Alliant Capital Purchase, New Co-CEO Give Ares a Trifecta
- May 16, 2013
In the second and third major moves in less than a week, Ares Commercial Real Estate Corp., Chicago, has agreed to acquire EF&A Funding L.L.C. (d/b/a Alliant Capital L.L.C.) for about $62.8 million in cash and stock and has also named a new co-CEO, Todd Schuster, the REIT announced Wednesday.
Alliant Capital L.L.C. will become a wholly owned taxable REIT subsidiary of ACRE. (Alliant Capital Ltd., which provides affordable housing tax credit equity, is not included in the acquisition and will remain a part of The Alliant Co.)
Alliant Capital L.L.C. focuses on lending, asset management and servicing in the multi-family sector and specializes in the origination and servicing of multi-family loans through the Fannie Mae DUS program. Its servicing portfolio is about $3.9 billion in multi-family loans with mortgage servicing rights at a fair value of about $61.0 million.
In addition, Alliant Capital L.L.C. recently was approved to originate loans insured by the Federal Housing Administration and to securitize those loans through Ginnie Mae.
Schuster’s appointment as co-CEO of ACRE, where he joins existing CEO John Bartling Jr., clearly is connected to the Alliant Capital acquisition, because Schuster is a board member of an affiliate of Alliant Capital L.L.C., as well as a current ACRE board member.
“As a leading commercial real estate finance CEO, Todd’s significant insights in running GSE and FHA/Ginnie Mae platforms will be invaluable to the success of this acquisition,” Bartling said in a release.
Schuster was the founder of CW Financial Services and its CEO from 1991 to 2009.
Through a spokesperson, Ares declined to comment further on either action.
These moves are hard on the heels of last week’s announcement by ACRE parent Ares Management L.L.C., Los Angeles, that it would purchase AREA Property Partners, essentially quadrupling Ares Management’s total committed capital, to $8 billion, once AREA’s real estate equity investments in North America and Europe are added.
The Alliant Capital acquisition, Bartling said “will enable ACRE to better meet the short- and long-term financing needs of multi-family owner/operators in an asset class that has performed well over the long-term, especially in the past five years.”
It’s reportedly expected to benefit ACRE shareholders in several ways.
* Alliant Capital L.L.C.’s national direct origination platform focused on Fannie Mae and FHA/Ginnie Mae multi-family loans scales up ACRE’s platform and enhances its direct origination capabilities.
* The addition of Alliant Capital L.L.C.’s focus on long-term multi-family GSE loans to ACRE’s background in providing multi-family bridge loans will let ACRE offer “a complete turnkey financial solution for multi-family owners/operators seeking short- and long-term financing options.”
* Adding Alliant Capital L.L.C.’s $3.9 billion servicing portfolio (about 1,000 loans) diversifies ACRE’s revenue stream.