GM Sells Stake in Commercial Mortgage Unit

While GM's auto business has suffered under the weight of soaring health care, pension and materials cost -- and its market share has dwindled -- its financing arm has benefited from rising real estate prices and low interest rates.

The result has been a windfall for GMAC's mortgage units. In the second quarter, GM's global automotive operations lost $948 million, while its financing arm earned $816 million. Still, even GMAC saw its earnings decline from last year's $846 million in the second quarter, but its mortgage unit has been a consistent grower. While its results are not yet available for the second quarter, the commercial mortgage group earned $63 million in the first quarter, up from $33 million in the year-ago period.

There is no indication that credit ratings for GM or GMAC will be helped if the commercial mortgage unit succeeds in getting a separate credit rating, because this move was widely expected before the company was hit by downgrades. However, Simonetti said this deal would ultimately benefit GM shareholders.

"This business has been a consistent grower for us, and GM shareholders will still be able to participate in that growth," Simonetti said, though she acknowledged that their participation would be reduced by 60% as a result of the sale. "A smaller percentage of a business that's thriving is better than 100% of a business that is constrained from growing."

Shares of GM closed down 13 cents, or 0.4%, to $36.40.

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