CharterMac makes $284m leap of faith into securities market.

CharterMac announced that the company has agreed to acquire 100% of the ownership interests of ARCap Investors, LLC in a transaction that values ARCap at $284.5 million, including ARCap's fees and expenses.

ARCap is one of the nation's leading fund managers specializing in the acquisition, management and servicing of high-yield commercial mortgage-backed securities and high-yield direct real estate loans.

The privately held, Dallas-based company manages a portfolio of over $2.8 billion of CMBS for its institutional clients and for its own account. CharterMac currently owns a 10.7% economic interest in ARCap, which the Company has held since 2000.

"The acquisition of ARCap is the next step in the transformation of our company from a spread investor to a real estate fund manager," said Marc D. Schnitzer, chief executive officer and president of CharterMac.

"Following our acquisition of Related Capital Company in 2003, this transaction represents a logical expansion of our fund management platform into a new area of real estate finance with significant growth potential.

"As commercial real estate finance continues its migration to the capital markets, it is a necessity to have a strong presence in the CMBS industry, which is why we believe this transaction represents an important opportunity and an excellent fit for CharterMac."

Paul, Hastings, Janofsky & Walker LLP represented CharterMac in this deal. Attorneys involved included Michael Zuppone, Mark Schonberger and Joseph Opich.