Regions Bank is gearing up to use its acquisition of Sabal Capital Partners to advance its own agency and small-balance lending business.
The acquisition of the diversified financial services firm’s lending business bulks up Regions’ sector- and market-specific capabilities, and enables it to offer a wider range of lending products.
Troy Marek, head of project finance, told Real Estate Capital USA: “This transaction enables us to complete our multifamily product suite and enables us to really go into any market and be able to provide financing – whether it’s a $1 million or $2 million loan and up to $100 million.”
One factor in the bank’s plans is the Federal Housing Finance Agency’s move to increase loan purchase caps for both Freddie Mac and Fannie Mae. At a time when Regions is having its largest-ever year for HUD originations, with projected closings of $400 million, head of capital markets Joel Stephens said Sabal’s balance sheet, track record and infrastructure for small-balance loan servicing would only bolster the bank’s bullish outlook.
Marek said that Sabal’s recent designation as a Freddie Mac Optigo lender and servicer, coupled with Regions’ existing Fannie Mae origination and servicing licenses, would complement the bank’s small-balance capabilities.
In addition to Sabal Capital Partners’ licenses and proprietary servicing technology, Regions acquired the firm’s $5 billion servicing portfolio. The bank will take over Sabal’s flagship offices in the Los Angeles metro and New York areas. Marek added that both businesses would now operate out of 20 offices across 15 US states.
Pat Jackson, founder and CEO of Sabal, said in a prepared statement: “Allowing Sabal’s lending business to join with Regions Bank catapults it to its target position.” Jackson, chief financial officer Mike Wilhelms and chief investment officer Kevin McKenzie will remain with Sabal’s investment management business, which was not part of the sale to Regions.
The executives from Regions said the acquisition serves as another building block for growth in Regions’ capital markets division. The bank acquired First Sterling, a low income housing tax syndicator and asset management firm, in 2016.
The acquisition also enables the bank to orient itself towards middle market multifamily as it enables it to originate and service loans ranging from $1 million to around $200 million.
Region’s acquisition of Sabal’s lending business comes on the heels of brokerage firm Cushman & Wakefield acquiring a 40% stake in agency, FHA and servicing business for $500 million.