Capmark Financial Group Inc. Reports 2008 First Quarter Operating Results

Business Wire,  May 13, 2008  

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Real estate related assets under management in our North American Investments and Funds Management business were approximately $10.2 billion as of March 31, 2008, compared to $10.3 billion as of December 31, 2007.

North American Servicing

Our North American Servicing segment generated pre-tax income of $23.2 million during the first quarter of 2008 compared to $44.0 million for the same period a year ago. The decline in income was primarily driven by lower noninterest income of approximately $20.5 million from a reduction in trust fees, document custodial income, and servicing fees. This reduction resulted from lower prevailing interest rates and a reduction in volume of mortgage loan servicing fee based transactions during the first quarter of 2008 compared to the first quarter of 2007.

Asian Operations

Our Asian Operations segment incurred a pre-tax loss of $19.1 million for the three months ended March 31, 2008, compared to pre-tax income of $49.3 million for the same period a year ago. The decrease was primarily due to approximately $34.7 million in lower net gains on sales of real estate and loan investments during the quarter compared to the same period in 2007. This segment also had an increase in impairments on real estate investments totaling approximately $20.4 million and a decrease in net interest income of approximately $5.7 million during the quarter due to reductions in interest accretion on lower acquired non-performing loan balances year over year.

European Operations

Our European Operations segment incurred a pre-tax loss of $246.6 million for the three months ended March 31, 2008, compared to pre-tax income of $28.3 million for the same period in 2007. The loss resulted primarily from a decrease in noninterest income from $28.7 million in the first quarter of 2007 to a loss of $243.6 million in the first quarter of 2008. The decrease in noninterest income was primarily a result of net losses on loans of $245.6 million in the first quarter of 2008 compared to net gains on loans in the first quarter of 2007. In April 2008, we completed the sale of interests in 39 loans with an unpaid principal balance of approximately $2.0 billion for an aggregate sale price of approximately $1.8 billion. Losses related to the loan interests sold, as well as fair value adjustments related to the retained interests, were recognized in the first quarter of 2008 because the sale prices were indicative of fair value as of March 31, 2008.

North American Affordable Housing

Our North American Affordable Housing segment reported a pre-tax loss of $5.8 million during the first quarter of 2008 compared to pre-tax income of $28.2 million in the same period in 2007. The results for the first quarter of 2007 included a non-recurring pre-tax gain of approximately $71.5 million on the sale of the majority of Capmark's Affordable Debt platform in February 2007. Excluding the effects of that non-recurring gain, the segment would have recorded a pre-tax loss of $43.3 million in that quarter.(*) The improvement year over year was primarily attributable to a reduction in losses relating to LIHTC yield guarantees, gains on disposition of real estate investments, and lower operating expenses during the first quarter of 2008.