In December 1992, Amresco Holdings Inc. reached a critical juncture.

"We had two choices," said Cat Hunkele, chief financial officer of the Dallas-based company, now called Amresco Inc. "To wind down and shut down or to get into a situation where we could compete in the marketplace."

Executives chose the second option.

Now the company, which was formed in 1988 to manage an $11 billion portfolio of bad real estate that NCNB Corp. obtained in a Texas acquisition, has freed itself from the bank and evolved into one of a growing cadre of companies angling to compete in the commercial real estate securitization business.

Experts believe securitization will be a major factor in real estate finance, providing a way to tap investors for loans in much the same way they are tapped for residential loans today.

New York attorney Kevin R. Hackett, who refers to this trend as the "Wall Street-ization" of real estate, said securitization ultimately will offer developers the nonrecourse loans that banks and insurance companies cannot keep on their books under today's stringent capital regulations.

"The market began with the Resolution Trust Corp., and the technology that the RTC developed has been now refined by the Wall Street investment houses to the point where we're seeing significant efficiencies, especially on the debt side," said Mr. Hackett, a partner in Fried, Frank, Harris, Shriver & Jacobson.

Banks, eager to maintain relationships with midsize real estate borrowers, are getting into the act, too, forming joint ventures with Wall Street firms or creating commercial mortgage conduits of their own (see article below).

Amresco, meanwhile, has proved to be the embodiment of the evolution toward securitization.

As part of NCNB -- later renamed NationsBank Corp. -- Amresco had branched out to take management contracts from the Resolution Trust Corp. on more than $4 billion of problem loans. It also got the contract on a $3.5 billion portfolio of loans originated by its parent.

The problem, Mr. Hunkele said, was that banking laws prevented the company from investing in real estate, which limited its ability to compete for private-sector business.

The solution was to go independent.

The company was sold to CGW Southwest, an investor group that remains a large shareholder in Amresco today.

A year later, Amresco Holdings merged with BEI Holdings, a company with similar roots in the troubled real estate business.

"Both companies were looking for alliances" in order to achieve the scale that was needed to compete in the real estate business, said Rob Adair, a former BEI official who is now president of Amresco.

The company, which has 850 employees, has provided due-diligence service, evaluating real estate portfolios for purchasers including Aldrich, Eastman & Waltch, Cargill Financial Services, Nomura Securities, and Soros Realty, as well as units of Bankers Trust New York Corp. and J.P. Morgan & Co.

About 90% of Amresco's revenue this year has come from consulting work for such investment banks, domestic and foreign financial institutions, investment groups, and government agencies. The firm manages a portfolio in excess of $28 billion. But Amresco is expecting a sharp change in its revenue mix following the acquisition last summer of Holliday Fenoglio, a Dallas mortgage bank. By 1996, said Amresco's chairman and chief executive officer Bob Lutz, as much of 45% of revenue is expected to come from mortgage banking activities.

Amresco's strategy is to build on the expertise of its component companies and develop a big business in origination and service loans for securitization or placement with correspondents.

In Holliday Fenoglio, the firm has acquired a company that originates about $2 billion a year of commercial real estate loans, averaging about $6 million per loan. It services about $3 billion.

The Amresco officials said their expertise in evaluating real estate credits will enable the firm to retain the riskier tranches of the real-estate-backed securities it issues, giving Amresco a leg up on the competition.

The strategy is predicated in part on the expectation that securitization will soon account for a huge chunk of the real estate finance business, though the Amresco officials said they were skeptical of one consultant's estimate that 75% of commercial real estate loans will be securitized. "We opine more in the 30% to 50% range," Mr. Lutz said. "It's going to have a dramatic impact."

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