CIBC Wood Gundy's real estate finance group is showing progress after last year's makeover.
Expanding beyond construction loans - its historical real estate finance tool - the group is now offering bridge acquisition loans and permanent loans. Because real estate is such a cyclical business, CIBC Wood Gundy found that construction lending alone is not profitable.
"By having a lot of products, you can manage your risk because you're in all of the markets," said Michael Higgins, managing director of the group, which is part of CIBC Wood Gundy's corporate finance department. "And you can make more money with a better risk profile."
The group hopes a successful acquisition of Oppenheimer & Co. will expand its capabilities even further by adding equity products.
Mr. Higgins said customers have noticed the real estate finance group's new look. "We're winning a lot of deals because we can provide both the construction and the permanent loans," he said. "We have seen volume go up."
In the past six months, according to Mr. Higgins, the real estate finance group has either committed itself to or received mandates for $450 million in financings. "We're looking to do $2 billion a year in business when we're completely set up," he added.
The group recently closed two New York deals.
CIBC Wood Gundy was lead lender on a $50 million loan for M.D. Carlyle to build a 16-screen Sony Cineplex. The deal, which closed in mid-August, was syndicated to two commercial banks.
The loan was priced at 75 basis points above the London interbank offered rate up-front, plus a 150-basis-point spread. The two-year loan came with the option of entering into a standby, permanent 10-year loan.
CIBC Wood Gundy was sole lender on a $35 million, 30-month term credit for Marriott. The loan will be used to build a Courtyard by Marriott hotel in New York. It was priced at Libor plus 175 basis points. The deal closed this month. CIBC Wood Gundy is the New York-based arm of Canadian Imperial Bank of Commerce, Toronto.
Wachovia Capital Markets Inc. has hired Thomas Brady to head its derivatives group.
Mr. Brady, who will start at the end of September, is a former member of the capital markets team at Boatmen's Bancshares, the St. Louis banking company acquired this year by NationsBank Corp.
Wachovia Capital Markets is the section 20 subsidiary of Wachovia Corp., a Winston-Salem, N.C., holding company with $48.5 billion of assets. Beyond confirming Mr. Brady's employment, Wachovia declined to comment.
