Newport Beach-based distressed-debt specialist Sabal Financial Group LP plans to expand into lending and boost hiring with money from the sale of a minority stake to Oaktree Investment Holdings LP.
Sabal currently offers underwriting on commercial mortgage-backed securities, valuations, and credit and acquisition consulting, among other services for banks and investors.
It manages a handful of debt portfolios that total more than $2 billion.
Oaktree Investment is part of Los Angeles-based Oaktree Capital Management LP, one the world’s largest distressed-debt investors.
Oaktree Capital had more than $80 billion in assets under management through March, according to a filing for a $100 million initial public offering last month.
Terms of its deal with Sabal were not disclosed.
Sabal plans to start a nationwide lending operation for commercial real estate and other assets by the end of the year, according to Chief Executive R. Patterson Jackson.
“We definitely see that as a growth area,” he said. “We’re actively working on it right now.”
Sabal, formerly known as Milestone Asset Resolution Company LLC, was established in 2009 during the teeth of the recession to value and manage soured loan portfolios for struggling and failing banks.
Distressed banks “were ill-suited to manage this,” Jackson said.
In the last two years the company has performed more than 85 bank valuations and opened offices in Pasadena, Chicago, Miami, Washington D.C., New York and Greenville, S.C.
Oaktree Investment was among the first to invest in Sabal portfolios in September 2009.
Sabal now targets portfolios with balances in excess of $50 million, with an average loan balance under $10 million.
“We think there’s a lot more distressed debt coming into the marketplace and can build this business pretty dramatically,” Jackson said.
It’s aiming to hold each portfolio for five to seven years, depending on the market, according to Jackson. He said he sees underlying land values as a good long-term investment on some types of assets.
Expansion
The equity investment from Oaktree Capital will allow Sabal to expand its employee count and space near John Wayne Airport.
The company employs about 40 people and is looking to add about 10 asset managers to its current staff.
Sabal was launched through personal investments from Jackson and Milestone Merchant Partners LLC, a Washington D.C-based investment bank.
Indymac Vet
Jasckon was a former chief executive at Indymac Commercial Lending Corp., part of Pasadena’s Indymac Bank, which underwent a historic collapse in 2008.
Indymac Commercial continued to fund loans after its parent was put into receivership by the Federal Deposit Insurance Corp. It took no credit losses under Jackson and its portfolio eventually was sold, he said.
