SAN FRANCISCO AND NEW YORK CITY — Union Bank, N.A., a San Francisco-based financial holding firm with $97 billion in assets, has reached an agreement with PB Capital Corp. to acquire its commercial real estate lending arm, headquartered in New York City.
The arrangement gives Union Bank $3.7 billion in loans outstanding on properties in major U.S. metropolitan areas. The acquisition is subject to closing conditions and is expected close in the second quarter of this year.
Approximately 50 percent of the lending portfolio is made up of Northeast properties with the rest in the Western U.S. (21 percent), South (15 percent) or Midwest (13 percent). New York City alone houses 35 percent of the portfolio.
By property type, about 53 percent of the lending portfolio includes office followed by multifamily (16 percent), mixed-use (12 percent), hotel (10 percent) or retail (9 percent).
Source: Union Bank
PB Capital Corp. is a wholly owned subsidiary of Deutsche Bank AG (NYSE: DB), a global banking and financial services firm based in Germany. Union Bank is a subsidiary of UnionBanCal Corp., which is a wholly owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ (BTMU).
According to Union Bank’s investor presentation of the transaction, the $3.7 billion deal is considered financially attractive because of its “use of excess capital and liquidity in strategic business, the returns exceed all internal hurdles and it’s immediately accretive to earnings.” The transaction will make Union Bank the ninth largest bank in terms of commercial real estate loans outstanding.
“This is an important strategic acquisition for Union Bank, as it leverages our established commercial real estate capabilities by adding a national origination platform and strong relationships with top-tier property owners,” says Masashi Oka, president and CEO of Union Bank and CEO for the Americas for BTMU.
“The transaction also enables BTMU to efficiently leverage its strength in the Americas and deploy capital into high-quality assets, through the strong capital position and U.S. dollar funding capabilities of Union Bank,” adds Oka.
The loans are mostly senior secured facilities on institutional-quality properties and they will have a low impact on Union Bank’s overall liquidity, according to Union Bank’s investor presentation.
Approximately 69 percent of the loans were originated after 2007 and have an estimated 63 percent weighted average loan-to-value ratio. The average loan size at origination was $52 million.
PB Capital Corp.’s lending platform originated approximately $1 billion in new loans in 2012 and $6 billion total since 2007, according to the investor presentation.
“The PB Capital team brings deep experience and strong relationships with marquee property owners that will provide tremendous expansion of our capabilities,” says Michael Stedman, senior executive vice president and head of Union Bank’s real estate industries.
“The ability to originate, underwrite and service institutional commercial real estate loans on a national platform will drive additional business opportunities for Union Bank and BTMU in the U.S.”
Deutsche Bank AG’s stock price closed Monday at $39.77 per share, down from $44.98 per share a year ago.
— John Nelson