Newmark to Shepherd Sale of $60B in Signature Loans
By Brian Pascus March 29, 2023 10:42 amreprints
The federal government is leaning on the private sector to help unwind Signature Bank (SBNY)’s vast commercial real estate loan portfolio.
The Federal Deposit Insurance Corporation (FDIC) has tapped Newmark (NMRK) to sell roughly $60 billion of loans originated by Signature, which failed earlier this month amid a wider regional banking crisis. The news was first reported by The Wall Street Journal.
Manhattan-based Signature, one of the top lenders of commercial real estate loans in all of New York City, was seized by federal regulators on March 12 shortly after the collapse of California-based Silvergate Bank on March 8 and Silicon Valley Bank (SIVBQ) on March 10. Signature held more than $110 billion in assets and roughly $88 billion in deposits prior to its collapse, according to the firm’s annual report.
Newmark’s Adam Spies, Doug Harmon, Dustin Stolly, Jordan Roeschlaub, and John Howley — acting as FDIC representative — are leading the sale, several sources familiar with the process said.
A source familiar with the sale said the loans will be structured into pools but the sizes of the loan pools remain unknown.
The majority of Signature’s lending activities were in New York City, where they were the third-largest CRE lender with about $20 billion in loans, including around $15 billion for multifamily properties, according to data from Maverick Real Estate Partners. That made up the bulk of its $35.2 billion CRE portfolio, according to Trepp.
The loan portfolio should be considered high-performing, according to George Klett, former chairman of Signature’s commercial real estate committee, but many of the loans will be be sold below market value because they were prior to the Fed’s interest rate increase.
“The vast majority of loans are five-year, fixed rate [loans],” said Klett. “Those loans that might have two or three years left, they might have an interest rate of 2 percent or 3 percent below market rate, but they are performing and they will pay off eventually.”
Klett said he expects the loans to be eventually bought at a discount.
“In this case, they will be looking for a discount because the interest rate on the loans is below market and that’s why a bidder will most likely be bidding at a discount to make up the difference,” he said.
Newmark is now the second third-party buyer to be brought in to carry on the remains of Signature’s failed business, with the same team also being hired back in February — prior to Signature’s failure — to sell the bank’s performing loan on the McGraw-Hill Building at 330 West 42nd Street.
Last week, the FDIC announced the sale of $38.4 billion of Signature’s assets to New York Community Bancorp, including $12.9 billion of commercial and industrial loans. The $2.7 billion shotgun marriage instantly converted 40 Signature branches to Flagstar Bank, a subsidiary of New York Community Bancorp, but left more than $60 billion of Signature loans still in FDIC control, including its entire commercial real estate loan portfolio.
That now falls in the hands of Newmark. CO had earlier reported that multiple bids for the real estate loans came in below par, which is one of the reasons the assets were not included in the Flagstar deal.
A representative at Newmark did not return a request to comment.
Brian Pascus can be reached at email@example.com.