Banking: Distressed Assets
Playing in the Distressed Field
Since 2009, Newport Beach, Calif.-based Sabal Financial Group has become one of the biggest investors in Florida commercial real estate loans and property. The firm has nearly $6 billion in troubled and performing assets under management, as measured by unpaid principal balance, with more than $1 billion in Florida — "our biggest market," says Sabal founder and CEO Pat Jackson.
Sabal, which has offices in West Palm Beach and Orlando, buys from banks in bulk, picking up portfolios of property, commercial real estate loans and land acquisition, construction and development loans for its investors. It's also lending — bridge loans for commercial real estate — and it opened an office in Winter Springs in June to originate loans for home builders and land developers in Florida. It also acts as an adviser to real estate loan investors and to banks on mergers and acquisitions.
Jackson says banks should sell their distressed assets, rather than hold out for the last penny on them so they can focus on the business of making performing loans. Like BBX Capital's Alan Levan, he says firms such as his can be more flexible than a regulated bank in handling troubled assets, including taking ownership of a property and holding it to await a good return. "We have any number of creative solutions we can come up with," Jackson says. "A bank has only a limited number of solutions they can pursue."