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Wells Fargo WFC.N agreed on Tuesday to sell its non-third-party managed commercial mortgage business to Trimont, making the company the largest manager of securitized debt in the U.S. commercial real estate sector.
Founded in 1988, Trimont, which primarily serves non-bank and alternative lenders, will manage $640 billion in loans in the United States after the deal closes.
According to Jim Dunbar, chairman of Trimont and partner at Värde Partners, this “strategically important transaction” will enable Trimont to become a key partner for real estate capital providers.
Wells Fargo, which has stepped up efforts to focus on its core businesses, fell marginally in the latest session. The stock is up about 15% year to date.
“This transaction is consistent with Wells Fargo’s strategy to focus on core businesses for our consumer and business clients,” Kara McShane, executive vice president and head of Wells Fargo Commercial Real Estate, said in a statement.
“We remain committed to our leading commercial real estate business,” added Ms. McShane.
Financing for the transaction will be provided by Värde Partners, an alternative investment firm, which has purchased and owned Trimont through certain funds since 2015.
This transaction comes at a time when the US banking sector is under increasing pressure due to high interest rates and difficulties in the housing market. Banks also suffered a sharp fall in valuations after the pandemic due to an increase in vacant offices.
The transaction, the amount of which was not disclosed, is expected to close in early 2025 subject to certain conditions and will allow Trimont to manage more than $715 billion in commercial real estate loans in the United States and worldwide.
Wells Fargo Securities acted as the bank’s exclusive advisor. JP Morgan Securities acted as an advisory bank along with Goldman Sachs and provided additional advisory services to Trimont and Värde Partners.
