CIT Group Inc. (CIT) re-initiated its commercial real estate (CRE) lending business with the launch of CIT Real Estate Finance on Wednesday. The new business will originate and underwrite senior secured real estate transactions in the Boston, New York City and Washington, D.C. areas. When the financial crisis was at its peak in 2008, CIT had scaled back its CRE lending division to stay afloat.
CIT Real Estate Finance will provide real estate loans above $20 million to well capitalized and experienced developers in the office, retail, industrial and multi-family rental sectors.
Matthew E. Galligan, Executive Vice President, has been appointed as the Group Head and will report to CIT President Nelson J. Chai. Apart from Galligan, Meggan Walsh is the group's new managing director with Christopher Niederpruem as the new Director.
The restart of CRE lending business reflects CIT’s focus on growth opportunities and building assets. Further, this business will enable the company to capitalize on current market conditions.
Last week, CIT had reported third quarter loss of 8 cents per share, significantly lower than the Zacks Consensus Estimate of a loss of 18 cents. Considerable deterioration of net interest revenue and higher debt-prepayment costs were the main reasons behind the loss. However, the company has been progressing well to remove high cost debts.
We expect CIT to continue benefiting from its strong capital and liquidity position. However, the company will have to focus on top-line improvement; otherwise, its bottom line will remain under pressure. The launch of CRE division is expected to slightly contribute to its revenue growth in the upcoming years.
CIT currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. However, one of its competitors, Dollar Financial Corp. (DLLR) retains a Zacks #2 Rank (a short-term Buy rating).
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