CIM Group sues Cantor Fitzgerald over CMBS fees

CIM Group has reportedly sued Cantor Fitzgerald, alleging that the latter firm collected $37.3m in excess fees through Cantor Commercial Real Estate (CCRE), a top CMBS shop that the joint venture formed in 2010.

Over the past year Cantor Fitzgerald used CCRE as “a vehicle for unauthorized self-dealing in flagrant disregard of its obligations” under an agreement binding the firms under Delaware law, CIM claimed in a lawsuit filed in Delaware state court.

Executives representing the CCRE general partnership denied the allegations in a letter sent to CIM officials today, stating that the fees are justified for services including credit analysis and the pricing of the loans, according to the WSJ. All of those fees were outlined in reports sent to CIM employees, they claimed.

“Your allegations are premised on your fundamental misunderstanding about the business and the partnership,” the executives wrote. “The partnership agreement explicitly provides that the Cantor Fitzgerald general partner will engage its affiliates to provide underwriting and financial advisory services at competitive market rates.”

Cantor Fitzgerald and CIM formed Cantor Commercial Real Estate in August of 2010, offering fixed and floating rate mortgages and mezzanine loans, with CIM providing $350m in backing for a 50% stake. Cantor owns 10% to 11%, running the day-to-day operations for fees.

CCRE has consistently ranked among the top CMBS lenders over the last several years, having originated more than $5bn in CMBS loans in 2014. CCRE is co-headed by Anthony Orso and Michael Lehrman, former managing directors and co-heads of Credit Suisse’s Real Estate Direct Group.

CIM Group declined to comment further. Cantor Fitzgerald did not immediately respond.