GMAC Reaches Agreement to Sell 60 Percent Stake in Commercial Mortgage Business

DETROIT – General Motors Acceptance Corporation (GMAC), the financial services subsidiary of General Motors Corporation, announced today that it has entered into a definitive agreement to sell a 60 percent equity interest in its commercial mortgage subsidiary, GMAC Commercial Holding Corp. (GMACCH) to an investor group comprising Kohlberg Kravis Roberts & Co. (KKR), Five Mile Capital Partners, and Goldman Sachs Capital Partners.

GMAC will continue to hold a 40 percent equity interest in GMACCH, a leader in commercial real estate loan origination, servicing, asset management, investment management, and technology services. GMACCH has a loan servicing portfolio of approximately $250 billion. The Board of Directors of GMACCH will be composed of individuals from the investor group, GMAC and GMACCH management. Members of the current GMACCH management team will also invest in the company shortly after the transaction is completed.

In conjunction with the equity sale, GMACCH will seek to obtain a standalone credit rating in order to enhance its ability to fund its operations on an ongoing basis. Under terms of the transaction, the company will repay all inter-company loans to GMAC upon the closing of the transaction, thereby providing GMAC significant incremental liquidity.

“GMAC continues to see exciting growth prospects at its commercial mortgage operations,” said GMAC Chairman Eric Feldstein. “By partnering with sophisticated and financially strong investors, we will ensure that adequate capital is available to GMACCH to sustain its profitable growth. By retaining a 40 percent equity interest, GMAC will continue to participate in the company’s profitability over the long term.”

GMACCH Chief Executive Officer Robert D. Feller said, “The acquisition of a majority interest in GMAC Commercial Holding Corp. by this experienced investor group represents an extraordinary opportunity for us to enhance the value of our enterprise.”

KKR, Five Mile Capital Partners, and Goldman Sachs Capital Partners said in a statement: “We are very pleased to pursue a transaction with GMAC that will establish a broad foundation on which GMACCH can realize substantial future growth. GMACCH is one of the largest providers of commercial mortgage loans and related products and services in the world, and we look forward to working with management to expand an already remarkable platform through enhanced access to the capital markets.”

The agreement is subject to regulatory approvals, consents and other conditions, and is expected to close in the fourth quarter of this year. The GM and GMAC boards of directors have approved the transaction.