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CIBC Sets Aside $1B For Loan Purchases, Origination

CIBC World Markets wants to buy or originate as much as $1 billion in commercial real estate loans by year end. "We were always originating loans, and now there's better value in buying loans in the secondary market," said Michael Higgins, head of real estate finance. "It's the best place to put money to work," he said, adding that the bank will deploy capital based on opportunity.

With lending volume down, CIBC is setting its sights on discounted loan portfolios, senior notes and mezzanine notes behind first mortgages. "We'd like to buy loans where we think the borrower could be a potential future client," Higgins said. The bank is looking to buy loans at steep discounts.

CIBC, which has been active in the secondary market since early this year, has seen itself out-bid on some portfolios. "There is competition in the space from other funds," Higgins said. "But we like the space." More loans may hit the market in coming months as sellers shed exposure, he added.

To this end, the bank wants to hire two to three bankers who could buy loans and also provide advisory and loan restructuring services. Higgins believes strongly in the marketable skills of commercial real estate investment bankers and due diligence experts in today's market.

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