How Goldman Sachs, KKR wrecked Capmark: report

Horsham-based Capmark Inc. filed for bankruptcy Sunday, three years after it was spun off by General Motors' finance arm, because its rich Wall Street owners borrowed too much and lent too much to office, mall, hotel and apartment owners on the eve of the real estate collapse, writes Bloomberg here. Inquirer story here, PhillyDeals note and links here. From the Bloomberg story:

"Capmark collapsed under the weight of the loans it made and the debt that financed its leveraged buyout by a group led by Goldman Sachs Group Inc. and KKR & Co." While other investors were leaving the market, "in 2006 and 2007, Capmark originated $60 billion in commercial mortgage loans, most for office buildings... As commercial property prices started falling, loan defaults accelerated. Payments were at least 60 days late on $4 billion of the $24.1 billion in loans Capmark listed as managed assets on June 30...

"Capmark was created in March 2006, near the peak of the real estate and buyout market. The company listed consolidated debt of $21 billion and assets of $20.1 billion as of June 30, according to Chapter 11 documents filed in U.S. Bankruptcy Court in Wilmington...

"Goldman Sachs, KKR, Dune Capital Management LP and Five Mile Capital Partners LLC bought 78 percent of Capmark, then called GMAC Commercial Mortgage, from General Motors Co. for $8.8 billion. The buyout consisted of $1.5 billion in cash and the repayment of $7.3 billion of debt, before GM’s sale of a 51 percent stake in the rest of its finance business, GMAC LLC.

"Commercial property values in the U.S. have plunged. The Moody’s/REAL Commercial Property Price Indices fell 3 percent in August from July, bringing the decline to almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19.

"Vacancies at U.S. office buildings are at a five-year high, a 23-year record for apartments and the highest since 1992 for retail centers, according to real estate research firm Reis Inc. All that unleased space makes it harder for landlords to pay their mortgages to lenders such as Capmark." In re Capmark Financial Group Inc., 09-13684, U.S. Bankruptcy Court, District of Delaware (Wilmington).