The not-so-typical mortgage banker continues to grow its services with the help of a major parent.
Construction loans. Interim loans. Equity deals. Primary servicing. Master servicing. Special servicing and even tenant services. If a customer wants it, then Horsham, Pa.-based GMAC Commercial Mortgage Corp. will do it.
While the company continues to add more and more products and services to its list, the not quite 3-year-old commercial mortgage banker is breaking away from the typical lending and servicing of mortgage loans.
"We have consciously, through our acquisitions and growth, tried to develop one-stop shopping, where unlike some of our competitors who can just do master servicing or just do primary servicing or just do lending, we can do all of the above and then some," says Charles E. Dunleavy, COO and executive vice president. "We have certainly tried to differentiate ourselves in the sense that we have all of the services that you need, Mr. Borrower or Mr. Wall Street Firm, so you don't really need to talk to anyone else but us."
But the versatility of such a company doesn't just happen. In GMACCM's case, there is the backing of a strong parent, GMAC Financial Services, and its parent, General Motors.
Having a parent such as GMAC allows the company to be more flexible in the way it does business by providing capital and by giving excellent name recognition.
"We have the best of both worlds," says Barry Moore, executive vice president. "Dave Creamer has a lot of opportunity to get into new markets and move very quickly and respond to the markets very quickly, whereas some of our larger competitors don't have that flexibility. They have to get a lot more approvals. But what gives us an edge with the smaller players is that some of them don't have the financial resources to compete with us."
"And we certainly have instant name recognition when we show up some place," says David E. Creamer, president. "Let's face it, if XYZ walks in your door and says they want to do business and GMAC walks in your door and says we want to do business, who are you more inclined to go with?"
GMAC Financial Services established GMACCM as a separate business unit in November of 1994, at which time its servicing portfolio stood at $5 billion. Within its first year, GMACCM acquired Republic Realty Mortgage Corp., which also had a $5 billion servicing portfolio, bringing GMACCM's portfolio up to $10 billion. And in that same year, GMACCM acquired $4 billion in HUD mortgage servicing rights from Fannie Mae, which rounded out the 1995 servicing portfolio at $15 billion.
In 1996, GMACCM made a couple of large acquisitions and had a very strong year of originations, creating a $25 billion company. Today, the company's servicing and master servicing portfolio exceeds $26 billion.
The two large acquisitions in 1996 included Lexington Mortgage Corp. in Vienna, Va., and the Hanford/Healy Cos. of San Francisco. In acquiring these two companies, GMACCM not only increased its worth, but it added new property types to the portfolio and increased its services.
By acquiring Lexington Mortgage, GMACCM began to diversify its portfolio from being dominated by multifamily product type. Lexington brought hospitality product to the portfolio.
Another opportunity that GMACCM jumped at was hiring a healthcare unit from South Trust Bank in Birmingham, Ala., to lead the healthcare services for the company.
"On the healthcare side of the industry, we didn't feel that there was a national player that was servicing that market properly," says Moore. "There were a lot of regional players, and we felt that a company like GMAC needed to come to the table to provide that service."
A year ago, the company was doing $100 million per year in healthcare, but today it is nearing the $750 million mark, says Creamer. "I'm actually optimistic that we will finish the year close to $1 billion in actual originations in healthcare," he adds. "Hospitality is the same way. With the acquisition of the Lexington group, we went from essentially zero to hopefully something in excess of $1.5 billion in hospitality."
Meanwhile, the Hanford/Healy Cos. brought to the company another service for its clients: special servicing. The company specialized in asset management as well as special servicing and workouts. This has allowed GMACCM to offer every possible step of loan servicing that a client could need.
"The Healy acquisition just filled out our dance card as far as I'm concerned," says Creamer. "To the best of my knowledge, we are the only entity out there that can do every level of servicing from subservice to primary service to master service to special service. On our first security, we had, in fact, redefined the role of servicer from having to list who was primary, who was master, who was special to just simply saying, 'We are the servicer.'"
These sorts of acquisitions are important to the survival of the company if there are any times ahead like those of the early-1990s.
"Even the addition of the Hanford/Healy group gives us somewhat a counter-cyclical play in that when you go into a recession and things get ugly, we've got a group that is going to specialize in workouts and dealing with troubled real estate," says Creamer, "so that gives us an income stream in a time when other income streams may not be quite what they are today."
Other areas of growth for GMACCM include the addition of a tenant services program, investment in new technology and international expansion.
"One thing that we're really excited about is our tenant services business," says Moore. "We've done a lot of work on this, and we've determined that, based on the market, about 5% of people turn over each month at a typical apartment complex, and we just see that as an excellent point of sale."
The tenant services division provides consumer goods and services to new tenants of apartment complexes. The services provided for tenants range from telecommunications to publication subscriptions and beyond.
"It was consistent with our strategic plan to have one-stop shopping," says Dunleavy. "If you are in the commercial field, not only can I lend you the money to buy that building, but now I can show you the way to earn more money by owning it by working with us and our tenant services unit."
The program debuted at the National Apartment Association conference in Atlanta last month. It is currently being test marketed in the Philadelphia area.
GMACCM is also investing heavily in technology in several different ways. It has updated its website, created a new pipeline system with its parent, enhanced its servicing system with an automated reconciliation piece, and it has seven more initiatives to come out almost weekly for the next several months.
"We've put a tremendous amount of money into systems, we've hired a lot of people, but we need to continue to put more resources toward that. The industry as a whole needs to do that," Moore says.
With all this new growth within the company, it now looks to move outside the country to better serve clients. It currently has portfolios in Canada and Mexico, and its sights are set on several other strategic markets.
"We happened to be overseas last week, and we think that a lot of the technology and the ideas and the approaches that we use here in the United States are greatly needed, especially in Europe and the Asian market," says Dunleavy. "Frankly, we see it as an opportunity because a lot of our competitors don't have the financial wherewithal to go after those markets, but they are in dire need."
And, GMACCM plans to take full advantage of any opportunities that come its way to develop more products and services for its clients.
"The world changes too fast, too often, and you have to be nimble and quick," says Creamer. "Every day the phone rings and someone is showing us some new opportunity that maybe we hadn't thought about or hadn't considered and, if it looks like it's a fit, we'll work on it."