WASHINGTON, Sept 5 (Reuters) – The Federal Deposit Insurance Corporation (FDIC) is seeking buyers for the $33 billion commercial real estate (CRE) loan portfolio of failed New York lender Signature Bank, it said on Tuesday.
The majority of the portfolio consists of multifamily properties located primarily in New York City, the regulator said, adding that it would market the asset over the next three months.
The FDIC has been trying to sell off parts of Signature, one of three major banks that failed in the spring, since the bank closed in March after an exodus of depositors seeking higher returns and safer institutions.
Later that month, New York Community Bancorp (NYCB.N) agreed a deal with the FDIC to buy most of Signature’s deposits and certain loan portfolios, as well as all 40 of its former branches.
The CRE portfolio includes about $15 billion of loans secured by residential properties that are rent-stabilised or controlled.
While the commercial real estate industry has been under pressure amid rising rents and lingering office vacancies, Signature Bank’s portfolio is relatively attractive, said Matt Pestronk, president and co-founder of Post Brothers, a real estate developer based in Philadelphia.
“The FDIC sale is somewhat unique in that it has a large concentration of rent-stabilised properties as collateral for the loans,” he said. “Even in this environment, there are buyers of rent-stabilized buildings and lenders making loans on them, because if the underlying properties are valued at cap rates close to today’s interest rates, they would be very safe investments to own as loans or as real estate in the event the loans do not perform.”
Because the FDIC has a legal obligation to preserve existing affordable housing for low-income people, the agency said it planned to place all of these loans into joint ventures in which the FDIC would retain a majority equity interest.
Any winning bidders for these ventures would be responsible for managing and servicing the loans, but would have to meet certain requirements to preserve the loans and the underlying collateral, the FDIC said.
New York City and State housing authorities and community groups are providing input to the FDIC as it begins the marketing process. The FDIC said it expects to complete all portfolio sales by the end of 2023.
