KeyCorp to Expand CMBS Servicing to More Than $70 Billion by Acquiring ORIX Capital Markets' CMBS Servicing Business

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    Dallas-based mortgage servicing company will add $26 billion to Key's

     servicing portfolio

    CLEVELAND, Nov. 16 - KeyCorp (NYSE: KEY) has reached an agreement to acquire the commercial mortgage backed securities (CMBS) servicing business of Dallas-based ORIX Capital Markets, LLC (ORIX). The transaction is subject to receipt of rating agency affirmations and certain other conditions. It is expected to close by year end. The operation is expected to be integrated at the end of the first quarter in 2006.

    The transaction expands Key's commercial mortgage servicing portfolio from $45 billion to more than $70 billion. Key will acquire the master and primary servicing rights, as well as the special servicing rights to a limited number of securitizations on which ORIX is the named special servicer. Key expects to retain all ORIX employees associated with the servicing operation.

    This acquisition positions KeyBank Real Estate Capital (KBREC) as one of the top five commercial mortgage loan servicers in the United States. At June 30, 2005, ORIX was the nation's eleventh-largest commercial mortgage servicer. It has been recognized consistently as a highly rated CMBS master, primary and special servicer since entering the business in 1994. The company services fixed-rate and floating-rate securitized commercial loans.

    ORIX is a subsidiary of Dallas-based ORIX USA Corporation, a diversified commercial financial services company. ORIX USA Corporation is the US subsidiary of ORIX Corporation, a publicly owned, Tokyo-based international financial services company listed on the Tokyo and New York (NYSE: IX) stock exchanges.

    Acquisitions have played an important role in KBREC's growth strategy, the nation's third-largest commercial real estate lender. Earlier this year, KBREC expanded its FHA lending capacity by acquiring Dallas-based Malone Mortgage, a move that elevated the lender to the top-10 FHA servicers in the U.S.

    "The acquisition of ORIX's servicing business enables us to continue our expansion in commercial mortgage servicing," said E.J. Burke, executive vice president and head of KBREC. "Our excellence in loan servicing drives significant revenue to our origination groups, so all of Key benefits either directly or indirectly from this expansion of our servicing operations and portfolio. We're pleased to welcome the experienced and well-respected team from ORIX and see them as a strategic component of our future growth."

    Jim Thompson, CEO of ORIX USA Corporation added, "ORIX USA has been increasing its emphasis on its corporate finance activities over the past several years. While loan servicing was one of ORIX's original strategic businesses in the U.S. and was very profitable, ORIX believes that the business will have better growth prospects if it is associated with the full- service real estate practice at Key. The transaction with Key is a great fit for both sides, and Key's commitment to the ORIX employees was an important factor in this decision."

    KBREC reported nearly $19 billion in annual financings in 2004. It provides construction and interim loans, mezzanine financing, private equity, commercial mortgages, investment banking and loan sales and syndications services nationwide for virtually all property types. Its 750 financing professionals serve a national client base through 36 locations in major U.S. markets. KBREC is a business unit of KeyBank National Association, a subsidiary of Cleveland-based KeyCorp, one of the nation's largest bank-based financial services companies, with assets of approximately $92 billion.

     At-A-Glance Facts

     KeyBank Real Estate Capital ORIX Capital Markets, LLC

    Annual Real Estate

     Originations $19 billion Not Applicable

    Commercial Mortgage

     Loan Servicing

     Portfolio $45 billion $26 billion

    Servicing Escrow

     Deposits $1.5 billion $0.7 billion

    Headquarters Cleveland, Ohio Dallas, Texas

    U.S. locations 36 1

    Specialty areas Construction & ORIX Capital Markets, LLC.

     Interim lending; is an active investor in

     Permanent Finance high yield corporate and

     (CMBS, FHA, Fannie real estate debt including

     Mae, Freddie Mac; commercial mortgage backed

     Life Insurance Co. securities and a highly

     Placements); rated servicer of

     Mezzanine & Equity performing and non-

     Finance; Syndicated performing commercial real

     Finance estate loans.

    This press release contains various remarks about the future expectations, plans and prospects of KeyBank Real Estate Capital and ORIX Capital Markets, LLC that constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. You are cautioned that such forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could significantly affect expected results in the future from those expressed in this press release.
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