Capital One Finalizes Beech Street Acquisition

MCLEAN, VA-Capital One Financial Corp. said Monday it had closed on its acquisition of Beech Street Capital, a Bethesda, MD-based originator and servicer of GSE and FHA multifamily loans. Terms were not disclosed; the deal was first announced in August.

“Capital One is an excellent fit for us, and our borrowers,” says Grace Huebscher, Beech Street's founder and CEO. At Capital One, Rick Lyon, head of the company's commercial real estate banking, calls the acquisition “the beginning of an exciting time” for the banks CRE business. “The combination of Capital One's multifamily business and Beech Street will significantly expand our reach in the market and enable us to offer a full range of lending solutions and other banking services to meet the needs of customers in the multifamily sector.”

The deal boosts Capital One into the top five of national multifamily loan originators. Founded in 2009, Beech Street originated about $4 billion in loans in 2012, making it the sixth largest agency originator in the country. The company services a loan portfolio of approximately $10 billion.

This past August, Lyon told GlobeSt.com's Erika Morphy that the acquisition was “all about growth.” For one thing, the two companies' strengths are highly complementary.

“Capital One has quite a few balance sheet products—long-term and construction finance, for example,” Lyon said in August. “Those products will be available for Beech Street customers, while our GSE and FHA platform will be made available to Capital One customers.”

Further, Lyon observed that the customer bases of Beech Street and Capital One fit together well. Beech Street tends to focus on middle market companies while Capital One has gone after slightly larger sized deals and institutional borrowers. Capital One also has a very active REIT lending operation based out of its Tysons Corner, VA office, and a health care real estate lending operation specializing in senior living and nursing homes.