Bloomberg News

C-III Capital Buys Real Estate Loan Servicing Business From JER

August 30, 2011

Aug. 30 (Bloomberg) -- C-III Capital Partners LLC, led by property investor Andrew Farkas, bought JER Partners’ special- servicing business to expand its management of delinquent U.S. commercial real estate loans.

Financial terms weren’t disclosed. JER, based in McLean, Virginia, is the named special servicer for $35.5 billion of commercial property debt, of which about $4 billion is under active management, C-III said in a statement today. Special servicers specialize in restructuring troubled debt.

“This acquisition strengthens C-III’s position as one of the top three special servicers in the country and advances our growth strategy,” Farkas, chairman and chief executive officer at Irving, Texas-based C-III, said in the statement.

JER’s special servicing business is the latest to change hands since the commercial real estate market slumped after the 2007 peak. Warren Buffett’s Berkshire Hathaway Inc. and Leucadia National Corp. bought the servicing and mortgage lending business of bankrupt Capmark Financial Group Inc. in 2009. Last year, Fortress Investment Group LLC purchased CW Financial Services, and Vornado Realty Trust and iStar Financial Inc. were part of a group that recapitalized LNR Property Corp., the biggest special servicer.

The purchase by C-III boosts its portfolio of loans managed in special servicing to $17 billion, the company said. With the transaction, it’s the named special servicer for about 14,000 loans with a total balance of more than $152 billion.

Late payments on commercial mortgages bundled and sold as bonds rose the most in more than 12 months in July to a record 9.88 percent, according to real estate data provider Trepp LLC.

--With assistance from Sarah Mulholland in New York. Editors: Daniel Taub, Kara Wetzel

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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