It looks like we might be entering the capitulation stage of this real estate cycle.

A San Diego firm has purchased a loan portfolio backed by distressed real estate properties in one of the first major deals among private investment funds, also known as vulture funds, trolling for bargains.

In a deal that closed July 24, Ayres Advisors LLC paid $44.2 million on a portfolio once worth $127.5 million from Central Pacific Bank in Honolulu.

The portfolio’s original value was based on $122 million paid for 16 loans and $5.5 million paid at auction for one property.

” Look, it’s no secret that there are a number of banks that would like to adjust their credit exposure to residential real estate in California or in other states to allow them to refocus on their core business and deliver value to their shareholders,” he said. ” And selling assets is one way of achieving that objective.”