An investor group led by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners finally closed its deal for a majority stake in General Motors Corp.'s commercial real estate business.
The group, which originally said it would buy 60% of the unit, said Thursday that it had actually bought 78%, though the unit's management team then bought a 4% stake from the group and the automaker's finance arm, General Motors Acceptance Corp. (The investor group was left with a 75% stake, and GMAC with 21%.)
GMAC said that it received $1.5 billion in cash for the stake in GMAC Commercial Holding Corp. Also, the commercial unit repaid about $7.3 billion of intercompany loans to GMAC.
Michael Stoller, a GMAC spokesman, said that it will redirect the capital to its other businesses. He would not say whether GMAC would boost its dividend to its parent. GMAC paid $2.5 billion of dividends to GM last year.
The commercial lender changed its name to Capmark Financial Group Inc., a name derived from a company it purchased in 2003.
Standard & Poor's Corp. gave Capmark's debt its lowest investment-grade rating, BBB-minus, and Moody's Investors Service Inc. gave it the equivalent rating of Baa3. Fitch Inc. rated the lender a notch higher, at BBB.
GM is still seeking a buyer for a controlling interest in GMAC, to help the finance arm get an investment grade rating.
Capmark appointed Dennis Dammerman, a former vice chairman of General Electric Co. and the former chairman and chief executive of GE Capital Corp., as its chairman.
Molly Morse, a spokeswoman for Kohlberg Kravis Roberts, said that her company, Goldman Sachs, and Five Mile all had previous relationships with Mr. Dammerman.
The deal, announced in August, was originally slated to close by Dec. 31. Representatives for Capmark and GMAC chalked up the delay to routine process and due diligence issues.
Joyce Patterson, a spokeswoman for Capmark, said that when the deal was announced the investor group had an option to increase its stake.
Ms. Morse said Kohlberg Kravis Roberts was "happy to invest more capital in the transaction."
Goldman Sachs had not said by press time why the group increased its stake.
Capmark said it originated $29.9 billion of loans last year and had a servicing portfolio of about $276 billion at yearend. It also manages $10.8 billion of investments for third parties.
In the first nine months of last year the lender's earnings rose nearly 70% from a year earlier, to $229 million, according to GMAC's most recent securities filing.
Also Thursday, Capmark closed a deal for a $10.75 billion financing package from a syndicate of banks.
GMAC will also invest $250 million in Capmark's trust-preferred stock.
