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Western Alliance Bank buying US franchise finance hotel biz from GE Capital

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Western Alliance Bank buying US franchise finance hotel biz from GE Capital

Phoenix-based WesternAlliance Bank ($14.16 billion) is buying General Electric Capital Corp.'s franchise finance U.S. hotelbusiness, according to a March 29 news release.

GE Capital said the sale includes approximately $1.4 billionin ending net investment and the majority of the hotel business employees. A separatenews release from Western Alliance indicated that approximately 35 members of GECapital's team who are focused on this sector are already based in Scottsdale, Ariz.,and will become part of Western Alliance. Also included in the purchase are certainrelated assets, according to a Form 8-K. The portfolio does not contain any nonperformingloans and has a yield of 4.8%.

The transaction is expected to be immediately accretive to 's earningsper share, while essentially neutral to liquidity and capital ratios due to thecompany's deposit growth and capital generation rates. The transaction is expectedto close in April.

In addition, GE Capital reached an agreement to sell its Canadianfranchise finance business, including most employees, to a different buyer, representingabout $300 million in ending net investment. The deal is set to close in the secondquarter. The buyer was not named in GE Capital's press release.

When completed, the U.S. hotel business and Canadian transactionswill contribute approximately $200 million of capital to the overall target of approximately$35 billion of dividends expected to be paid to General Electric Co., subject to regulatory approval.

Barclays provided financial advice to GE for both transactions.Hogan Lovells provided legal advice for the U.S. hotel transaction, and McCarthyTétrault LLP provided legal advice for the Canadian transaction.