REO Auction Platform Combination Should Benefit Affiliated Lender

Genesis Capital, which lends to investors in distressed single-family properties, will soon have a fresh source of leads for new business.

The lender's owner, Trixy Weiss, is joining with Dave Webb to form a new holding company called Global Property Exchange LLC. It will house another business Weiss owns, Genesis Auctions, and Webb's Hudson & Marshall. The former auctions distressed properties online; the latter does it the old-fashioned way, in ballrooms.

Genesis Capital will not be part of the transaction. But it will benefit as it gains access to Hudson & Marshall auction participants, who bid on a wider range of distressed properties, including commercial and multifamily buildings, than Genesis Auctions' all-residential fare.

After the deal is finalized, both auction companies will maintain their separate platforms as Genesis will remain headquartered in Los Angeles while Hudson & Marshall will keep its headquarters in Dallas.

Genesis Capital did 340 debt transactions last year; in the previous five years it did a total of 528. (The company did not disclose a dollar amount.)

One of the ways that auction companies can attract buyers and buyers can afford to bid on more properties is if they have access to debt, which in turn expands their ability to make purchases, noted Rayman Mathoda, the president of both Genesis Auction and Genesis Capital.

Genesis Capital provides short-term funding for investors, who use this debt as a bridge loan, repaid when the property is sold or refinanced into a longer-term loan.

The lender predates Genesis Auctions, noted Mathoda; the auction company started in business during the height of the crisis in 2011. So coming out of the gate Genesis Auctions had a database of investors it could market to which helped it grow and get off the ground quickly, she said.

The foreclosure market until recently has been shrinking year-over-year, but both companies have a small share in a fractured space and as a result are positioned to gain market share, she said.

The single family market consisted of 250,000 foreclosures a year before the housing crisis began. That spiked to over a million at the height of the crisis. Today it is around 550,000-600,000 foreclosures per year.

"There is always a market for foreclosures and REOs and we believe it's a very strong long term business for us to grow," Mathoda said.

As for the transaction between Genesis Auction and Hudson & Marshall, "It is not technically a merger because both of the companies will survive for the long run and continue. But it is a combining of forces," she explained.

Both companies have unique things they bring to the table and they also have complementary client relationships with very little overlap.

"The idea for 2015 is to combine Hudson & Marshall's expertise in traditional ballroom and onsite auctions and pair it up with Genesis' expertise in occupied and investor-oriented auction programs, as well as multi-channel marketing," added Mathoda.