Home > SCT News Home

SCT News Home

Executives assess Capmark bankruptcy impact

The current state of the commercial real estate sector being what it is, overall repercussions of Capmark Financial Group’s bankruptcy filing are likely to be limited, sources say. “The bankruptcy will impact certain assets Capmark may be involved in, but I don’t think it will have a general impact on the market,” said Richard Swartz, who heads the Boston office of Cushman & Wakefield Sonnenblick Goldman.

The firm works with Horsham, Pa.–based Capmark, but the bankruptcy will affect at most only some business lines, Swartz says. This is because Capmark aims not to go out of business, but only to restructure, reduce debt and maximize shareholder value, he says.

Capmark will probably re-emerge in better shape, others concur. “I don’t think they are going to liquidate the company,” said Dan Fasulo, managing director of research at Real Capital Analytics, New York City. “It could come back as a trouble-free lending operation and have a positive impact on the market.”

The firm, formerly GMAC Commercial Holding Corp., was a financing affiliate of General Motors. A private equity group led by Five Mile Capital Partners; Goldman Sachs Capital Partners; and Kohlberg Kravis Roberts acquired the firm in 2006. The firm originated some $10 billion in commercial real estate loans, according to published reports.

The bankruptcy could, however, adversely affect those companies still in the Capmark financing process, says Fasulo. When a lender makes a loan for the acquisition of an office building, say, there are usually upgrades needed on the property. The borrower does not get all the money up front, but draws down over time as those upgrades are addressed. Such borrowers could now be in limbo.

“If Capmark is in bankruptcy, it may not meet all these obligations,” said Fasulo. “When Lehman went bust, a lot of investors were fighting to get the money that was already approved. Lehman picked and chose which owners would get capital. That can happen with the Capmark bankruptcy.”