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Tuesday, 13 November 2012

Sabal Financial Launches Bridge-Lending Program

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Commercial Real Estate Direct Staff Report

Sabal Financial, an affiliate of Oaktree Capital Management that has been an active buyer of distressed mortgages, is stepping into the bridge-lending arena.

The Newport Beach, Calif., company will pursue the middle market. That is, loans of between $5 million and $20 million. Its loans will be relatively short-term, with terms of two to three years, with possible extensions, against properties that are best described as being value-add opportunities. Loans will typically require a 1 percentage point origination fee and similar exit fee and will carry floating rates, subject to Libor floors.

To get the program in gear, the company has hired James M. Martin as director of its commercial real estate bridge-lending group. He is a 25-year veteran of the commercial real estate finance arena and most recently ran a brokerage company, Martin Real Estate Group, in California that focused on arranging financing and investment-sales transactions. He previously was with Picerne Group and Orix USA.

Initially, Sabal will focus on writing loans of $5 million to $10 million each against properties in four Western states: Arizona, California, Oregon and Washington. It is in the process of building an origination team and looks to expand its presence nationwide.

The $5 million-$10 million space is one in which relatively few lenders compete. It will provide capital to fund the acquisition of underperforming properties that can be turned around, recapitalizations and discounted pay-offs of loans.

Its aim is to write loans that amount to about 75 percent of a property's stabilized value. That means they can amount to as much as 90 percent of a property's cost, before it's stabilized.

"Every loan we write is customized," Martin said, explaining that most will have some sort of future funding mechanism, which takes advantage of the sophisticated servicing systems that Sabal developed specifically for its workout practice. "We listen to the sponsor's business plan and develop a loan structure" that would facilitate the plan's execution, he said.

The lending business "is a natural extension of our core business" of buying and working out distressed loans, Martin said.

The company, previously known as Milestone Asset Resolution, has some $4 billion of assets under management. It's been among the biggest buyers of distressed assets through FDIC's structured-offerings program, in which the agency sells stakes in large portfolios of failed-bank assets.

It made its investments in partnership with Oaktree, which subsequently acquired a non-controlling stake in the company. Sabal was founded three years ago by R. Patterson "Pat" Jackson, the former founder and chief executive of IndyMac Commercial Lending Corp.

In underwriting its loans, Sabal will focus on property location, the turnaround plan and on whether a take-out loan could be had when the property is stabilized.

Comments? E-mail Orest Mandzy, or call him at (267) 247-0112, Ext. 211.



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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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