Capmark To Choose Bankruptcy Over Firesale?

PHILADELPHIA-Welcome to the Philly 411, our monthly column on real estate happenings in the Metro area supplied with intel from David Jacobs, a director at Llenrock Group, a local commercial real estate investment-banking firm. You can also follow their blog here. Opinions are the author’s own

Last week, a Warren Buffet-led group struck a deal to acquire Capmark Financial Group Inc.’s mortgage banking business. A newly formed entity owned by Buffet’s Berkshire Hathaway and Leucadia National Corp. was also given a put option to purchase Capmark’s North American servicing and mortgage banking businesses. Capmark operates three core business lines: lending and mortgage banking, investments and funds management, and servicing. The latter of which has been drastically adversely affected by the poor performance of the first two. Buffet’s bid reflects the possibility of a potential Chapter 11 bankruptcy. Buffet’s group is offering two prices: $490 million should Capmark stave off bankruptcy, and $415 million if Capmark succumbs to it. So why could bankruptcy for Capmark be imminent?

In order for Buffet to officially take control of the servicing and mortgage banking businesses, a servicer needs the approval of all existing bondholders and lenders to the company. Essentially, Capmark’s debtors need to agree to release the servicing division, and getting everyone to play nice may prove to be quite an uphill battle. If the debtors do not agree, management would likely take the company into bankruptcy in an attempt to have a bankruptcy judge approve the sale to bring the company liquidity. The decision comes down to whether or not Capmark believes the $415-million bankruptcy adjusted price that Buffet is offering is higher than the price a distressed exchange outside of bankruptcy would bring. And if Capmark’s bondholders and lenders disagree with them, bankruptcy may be the only option to bring the company the liquidity it is seeking.

Does Toll Brothers believe the housing slump is over?

According to one source, local residential housing giant Toll Brothers is looking to hire people for land acquisition in the region. This may suggest, that Toll feels the residential housing slump has bottomed out.

A Jackass Buys at the Murano.

According to rumors, local West Chester native Bam Margera, star of MTV’s hit series-turned-movie “Jackass”, has purchased a unit at Center City’s Murano condominiums as a place to crash in Philly when he isn’t in West Chester building skate parks or terrorizing his parents. It is unknown whether Bam participated in the recent condominium auction, or whether he purchased at similar pricing thereafter.

Movers & Shakers

Charlie Davidson, a former senior vice president at BPG Properties, who recently retired, is rumored to be pulling a “Brett Favre”, immediately returning to work after retirement. Peterson will be joining Grubb & Ellis as a broker.

Tim Pulte, former president of local brokerage GVA Smith Mack, has taken a position with the Delaware River Port Authority as its new COO. Pulte will be responsible for the daily operations of the Delaware River Port Authority’s four bridges, the RiverLink Ferry System and the Philadelphia Cruise Terminal.