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NorthMark Deal Makes Big Servicer

NorthMarq Capital is acquiring the commercial mortgage financing and commercial mortgage servicing businesses of Legg Mason Real Estate Services in a deal that NorthMarq says will create the third-largest commercial mortgage banking organization in the United States.

The terms of the deal were not disclosed, but Baltimore-based Legg Mason reports that it expects to record a pre-tax gain of approximately $11 million on the transaction, which the company specifies does not include its real estate investment advisory business or any other Legg Mason business.

Bert Colianni, executive vice president and COO of Marquette Financial - a financial services firm based here, owned by the Pohlad family, and NorthMarq's parent company - said, "This is a very attractive business segment for Marquette. We're committed to growing this key segment of our portfolio of companies going forward."

NorthMarq reports that after the deal is done, the company will have 28 offices across the country, 350 employees, more than $6.5 billion in annual commercial real estate financing (including both debt and equity transactions) and more than $21 billion in commercial mortgage servicing.

Edward Padilla, NorthMarq CEO, who will head the Minneapolis-based organization, said, "This transaction gives us a true nationwide presence with stable management and a strong industry reputation. We now can offer a national platform across multiple markets and provide more options to our clients than ever before."

Walt D'Alessio, chairman and CEO of Legg Mason Real Estate Services, will become vice chair of NorthMarq, and will join the NorthMarq board of directors.

And Craig Butchenhart will become president of NorthMarq, reporting to Mr. Padilla, NorthMarq said. He will be responsible for the company's eastern operations and "coordination of national production efforts."

Mr. Butchenhart noted that this is "the combination of two great organizations with similar cultures and approaches to working with clients."

Following the news of the acquisition, Standard & Poor's placed its "above average" commercial mortgage (primary) servicer rankings on both Northmarq Capital and Legg Mason Real Estate Services Inc. on CreditWatch with "negative implications."

In the period before the transaction closes, the rating agency expects to monitor each entity "for operational continuity and the fulfillment of their respective, ongoing primary servicing obligations."

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