First Union's real estate group of over 75 real estate professionals executethe origination, structuring and rating process for mortage loans secured by multifamily and commercial properties. It is through this conduit that commercial real estate clients are provided with long-term, fixed-rate non-recourse mortgages.

First Union's managing director of commercial real estate finance, Barry Reiner, tells GlobeSt.com that the bank "has restructured several of the businesses in real estate capital markets. In the process, he says, "a new position has been created--head of real estate securitization--which covers several real estate product types, one of which includes CMBS."

Reiner has left his position as head of the conduit. Rob Verrone and Chuck Wolter will remain as co-heads of production in CMBS. "The conduit is part of the CMBS effort, so the conduit now will fall into this real estate securitization group," explains Reiner. Although he was not specific, Reiner said the restructuring was triggered by "a variety of factors."

According to Reiner, the bank's action will have no real impact on the Charlotte market. "I don't think it will change anything here in Charlotte. This is the kind of business that is more national in scope."

Reiner attributes vacating the position he held since February of 1998 to differences in terms of how to grow the business. "I was frustrated with a number of initatives that were proposed but never got done; and I thought those initatives were essential to growing the business to the next level." Reiner is considering several options within First Union but says he is also exploring opportunities outside the company.

When asked if the industry might start to see a trend toward restructuring among other lenders, Reiner said "the conduit business is much more difficult today than it once was and that's putting everybody under increased pressure to take a harder look at the operation and how it's structured."

As to why the business has become more difficult, he concedes that technology is more involved, but suggests "it's more a function of the fact that the product has become commoditized and the profitability has diminished due to increased competition."

Looking ahead, Reiner believes the industry is going to be dominated by a few giants. "I think the institutions with large balance sheets will continue to be active on the principal side. They'll take principal risk and be in the business of originating loans while we continue to see the small players fall by the wayside."

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Management Shifts Kick in as First Union Restructures Real Estate Operations

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