Buffett's Berkadia venture weighs acquisitions

Berkadia Commercial Mortgage LLC, the lender and servicer backed by Warren Buffett’s Berkshire Hathaway Inc, is considering mergers and acquisitions (M&A).

“Berkadia is looking to grow, and one of the components of the strategy is M&A, potentially,” Kelly Davis, a spokeswoman for Berkadia, said in an interview on Friday. She declined to comment further. Horsham, Pennsylvania-based Berkadia last week announced the hiring of a chief financial officer with duties including “an important role” in M&A.

Berkshire and Leucadia National Corp bought the business that became Berkadia from bankrupt Capmark Financial Group Inc in 2009. Berkadia has announced at least nine hires this year and financed student housing in Laramie, Wyoming, and a co-op in Santa Monica, California. In 2010, it began issuing loans for inclusion in mortgage bonds. Lenders such as Bank of America Corp have scaled back as regulators raise capital requirements.

“It makes all the sense in the world” to expand by acquisition, said Jeff Matthews, author of “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett.” “Banks are still under stress. The Basel III guidelines are probably going to mean that a lot of financial assets are going to come on the market.”

The new Berkadia CFO, Randy Jenson, was president and co-founder of private equity firm Ranch Capital LLC where he spent nine years overseeing about $2 billion of investments in financial services, energy and real estate and other industries. He’s a former chief executive officer of banking and lending at New York-based Leucadia.

COMMERCIAL REAL ESTATE
Buffett, the world’s third-richest man, said in May that the commercial property market was showing signs of strength. Non-distressed buildings in six major markets have recovered more than half of their post-peak losses, Moody’s Investors Service said in a June 22 statement. “The country’s expanding, the activity is expanding, households are expanding,” Buffett, 80, said in the May 1 interview. “Prices have been pretty strong if you start looking at particularly apartment buildings, but even shopping malls.”

Bank of America’s Bruce Thompson, who was promoted to CFO from chief risk officer this year, said in March that his firm was a “very active seller” of commercial real estate. Charlotte, North Carolina-based Bank of America, the biggest US lender, is preparing for the implementation of Basel III capital standards.