Union Bank to Acquire PB Capital’s $3.7B CRE Portfolio/Platform

Union Bank N.A. has reached an agreement to acquire the $3.7 billion institutional CRE lending portfolio and platform of PB Capital Corp.

Union Bank president & CEO Masashi Oka

Union Bank N.A., of San Francisco, has reached an agreement to acquire the $3.7 billion institutional CRE lending portfolio and platform of PB Capital Corp., New York, the parties announced Sunday. The outsized acquisition will catapult Union Bank from number 17 to number 9 among the largest bank investor CRE lenders in the United States.

The acquisition is expected to be completed in the second quarter of 2013, subject to customary closing conditions.

“This is an important strategic acquisition for Union Bank, as it leverages our established CRE capabilities by adding a national origination platform and strong relationships with top-tier property owners,” said Union Bank president and CEO Masashi Oka in a release.

Union Bank also touted the geographic and asset class diversification and the seasoned management team the acquisition will bring.

Union Bank is the primary subsidiary UnionBanCal Corp., a financial holding company with assets of $97 billion. The latter in turn is a wholly owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ Ltd., a subsidiary of Mitsubishi UFJ Financial Group Inc.

PB Capital’s seller, Deutsche Bank, took a large stake in Postbank (the former postal savings division of the Deutsche Bundespost) in September 2008 and gained a majority holding in December 2010. PB Capital came along as part of the deal, but was officially designated a non-core asset in November of last year, when Deutsche Bank formed its Non-Core Operations Unit. 

Overall, the portfolio reportedly consists predominantly of senior secured facilities on institutional-quality properties. Information provided by Union Bank sketches out the broad outlines of the loan portfolio.

* 69 percent of the loans were originated after 2007.

* The average loan size is $52 million, and the weighted average LTV is estimated at 63 percent.

* Loans on office buildings, mostly in major U.S. cities, comprise 53 percent of the total portfolio, followed by rental residential (16 percent), mixed-use (12 percent), hotel (10 percent) and retail (9 percent).

* 52 percent of the portfolio is secured by properties in New York, Los Angeles or Chicago. 

Deutsche Bank’s core CRE business evidently will remain unchanged.