Towle Financial Services, a commercial real estate mortgage banking firm with offices in Minneapolis and Detroit, is merging into Bellwether Enterprise Real Estate Capital based in Cleveland.
As part of the merger agreement, Towle’s executive team will receive an equity stake in Bellwether, and Towle’s 11 employees will remain with the company. Towle will be the third-largest shareholder of the combined firm. They’ll continue doing business out of their Minneapolis and Detroit offices but now will be part of a larger platform that includes 16 national offices.
Both firms offer boutique-style financial services to commercial real estate developers. Towle offers lending for apartments, student housing, office/medical, industrial, self-storage, retail, senior assisted living and other properties.
Bellwether will add approximately $400 million in annual loan volume and $1.4 billion in servicing. The combination will boost Bellwether’s total loan volume to approximately $2.5 billion and $8 billion in servicing.
Mark Vannelli, principal of Towle, says the firm will maintain the 105-year-old Towle brand as long as possible but may eventually adopt the Bellwether Enterprise name. “We are excited about our merger,” Vannelli said. “Strategically we think this makes a lot of sense going into the future.”
Towle was founded in Minneapolis in 1909, but the commercial mortgage banking business has been through a number of ownership changes in the past 20 years. Vannelli and Dan Mott have helped the Towle brand survive those ownership changes. The mortgage banking business was split from Towle Real Estate in the 1990s, acquired by Wells Fargo in 2003; and in 2010 Vannelli, Mott and others reacquired Towle from Wells Fargo and ran it as an independent private company for last five years.
The latest ownership structure will be unique. Enterprise Community Partners of Baltimore, a national nonprofit that develops affordable housing, is the largest shareholder of for-profit Bellwether Enterprise Real Estate Capital. Dividends from Bellwether are used to support the affordable housing initiatives of Enterprise Community Partners.
Vannelli and Mott believe Towle and Bellwether pair up well culturally, offering similar services, and with principals on both sides that have deep industry experience in commercial real estate mortgage banking. “The Enterprise Community component resonates with us,” Mott said.
The deal with Bellwether is expected to close in September; terms were not disclosed.