(To read more on the debt and equity markets, click here and to read more on the multifamily market, click here.)
MCLEAN, VA-Wells Fargo & Co signed a definite agreement for Wells Fargo Bank to acquire the assets of locally based Reilly Mortgage Group from a group of investors led by Stonehurst Capital LLC. The privately owned, multifamily real estate finance firm will become part of Wells Fargo Wholesale Banking's Specialized Financial Services Group.
Terms of the agreement were not disclosed. Subject to regulatory approval, the acquisition is expected to close in the third quarter of 2006.
Ed Blakey, head of Wells Fargo's Commercial Mortgage Group, tells GlobeSt.com that the acquisition will allow Wells Fargo to move beyond the short-term, floating-rate, construction-oriented multifamily financing that it has mainly provided up until now. "Wells Fargo does about $35 billon in commercial real estate financing, including multi family production." But of that amount, multifamily consists of only $3.5 billion to $4 billion. To expand into permanent debt products, he says, an institution would need a fully dedicated team to have a material impact. "Most of our people are generalists."
Wells Fargo intends to use Reilly's platform to move into large transaction, permanent debt lending. It has 30 national offices through which Reilly products will be sold to Wells Fargo customers, Blakey says. "In some cases we will be looking to expand Reilly's product to areas where they [don't have as much of a presence] such as the West Coast and in areas where we have a large customer base."
Reilly Mortgage provides financing to multifamily properties through the lending programs of Freddie Mac, Fannie Mae and FHA; in fact it was the first mortgage banker approved under Fannie Mae's Delegated and Underwriting Servicing Program in 1988 and also one of the first companies approved as an FHA MAP (Multi-Family Accelerated Processing) lender. It originates over $1.5 billion in new loans a year and services a portfolio of $10 billion.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
