As one of the smaller real estate managers to the State of Connecticut Trust Funds, Carter Primo Chesterton L.P. was hit particularly hard by the pension fund's decision last year to consolidate its separate account business with one real estate manager, Aldrich Eastman Waltch (Pensions & Investments, Oct. 28).
The $13 billion fund was the firm's largest pension client and a major revenue source for the Chicago-based mortgage adviser.
CPC is back from the brink with a new deal that, while outside of the tax-exempt arena, complements its core pension mortgage advisory business, said Quintin Primo III, chief financial officer.
CPC Mortgage Capital, an affiliate company, will buy the mortgage servicing rights to a $780 million pool of apartment loans from FT Mortgage Cos., Memphis, Tenn., said Mr. Primo.
FT is the seventh largest residential loan servicer in the country, and the company will retain a minority interest in the portfolio, said Mr. Primo. FT Mortgage is a subsidiary of First Tennessee Bank.
CPC Mortgage will collect principal and interest on the loans and remit it to its clients. The company also will be a mortgage originator for the Federal National Mortgage Association.
"There are only 27 such lenders in the country," said Mr. Primo. "That group of 27 did over $6 billion in new originations in 1996.
"It puts us squarely in the mortgage banking industry. It will also complement our mortgage servicing on the pension side."
The new line of business allows CPC to diversify its revenue stream away from its core business, said Mr. Primo.
"We were stung by Connecticut," he said. "It was a wake-up call for us. We can't have all our eggs in one basket."