GMAC's road to the top

Headnote

Capital is not an issue for GMAC Commercial Mortgage. This subsidiary of General Motors has been on a buying spree of late. Its position as the industry's top commercial servicer seems secure in a business where size definitely matters.

IF IT'S ONE THING GENERAL MOTORS CORPORATION UNDERSTANDS, IT'S THE WORD "BIG.The world's largest automobile manufacturer is also the nation's biggest commercial mortgage banker.

While the Detroit-based carmaker can toss up some imposing numbers-such as $130.5 billion in revenues and $4.8 billion in net income through the third quarter of 1999, making it arguably the world's largest corporation-it is no longer the imposing giant it once was. Targeted by unions, burdened by high manufacturing costs and challenged by legions of other automakers, its once-dominant share of the auto market has steadily eroded.

Yet, the same cannot be said of GM's much smaller commercial real estate mortgage subsidiary, GMAC Commercial Mortgage, Horsham, Pennsylvania. In the world of comercial real estate finance, GMAC Commercial Mortgage is fast becoming the behemoth that GM once was in the automobile world. It is the No. 1 commercial mortgage servicer, and it could possibly end 1999 as the No. 1 originator as well.

In the bumpy, turbulent world of commercial real estate finance, where major servicing, finance and lender participants come and go unpredictably, the only sure thing has been the ascension of GMAC Commercial Mortgage. In 1999, when the issuance volume of commercial mortgagebacked securities (CMBS) dropped from $78 billion to approximately $65 billion, GMAC Commercial Mortgage reported its best year ever. In 1998, it boasted sq billion in originations. By the end of October 1999, the company's origination volume already had topped $10 billion.

"If you look at the players in the industry," says Charles Dunleavy, president of GMAC Commercial Mortgage Corporation, "GMAC Commercial Mortgage would stand out as the one that has the financial wherewithal and the global presence to make it a pretty tough competitor."

When you have a parent company the size of General Motors standing behind you, it's easy to do the things-- such as acquiring smaller companies-needed to prosper in the contentious commercial mortgage banking industry.

Since it was carved out as a separate unit in 1994, GMAC Commercial Mortgage has been on...