beardall labeled the loans of “high quality,” absent of delinquency. They originated from Luther Burbank Savings, which WaFd completed its $654 million buyout of in February.
Santa Rosa-based Luther Burbank Savings specialized in lending within the multifamily dwelling sector. And with aligning philosophies, WaFd considers these multifamily commercial loans its “bread and butter.”
The loan sale was not a condition of the all-stock acquisition from the over $30 billion bank that manages 210 branches in nine western states. They include its home state of Washington, as well as California, Idaho, Nevada, Arizona, New Mexico, Oregon, Texas and Utah.
