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Special Reports
Commercial Lending
iStar Buying Fremont's CRE Business
iStar is adding on origination capabilities in six locations.
Commercial real estate lending company iStar Financial is acquiring Fremont General's
commercial real estate business for a total cash purchase price of about $1.9 billion.
iStar is acquiring California-based Fremont General's commercial real estate lending
business and retaining a 30% interest in Fremont General's $6.5 billion portfolio of commercial real estate loans,
iStar reports. (Fremont General has also reported that other investors are investing in its subprime lending operations).
iStar is to have a "B" participation interest in the Fremont portfolio,
which will be subordinate to Fremont's 70% "A" participation in the portfolio.
iStar is also funding up to about $4.4 billion in unfunded loan commitments associated
with the portfolio.
The company is planning to retain most of Fremont's employees in eight offices
nationwide.
Jay Sugarman, chairman and chief executive officer of iStar, noted, "With
greater regional reach and an enhanced platform, this acquisition will allow iStar to expand its U.S. footprint
and leverage our strong brand across a larger universe of commercial real estate borrowers."
Through the acquisition, which is expected to close this summer, iStar is adding
on loan origination capabilities in six new regional locations: Atlanta, Chicago, Dallas, Phoenix, Southern California
and Bethesda, Md.
Multifamily properties represent about 60% of the Fremont General portfolio, iStar
reports, with condominium construction and conversion projects accounting for about 45% of the total portfolio.
Mr. Sugarman believes that "the increased level of reserves iStar will have
at closing will be adequate for the risks we have identified in the portfolio thus far."
Initial funding for the acquisition will be through interim financing, which is
expected to be replaced through the issuance of debt and equity securities after the transaction closes.
iStar Financial Inc. is a publicly traded finance company focused on the commercial
real estate industry.
The company primarily provides investment capital to high-end private and corporate
owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital,
as well as corporate net lease financing and equity.
iStar Financial is taxed as a real estate investment trust.
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