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Thursday, Aug 11, 2022

Regions Bank Buys Sabal Capital Partners

Alabama’s Regions Bank is acquiring Irvine-based Sabal Capital Partners for its “industry-leading technology platform” that makes small loans for commercial real estate properties and apartment complexes.

“Sabal’s industry-leading technology platform and its leadership in the small-balance commercial real estate arena make the company a great match for Regions,” Joel Stephens, head of Capital Markets for Regions Bank, said in a statement last week.

“Our current affordable and large-balance Fannie Mae and Freddie Mac products, combined with Sabal’s small-balance agency capabilities, will allow Regions to offer real estate solutions across the full spectrum of agency offerings,” he said.

Sabal, which offers loans from $1 million to $100 million, is one of the largest originators of Fannie Mae and Freddie Mac small-balance commercial real estate loans and has a growing presence in non-agency commercial mortgage-backed securities loan origination.

Regions plans to incorporate Sabal into its growing Real Estate Capital Markets division.

Regions will maintain Sabal’s flagship offices in Irvine and Pasadena, as well as New York City.

When combined with Regions Real Estate Capital Markets’ existing facilities, the combined platform will have 20 production offices nationwide.

“Regions is a good fit not only because of the range of services the bank offers but also because their culture is very similar to ours,” Sabal Chief Executive and founder Pat Jackson told the Business Journal. “Regions prioritizes a seamless customer experience and prudent risk management. That’s an ideal complement to Sabal’s track record of innovation and superior service.”

OC and Stone Point

Jackson himself will not be going to Regions Bank, which is the principal banking subsidiary of Regions Financial Corp. (NYSE: RF), a publicly traded firm based in Birmingham with a $20 billion market cap and $156 billion in assets.

Regions’ agreement is specific to the lending and servicing segments of Sabal’s business and does not include Sabal’s investment management business, which will remain with the sellers, including investment funds managed by Stone Point Capital LLC.

Jackson and Mike Wilhelms, Sabal’s chief financial officer, will remain with the investment management business while other members of Sabal’s leadership team will join Regions.

Financial terms of the sale were not immediately disclosed.

Stone Point, a financial services-focused private equity firm based in Greenwich, Conn., has other ties to OC.

Earlier this year, Stone Point and Insight Partners led a $6 billion buyout of Irvine-based real estate data firm CoreLogic Inc. after an eight-month long proxy battle.

Stone Point has invested in other companies with OC ties, including Alliant Insurance Services, employment screener HireRight, which last week filed plans for an IPO, and corporate restructuring service provider Stretto.  

Stone Point has raised and managed seven private equity funds—the Trident Funds—with aggregate committed capital of approximately $19 billion.

Sabal Capital was acquired in 2018 by the Trident VII funds managed by Stone Point.

$6B Financing

Jackson, who was the founder and CEO at Indymac Commercial Lending Corp., part of Pasadena’s Indymac Bank, began Sabal Capital in 2009 to acquire and manage portfolios of distressed debt from struggling banks amid the Great Recession.

The company said it acquired and managed over $8 billion of distressed CRE loans and assets following the global financial crisis.

In 2011, it sold a minority stake to Oaktree Investment Holdings LP, one of the world’s largest distressed debt investors.

In 2012, Sabal started a commercial real estate lending program to offer bridge loans starting at $5 million.

Sabal Capital has originated nearly $6 billion in financing across the U.S. since inception and maintains a current servicing portfolio of nearly $5 billion.

The company serves clients through a proprietary platform it calls SNAP to optimize lending in as short as 30 days.

Sabal’s products include Fannie Mae Small Loans, Freddie Mac Optigo Small Balance Loans and Freddie Mac Optigo Conventional Loans.

The acquisition is expected to close in the current quarter.

Beekman Advisors represented Regions in connection with the Sabal Capital Partners transaction, and Davis Polk & Wardwell LLP served as Regions’ legal counsel. Wells Fargo Securities LLC served as financial advisor to Sabal Capital Partners, and Kramer Levin Naftalis & Frankel LLP served as Sabal’s legal counsel. 


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