Lubert-Adler may buy ailing Corus Bankshares

Lubert-Adler Partners LP, the Philadelphia-based private-equity firm, may participate in a bid for all or part of Corus Bankshares Inc., the Chicago lender crippled by loans to build condominiums, Bloomberg's Jonathan Keehner and Jason Kelly reported.

Lubert-Adler is among at least four investors weighing bids for Corus, said the people, who asked not to be named because the talks are private. The Federal Deposit Insurance Corp. has indicated that the bank, which said this week it understated its first-quarter loss by $16 million, may be seized as soon as Aug. 6, the people said.

"The appeal of these distressed bank deals is buying at a discount with a potential government guarantee on some losses," said Joseph Vitale, a partner at New York-based law firm Schulte Roth & Zabel LLP, who advises buyout firms on investments in financial institutions. "There's a real chance to reap the upside."

New York developer Related Cos., Thomas Barrack's Colony Capital LLC and J.C. Flowers & Co. are also mulling bids for Corus. The 51-year-old bank's fate rests with the FDIC because the lender and its financial adviser, Bank of America Corp., haven't been able to find a buyer willing to complete a deal without government assistance.

Lubert-Adler and Related Group, an affiliate of Related Cos., announced a $1 billion investment vehicle last year to buy mortgages and property from developers, lenders and owners. Lubert-Adler focuses on real-estate investments.

The FDIC, led by Sheila Bair, is wrestling with the role private investors should play in the resolution of the banking crisis. After closing BankUnited Financial Corp. and IndyMac Bank, regulators agreed to loss-sharing provisions when selling them to investors this year.

The regulator proposed takeover rules two weeks ago that buyout managers said would deter them from pursuing future deals.

"There's a question on what Corus signifies about the FDIC's proposed rules," said Vitale. "Will it follow the precedent of other recent private equity deals or will they subject the buyers to something new based on how they expect to finalize the rules?"