GE picks off Capmark loans

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GE Real Estate said today that it had bought €1.3bn (£1bn) of loans from specialist property lender Capmark.

GE has bought the portfolio of 39 senior and whole loans, which are spread across Europe with the majority in Germany. The company described the loans as being to high quality borrowers with attractive loan to values.

It is a further sign that GE is expanding its activities in the property lending world, despite the fact that GE’s property and finance arms contributed to lower than expected profits in its last set of financial results.

Discounted portfolio

Last November it bought a £2bn portfolio of loans from Bradford & Bingley at a 4% discount to the value of the loan book.

Mike Rowan, managing director of GE Real Estate UK, said: ‘This significant transaction has enabled us to capitalise on GE’s AAA-rated corporate balance sheet and our local and global resource to enable us to continue to invest in the market during a period of uncertainty.

‘This, our second large debt deal within the last six months, was attractively priced against good quality underlying real estate providing strong cash flow.’

Out of the market

The sale comes after Capmark reduced its London-based European property lending team in November, essentially taking it out of the market.

The company uses a securitisation model, where it originates loans then sells bonds in the commercial mortgage backed securities (CMBS) market, freeing up space for new lending.

The credit crunch meant that this market froze up, so that securitisers like Cpmark and investment banks were unable to lend.

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