Execution for Key
KeyBank Real Estate Capital has had plenty of opportunities to make commercial real estate loans insured by the Federal Housing Administration, according to Todd Rodenberg, the director of agency lending at the KeyCorp unit. But it lacked enough back-office expertise.
This gap was a big reason KeyCorp bought American Capital Resource Inc. on June 30, he said in an interview Tuesday.
"You've got to find a balance between marketing capability and the resources necessary" to close the loans, Mr. Rodenberg said. The acquisition created such a balance, as well as capacity for growth.
American Capital, of Atlanta, specialized in loans on apartment buildings, senior-citizen housing, and health-care properties insured by the FHA and the Department of Agriculture. Its small but seasoned staff consisted of seven employees, most of whom are approved underwriters for the FHA's Multifamily Accelerated Processing program.
Key had achieved some FHA capabilities with its 2000 acquisition of Newport Mortgage, one of four commercial real estate finance acquisitions in the last five years. Its FHA lending operations have already been "gathering steam," Mr. Rodenberg said.
Because of robust pipelines at both Key and American Capital, Key is on track to originate $300 million in FHA loans this year, he said. That would be an increase from $100 million last year - out of nearly $12 billion of overall originations. Last year American Capital originated $60 million.
Gary B. Alex, American Capital's former chief executive, became Key's FHA program director. He said he was impressed by some large FHA-insured construction loans in Key's pipeline.
FHA construction lending has been slow, but Key's ties with big developers have led to recent deals and show what it brings to the table, Mr. Alex said. Several competitors had also approached American Capital about buying it.
The acquisition helps Key expand its commercial real estate operations in the Southeast as well. Key recently hired the former institutional lending group of FleetBoston Financial Corp., which Bank of America Corp. bought. The team, led by Bill Hipp, is based in Atlanta.
Huntington Helper
Huntington Bancshares Inc. must have been also seeing demand for FHA commercial real estate loans.
The Columbus, Ohio, banking company's Huntington Capital Corp. announced Tuesday that it recently created an FHA lender, Huntington/NAC Mortgage Capital LLC. (It also announced the start of a municipal leasing business.)
John Lewis, Boyd S. Crall Jr., and David D. Fumi run the new FHA unit, Huntington said. Mr. Crall and Mr. Fumi have been managing directors of Huntington Capital's investment banking group since May 2003. A spokesman said Mr. Lewis, the managing director of BPU Investment Group Inc.'s New Albany Capital, is an outside consultant.
"For this partnership, John Lewis brings the initial expertise, and Huntington provides the capital and an introduction to customers," Michael McMennamin, Huntington Bancshares' chief financial officer and Huntington Capital's president, said in a press release announcing the new unit.
Since the unit's inception in March, it has begun working with developers on eight projects in Louisiana, Ohio, Pennsylvania, Texas, West Virginia, and elsewhere.
Signs of Life
Residential mortgage applications jumped last week as the average rate on 30-year fixed-rate mortgages dropped below 6% for the first time since April, the Mortgage Bankers Association said Wednesday.
On a seasonally adjusted basis, overall applications surged 19.5% from the previous week, while refinancing spiked 27.6%, to an index reading of 1,769.7, nearing the 2,000 level that traditionally marks a boomlet.
Still, applications fell 34.1% from the same week last year.
