The revival of real estate lending and the growth of securitization are causing more banks to shift the focus of their real estate groups to the capital markets.
Chase Manhattan Corp. this week reorganized its real estate finance group to better integrate it with related units within its global investment bank.
The move effectively took Chase's real estate group, which had been a separate entity, and made it more akin to the bank's other specialized industry groups.
Chase is the latest in a string of banks to have rejiggered its real estate unit. Fleet Financial Group, BankBoston Corp., and Canadian Imperial Bank of Commerce have also sought to better integrate their once-autonomous real estate efforts into other business units.
"As the business changes, and more of it is securitized, real estate is starting to resemble an industry group rather than a specialist function," said Phil Wharton, chief executive officer of the Property Information Exchange, New York, a commercial property data base.
"The investment banking function and analysis of real estate is more and more like other industries," he said. "The asset management has not changed and still requires specialized knowledge, but the vehicles for capital to flow in and out of the market have changed."
Another real estate lender said the reorganizations reflect the rising profile of the business at the nation's banks. In 1996, banks' commercial real estate lending portfolios grew by 7%.
"In bad times, real estate capital markets generally report to the real estate function," this lender said. "In good times-once real estate is a meaningful part of revenues-it is carved into the corporate side of the business."
Under the reorganization at Chase, real estate syndicated finance will be combined with global structured finance, under Peter Gleysteen. Real estate portfolio management, meanwhile, will be combined with the global investment bank's credit and lending group under Suzanne Hammett.
Real estate securitization, which includes the commercial mortgage banking department, will be under the leadership of John Steinhardt, who heads investment-grade fixed income.
Mr. Steinhardt and Joe DeLuca, who heads Chase's real estate group, will run a new joint venture designed to identify opportunities in real estate securitization.
Chase will also establish a "real estate finance council," to be led by Mr. DeLuca, which will focus on coordinating real estate exposure globally, review product strategies, and align policies, practices, and the approach to the real estate market.
"Real estate finance is a capital markets animal, and the only way to compete is to marry traditional real estate with capital markets products," said Mitch Roschelle, a part of Coopers & Lybrand's commercial real estate group.
