Tuesday, July 20, 2010

Fortress Buys CWCapital

CWCapital has been acquired by New York-based Fortress Investment Group in the third major acquisition of a special servicer in the past year. The deal is expected to close in the third quarter, and terms of the deal were not disclosed.

It’s the company’s special servicing division, the nation’s second largest, that primarily attracted Fortress. And as the amount of distressed CMBS loans continues to grow, it’s a business that should continue to expand.

“It makes sense that a player like [Fortress] would be interested, not only in the income generated, but also by having the first crack at any opportunities that may arise on the real estate side” says Dan Fasulo, managing director of market-research firm Real Capital Analytics. (ENSO Observation: This doesn't sound too much like an opportunity for self-dealing does it?)

The buy is yet another example of how creative some real estate players are in trying to get access to distressed properties. Steve Ross, founder of the Related Companies, and fellow Related executives Jeff Blau and Bruce Beal Jr. formed a bank, called SJB National Bank, late last year, with the sole intent to buy other failed banks to get their hands on distress.

The acquisition brings to Fortress a wealth of data that will inform the company’s strategy for capitalizing on distress, according to a source close the transaction (Fortress executives were not available for interview at press time). Fortress was also attracted by the breadth of CWCapital—the mortgage origination, prime servicing and investment advisory businesses give CWCapital pro-cyclical growth opportunities as well.

The company’s agency origination business has continued to grow over the last few years. In 2009, the company originated more than $1 billion in Fannie Mae and Freddie Mac loans, and another $330 million in FHA deals. Senior management at Fortress is well aware of the company's prolific pace—Fortress’ CEO is former Fannie Mae CEO Daniel Mudd.

No major changes are planned for CWCapital’s management team, and the company remains headquartered in Needham, Mass., according to Fortress.