Bayview Financial Holdings LP, a Coral Gables, Fla., mortgage finance company, has agreed to sell a minority position in its Bayview Asset Management LLC to Blackstone Group LP, a New York alternative investment manager.
The unit currently manages a $2 billion fund and said its servicing arm, which specializes in sub-performing and nonperforming loans, gives it "a unique advantage over other asset managers seeking to deploy capital" in mortgage investments.
David Ertel, Bayview Financial's chief executive, said in a press release Monday that after the Blackstone investment, his company would be "well positioned to take advantage of the significant dislocation in the secondary mortgage market."
Most of Bayview's loans are serviced by M&T Bank Corp. of Buffalo. In February of last year the $65.9 billion-asset M&T paid $300 million for a minority stake in Bayview Lending Group LLC, a Bayview Financial unit that originates commercial mortgages with balances of $100,000 to $1 million.
M&T's share of Bayview Lending's second-quarter loss was $13 million. M&T said it expects to recognize a similar loss from the investment this quarter and a smaller loss next quarter.
The company decided not to recognize an impairment on the investment, because "Bayview seems to be doing all of the right things and is on track with slowing down the business in a way that really protects the franchise value," Rene Jones, M&T's chief financial officer, said during a conference call this month.
"First and foremost, there has to be a demand out there for small-balance commercial lending. We believe that definitely still exists," he said. "Bayview has to have access to cash flow to be able to continue those operations and to fund that growth. And to the extent that they get that, either from the securitization market or some other fashion, then clearly the business is not impaired. We can't rule out anything in the future," but as of June 30 "we don't believe the investment was other than temporary impaired."
The Blackstone deal is scheduled to close next quarter.