Finance Midwest

Starting 2020 with a bang: ORIX building a commercial finance giant

Orix big acquisition,ph01

ORIX Corporation USA kicked off the new year with a big commercial real estate deal, completing in early January its acquisition of New York City-based Hunt Real Estate Capital.

This deal has a Midwest flavor, as ORIX had already acquired Columbus, Ohio-based Lancaster Pollard in 2017 and RED Capital Group, also based in Columbus, in 2010. This latest acquisition provides yet another boost to ORIX Corporation’s goal of becoming a top national commercial real estate lender.

James Flynn, president and chief investment officer with Hunt Real Estate Capital, will lead the newly created company, ORIX Real Estate Capital. Hunt Real Estate Capital and ORIX Real Estate Capital combined to exceed $9 billion in loan production in 2019. The companies have a combined servicing portfolio of more than $40 billion.

Jerry Abrahams, chief executive officer for ORIX Commercial Mortgage Servicing Group, said that the latest acquisition is a continuation of ORIX’s multi-year strategy to expand its presence in the commercial real estate space with successful mortgage companies.

“Hunt brought a lot of pieces that were missing in our existing platform,” Abrahams said.

Hunt has a Freddie Mac convention license, one of the major licenses that ORIX lacked, Abrahams said. He said that Hunt’s Fannie Mae multifamily conventional business will be an important addition to ORIX’s existing multifamily business.

At the same time, ORIX is strong in FHA lending, something that will benefit Hunt. Hunt’s FHA business had room to grow, Abrahams said.

“We look for acquisitions that are complementary and that don’t have a lot of overlap,” Abrahams said. “Hunt fit that model in so many ways. It is the right size. We were impressed with Jim and his leadership team. That made this acquisition very consistent with our long-running strategy of growth.”

Flynn said that Hunt will receive plenty of benefits from the acquisition, too. The main one? Being part of a larger organization will help Hunt become a stronger presence across the country and, in particular, in the Midwest.

“Being part of a smaller, private organization certainly facilitated our growth over the last four or five years and has been a great experience,” Flynn said. “But the size of our parent company relative to capital needs eventually began to limit our own growth. Putting ourselves with ORIX’s existing platform made sense and will help us in our efforts to expand. The financial wherewithal that comes with being a subsidiary of ORIX is very powerful.”

ORIX is no stranger to growth. ORIX Corporation itself is based in Tokyo. ORIX USA already counts Boston Financial Management, NXT Capital, Mariner Investment Group, RB Capital and ORIX Capital Partners among its U.S. subsidiaries. ORIX USA and its subsidiaries include a team of more than 1,000 employees spanning more than 30 offices. Its parent company, ORIX Corporation, has operations in 37 countries and regions across the globe.

“As a public company, we are always looking to grow to enhance shareholder value,” Abrahams said. “We are active in the market at all times. When we spot an opportunity, we act. We are not driven by time. We are driven by what transactions are available, which ones make strategic sense. Hunt Real Estate Capital fit extremely well into our existing business. That is what drove this transaction: The right opportunity came along.”