PacWest (NASDAQ:PACW) stock is taking off on Tuesday as investors react to the regional bank selling real estate loans.
PacWest revealed in a filing with the U.S. Securities and Exchange Commission (SEC) that it will sell $2.6 billion worth of real estate loans to Kennedy-Wilson Holdings. This covers a portfolio of 74 real estate construction loans.
To build on that, PacWest is seeking permission to sell further real estate loans to Kennedy-Wilson. If approved, that would see it offload loans with a principal balance of $363 million to the company.
PacWest notes that this asset sale won’t take place all at once. Instead, the company will handle the sale in multiple steps. That will see the sale take place across the second and third quarters of 2023.
What’s Behind the PACW Asset Sale
Here’s what PacWest said in a note to clients about the real estate loan sale:
“While the strategy (to divest non-core assets) was put in place in early 2023, recent events have increased the import of asset sales as it relates to removing funding pressure from the balance sheet and building CET1 capital.”
Investors are reacting well to today’s news with some 36 million shares of PACW stock changing hands. For the record, it’s daily average trading volume is closer to 29.7 million shares. PACW is also up 19.1% as of Tuesday morning.
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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
