WASHINGTON – The FDIC has announced the start of a marketing process for the approximately $33 billion commercial real estate (CRE) loan portfolio it took over following the failure of Signature Bank om New York.
According to the FDIC, the majority of the CRE loan portfolio being marketed is comprised of multifamily properties, primarily located in New York City. A large portion (approximately $15 billion) of the CRE loans secured by multifamily residences are rent stabilized or rent controlled, the agency added.
Signature Bank was shut down in early March of this year, joining Silicon Valley Bank and First Republic Bank in failing during the same time period. At the time of its failure, Signature Bank had assets of $110 billion and was the 19th largest bank in the country.
Statutory Obligation Cited
The FDIC further explained it 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. To support this obligation, the FDIC said it 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. In addition, the JV operating agreement will provide certain requirements that facilitate the financial and physical preservation of these loans and underlying collateral, the FDIC said.
“While the FDIC will retain a majority equity interest in the JVs, 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. 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 said.
It added that marketing of the former Signature Bank’s CRE portfolio will take place over the next three months and the transactions are expected to be completed by year-end 2023.
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