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Wednesday, 04 July 2001

Amresco, One-time Mortgage Powerhouse, Files Chapter 11

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July 5, 2001

DALLAS – Amresco Inc. (Nasdaq:AMMB), which got hammered during the debt market's downturn in late-1998, has filed for Chapter 11 Bankruptcy protection.

The Dallas company, which is being advised by Greenhill & Co. Inc., has also agreed to sell all of its assets (exclusive of its cash) for $309 million to NCS I LLC, which is made up of Renewal Partners LLC, affiliates of Fortress Investment Fund LLC and Goldman Sachs Mortgage Co.

The purchase price is comprised of $151 million of cash, subject to adjustment, a $25 million six-month note and the replacement of current warehouse indebtedness of $133 million.

The filing is the result of Amresco's inability to raise fresh financing.

Renewal Partners and Fortress – which had once tried buying Amresco Capital Trust, Amresco's mortgage REIT affiliate – had earlier signed a letter of intent to provide financing allowing Amresco to continue operating. But Amresco's business-loan portfolio subsequently deteriorated in value, prompting Renewal and Fortress not to proceed with the financing.

"Given the projected losses and anticipated default under the company's outstanding senior subordinated notes caused by the devaluation of the business lending residuals, the company believes a Chapter 11 filing, in conjunction with an auction process, will maximize the value to stakeholders and provide a process for other potential buyers to bid for the company," said Randy Brown, Amresco's chairman and chief executive.

"Because the company has been unsuccessful to date in finding traditional warehouse financing to fund loan origination activities, this process will also allow Amresco to preserve the value of its loan origination franchise," he said.

The filing brings to a near-close the life of what at one point had been among the most active commercial mortgage workout shops in the country.

Amresco, originally a unit of what was then Nationsbank, was formed to handle the workout and disposition of distressed loans for the bank. It then parlayed that expertise into lucrative government contracts, helping the Resolution Trust Corp. and FDIC manage the troubled assets from failed banks and thrifts. It eventually merged with BEI Management, another Dallas company, allowing it to tap the public equity markets.

Having built a sizable servicing and workout operation, Amresco eventually moved into the origination business and bought mortgage brokerage giant Holliday Fenoglio Fowler.

Some would argue that the lending business is what ultimately led to its demise. Amresco profited handsomely from originating loans, using money that was borrowed under a short-term basis and securitizing them. Its idea: securitize loans and retain the resulting B-pieces. But when the market went south, the value of the loans it had warehoused fell dramatically.

Last year, most of Amresco's commercial real estate operations, including its servicing and mortgage banking units, were sold to Lend Lease Real Estate Investments.

While Amresco Inc. has filed, two of its operating units, Amresco Commercial Finance Inc. and Amresco Independence Funding Inc., did not. The units have received commitment letters for up to $275 million of warehouse financing from NCS II, which is affiliated with the NCS. The replacement warehouse financing is subject to Bankruptcy Court approval as it will be guaranteed by Amresco and secured by its assets.


Comments? E-mail Susanna Potter, or call her at (215) 504-4288, Ext. 212.


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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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