FDIC Begins Marketing $33B Of Signature Bank's Real Estate Loans

The Signature Bank branch on Madison Avenue in Manhattan.
The Former Signature Bank Branch On Madison Avenue In Manhattan.

The official marketing process has begun on $33B of commercial real estate loans taken over by the Federal Deposit Insurance Corp. after the failure of New York lender Signature Bank in March.

The FDIC announced Tuesday that it had begun the official marketing process for Signature Bank loans that were excluded when Flagstar Bank acquired $38.4B of Signature's assets, including its deposits and bank branches, less than a week after the FDIC took over Signature.

That left more than $60B of Signature's old assets on the FDIC's books. The regulator enlisted Newmark to coordinate a loan sale process, and the official marketing period for the majority of those loans opened this week, with a sale expected to be completed by the end of 2023, the FDIC said in a release.

The 5,137 loans on offer have a $33.22B unpaid balance and will be broken into 14 pools, according to an FDIC notice. Nearly half of the debt, roughly $15B, is connected to rent-stabilized or rent-controlled buildings. The FDIC is offering those loans as joint venture investments in which the regulator would maintain a majority stake, while the buyer would be responsible for servicing, management and disposition of the loans.

"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," the agency said in its announcement.

"For this subset of the portfolio, the FDIC engaged with New York City and New York State housing authorities and government agencies, as well as community-based organizations, to obtain their input and provide information on the FDIC’s efforts as the FDIC developed its marketing and disposition strategy," the agency added.

Interested parties have until Nov. 1 to submit their bids.

The sale of the loans is seen as a potential benchmark in New York City's troubled rent-stabilized sector as buyers and sellers try to assess how far the values of the buildings has fallen. One analysis pegged the valuation drop for these buildings as anywhere between 25% and 60%.

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