Ranieri, Partners Look at GMACCM

A partnership that includes Kohlberg Kravis Roberts, Goldman Sachs and Five Mile Capital has been granted exclusive negotiating rights to buy a majority stake in GMAC Commercial Mortgage, the nation's largest commercial servicer.

Industry sources told Mortgage Servicing News that negotiations have been ongoing since at least mid-March.

Five Mile Capital is headed by investment banker Lewis S. Ranieri, who is considered the "father" of the mortgage-backed security. At press time, Mr. Ranieri declined to comment.

KKR already has a presence in mortgages through its ownership of Nexstar Financial of St. Louis, a private-label funder/servicer. Goldman has long been a key player in mortgage M&A and last fall launched a private-label conduit.

A spokeswoman for General Motors in New York told MSN that the company is in "advanced talks" with a group of buyers, but declined to identify any of the parties involved.

Industry sources say the deal is far from being wrapped up and its parameters could change.

"The price is still up in the air," said one investment banker. "But it looks like GM will keep a piece of the company."

The spokeswoman, in response to a question, stressed that GMAC Residential of Horsham, Pa., is not for sale at this time and the automaker has no current plans to sell that unit.

Industry sources have said potential bidders have appro-ached GM about buying the residential business.

"Some people out there smell blood," said one mortgage executive who competes against GMAC.

GMAC Commercial, which also is based in Horsham, is the nation's largest commercial mortgage banker. GMAC Residential ranks seventh based on a servicing portfolio of $231 billion.

Last year, GMAC Commercial and Residential, combined, earned $2.9 billion. This year it is forecasting profits of $2.5 billion.

Mr. Ranieri is highly regarded in the mortgage industry. Besides being the inventor of the MBS, and a former vice chairman at Salomon Bros., a few years ago he sold his depository, Bank United of Houston, to Washington Mutual.

He currently is chairman of another Houston bank, the fast-growing Franklin Bank Corp. He is chairman of Five Mile, a sponsor and manager of private investment funds.

GM, which is suffering from sluggish auto sales, has been hurt by downgrades on its corporate debt, which increases its borrowing costs. The automaker is in the process of creating a separate holding company in an effort to insulate GMAC from GM's debt woes.

The spokeswoman said GMAC's "liquidity profile is excellent."

GMACCM's Servicing

(Dollars in Millions)

Comm. serv. for self & others $51,468

Comm. subserv. for others $54,449

Comm. master servicing $141,537

Total $247,454

Source: MSN/Commercial Quarterly Data Report.

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