Bloomberg News
WASHINGTON — The Federal Deposit Insurance Corp. announced Tuesday day it would begin marketing $33 billion in commercial real estate loans previously belonging to the now-failed Signature Bank.
The agency said it is setting up joint ventures to market those loans secured by rent stabilized or rent controlled units — loans amounting to $15 billion, or roughly half of the portfolio — to support its obligation to protect low income housing availability.
“The FDIC will place the rent stabilized or rent controlled loans in one or more joint ventures (JV) with the FDIC retaining a majority equity interest in the JV,” the agency announced in a release. “The JV operating agreement will provide certain requirements that facilitate the financial and physical preservation of these loans and underlying collateral.”
Under the Federal Deposit Insurance Act, the FDIC has a statutory obligation to safeguard the affordability and availability of residential real estate for low- and moderate-income individuals. The agency said the $33 billion in loans — which the FDIC retained in receivership following the failure of the New York-based bank in March earlier this year — are made up primarily of apartments in the New York metropolitan area. FDIC previously announced it was considering various means of marketing the portfolio in a way that safeguarded the roughly $15 billion in low-income housing secured loans represented in the portfolio.
FDIC said while it will take on a majority equity interest in the joint ventures, ultimately the winning bidders on the loans will be responsible for maintaining the loan portfolio on their terms.
“The winning bidders, or partners, will act as the managing member of the joint venture and will be responsible for the management, servicing and ultimate disposition of the loans,” FDIC said in a statement. “The JV partner will be required to manage the portfolio in accordance with the JV operating agreement and be subject to stringent monitoring.”
The FDIC tapped Newmark & Company Real Estate, Inc. to assist in advising on the sale.
The FDIC will be accepting bids for Signature Bank’s former commercial real estate loans over the next three months. They indicated that they expect the sales to be finalized by the end of the year. The FDIC said input from relevant New York city and state agencies and community groups Informed its marketing strategy.
Signature Bank was shuttered by New York State regulators in March amid mounting withdrawal requests that decimated the bank’s available funds. Signature’s failure, along with that of Silicon Valley Bank, spurred banking regulators to invoke the systemic risk exception that would allow the FDIC to cover uninsured deposits.
Following the bank’s failure, the FDIC sold most of Signature’s deposits and some of its loans to Flagstar Bank. The deal with Flagstar left out $4 billion of deposits related to Signature Bank’s digital banking business, and a $60 billion loan portfolio.
Commercial real estate loans have been viewed with increasing anxiety by banks and regulators amid growing concerns about the disastrous effects delinquencies on such loans could have on the economy.
- SEO Powered Content & PR Distribution. Get Amplified Today.
- PlatoData.Network Vertical Generative Ai. Empower Yourself. Access Here.
- PlatoAiStream. Web3 Intelligence. Knowledge Amplified. Access Here.
- PlatoESG. Automotive / EVs, Carbon, CleanTech, Energy, Environment, Solar, Waste Management. Access Here.
- PlatoHealth. Biotech and Clinical Trials Intelligence. Access Here.
- ChartPrime. Elevate your Trading Game with ChartPrime. Access Here.
- BlockOffsets. Modernizing Environmental Offset Ownership. Access Here.
- Source: https://www.nationalmortgagenews.com/news/fdic-to-market-33-billion-of-signatures-commercial-real-estate-loans
