Reporting by Michelle Price and Pete Schroeder; Reporting by Mohamed for the Arabic Bulletin; Reporting by Michelle Price and Pete Schroeder; Reporting by Mohamed for the Arabic Bulletin (Reporting by Matt Tracy); Editing by David Goodman
Buyers sought Signature Bank’s $33 billion CRE portfolio
A person walks into a branch of Signature Bank in New York City, US, on March 13, 2023. REUTERS/David ‘Dee’ Delgado acquires licensing rights
WASHINGTON (Reuters) – The Federal Deposit Insurance Corporation (FDIC) said on Tuesday it is looking for buyers for the $33 billion commercial mortgage portfolio of troubled Signature Bank in New York.
The majority of the portfolio is made up of multi-family properties located primarily in New York City, the regulator said, adding that it will market the assets over the next three months.
The FDIC has been seeking to sell parts of Signature, one of the Big Three banks that failed in the spring, since the bank closed in March after depositors fled in search of higher returns and safer institutions.
Later that month, New York Community Bancorp (NYCB.N) agreed to a deal with the Federal Deposit Insurance Corporation (FDIC) to purchase most of the designated deposit and loan portfolios along with all 40 of Signature’s former branches.
CRE’s portfolio has approximately $15 billion in loans secured by rental-fixed or controlled homes.
Matt Bystrunk, president and co-founder of Post Brothers, a real estate developer based in Philadelphia, said that while the commercial real estate industry is under pressure amid rising rents and office vacancies, Signature Bank’s portfolio is relatively attractive.
“The FDIC sale is somewhat unique because it has a significant concentration of rental-stable properties as collateral for the loans,” he said. Primary real estate is valued at cap rates close to today’s interest rates and would be a very safe investment to own as a loan or as real estate in case the loans fail to perform.
Since the FDIC has a legal obligation to preserve existing, affordable housing for low-income people, the agency said it plans to place all of these loans into joint ventures where the FDIC maintains a majority stake in the equity.
The FDIC said any winning bidders for these projects would be responsible for managing and servicing the loans, but would have to meet certain requirements to maintain the loans and underlying collateral.
New York City and New York State housing authorities, as well as community groups, provide input to the FDIC when marketing begins. The FDIC said it expects to complete any portfolio sales by the end of 2023.
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