Berkadia Buys Keystone Commercial Capital

Berkadia Commercial Mortgage L.LC. added new offices in three U.S. cities to its growing company and more than $2 billion in commercial real estate loans to its servicing portfolio with the acquisition of Keystone Commercial Capital.
Ernie Katai, Berkadia

Ernie Katai, Berkadia

Berkadia Commercial Mortgage L.LC. added new offices in three U.S. cities to its growing company and more than $2 billion in commercial real estate loans to its servicing portfolio with the acquisition of Keystone Commercial Capital.

Headquartered in Phoenix, Keystone is a full-service commercial mortgage banking company with 16 employees that also has offices in Boston and San Diego. Terms of the deal were not announced. Keystone was founded in 2007 by Managing Partners Charlie Williams and Scott Holland, who will remain on along with Partners Jon Krieger, Ryan Nelson, Gene Kim and the entire Keystone origination and support staff. Williams will continue to oversee operations in all three offices for Berkadia, which is headquartered in Horsham, Pa.

Keystone services more than $2 billion in commercial real estate loans for a diverse base of capital providers and maintains relationships with 23 of the country’s leading life insurance companies.

“The number of capital providers has grown in recent years, and Berkadia has invested significant time in developing relationships – particularly with life insurance companies – to expand our financial capabilities,” Ernie Katai, executive vice president & head of production at Berkadia, said in a news release. “This demonstrates our continued commitment to that expansion, and we look forward to leveraging Keystone’s resources and expertise in order to provide our clients with an even more robust portfolio of service offerings.”

Katai told Commercial Property Executive Keystone’s experience in the life insurance company market as well as its three office locations, particularly in Phoenix, were attractive to Berkadia. Calling it a “strategic and critical” move, Katai said Berkadia wanted a commercial mortgage company in Phoenix to complement the multi-family investment sales expertise of a previous Berkadia acquisition – Hendricks & Partners, another Phoenix-based firm it had purchased in late December 2012. Now known as Hendricks-Berkadia, it offers multi-family advisory services and investment sales through more than 180 apartment professionals and 37 offices.

Keystone was the “first sizable” acquisition for Berkadia since Hendricks & Partners, Katai said but it likely won’t be the last.

“We’re in growth mode,” he told CPE. “Our goal over the next five years is to double our production.”

Katai said that growth will come from both organic growth and acquisitions.

“We want to expand in all food groups and not just one particular segment of the business. We want to continue to diversify our capital base,” Katai said.

The Keystone acquisition was “a good strategic opportunity to make a big impact quickly,” Katai noted.

“We’ll continue to look for those opportunities,” he added.

For Keystone, becoming part of Berkadia gives its team more direct access to Fannie Mae and Freddie Mac.

“Berkadia has one of the most extensive origination platforms and strong relationships with the GSEs, as well as servicing and investment sales capabilities,” Williams said in the news release. “We look forward to helping grow Berkadia’s already strong life company pipeline, building on the company’s outstanding agency relationships and integrating our operations to help both current and prospective clients.”

A joint venture of Berkshire Hathaway Inc. and Leucadia National Corp., Berkadia manages a portfolio of more than $229 billion as of March 31. It will now have more than 130 production employees working out of more than 50 offices across the United States, according to Katai.