Press Releases

The Class "A" warehouse program will expand First Union's loan capabilities to allow for the underwriting of permanent, non-recourse real estate debt for shopping centers, apartments and other types of high-quality commercial properties. Traditionally, First Union has provided short-term construction loans for Class "A" properties but placed the permanent loans with insurance companies and other institutional investors - a practice it will continue in addition to the new capability. Class "A" property typically is newer real estate located in major metropolitan areas.

Loans originated under the new program will be packaged and sold to traditional institutional investors or securitized in First Union's existing commercial loan conduit and distributed through First Union Capital Markets Corp. First Union is one of the nation's leading commercial bank originators of securitized commercial loans, having originated more than $2 billion such loans over the last three years.

"This new program represents another step in the continuing expansion of our real estate finance capabilities and provides clients competitive, convenient financing that they can obtain directly from us," said Mike Greco, senior vice president and managing director of First Union's Real Estate Capital Markets Group. "Through this new program, we can better serve the total financial needs of our commercial real estate clients."

The Class "A" program will offer various types of commercial mortgages, including immediate funding fixed rate permanent loans, forward fixed rate permanent loans and construction/permanent combination loans. The loans will be originated from First Union's East Coast franchise and through three new Real Estate Capital Markets offices in Houston, Chicago and Irvine, Calif. Each of those offices opened earlier this year.

The Class "A" program will be housed within the Income Properties Group managed by Kroghie Andresen, a 26-year commercial real estate veteran. The group is expected to be expanded as a result of the new capability.

The Income Properties Group has been one of the leading originators of commercial real estate transactions for life insurance companies and pension funds during the 1990s, having consummated nearly $3 billion in closings. "The new Class A program will allow us to be more responsive to customers since we are using our own capital and to deliver more products to our institutional investors on a nationwide basis," Andresen said.

The Real Estate Capital Markets Group was formed earlier this year as part of First Union's expanded focus on commercial real estate finance. In addition to its commercial conduit operations, the Real Estate Capital Markets Group offers credit tenant lease finance, REIT lending, affordable housing debt and equity finance and off-balance sheet lending products for corporate real estate clients.

The Real Estate Capital Markets Group is an integral part of First Union's capital markets business. First Union Capital Markets Corp. provides corporate clients a full array of products and services, including asset-backed securities, public finance, derivatives, syndicated loans, merger and acquisition advisory, private placements and investment grade and high-yield finance.

First Union has grown its capital markets business substantially over the last three years. In 1996, First Union Capital Markets reported a 75 percent increase in fee income to $464 million from 1995 and a 46 percent increase in pretax net income to $422 million.

Charlotte-based First Union Corp. is a leading provider of financial products and services to approximately 12 million customers nationwide. First Union is the nation's sixth-largest bank holding company with assets of $143 billion as of June 30, 1997. It operates financial centers in 12 Eastern states, as well as in Washington, D.C.

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