When PNC’s acquisition of National City Corp. closed at the end of December, it added Red Capital Group to its toolkit of multifamily programs.
Red Capital Group, formerly a subsidiary of National City, expands PNC’s offerings in both market-rate and affordable multifamily housing. Like PNC, Red was a top 10 Fannie Mae and Federal Housing Administration (FHA) lender, used its balance sheet to fund some construction and pre-development work, and also offered equity capital.
But Red’s work in seniors housing, where it’s been a top Fannie Mae seniors housing lender since 2003, may have the biggest impact on PNC.
“We expect that they will allow us to be a preeminent provider of seniors housing,” said Tim White, president of PNC ARCS, the market-rate multifamily arm of PNC. “We’re excited to have a chance to work with them and expand the company’s horizon.”
Red funded all seniors asset classes, including independent and assisted-living developments, skilled-care, and continuing-care retirement centers. Red offered construction and permanent financing, bond financing, mezzanine and other structured options, as well as financial and M&A advisory services.
The acquisition should help PNC continue its ascent among the multifamily debt industry. The company was ranked the No. 19 lender in 2006, originating more than $1.4 billion, according to the Mortgage Bankers Association’s (MBA) list of top multifamily lenders. But PNC climbed to No. 9 in 2007, originating more than $3.4 billion, an uptick mostly attributable to its acquisition of ARCS Commercial Mortgage.
Based on last year’s success of PNC ARCS alone, the company should be among the top 10 again when the MBA releases its 2008 rankings. PNC ARCS originated about $2.8 billion in Fannie Mae and Freddie Mac loans last year, and that figure doesn’t include the affordable housing division, PNC MultiFamily, or the multifamily debt issued from the company’s balance sheet.
The future looks bright for the Pittsburgh-based bank’s multifamily operations. Unlike many of its banking peers, PNC is still profitable. And the company views the mass consolidations in the lending industry as an opportunity to expand its reach.
“It has opened up the opportunity to expand existing relationships that may have been shared with one or more other multifamily lenders,” said White. “And it’s also opened up a chance to develop new relationships with strong potential new customers.”
