SilverLeaf Grabs $16M Portfolio of Non-Performing Loans

ATLANTA-SilverLeaf Financial, a private equity firm best known for buying distressed debt, is taking full advantage of the still-turbulent market. The company just acquired six non-performing notes secured by multifamily complexes in the metro Atlanta area.

The aggregate unpaid balance of the notes totals $16.61 million. The firm disclosed that depressed market conditions coupled with overleverage factored into the default. The underlying collateral spans 751 apartment units. The subject loans originated between 2002-2008, for the purpose of acquiring the complexes.

“The notes were attractive to us based on their asset class—multifamily—geographic location, default circumstances, occupancy levels, physical condition and our acquisition basis,” Campbell Dosch, a spokesperson for SilverLeaf, tells GlobeSt.com. “We are not strictly targeting the Southeast, in fact we target all regions of the US with exception to Alaska and Hawaii. The majority of our notes have had their collateral located in the West and Midwest.”

Still, the Southeast market is an attractive hotbed of potential. The region is still seeing increases in distressed debt volume. Both CMBS trusts and US banks have resolved a comparably small portion of their distressed debt from a year ago.

“Our investment platform incorporates a strategy in which we acquire loans and loan portfolios that are priced below the intrinsic value,” Shane Baldwin, a principal of SilverLeaf, said in a statement. “In the event we exhaust our work-out or restructuring options, the hope is we own the real estate at a very good value.”

This latest purchase brings SilverLeaf Financial's acquisition total to $647 million of face value non-performing notes since the company launched. SilverLeaf plans to purchase additional loans that match its strategy of locating, underwriting, negotiating and purchasing non-performing first trust deeds secured by commercial real estate from financial institutions at a comfortable cost basis.

“The stock market is not an influencing factor to our acquisition strategy at all,” Dosch says. “That’s not to say the stock market or other financial markets don’t affect real estate values directly or indirectly for that matter. Our distressed debt market today is a result of overleveraged debt that has quickly lost value over the past few years and is now maturing and the borrowers cannot refinance or sell because they are under water.”