Sabal Investment Holdings has made several hires and promotions as the investment management company sees the ability to tap into opportunities that may emerge from rising interest rates and general economic and geopolitical uncertainty.
The manager is investing via three key verticals: workforce housing, opportunistic investing and its lender solutions group. “We have been a participant in the commercial real estate investment market through many cycles as an investor, which is the core of what we have always been, and we see similar opportunities emerging,” said Pat Jackson, founder.
To this end, Sabal last week promoted Drake Ayres to managing director of structured credit and Barton Vaughn to director of structured credit. It also hired Michael Cook from the AFL-CIO Housing Trust as managing director of lending solutions.
Finally, the manager brought on Tal Seder and Jonathan Mirkin as managing directors of opportunistic investments. The duo joined from a firm they launched, MLN Partners, with Seder also holding senior posts at firms such as Lone Star Funds and Mirkin having stints at Kennedy Wilson and Walton Street Capital.
The hires and promotions will help the firm to adapt quickly to today’s disrupted environment, as Sabal will be able to identify, underwrite, structure and close credit, equity and lending investments, Jackson noted.
“Sabal is trying to be responsive to what is going on in the market at a very interesting time,” Jackson said. “We have one part of the market – workforce housing – that continues to perform fantastically well because of the dynamic in supply and demand. Our structured credit will be about participating in opportunities in that part of the market.”
While the current rising rate environment is moving some potential homeowners into longer-term renting, it is also creating other opportunities.
“In the opportunistic space, there is certainly dislocation between liquidity and performance. Interest rates are going up dramatically on the back of covid, properties that were already challenged are even more challenged, and we can participate in the commercial real estate market in a similar way that we did during the GFC,” Jackson continued.
Opportunistic investment is where the skills and relationships of Seder and Mirkin will best come into play, Jackson said, noting the firm already had an existing relationship with the duo.
“We said, ‘Why don’t you just join the Yankees here and win the pennant together instead of doing it separately?’” Jackson pointed out. “We are excited about their contacts in the market, their pedigree and how they participated in the GFC just like we did and see opportunities the same way we do.”
Finally, the lender solutions group will meet the capital needs of their clients via a bridge loan-type structure. In many cases, these opportunities will be around fully performing real estate on which a borrower doesn’t want to take out a longer-term mortgage, with the idea that rates could come down. Michael Cook will lead the effort.
“I am not a lender and don’t want to be one, but we can use our capital and expertise to enable loan creators to use our capital for opportunities,” Jackson said. “A lot of this could happen around fully performing real estate where the borrower doesn’t want to take out a mortgage right now, especially with where the two- and 10-year Treasury yields are right now – it’s an inverted yield curve.”
Whether or not the expected recession materializes, Sabal believes opportunities will arise. “We may see a period where we have a roaring economy, but JV equity and other opportunities will come along because a sponsor’s business plan didn’t work out or they exhausted their resources after keeping a sound deal afloat through covid. There is going to be a long tail end of that and that is where I believe we will be able to participate,” Jackson said.