$33 billion in CRE loans from failed NYC bank, mostly for multifamily residences, will go up for sale

A total of $33 billion in commercial real estate (CRE) loans of a failed New York, N.Y., bank – mostly for multifamily residences – is up for sale over the next three months, the federal bank deposit insurance agency said Tuesday.

In a release, the Federal Deposit Insurance Corp. (FDIC) said it expects the sale of portions of the CRE loan portfolio of Signature Bank, which failed in March, to be completed by year’s end. The agency said most of the loans being sold are for multifamily properties in New York City, with $15 billion of the loans secured by multifamily residences that are rent stabilized or rent controlled.

Since that’s the case, the agency said, it cited its statutory obligation 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 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,” the agency said. “In addition, the JV operating agreement will provide certain requirements that facilitate the financial and physical preservation of these loans and underlying collateral.”

The agency said it would retain a majority equity interest in the JVs. However, the winning bidders, or partners, FDIC said, would act as the managing member of the joint venture and would be responsible for the management, servicing and ultimate disposition of the loans. The JV partner would also be required to manage the portfolio in accordance with the JV operating agreement and be subject to stringent monitoring, the agency said.

Newmark & Company Real Estate, Inc. (Newmark) has been retained as an advisor on the sale, FDIC said.

FDIC Announces Start of Marketing Process for $33 Billion Commercial Real Estate Loan Portfolio of Former Signature Bank, New York