Finance  ·  Distress

Newmark Sells $80M Commercial Loan Portfolio for Webster Bank

Three different buyers gobbled up 32 mortgages attached to office, retail and mixed-use properties in the New York tri-state area

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The great unwinding is now underway. 

Newmark (NMRK) has arranged the sale of an $80 million commercial real estate portfolio comprised of 32 mortgages previously held by Webster Bank, a Connecticut-based regional bank with $4.3 billion assets under management. 

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The pool of loans were sold to three different buyers: an unnamed Northeastern bank, an unnamed debt fund, and Directed Capital, a Florida-based real estate finance firm, according to Newmark. 

The 32 loans are collateralized by several office and mixed-use properties across four secondary asset classes in New York, New Jersey and Connecticut. More than 55 percent of the loans are concentrated in office properties, while the rest are connected to office/retail, office/warehouse, and medical facilities. 

Newmark was the sole broker on the transaction. Executive managing director Steven Schultz’s 15-person team led the loan sale out of the firm’s Rutherford, N.J., office. 

“The story here is banks need to start selling some of their assets and this is probably one of the first regional bank loan sales that wasn’t directed by the FDIC,” Schultz told Commercial Observer. “The marks are being made and it’s a great sale for the market to know about.”

Schultz added the loans carried short-term maturities and had been originated by Webster Bank over the previous five to seven years. He said the loan sale took about three months to complete and that nearly all of the commercial properties in the loan pool are located in suburban locations. 

Webster did not respond to a request for comment on the sale. 

The sale of an $80 million portfolio from a regional bank follows the U.S. regional banking crisis this spring that saw the second, third and fourth-largest commercial banking collapses in the country’s history. Silicon Valley Bank (SIVBQ), Signature Bank (SBNY), and First Republic Bank (FRCB) all failed between March 13 and May 1 this year. 

Newmark has been tapped by the FDIC to lead the sale of the Signature Bank commercial loan portfolio that is valued at $60 billion. 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.

Schultz emphasized that this loan sale from Webster Bank is likely to be only the beginning of large pools of loans being offloaded by regional banks. He noted that underlying valuations of many commercial assets have changed in the last year as interest rates rose and that “unless there’s a miracle” the unwinding process of selling off performing and non-performing balance sheet loans is all but inevitable for the foreseeable future. 

“It’s going to change — it has changed — and we just need to wait to start the process,” he said. 

Schultz added that Newmark stands ready to capitalize off the desire for banks to shore up their balance sheets. 

“As the economic climate continues to evolve, we expect financial institutions across the country to continue to find ways to optimize their lending portfolios, opening up major opportunities for savvy investors,” he said in a statement. “The Newmark team looks forward to partnering with banks of all sizes as they navigate the future for their mixed-use and office loans.”

Brian Pascus can be reached at bpascus@commercialobserver.com