On the Margin
GE sells its restaurant loan portfolio

GE sells its restaurant loan portfolio

This post is part of the On the Margin blog.

GE Capital, Franchise Finance, long one of the largest lenders to the restaurant space, is breaking up.

On Monday, GE Capital said it has deals with three different buyers to sell most of its restaurant financing assets, about $1.4 billion total. The deal is part of the decision last year by its parent company, GE, to sell most of its GE Capital business to focus on its industrial businesses.

The loans will be sold to buyers based on their region. Loans to borrowers in the Southwest and Southeast will be sold to First Horizon National Corporation, a Tennessee-based bank with $27 billion in assets.

Loans to borrowers in the Midwest and parts of the West will be sold to Illinois-based Wintrust Financial Corp. Loans to borrowers in the East will be sold to New York-based Sterling National Bank.

Other loans, to borrowers out West, will be sold in a separate deal.

The deals signal the end of one of the largest lenders in the restaurant industry — one that helped many of the largest restaurant companies expand both before and after the recession.

GE Capital also provided a lot of the talent that helped build many of its current competitors. In the aftermath of the recession, several GE Capital, Franchise Finance, veterans left to help create restaurant lending programs at other financial institutions.

The sale of the restaurant-lending portfolio was long expected given GE’s stated decision to break up its GE Capital unit. And it’s unlikely to affect the restaurant lending environment all that much, given the presence of so many lenders.

Indeed, the three lenders are likely to ramp up their lending to the space. Restaurant lending has flourished in recent years due largely to a belief that the industry is protected from some outside elements that might diminish its success, such as the Internet.

“As we continue to execute on our strategy to sell GE Capital’s assets that are not linked to GE, the sale of these restaurant financing assets represents our last major US platform transaction,” GE Capital CEO Keith Sherin said in a statement. “We are pleased to reach separate agreements with three strong buyers that will be able to continue to serve our customers and restaurant brands as they continue to grow.”

Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze

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