Strategic Alliance Between Washington Mutual and Franchise Finance Corporation of America

Strategic Insights -

Washington Mutual, Inc. and Franchise Finance Corporation of America (FFCA) have entered into a strategic alliance for the sale and purchase of commercial loans, enabling Washington Mutual to add high-quality, high-yield assets to its portfolio. The agreement allows FFCA to continue its rapid growth with less reliance on new capital funding, while Washington Mutual gains access to FFCA's expertise in single-tenant retail property lending. Under the terms of the alliance, Washington Mutual will purchase loans originated by FFCA, retaining them in its portfolio and providing FFCA with fee income from loan originations and servicing income on the sold loans.

Key Takeaways:

  • The alliance is a three-year agreement with two one-year renewal options, allowing for continued diversification of Washington Mutual's loan portfolio.
  • Washington Mutual will purchase approximately $4 - $5 billion in loans from FFCA during the three-year agreement, with no specific timeline for loan originations.
  • FFCA has originated $1.2 billion in commercial loans as of September 30, 1999, with a focus on financing multi-unit operators of chain restaurants, convenience stores, and automotive service and parts outlets.
  • The alliance allows FFCA to maintain and expand its growth rate, reward shareholders with continuing dividend increases, and implement a stock repurchase program.
  • FFCA's portfolio is diversified by industry, geographic location, client, and chain, with investments in approximately 5,200 properties across 48 states and Canada.
  • Washington Mutual operates nearly 2,000 offices throughout the nation, with consolidated assets of $180.80 billion as of September 30, 1999.

Statistics:

  • $4 - $5 billion: The estimated value of loans Washington Mutual will purchase from FFCA over the three-year agreement.
  • $1.2 billion: The value of commercial loans originated by FFCA as of September 30, 1999.
  • 5,200: The number of properties in FFCA's portfolio as of September 30, 1999, including interests in securitized loans.
  • 48: The number of states where FFCA has investments, as well as Canada.
  • 1,800: The number of offices operated by Washington Mutual as of September 30, 1999.
  • $180.80 billion: The consolidated assets of Washington Mutual and its subsidiaries as of September 30, 1999.
  • 2 million: The number of warrants issued to Washington Mutual for FFCA shares.

Sources:

  • Washington Mutual, Inc. (NYSE:WM)
  • Franchise Finance Corporation of America (NYSE:FFA)
  • Business Wire
  • Washington Mutual's News On Demand Plus System (1-800-329-6236)
  • http://www.businesswire.com/cnn/wm.shtml
  • http://www.ffca.com