Chicago mortgage brokers join forces

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Chicago mortgage brokers join forces

By: Alby Gallun
Crain’s Chicago Business

Two well-known Chicago deal-makers, Sean Conlon and Neil Freeman, have combined their real estate financing businesses, betting they can grow faster together in a strong market.

Freeman's firm, Aries Capital, has merged its mortgage banking group into Conlon Capital, Conlon's financing firm, creating a bigger boutique firm in an industry dominated by giants like CBRE, Jones Lang LaSalle and HFF.

The move will allow Freeman, 61, to step back from the day-to-day management of his business and allow the firms to offer a fuller range of expertise and services than they could apart, according to the two executives.

"In order to create the most value for our company, I thought that we needed to grow, and needed some younger blood and some synergies in order to grow," Freeman said.

The two firms complement each other well, he said, noting that Aries, which he founded in 1991, has focused solely on financing properties, whereas Conlon Capital handles sales as well. Freeman expects property sales to generate financing leads. Aries also is strong in the hotel and hospital sectors, while Conlon Capital is strong in multifamily, Conlon said.

Both firms act as intermediaries, charging fees or commissions for arranging deals. Aries generated more than $300 million in deals last year and more than $500 million in 2015, Freeman said. Conlon estimates that his firm did about $250 million in loan originations last year.

The combined business, part of Chicago-based Conlon & Co., now employs about 10 people, Conlon said. But he has ambitious growth goals, aiming to build it into one of the five biggest commercial property financing businesses in the country.

Conlon, 47, declined to disclose terms of the transaction. Two former Northern Trust executives, Rushi Shah, who will be chief executive officer, and Tom Reckley, chief operating officer, will run the business.

DIFFERENT STYLES

The deal brings together Conlon, a voluble Irishman who co-hosts a reality television show, “The Deed,” that premieres in March, with Freeman, a respected real estate veteran who cuts a much lower profile.

"I like his style,” Conlon said. “He's old-school. He doesn't suffer fools gladly."

The success of the business will largely depend on the direction of the commercial real estate market, which has been on a hot streak, fueled by the expanding economy, low interest rates and free-flowing lending markets.

"There obviously are a ton of financing opportunities right now," Conlon said. “There is a lot of money to be lent out."

But the market is several years into its current up-cycle, causing some observers to wonder how much longer the boom can last. The Conlon unit also faces tough competition from the big full-service real estate firms, though Conlon thinks its small size is an advantage.

"We are absolutely more entrepreneurial—that's our edge,” he said.

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