EverBank Financial Corp. (EVER) will buy Business Property Lending Inc., a unit of industrial conglomerate General Electric Co. (GE), for $2.51 billion in cash, the two companies said Monday.
Business Property Lending originates and services commercial real estate loans for essential use properties owned or leased by small and midsize businesses nationwide. The company is a unit of GE Capital Real Estate North America. GE Capital noted that the deal will reduce the overall size of its real estate portfolio.
Jacksonville, Florida-based EverBank, which went public in May, noted that the acquisition will bolster its ability to lend to small as well as midsize businesses and accelerate its strategic growth plans.
The deal will also diversify EverBank's balance sheet into high-quality commercial business property loans. As of March 31, the company had $13.8 billion in assets and $10.6 billion in deposits.
Business Property Lending is a commercial real estate company with global assets of $61 billion and debt as well as equity activities in North America, Europe and Asia-Pacific. It has 10,000 properties owned or financed worldwide covering more than 150 million square feet.
Under the terms of the deal, a subsidiary of EverBank will acquire the stock of Business Property Lending, but will not assume any debt. The transaction has been approved by the boards of directors of both companies.
At the closing of the transaction, Business Property Lending will hold the origination and servicing platform for Business Property.
The deal includes about $2.44 billion of performing commercial loans, the origination and servicing platforms, 108 employees and servicing rights on $3.1 billion of loans securitized by GE Capital. The transaction is expected to close in the fourth quarter of 2012.
Business Property currently has 14 offices in the U.S. EverBank said it expects to retain the management team and grow the business from current levels.
EverBank noted that the transaction will result in immediate low double digit earnings per share accretion and 100 basis points return on equity accretion. The transaction will also result in pro forma assets of $16.2 billion and pro forma Tier 1 common ratio of 11.8 percent.
Since the global financial crisis, GE has said it is in the process of shrinking GE Capital by selling assets and reducing its loan portfolio. GE's CEO Jeff Immelt is looking to pull out of consumer finance and cutting the company's real estate holdings.
Alec Burger, president of GE Capital Real Estate, North America division said, "The sale of Business Property to EverBank is a strong strategic win and is consistent with our stated strategy to reduce the overall size of our real estate portfolio."
In Monday's regular session, EVER is trading at $11.50, up $0.63 or 5.80 percent on a volume of 10,293 shares. GE is trading at $20.75, up $0.09 or 0.43 percent on a volume of 2.38 million shares.
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