Wells Fargo Sells Most of Its Commercial Mortgage Servicing Business
This deal would make the buyer the largest CRE loan servicer in the nation.
Trimont, a global commercial real estate loan services provider, has agreed to buy Wells Fargo’s non-agency third-party Commercial Mortgage Servicing business. The deal, backed by Värde Partners, will make Trimont the largest loan servicer in the U.S. commercial real estate industry.
Once the transaction closes, likely in early 2025, Trimont will manage a combined $640 billion of loans in the U.S., or about 11 percent of the nation’s CRE lending market. That total rises to more than $715 billion when international commercial real estate loans are included.
Funding for the transaction will be provided by Värde Partners. The global alternative investment firm has owned Trimont through certain funds since 2015.
READ ALSO: Have Cap Rates Peaked?
Trimont primarily serves non-bank and alternative lenders, while CMS specializes in securitized debt products including CMBS conduit, SASB, CLOs and Freddie Mac-K series. The acquisition will enable the firm to offer comprehensive servicing across all non-bank CRE lending structures, including master servicing.
CEO Bill Sexton noted in prepared remarks the businesses are highly complementary and combining them will allow Trimont to provide comprehensive service offerings to the increasingly sophisticated CRE lending market.
Upon closing, Trimont will be the single largest loan servicer in the CRE industry, moving up from 10th place last year, according to the Mortgage Bankers Association. When MBA released the 2023 year-end ranking of commercial and multifamily mortgage servicers’ volumes in February, Wells Fargo topped the list with $669 billion in master and primary servicing, while Trimont had only $144.7 billion in servicing.
PNC Real Estate/Midland Loan Services followed Wells Fargo with $646 billion, KeyBank National Association ($465 billion), CBRE Loan Services ($410 billion) and Berkadia Commercial Mortgage LLC ($405 billion). MBA noted Wells Fargo serviced 39,759 loans in 2023 while Trimont serviced 2,722 last year.
Wells Fargo strategy
Wells Fargo, the fourth-largest U.S. bank, will continue servicing Fannie Mae and Freddie Mac loans and loans held on its balance sheet.
Kara McShane, executive vice president & head of Wells Fargo Commercial Real Estate, said in a prepared statement the sale of the CMS business is consistent with the bank’s strategy of focusing on businesses that are core to its consumer and corporate clients.
McShane stated the bank remains committed to its market-leading CRE business and will continue to provide a broad suite of lending, advisory and capital markets capabilities while leveraging the franchise to grow its corporate and investment bank. Wells Fargo currently has approximately $1.9 billion in assets.
Bloomberg reported the planned sale of the CMS business is another move to reduce some of the bank’s real estate lending operations. Last year, Wells Fargo scaled back its home-lending business as well and The Wall Street Journal noted those moves come as the bank tries to grow other aspects of its business, including credit cards.
Transaction advisors
J.P. Morgan Securities LLC served as financial advisor, with Goldman Sachs & Co. LLC providing additional advisory services. Kirkland & Ellis, Cadwalader, Wickersham & Taft LLP and Trilegal served as legal advisors to Trimont and Värde Partners.
Wells Fargo Securities LLC served as exclusive financial advisor to Wells Fargo, while Wachtell, Lipton, Rosen and Katz provided legal advisory services.
You must be logged in to post a comment.