A major name in U.S. banking has now joined the ranks of senior housing lenders through a recently announced acquisition.
SunTrust Banks, Inc. (NYSE: STI) announced Thursday it has entered into a definitive agreement to acquire substantially all of the assets of the operating subsidiaries of Pillar Financial, LLC, a direct lender for health care and multifamily properties and one of the select few independent Agency lenders that holds licenses with Freddie Mac, Fannie Mae and the Federal Housing Administration.
SunTrust is the nation’s 13th-largest commercial bank, with about $195 billion in consolidated assets of June 30, 2016, according to a Federal Reserve Statistical Release.
In the transaction, Atlanta-based SunTrust is set to acquire Pillar’s multifamily lending business, which includes senior housing, health care properties, multi-family affordable housing and manufactured housing specialty teams. SunTrust will also acquire Chicago-based Cohen Financial’s commercial real estate investor services business, which provides loan administration and advisory services, in addition to its mortgage banking business.
Financial terms of the transaction were not disclosed.
During SunTrust’s third-quarter 2016 earnings call on Oct. 21, SunTrust CFO Aleem Gillani said the Pillar acquisition is expected to produce about $90 million in fees in 2017, though it will not be accretive to the overall efficiency ratio in the first year. However, it will enable the company to enter into businesses it is not currently in, including senior housing.
“Pillar is accretive to SunTrust’s capabilities and our financial position and is also fully consistent with our purpose by helping finance critically-needed affordable housing and senior housing for the communities we serve,” SunTrust Chairman and CEO added during the call.
The transaction is expected to close before the end of the year. Once it’s completed, the Pillar team is expected to join the SunTrust Commercial Real Estate (CRE) line of business, which is part of the Wholesale Banking Segment. Post-acquisition, Pillar Financial Senior Managing Director and CEO Anand Gajjar will report to SunTrust CRE’s Kathy Farrell.
“This acquisition will enhance our commercial real estate platform by providing our clients with full access to the Agency programs currently licensed to Pillar,” Mark Chancy, SunTrust Wholesale Banking executive, said in a press release. “In addition, SunTrust will offer Pillar clients access to a number of expanded products and capabilities including bridge loans, equity for affordable housing developments, and a full suite of capital markets capabilities through SunTrust Robinson Humphrey.”
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SunTrust declined to provide further comment to Senior Housing News on the transaction, pending its upcoming closing.
Written by Mary Kate Nelson