First Foundation in Dallas sets stage to sell $1.9M of multifamily loans

First Foundation in Dallas has begun the process of purging multifamily loans from its balance sheet.

The $13.6 billion-asset company said in a press release that it reclassified about $1.9 million of loans from held to maturity to held for sale. The company said it expects fair-value pricing for the loans to surpass 92% based on recent pricing for Southern California-focused multifamily loans and “renewed optimism for lower rates.”

The move “marks an important next step in the company’s strategic roadmap to fortify the balance sheet and embrace a more offensive-minded posture,” Scott Kavanaugh, First Foundation’s CEO, said in the release.

“We believe this move will position the company for a return to its historical profitability and performance levels,” he added. “While the resulting write-down to fair value will meaningfully impact third-quarter earnings and will reduce our ‘as converted’ tangible book value per share, we expect the move to provide the flexibility needed to work with credit-minded counterparties in exploring a variety of options for securitizing or selling the loans and maximizing final execution pricing.”

First Foundation also said that all of the Series B preferred stock it issued as part of a $228 million recapitalization has converted into nearly 14.5 million shares of common stock.