The Baltimore-based affordable-housing financier Municipal Mortgage & Equity LLC, known as MuniMae, announced on June 8 an agreement to acquire Glaser Financial Group Inc., a commercial mortgage bank in St. Paul, Minn.
The $67 million transaction is expected to expand the services provided by MuniMae and increase its assets under management to more than $15 billion.
MuniMae, which provides debt and equity financing to developers of multifamily housing projects and other real estate investments, currently gets the bulk of its revenue from investing in unrated and unenhanced municipal bonds used to build multifamily housing developments around the country. It helps to originate many of those bonds by seeking out borrowers who want to develop and build affordable housing developments and then serving as underwriter on the deals, which are usually about $10 million in size.
The firm's current portfolio of municipal bonds is in excess of $1 billion, according to Mike Rulf, a principal at MuniMae and head of its investor relations department.
Glaser originates mortgages in the upper Midwest for multifamily, senior housing, and commercial real estate through funding sources such as Fannie Mae, Freddie Mac, the Federal Housing Administration, and Department of Housing and Urban Development. It has a loan-servicing portfolio that totals $3.5 billion, which consists of 64,000 units and includes both insured and uninsured taxable and tax-exempt bond issues.
The merger "increases our presence as one of the top providers of capital to the multifamily housing industry," Rulf said. In addition to expanding the services provided by MuniMae, the Glaser acquisition will help strengthen its upper Midwest regional business, he added.
"From a geographical standpoint, Glaser is an excellent compliment to our already national portfolio," Rulf said. "Glaser has a long history in the Minnesota area and is one of the biggest players in the multifamily housing market in that region."
The merger, which is expected to close sometime early in the third quarter, will also help enhance and increase the services offered by MuniMae in the senior housing market, which previously represented "a relatively small part of the overall business," Rulf said. By contrast, 40% of Glaser's existing mortgage originations take place in the senior housing area of the market, he said.
However, the addition of a business like Glaser will not be entirely new territory for MuniMae, according to Rulf. The firm currently maintains a real estate finance division, of which a large portion consists of mortgage banking business.
Under the merger plan, Glaser will operate as part of MMA Financial, one of MuniMae's operating units, although its staff and network of regional offices will continue to report to Glaser's chief executive officer, David Williams.
MuniMae has been growing by leaps and bounds as it has sought to increase and enhance its product line and build shareholder value since going public on the New York Stock Exchange in 1996, Rulf said. The Glaser acquisition is MuniMae's second so far this year, and its fourth in six years, he said.
In January, the firm acquired MONY Realty Capital Inc. from AXA Financial Inc. The MONY unit -- which had over $2 billion in assets under management at the time of the acquisition and now operates as MMR Realty Capital Inc. -- underwrites, structures, and manages commercial real estate investments. That merger increased MuniMae's assets under management by more than 20%, enhanced the growth of its investment advisory business, and expanded its multifamily housing product platform, according to a MuniMae release.
"We are always looking for strategic acquisitions that fit our business," Rulf said. "All of our acquisitions are aimed at strengthening our ability to provide our customers with all the products they need to finance their real estate transactions."
During the last nine years, MuniMae has experienced growth in its assets, equity, staff, and stock performance.
From 1996 through the end of 2004, the company's stock posted an average annual return of approximately 18%, not including any of the tax-exempt benefits associated with MuniMae's quarterly dividend payments. According to data provided by the firm, its total business production grew 68% from 2003 to 2004 alone.
As of March 31, assets under management totaled $11.9 billion, secured by 2,376 properties containing 249,276 units in 49 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, according to the company's Web site. Taking into account all of its acquisitions, MuniMae will have in excess of $15 billion in assets under management once the Glaser deal has been closed, Rulf said. That compares with just $300 million in assets the firm managed in 1996.
Meanwhile, MuniMae's equity market capitalization has grown to nearly $1 billion, up from just $197 million in 1996.
After the Glaser deal is finalized, the firm will have nearly 500 employees; it had just 13 in 1996 before going public. (c) 2005 The Bond Buyer and SourceMedia, Inc. All rights reserved. http://www.bondbuyer.com http://www.sourcemedia.com
