How common is that? I work for a bank focussing on CMBS originations. Few years ago, Walker & Dunlop launched a CMBS origination platform and formed a joint venture with a fund managed by an affiliate of Fortress Investment Group. The benefit to Fortress was the robust deal flow resulting from a strong network of W&D's debt brokers. I am trying to see if there is a similar opportunity here for my bank. Anybody here know of similar JV relationships on the debt side where there can be a symbiotic relationship? Would a debt broker like W&D be the perfect choice from a origination perspective if all we are looking to gain from the relationship is access to deal flow? Would any other partner make more sense? How would you pay your partner here?
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Bump, sounds interesting!
I'm not sure I understand what you're asking, when you refer to a joint venture between Walker Dunlop and Fortress are you just talking about an exclusive relationship between the debt broker and the bank? Or are you referring to something where Walker Dunlop invests "house money" into the fund that Fortress manages. This fund being some type of high-yield debt focus.
The Walker JV is a CMBS origination platform. Walker gets access to capital to lend and Fortress gets to leverage Walker's deal flow, origination, underwriting and asset management infrastructure in place. So, I am thinking about similar JV's in the debt space, potential JV opportunites for my bank in terms of cmbs origination opportunities. Access to deal flow is the main thing I want to get out of a JV.
The way I understand it, this was just a private equity play by Fortress. They already owned a business, CW Financial services, which owned CWCapital, a CMBS broker. Fortress used to own / be the largest shareholder in walker and Dunlop. Walker and Dunlop bought CWCapital from Fortress. This is the ideal PE exit (strategic company pays a premium for a business you own). Eventually Fortress sold their remaining stake in w&d and in the CMBS broker. Fortress was just doing what their PE business does (or tries to do): buy companies and sell them for a profit. The sale of the company was the goal, the “JV” was just a way to get there. I don’t think you can just do a JV with another bank to get access to deal flow.
I might be missing some details but the article below summarized it.
https://www.bizjournals.com/washington/news/2012/09/05/walker-dunlop-cl…
In a potential JV I am thinking, we are the bank. We have capital to lend and we can originate, underwrite, securitize or hold in our balance sheet if necessary. I am thinking who would be a good JV partner if all we want is access to deal flow. We already do 2/3rd of our business with brokers. We pay some of them. But I am thinking a much bigger partnership with a solid debt broker will allow us to see more deals.
Would a Greystone-Bassuk JV be another example of a symbiotic relationship in lending? This type of partnership is what we are exploring.
This is the same case as Fortress. Greystone, the strategic buyer, bought the debt broker, Bassuk (target company). It’s confusing because you’re only paying for people, but it’s still an M&A transaction
The question to ask is what does the brokerage firm get out of it? How do you sell them? They have correspondent relationships with Life Cos which provides them cheap access to capital for their clients and income from servicing loans for the Life Cos. Would they gain fees with a CMBS JV? BB&T owns Grandbridge, but I don't believe BB&T has a CMBS platform.
Grandbridge brokers CMBS loans I think? And you bring up a good point. I am also failing to see how we can sell a brokerage on this idea. We (the bank) have a lot more to gain as we get to leverage the brokerage's relationships with sponsors. I am thinking fees from every deal they bring is is one option. We already pay some brokers fees so this is not new to us. Do you have any ideas? What else would sell a brokerage on forming a JV with us when they already place cmbs debt with numerous lenders already? Is the only option to find a brokerage that does not place a lot of cmbs loans but has a strong network with sponsors and are looking for a cmbs financing source?
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