The Federal Deposit Insurance Corp. has begun seeking buyers for $33 billion of commercial property loans from Signature Bank, the latest step in a massive offloading of debt from the bank that collapsed earlier this year.
(Bloomberg) — The Federal Deposit Insurance Corp. has begun seeking buyers for $33 billion of commercial property loans from Signature Bank, the latest step in a massive offloading of debt from the bank that collapsed earlier this year.
The majority of the loans are backed by multifamily properties, primarily in New York City, the FDIC said Tuesday in a statement. A portion of the loans, about $15 billion, are tied to properties that are rent stabilized or rent controlled.
“The FDIC has a statutory obligation, among other factors, to maximize the preservation of the availability and affordability of residential real property for low- and moderate-income individuals,” according to the statement. “To support this obligation, the FDIC will place the rent stabilized or rent controlled loans in one or more joint ventures with the FDIC retaining a majority equity interest in the JV.”
The winning bidders will service the debt. The joint-venture agreements will have certain requirements that “facilitate the financial and physical preservation of these loans and underlying collateral,” the FDIC said.
The debt is being split into 14 pools. The FDIC is offering financing on some of the debt, according to a notice. The bid deadline is set for Nov. 1.
Investors have been closely watching the sale process, which will be a marker of values for a dried-up market that’s seen few transactions so far. The commercial real estate market has slowed drastically in the past year as borrowing costs rose and values dropped.
Transactions are expected to be completed by the end of 2023. Newmark Group Inc. is the brokerage managing the sale.
The marketing of the debt is the latest phase of the FDIC’s offloading of roughly $60 billion of Signature Bank loans. In July, the FDIC said it was seeking buyers for an $18.5 billion loan portfolio from Signature that was tied to major private equity and investing firms. The bid deadline for that sale is Sept. 12, according to the FDIC.
–With assistance from Gillian Tan.
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