Horsham, Pa.-based GMAC Commercial Mortgage Corp. has fought its way to the No. 1 direct lender ranking in NREI's 10th Annual Top Lender Survey, with $14.76 billion financed during calendar year 2000. In doing so, GMAC Commercial displaced last year's No. 1 leader, New York-based Lehman Brothers, which slipped a few notches to the No. 3 spot with $10.2 billion financed.

Meanwhile, Washington, D.C.-based Fannie Mae topped the list of financial intermediaries with $13.5 billion arranged in 2000, rising from the No. 3 spot in last year's survey.

One of the biggest drivers of GMAC Commercial's growth is the “large loan transactions syndrome,” according to Charles Dunleavy Jr., president and COO of GMAC Commercial.

“My recollection is that the actual number of loans went down, but the dollar volume went up,” Dunleavy said, referring to loan production in 2000. “You could lose a few $10 million deals and make up for it with a $1.3 billion deal.”

What Dunleavy is referring to is $1.3 billion in financing provided by GMAC Commercial for Columbus Centre, a 2.1 million sq. ft., mixed-use facility that is New York City's key site in the redevelopment of Columbus Circle. The project combines office, retail and entertainment space and is expected to open in the fall of 2003.

GMAC has another huge deal in the works this year. The lending giant is providing financial services for New York-based Silverstein Properties, which has become the top candidate to gain title to the 99-year net lease on the World Trade Center towers in Manhattan. Four finalists reportedly submitted bids of approximately $3.25 billion to lease, manage and operate the complex, with Paramus, N.J.-based Vornado Realty Trust becoming the top contender before talks recently broke down with the New York Port Authority.

“As we speak, we are literally working with Silverstein Properties, and they in turn are working with the Port Authority to see if they can be successful in acquiring those buildings,” Dunleavy said.

GMAC Commercial's mantra, “if you need a billion or if you need a million you can get it here,” has helped spur the growth of the company, Dunleavy said. “It didn't take long for us to get some feelers from other major players as soon as the word got out on Columbus Centre,” Dunleavy explained.

The M&A factor

Besides the emergence of mega deals, GMAC Commercial's financing portfolio has grown through acquisitions of other lenders. A couple years ago, the company acquired Denver-based Newman & Associates, which became a subsidiary.

This year, GMAC Commercial acquired Phoenix-based Keystone Mortgage Partners, which posted $1 billion in loan production prior to the acquisition.

GMAC Commercial isn't alone in its flurry of acquisition activity. In recent years, lenders have used acquisitions and mergers to gain a better foothold in the market. Last year marked the merger of two New York banks, The Chase Manhattan Corp. and J.P. Morgan & Co. The combined entity is now J.P. Morgan Chase & Co. Other major bank mergers and acquisitions include Bank of America and Nation's Bank; Bank One and First Chicago; and Fleet and BankBoston.

Many industry players expect a slowdown in mergers this year, citing the economy as the main culprit. “It would be pretty difficult for any mergers to occur until we see some kind of stability in the economy and the stock market,” said Dan Sullivan, managing director in charge of REIT lending for Charlotte, N.C.-based First Union Securities.

Interest rates and the economy

Frank Nothaft, deputy chief economist at McLean, Va.-based Freddie Mac, said that lower interest rates trigger an outburst of refinancing and mortgage loan applications. In late March, the Federal Reserve cut interest rates 50 basis points. It was the third half-point decrease since January.

Many in the industry are cautious. “I believe the commercial real estate industry has reached a plateau,” said George Emmons Jr., executive vice president and national manager of Cleveland-based Key Commercial Real Estate. “Loan structures have tightened, covenants have tightened. Clearly, today it's a much more cautionary environment.”

For companies anchored in the top of the lending game such as GMAC Commercial, 2001 might offer more of a challenge than last year, according to Dunleavy. Even so, he said, GMAC Commercial currently is on a pace to exceed last year's financing total.

Dunleavy warned the year isn't over. “It's a little bit early in the game, and it's hard for any one of us to really tell just what's going to happen out there in the capital markets.”