Sternlicht at it again with Viceroy

The bank is selling its mortgage on the Viceroy Anguilla to Barry Sternlicht’s Starwood Capital Group at a hefty discount, according to Anguillan Chief Minister Hubert Hughes and others familiar with the talks. The debt has a face value of close to $300 million, these people said. Starwood is paying $105 million, according to Mr. Hughes.  The deal is the latest example of a capitulation by a bank that has nursed a troubled real-estate project for years. For most of the economic downturn, banks were unwilling to sell ailing assets for fear of the damage the losses would do to their balance sheets. But as the banking sector has stabilized, some are showing a willingness to dump bad loans.

Citigroup has been particularly active. In February, KSL Capital Partners LLC paid Citigroup roughly $120 million for the $380 million mortgage on the 479-room La Costa Resort and Spa in Carlsbad, Calif. Citigroup also is close after two rounds of bidding to selling a $340 million portfolio of loans backed by warehouses and manufacturing facilities to Oaktree Capital Management LP for $228 million, or about 67 cents on the dollar, according to people familiar with the matter.  The willingness of Citigroup and others to sell has been good news for Starwood and other firms, which have raised capital to take advantage of the mistakes of others. Starwood, which has $14 billion of assets under management, last year also won the bidding war run by the Federal Deposit Insurance Corp. for the condominium assets of Corus Bank after the lender failed.  click here for full story from the WSJ…