Archive News

9 December 1999

Lend Lease acquires five of AMRESCO Inc.'s Businesses
Lend Lease Corporation Limited ("Lend Lease") announces that its subsidiary, Lend Lease Real Estate Investments, Inc., has signed agreements to acquire five of AMRESCO Inc.'s ("AMRESCO") commercial mortgage businesses for a total amount of US$257.5 million. This follows the announcement on 23 August 1999 thaT discussions were being held between the parties. The acquisition will be funded on settlement out of cash and available facilities and will be earnings accretive in year one. Settlement of the transaction is targeted for the end of first quarter 2000. However the transaction is subject to government, regulatory and other approvals and there is no guarantee that the acquisition will be completed.

AMRESCO is a diversified financial services company headquartered in Dallas, Texas, specialising in commercial and residential real estate lending, asset management and commercial finance. Lend Lease is not buying the AMRESCO holding company or any of its commercial finance, residential mortgage lending or home equity lending businesses, nor is Lend Lease assuming any of AMRESCO's corporate liabilities. The acquisition further strengthens Lend Lease's global real estate investment capabilities by expanding significantly its real estate debt- related products and services in the areas of loan origination, lender representation, loan servicing, asset management and loan resolution. On completion of the acquisition, Lend Lease will become one of the largest commercial mortgage servicers in the U. S. with approximately US$50billion in loans under servicing.

A copy of the media release is attached.

MEDIA RELEASE

8 December 1999

LEND LEASE AGREES TO ACQUIRE AMRESCO BUSINESSES FOR US$257.5 MILLION; ACQUISITION POSITIONS COMPANY AS LEADING COMMERCIAL
MORTGAGE INVESTMENT MANAGER AND LOAN SERVICER

New York, New York-Lend Lease Real Estate Investments, Inc., the U.S. subsidiary of Lend Lease Corporation Limited (ASX: LLC), today reached an agreement to buy five of AMRESCO, INC.'s commercial mortgage businesses: AMRESCO Capital Limited Partnership, Holliday Fenoglio Fowler, Real Estate Structured Finance, AMRESCO Services Limited Partnership, and Asset Management. The US$257.5 million cost to Lend Lease comprises a US$222.5 million cash payment to the sellers, a US$25 million holdback note to the sellers extending up to three years, and US$10 million in management incentives. The acquisition is expected to be earnings accretive in year one.

Matthew Banks, Chief Executive Officer of Lend Lease Real Estate Investments, announced the agreement here today. Lend Lease expects to close the transaction by the end of first quarter 2000, pending various conditions including government and regulatory approvals as well as certain client consents. There is no guarantee that the transaction will be completed.

The acquisition of the AMRESCO commercial mortgage businesses will further strengthen Lend Lease's global investment management platform. It moves the Group into leadership positions within key segments of the U.S. institutional real estate debt market, which at US$1.4 trillion is four times larger than the institutional real estate equity market. This also expands significantly Lend Lease's real estate debt-related products and services in the areas of loan origination, lender representation, loan servicing and asset management/resolution.

The acquisitions will increase Lend Lease Real Estate Investments' total assets under management from US$36.7 billion to US$43 billion worldwide, including US$37.2 billion in the United States. In addition, Lend Lease Real Estate Investments' assets under administration (loan servicing) will now total US$50 billion. Lend Lease ranks as one of the largest real estate investment management companies in the world.

In combining the Lend Lease and AMRESCO loan servicing portfolios, Lend Lease will become one of the largest commercial mortgage servicers in the United States. Lend Lease is also acquiring the largest U.S. commercial mortgage broker in Holliday Fenoglio Fowler as well as one of the largest managers of distressed commercial mortgages.

"Lend Lease is a recognized global leader in the real estate investment management business," Banks said. "This acquisition transforms Lend Lease into a leader in the commercial real estate debt markets. We also gain a tremendously talented group of employees and significant additional information technology capabilities." Banks added: "We expect to grow these successful businesses not only in the United States, but also internationally, taking advantage of our extensive global network which operates on five continents."

"Our strategy focuses on agency activities and investment management, and we do not intend to take on material capital risk on our own balance sheet from mortgage investments," Banks said.

The five AMRESCO business lines to be purchased by Lend Lease are:

• AMRESCO Capital Limited Partnership: Originates loans for Government Sponsored Enterprise programs as well as for institutional clients. The unit's estimated total loan origination volume for 1999 is US$1.4 billion.
• Holliday Fenoglio Fowler: Provides financial brokerage services for commercial real estate owners, including the arrangement of first-line mortgages and mezzanine capital, loan servicing, and asset sales. The unit ranks as the U.S. leader in commercial loan transactions with an estimated volume of US$12.3 billion during 1999. It also provides US$9 billion in commercial mortgage loan servicing on behalf of its lenders. Holliday Fenoglio Fowler will operate as an independent, wholly-owned subsidiary of Lend Lease.
• Real Estate Structured Finance: Arranges high-yield debt financing for real estate ventures unable to access traditional lending sources. In 1998, the unit structured more than US$250 million in financings.
• AMRESCO Services: Manages US$35 billion in servicing volume for commercial mortgage-backed securities (CMBS) issuers and owners of whole loan portfolios. Lend Lease currently provides servicing for US$5.5 billion of commercial mortgages.
• Asset Management: Acquires, manages and resolves non-performing and sub-performing loan and real estate portfolios for governmental agencies, institutional investors, banks, insurance companies and private investors. This unit also provides special servicing for CMBS issuers, and recently has expanded operations to Japan, Thailand, Mexico and Canada with plans to begin operations in South Korea.

media | stock exchange