Regions Bank continues expanding its offerings with the planned acquisition of Sabal Capital Partners LLC, a top originator of Freddie Mac and Fannie Mae small-balance commercial real estate loans with a growing commercial mortgage-backed securities loan origination presence. Regions plans to incorporate Sabal into its Capital Markets division.
Terms of the definitive agreement to acquire Sabal’s lending and services segments were not disclosed. The acquisition is expected to close in the fourth quarter.
Regions will maintain Sabal’s flagship offices in Irvine, Calif., and Pasadena, Calif., as well as New York City. When combined with Regions Real Estate Capital Markets’ existing production offices, the platform will have 20 offices across the United States. Headquartered in Birmingham, Ala., Regions Bank is a subsidiary of Regions Financial Corp. and serves customers across the South, Midwest and Texas.
The agreement to acquire Sabal Capital Partners does not include Sabal’s investment management business, which will remain with the sellers, including Pat Jackson, CEO of Sabal Capital Partners, and investment funds managed by Stone Point Capital LLC. Stone Point acquired the majority interest in Sabal Capital Partners in 2018 through its Trident VII funds. Jackson and Mike Wilhelms, CFO of Sabal Capital Partners, will remain with the investment management business while other members of Sabal’s leadership team will join Regions. Upon closing, approximately 125 associates at Sabal will join Regions Bank.
Based in Irvine, Sabal Capital Partners is a vertically integrated platform that has originated nearly $6 billion in financing across the U.S. since inception and maintains a current portfolio of about $5 billion. The company serves clients through its SNAP™ platform, a proprietary tool developed by Sabal to optimize the lending and communications processes with clients and Sabal’s investor base. Sabal leverages tools such as real-time commercial property financing scenarios, seamless online loan applications and technology enabling clients to track loan progress through closure.
Joel Stephens, head of Capital Markets for Regions Bank, said in a prepared statement the acquisition would help Regions build on its client base and expand its range of agency and non-agency options for real estate lending. Stephens said Sabal’s technology platform and leadership in the small-balance lending arena would complement Regions’ affordable and large-balance Fannie Mae and Freddie Mac products. The combination would enable Regions to offer commercial real estate lending solutions across the full spectrum of agency offerings.
Sabal’s agency finance solutions include Fannie Mae Small Loans, Freddie Mac Optigo Small Balance Loans and Freddie Mac Optigo Conventional Loans, a product Regions also recently added to its suite of services.
The plan to purchase Sabal comes just days after Regions closed on the acquisition of EnerBank USA, a home improvement point-of-sale lender. In 2020, Regions acquired equipment finance lender Ascentium Capital and a year earlier acquired institutional investment firm Highland Associates.
Beekman Advisors represented Regions in connection with the Sabal transaction and Davis Polk & Wardwell LLP served as Regions’ legal counsel. Wells Fargo Securities LLC served as financial advisor to Sabal Capital Partners and Kramer Levin Naftalis & Frankel LLP was the firm’s legal counsel.