Smith, Graham & Co. Investment Advisors acquired the residential mortgage team from alternative investment manager Five Mile Capital Partners, confirmed Gerald Smith, Smith Graham chairman and CEO.
Financial terms of the deal were not disclosed. The deal closed at the end of February.
The five-person team led by Brian Tortorella, managing director, moved to Smith Graham's New York office from its Connecticut office. The unit has been rebranded as “mortgage and real estate debt alternatives.” Since the transition, Smith Graham has added additional operational support to assist the team.
The acquisition was made to both enhance Smith Graham's fixed-income offerings and allow the firm to provide alternatives capabilities. Although Smith Graham has never offered residential whole loans or real estate before this deal, it has offered mortgage-backed securities since its inception in 1990.
“We have been strategizing to move into the alternative space for the last two to three years,” said Mr. Smith in a phone interview. “The challenge has always been finding the right partner, the right cultural fit and the right strategy.”
Smith Graham President Donna Sims Wilson added in the same telephone interview that she knew Mr. Tortorella as a former client, which is how Smith Graham became familiar with Five Mile Capital Partners' residential mortgage team.
“We thought it was important to expand the capabilities of our firm to meet the needs of our clients and prospects in a low-yield environment. This (acquisition) was an excellent opportunity for us to move in the alternative space,” said Ms. Wilson.
Mr. Tortorella will work closely with Mr. Smith and Ms. Wilson.
The original value of the residential mortgage team's loan portfolio transitioned to Smith Graham was approximately $578 million.
Smith Graham is a Houston-based institutional fixed-income and equity investment management firm with $6 billion in assets under management.