Sabal Launches Builder Lending Program
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NEWPORT BEACH, CA-Sabal Financial Group L.P., a diversified financial-services firm, has launched a new builder lending program in a strategic move to offer non-recourse construction and acquisition and development loans to established homebuilders in California. The firm has hired Tom Farrell to lead the division; Farrell was formerly Bank of America’s top executive in its homebuilder division and has a 26-year background in construction lending.
Sabal is filling a void in the lending market left by the departure of traditional capital sources, namely commercial banks, and comes at a time when homebuilders are actively pursuing quality development opportunities. As a non-regulated lender, the firm is unique in its ability to provide non-recourse construction and A&D loans secured with completion-only guarantees. Non-recourse loans are highly appealing to developers, especially given the difficulty over the past several years in accessing construction loans.
“Sabal’s builder lending program will help provide construction and A&D loans for mid-sized residential projects in California, and in doing so will contribute to the ongoing economic recovery in the new home market,” said Sabal’s CEO Pat Jackson in a prepared statement. “Experienced homebuilders with sound projects need a reliable construction lender that is responsible and knows how to deliver creative loan structures. High-quality residential development opportunities are being competitive bid by homebuilders, and certainty of execution is critical.”
Jackson tells GlobeSt.com that with the program the firm will focus on serving the experienced middle-market homebuilders of for-sale homes in the California, Washington and Oregon markets, making it truly a West Coast-focused initiative. The group will target entry-level to luxury residential projects, including detached single-family homes, townhomes and condominiums, and the firm expects to lend in the $3-million to $35-million range, providing loans of up to 80% of project cost or 75% of value, flexible pricing and terms of 12 to 36 months for qualifying projects.
Jackson adds that the program is a “great next step for Sabal as we expand our company. It leverages the expertise of our team and allows us to participate in a recovering market where the banks are not participating today. It will also serve a real need as things start to improve.”
According to Jackson, Farrell, who joined the firm earlier this year, was chosen to head the program due in part to his long-standing focus on West Coast builders and his knowledge and experience in that side of the business. “Tom has long relationships in the marketplace. He has seen multiple cycles and knows what to look out for,” Jackson tells GlobeSt.com. “He’s a great fit for our team. Marry that with the real estate expertise we have on staff, and we have a compelling offering for builders getting back into the market.”
In addition to Farrell, Sabal has several former homebuilders on its staff, a key component in the group’s ability to underwrite and structure residential construction financing. “Sabal’s builder lending program is well positioned to create funding solutions for homebuilders with projects that exhibit sound feasibility, quality design and have a defined competitive market edge,” said Farrell in a prepared statement.
In January, as GlobeSt.com previously reported, Sabal acquired a $204 million portfolio of performing and non-performing loans consisting mainly of commercial and residential acquisition, development and construction loans. The acquisition was part of a portfolio sale mandated by the FDIC for the assets of more than 50 recently failed banking institutions throughout the U.S. According to Jackson at the time, this was Sabal’s fourth FDIC transaction, and he pointed out that the firm was currently “bidding on others.”
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