Failed insurer's real estate assets to be sold

Real Estate Weekly, March 2, 1994

Bankers Trust has announced that a Kentucky state court had approved the sale of a poryfolio of approximately $265 million in book value of real estate assets held by the Kentucky Central Life Insurance Company.

Kentucky Central Life was placed in rehabilitation last year, representing the seventh largest insurance company failure in U.S. history. This transaction marks a growing trend in bulk dispositions of insurance company real estate portfolios.

The portfolio for sale, which represents the majority of Kentucky Central Life's real estate assets, is comprised of a diversified mix of assets including performing and non-performing commercial mortgages, real estate owned (REO), and joint ventures. There are a total of approximately 174 assets in the portfolio, which will be broken down for sale into several pools ranging in size from approximately $50 million to $80 million. The assets have an average size of approximately $1.5 million and are backed by properties including multifamily, retail, office buildings, and horse, farms. In addition, there is a small pool of residential mortgages. The assets are located primarily in Kentucky.

Bankers Trust and Creamer Realty Consultants was retained in 1993 by the Commissioner of the Kentucky Department of Insurance, acting as Rehabilitator of Kentucky Central Life to serve as the advisor for the company in regard to its real estate portfolio. Bankers Trust was directed to stabilize the portfolio, recommend a strategy to maximize the economic value for the portfolio, and implement such a strategy. Creamer Realty Consultants has worked closely with Bankers Trust in the asset management of the portfolio.

Marketing of the transaction is expected to begin in the next few weeks, with bids due in mid April. Ernst & Young is providing due diligence for the transaction.

In a separate announcement last week, the Rehabilitator recommended to the court that Kentucky Central Life's life insurance business be sold to Jefferson-Pilot Corp, a North Carolina based insurance company.

Kentucky Central Life, a publicly owned company, had $43 billion in life in force in 49 states and the District of Columbia as of the date it was placed in rehabilitation.

Investors wishing to receive information on the sale should send their name title, company and address to William Benjamin, vice president, Bankers Trust, 280 Park Avenue, 21W, New York, NY 100 17 or call (2 12) 454-5856.