SADA Capital Partners LLC
The Opportunity
Regardless of the economy, political climate or the world affairs, thousands of borrowers every day fall behind on their loan payments due to variety of reasons. This creates a nightmare scenario for lenders. Delinquent and non-performing loans are commonly referred to as toxic assets because of the negative effects they have on bank ratings and often require higher ownership equity by the FDIC. A higher percentage of non-performing loans can also drive down a bank's share price and negatively impact other financial stress tests required by the regulators.
Therefore, banks prefer to keep their delinquent loans ratio to as minimum as possible. Any workout or restructuring of these delinquent loans by a bank triggers FDIC auditor's scrutiny. Often FDIC requires banks to increase their equity to hedge potential losses associated with the restructured and delinquent loans., Hence, banks are extremely motivated to sell delinquent loans at attractive discounts usually between 30-70 of the principal balance due.
This creates a prime opportunity for investors and funds focused on distressed real estate loan portfolios. Large hedge funds like Cerberus Capital Management have been investing billions of dollars to purchase non-performing loans in the USA and around the world. For several years, Cerberus has been earning between 15 to 20% return on their non-performing loan portfolio.
In the last few years, financial industry leaders such as Goldman Sachs Group and the Deutsche Bank have invested billions of dollars to purchase delinquent loans directly and indirectly by providing financing to the investors of delinquent loans in the US market.
The management team of SCP consists of former bankers and business professionals. Through our contacts in the banking industry, we identify banks motivated to liquidate their non-performing / undesirable loans and OREO portfolios. With inner knowledge of the banking industry, business world and the Chicago area real-estate market, we negotiate the best possible deals with banks and other lenders to purchase OREO assets and non-performing loans collateralized by commercial real-estate.
We purchase distressed properties and delinquent loan portfolios from lenders and make them profitable.