On the Brink

Capmark Financial Group has completed a financial restructuring designed to keep the wolves away from its door. But the troubled lender is bleeding staff and shutting down offices as it aggressively downsizes.

Many of Capmark's originators in major markets are fleeing. Northmarq recently hired four former Capmark producers in San Diego, and in May, Capmark's Seattle office became a Northmarq regional office.

Capmark's Atlanta office recently laid off a sizable chunk of its staff, and the company's Dallas offices are also thinning and may soon be absorbed by another firm, possibly Northmarq.

In late May, Capmark entered into a new $1.5 billion term loan facility and amended its senior credit and bridge loan agreements. The maturity date of the facility is March 23, 2011.

Industry watchers see this as a sign that the company's creditors believe Capmark will be able to get through the next year. If not, the refinancing at least allows Capmark to keep its core business units together, thereby maximizing the value for a potential sale. Indeed, many in the industry see a lot of value in Capmark's huge debt servicing portfolio, but question if a potential suitor can be found in today's struggling economy.

Capmark has also begun to sell off parts of its noncore business. On June 9, the company sold its European loan administration, asset management administration, and CMBS administration services to U.K.-based Capita Group for $16.5 million.