ORIX USA Acquires Lancaster Pollard for Reported $300M

COLUMBUS, Ohio, and DALLAS — ORIX USA, a Dallas-based division of international financial services group ORIX Corp., has acquired Lancaster Pollard Holdings LLC. The acquisition price was more than $300 million, according to a report by Commercial Mortgage Alert.

Based in Columbus, Lancaster Pollard was the top HUD lender in the seniors housing sector for fiscal year 2016, which ended Sept. 30, 2016. The company closed 60 transactions totaling $554.4 million, accounting for 21 percent of total HUD volume in the sector.

Lancaster Pollard is a new separate subsidiary of ORIX alongside RED Capital Group, which is also based in Columbus, and Boston Financial Investment Management. All three ORIX subsidiaries will continue to operate as separate companies with their current management. Andrew Garvey, senior managing director and head of ORIX Commercial Mortgage Servicing, will have overall responsibility across the three businesses, managing the growth opportunities provided by the larger platform.

“As a continued commitment to building American infrastructure, ORIX has made another investment in a high-value brand serving the senior living and healthcare sectors,” says Hideto Nishitani, ORIX USA’s chairman, president and CEO. “The acquisition of Lancaster Pollard is a natural extension of ORIX’s successful strategy of acquiring leaders in affordable, seniors and healthcare housing finance, as evidenced by our previous acquisitions of RED Capital Group and Boston Financial Investment Management.”

“Having these three companies under the ORIX umbrella extends our ability to improve the quality of life in our communities through investments in seniors housing and healthcare,” adds Nishitani.

To help grow its multifamily, seniors and affordable housing businesses, ORIX bought an 88 percent stake in RED in May 2010, making it the foundation of ORIX Commercial Mortgage Servicing. Last year, ORIX purchased the remaining 12 percent interest in the company.

In July 2016, ORIX acquired Boston Financial. The acquisition combined the financial strength and capital solutions of ORIX with Boston Financial’s track record as one of the largest syndicators in the Low-Income Housing Tax Credit (LIHTC) industry.

“There is a great deal of synergy between Lancaster Pollard, RED and Boston Financial, with all three companies focused on the vital sectors of housing and healthcare for our most in-need populations,” says Nick Gesue, Lancaster Pollard’s CEO. “We’re thrilled with the confidence that one of the largest global financial services companies has shown in our platform and employees, and together we are positioned for a new chapter in our company’s history, focused on innovation and growth.”

Moving forward under the ORIX Commercial Mortgage Servicing umbrella, Lancaster Pollard will focus on the financial, capital and advisory needs of senior living and healthcare clients, and RED will do the same in the affordable and market-rate multifamily sectors.

As a result, employees from Red Capital Group active in the HUD Lean 232 mortgage insurance program for seniors housing will move over to the Lancaster Pollard team, while Lancaster Pollard's affordable housing bankers will transition to RED. "Specifics are still being worked out" for the plan, according to a representative from Lancaster Pollard.

Boston Financial will continue to provide tax credit equity and related development capital to all three housing sectors.

“ORIX Commercial Mortgage Servicing is well positioned to make a positive impact on the U.S. housing infrastructure through the subsidiaries of Boston Financial, Lancaster Pollard and RED,” says Garvey. “Further, we believe that having RED focus on its leading position in affordable and market-rate multifamily housing and Lancaster Pollard focus on its leading position in seniors and healthcare housing will provide clients with the highest level of expertise and service. [This will] also ensure optimal coordination with the housing agencies and FHA.”

Advisors for ORIX USA on the transaction included Beekman Advisors Inc. and Houlihan Lokey Inc. for financial services and Weil, Gotshal & Manges LLP for legal services. For Lancaster Pollard, Credit Suisse Securities (USA) LLC served as financial advisor and Kramer Levin Naftalis & Frankel LLP as legal advisor.

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