Angel Oak Commercial Lending has acquired a controlling interest in lender Cherrywood Mortgage in order to strengthen its focus on small-balance commercial lending.
Terms of the transaction were not disclosed.
Cherrywood and Angel Oak Commercial Lending specialize in loans with a maximum balance of $5 million. This is a market that was historically served by community banks, but more recently regulatory restrictions have dampened their involved in the space, opening up opportunities for other players.
"Many individuals and companies with great ideas for commercial real estate projects often find themselves stuck due to limited financing options," said Cherrywood CEO Bill Komperda in a press release. "Both Cherrywood and Angel Oak understand this problem."
Cherrywood will serve as Angel Oak Commercial Lending's wholesale small-balance commercial lending arm.
"Cherrywood has long been regarded as a top firm in the space with an extensive network of brokers throughout the country," said Ben Easterlin, managing director of AOCL.
Angel Oak Cos. launched its commercial lending unit last month. The parent company also has lending affiliates that specialize in serving the market for single-family home loans made outside of the bounds of the Qualified Mortgage safe harbor from ability-to-repay liability.
"Angel Oak has an established track record of providing financing in constrained and dislocated markets and sees commercial lending and the next extension of this line of thinking," Easterlin said in a separate press release about AOCL's launch.
Broker-sourced small-balance commercial loans typically become more popular when single-family originations are less accessible as they are in today's market. When regulation compressed home loan volumes in 2014, for example, there was a surge of interest in small-balance products.