FDIC Selects Related-Backed Bid for Signature Rent-Regulated Loan Pool
The Community Preservation Corporation is leading venture as managing partner.
By Andrew Coen December 15, 2023 3:18 pm
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The Federal Deposit Insurance Corp. has closed two joint venture partnership transactions with Related Fund Management and two nonprofit housing groups to service Signature Bank (SBNY)’s loans tied to rent-stabilized apartments in New York City, the entities announced Friday.
The partnership backed by Related, The Community Preservation Corporation (CPC) and Neighborhood Restore HDFC acquired a 5 percent equity interest in $5.8 billion of Signature loans. CPC is leading the venture as managing partner.
The announcement confirmed earlier reports that Related was slated to win the pool of loans and the partnership already garnered support New York City and New York State elected officials.
Newmark (NMRK)’s Adam Spies and Douglas Harmon arranged the transaction.
The FDIC did not release the winning bid amount, but Commercial Observer previously reported they decided to go with Related’s proposal despite having a bid of less than 69 cents on the dollar while at least three others were above 80 cents, causing some to question the selection process.
“Related Fund Management is proud to support CPC and Neighborhood Restore with a strategic equity investment in this venture,” Justin Metz, managing principal, Related Fund Management, said in a statement. ”Our collective expertise, track-record, and mission to preserve affordable housing will help secure the future of these buildings.”
Bidders that were rejected in favor of Related included one at more than 80 cents on the dollar from Brookfield Asset Management in partnership with Tredway, sources told CO. Similarly priced bids also came in from a partnership between Brooksville and Sabal along with one pitched by multifamily investor Skylight Real Estate Partners with Rithm Capital, a public real estate investment trust.
The Signature portfolio announced Friday includes 868 permanent loans secured by properties that have nearly 35,000 units, with 80 percent of those being rent-regulated. The pool makes up a large part of the roughly $15 billion Signature had tied to rent-stabilized or rent-controlled assets before the bank was seized by regulators in March.
“The collapse of Signature Bank earlier this year disrupted the market and threatened to erode trust in the banking industry,” New York City Comptroller Brad Lander said in a statement. “Today’s partnership is the next step in ensuring residents have a stable loan provider.”
The FDIC retained Newmark in the early spring to sell off the Signature debt in seven pools shortly after the bank’s collapse that was part of a wider regional banking crisis that struck in early March.
The rent-regulated loan sale announcement came a day after a JV led by Blackstone along with Canada Pension Plan Investment Board and funds affiliated with Rialto Capital captured a 20 percent stake for Signature’s 16.8 billion commercial loan portfolio.
Andrew Coen can be reached at acoen@commercialobserver.com
