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Fitch Initiates 'BBB/F3' Ratings On Capmark Financial After GMAC Equity Sale.

NEW YORK -- Fitch Ratings has assigned Capmark Financial Group Inc. (Capmark; formerly GMAC Commercial Holding Corp.) a 'BBB' long-term issuer default rating (IDR) and an 'F3' short-term issuer rating. The Rating Outlook is Stable. A complete list of rating actions by Fitch, which includes various upgrades and affirmations of Capmark entities, is detailed at the end of this release.

The assignment of ratings to Capmark follows the company's partial equity sale from a subsidiary of General Motors Acceptance Corp. (GMAC) to a an entity controlled by affiliates of Kohlberg Kravis Roberts & Co., L.P., Five Mile Capital Partners LLC, and The Goldman Sachs Group, Inc. At closing, the new majority owner and management together will own approximately 80% of Capmark and GMAC will retain a 20% stake. As GMAC will be a minority shareholder, the ratings and Outlook of Capmark are not linked to those of GMAC. Also at time of closing, all debt owed by GMACCH to GMAC will be repaid.

Fitch's ratings reflect Capmark's strong and growing franchise in all facets of commercial mortgage banking, experienced management team, and sound level of core earnings. In terms of franchise, Capmark is one of the largest originators of commercial mortgage assets and the largest servicer with a servicing portfolio of $275.9 billion at year-end 2005. Moreover, Capmark is broadening its geographic reach with its growing European and Asian operations, which provide a degree of diversity relative to its U.S. business. Fitch also recognizes Capmark's relatively stable and experienced management team, which should provide long-term perspective in what is a cyclical business. As Capmark's primary business is to originate loans for sale, a high percentage of the company's balance sheet is marked-to-market, with gains and losses flowing through income, which can cause reported earnings to be more volatile period to period. Nonetheless, Fitch believes that Capmark possesses sound core earnings through spread, fee, and servicing income.

While Capmark enjoys a strong franchise in commercial mortgage banking, it is exposed to the cyclicality in this market. As such, earnings and credit quality may be more volatile during a cyclical downturn. This risk is partly mitigated by Capmark's third-party special servicing function, which would likely prosper during a time of rising defaults.

The 'F3' rating reflects Capmark's historical reliance on short-term sources of financing. Fitch believes that this reliance will be reduced as Capmark establishes itself in the capital markets and as this occurs and Capmark establishes it short-term funding plans, Fitch will review the short-term rating with a view towards an upgrade. Short-term deposits at GMAC Commercial Mortgage Bank are rated 'F2' in keeping with Fitch's view of the superior recovery prospects for depositors due to National Depositor Preference.

In terms of capital and leverage, Fitch expects Capmark to manage within current ranges, with debt to tangible equity of approximately 6.5 times (x) as of the closing date of the equity sale. Fitch also expects Capmark to maintain adequate unencumbered assets relative to unsecured debt, generally in excess of 1.0x.

Ratings upgraded and removed from Rating Watch Positive include the following:

GMAC Commercial Mortgage Bank

-- Long-term Issuer Default Rating (IDR) to 'BBB' from 'BB';

-- Short-term issuer to 'F3' from 'B'.

GMAC Commercial Mortgage Bank Europe plc

-- Short-term issuer to 'F3' from 'B'.

GMAC Commercial Mortgage Funding plc

GMAC Commercial Funding Asia K.K.

-- Long-term Issuer Default Rating (IDR) to 'BBB' from 'BB+'.

GMAC Commercial Mortgage Bank

-- Long-term deposits to 'BBB+' from 'BB+';

-- Short-term deposits to 'F2' from 'B'.

The Rating Outlook is Stable for these ratings

Fitch has also affirmed the following ratings and removed them from Rating Watch Positive:

GMAC Commercial Mortgage Bank

-- Individual 'B/C';

-- Support '3'.

Fitch also assigns the following:

GMAC Commercial Mortgage Funding plc

-- Short-term issuer 'F3'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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Publication:Business Wire
Date:Mar 23, 2006
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