Trimont Buys $475B CRE Loan Servicing Portfolio From Wells Fargo

Trimont will acquire Wells Fargo’s non-agency commercial mortgage servicing business, becoming the nation’s largest loan servicer.

Jordan B. & Han-Gwon Lung
August 22, 2024

Together with

Good morning. Wells Fargo is offloading most of its commercial mortgage servicing business to Trimont, boosting the Atlanta firm from 10th to 1st in the U.S.

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Market Snapshot

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10Y Treasury

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*Data as of 8/21/2024 market close.

Changing of the Guard

Trimont Buys Wells Fargo Debt Portfolio to Become Largest U.S. Commercial Loan Servicer

Trimont is on track to become the largest commercial loan servicer in the U.S. after acquiring a major portion of Wells Fargo’s loan servicing business.

What happened: Wells Fargo, the top commercial mortgage servicer in 2023 with $669 billion in managed debt, is selling its nonagency, third-party commercial mortgage servicing unit to Trimont. This deal will catapult Trimont’s U.S. loan servicing portfolio to $640 billion, commanding 11% of the market and expanding its global reach to $715 billion in serviced loans across 72 countries.

Zoom in: Set to close in early 2025, Bloomberg reported that Trimont will pick up servicing for about $475 billion of loans. The acquisition will add 710 Wells Fargo employees to Trimont, nearly doubling its debt servicing team to over 1,100, primarily in Charlotte, North Carolina. Before this deal, Trimont managed 2,696 loans and real estate-owned properties.

From the horse’s mouth: Trimont CEO Bill Sexton said, “Trimont is very strong in the nonbank lending sector. The division we’re acquiring out of Wells Fargo is very focused on the capital markets and securitization market. “Putting these two businesses together now, we think, positions our business really well for what is coming in this stage of the cycle.”

Shifting focus: Wells Fargo is refocusing on more profitable areas like loan origination and securitization, having issued $15.2B in CMBS this year, up from $2.2B in 2023. Even after scaling back its $475 billion servicing portfolio, the bank faces a 5% rise in nonperforming assets, mainly in office properties.

➥ THE TAKEAWAY

The bigger picture: As $2 trillion in debt matures over the next three years, Trimont, owned by Värde Partners, is strategically positioned to capitalize on the surge in demand for loan services, particularly in CMBS and CLOs. Meanwhile, Wells Fargo continues its strategy to narrow its focus on core businesses, marking a shift away from its once-dominant real estate lending ambitions.

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✍️ Editor’s Picks

Rising tide: CBRE’s Lending Momentum Index rose in Q2 after a year, boosted by industrial and multifamily loans and data center demand.
Property scandal: The family behind Jordache jeans and the Setai in Miami is being subpoenaed in connection with the $60M Nightingale real estate scandal involving CEO Elie Schwartz.
Raise capital faster: In just two quarters Helu Capital was able to increase their equity raised by 300% thanks to Agora. (sponsored)
Expansion: Warner Bros. commits $8.5B to a long-term lease for a new 34-acre studio in Nevada, pending approval of a film tax credit program.
Reimagining wealth: Americans now view a net worth of $2.5M as the benchmark for being considered wealthy, up 14% from $2.2M last year.
Growing beyond Dallas: Smaller Texas markets like Sherman-Denison saw significant job growth with 2.6% higher employment and 5K new semiconductor jobs.

🏘️ MULTIFAMILY

Sunny capital: Atlanta’s Cortland, managing 80K+ homes nationally, raised $1.5B in private equity funding and will target Sunbelt investments.
Multifamily showdown: Dallas-Fort Worth vies with NYC in multifamily construction, trailing by only three units, with 32.9 KSF units planned.
Rising rents: The Inland Empire multifamily market is rebounding with investment sales doubling in Q2, driven by strong occupancy rates.

🏭 Industrial

Downturn drama: Ford (F) cancels its highly anticipated large electric SUV, anticipating $1.9B in charges, as the automaker shifts focus to hybrid SUVs due to low EV demand.
Billions flow in: Dermody Properties raised $1.04B for DPIF IV, matching its predecessor’s funding and attracting existing and new investors for logistics investments.

🏬 RETAIL

Discount shopping: Target Corp.’s (TGT) lower prices on essentials boost sales, with comparable sales up 2%, highlighting consumers’ focus on value.
Regulatory roadblocks: Circle K’s parent company, Canada’s Alimentation Couche-Tard, seeks a 7-Eleven (SVNDY) acquisition amid regulatory uncertainty in 19 countries.
Creekside venture: Google (GOOGL) partners with Jamestown for a retail development in San Jose’s Downtown West project, investing $99M since 2016.
Legal drama unfolds: In a legal battle, bankrupt Steward Health Care sued Medical Properties Trust (MPW) for interfering with hospital sales.

🏢 OFFICE

Rusty silicon: Distressed SF offices are seeing up to an 84% loss in value, leading to a record 37% vacancy rate in the city.
Rising high: Allen, TX, will see a new nine-story office tower development at One Bethany North, costing over $100M.

🏨 HOSPITALITY

Luxury lodging leap: Hyatt Hotels Corp. (H) is set to acquire Standard International for up to $335M, strengthening its lifestyle lodging market presence with new brands.
Hotel refi makeover: Loews Corporation (L) secured a $305M loan to refinance its Miami hotel, investing $99M in renovations over the past 8 years.