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Berkadia Rises from Capmark’s Ashes

APARTMENT FINANCE TODAY • January/February 2010

BY JERRY ASCIERTO

A new name entered the multifamily arena in December, when Berkadia Commercial Mortgage was born out of the ashes of Capmark Financial Group. Berkshire Hathaway and Leucadia National partnered to acquire Capmark’s mortgage origination and servicing business for about $515 million.

Berkadia is the third name for the organization that spun off from GMAC Commercial Mortgage in 2006, only to file for bankruptcy three years later. But the faces are the same: Nearly 1,000 employees will move over to Berkadia. Company veteran Michael Lipson has been named president and CEO, while John Cannon continues to head the mortgage origination business.

Like Capmark, Berkadia will originate loans for Fannie Mae, Freddie Mac, the FHA, and life insurance companies, and expects to be among the top GSE lenders for the year.

Capmark’s financial situation did cut into its market share, however, as some borrowers shied away. “Capmark’s financial situation in 2009 had an impact on our origination volume, but the cloud of uncertainty has been removed,” says Cannon of the Horsham, Pa.-based Berkadia. “Our expectation is that we will gain back whatever little market share we lost in 2009.”

Capmark’s financial problems can be traced to its spin-off from GMAC, when it took on a sizable amount of corporate debt. As of the second quarter of 2009, the company had a negative net worth and was technically insolvent. But the company’s creditors continued to extend the debt in hopes of a resolution.

The company is anxious to turn the page and begin anew. “The highlight of the year was getting bought by Berkshire and Leucadia,” says Lipson. “Everything else was water under the bridge.”