Blackstone, Related lead bidding for Signature’s $32B loan portfolio 

The competition for Signature Bank’s commercial real estate loans is coming into focus after bidding on the failed bank’s debt closed.

Blackstone is pacing the field to win about $17 billion in commercial property loans from the FDIC’s debt sale from the failed bank, Bloomberg reported. The loans are secured by commercial assets, including retail, office and industrial.

Other bidders include Starwood Capital Group and Brookfield Asset Management. Blackstone is in discussions with Rialto Capital to help service the loans.

Meanwhile, a Related Companies affiliate has emerged as the leading contender for a 5 percent stake in $15 billion in Signature loans backed by New York’s rent-regulated apartments. Because the properties’ value has declined since the state overhauled rent stabilization in 2019 and New York Community Bank snubbed those loans upon buying the rest of Signature’s assets, some industry observers dubbed the debt “toxic waste.”

Still, Related sees value in the loans, which are expected to sell at a significant discount. Related Fund Management — in partnership nonprofit housing groups Community Preservation Corporation and Neighborhood Restore — is the leading contender for the rent-regulated loan portfolio, the Wall Street Journal reported. Most of the money would come from Related.

The joint venture bid less than 70 cents on the dollar of the loans’ face value. With the FDIC planning to keep a 95 percent stake in the rent-regulated portfolio as part of its statutory obligation to protect low-income tenants, the venture’s bid for the full $15 billion would be approximately $500 million.

New York’s commercial real estate players have been watching the bidding process closely to check the temperature of how far property values have fallen given remote work, higher interest rates and the rent law reform. Signature was the largest bank lender to rent-stabilized landlords.

Much remains to be seen, including confirmation of winning bidders and how much they bid for the various pools of commercial loans. Winners could be declared as early as today, though the FDIC’s projected closing date for all of the loan pools is Dec. 21, sources previously told The Real Deal.

Newmark’s Doug Harmon and Adam Spies are marketing the Signature loans.

Holden Walter-Warner

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