Nearly six months after Signature Bank’s collapse, regulators are ready to sell the defunct lender’s $33 billion commercial real estate loan book.
But, there’s a catch: the Federal Deposit Insurance Corporation will maintain partial control of the portfolio’s loans to rent-stabilized buildings, which make up nearly half the loan book.
The agency is dividing the portfolio into two segments. The first, comprising around $18 billion in loans tied to market-rate buildings in New York City, should be attractive for buyers.
The rent-stabilized segment, not so much.
The latter has been a major point of discussion over the past six months. Following Signature’s downfall, New York Community Bank acquired its failed competitor’s loan book, excluding commercial and multifamily loans. The snub sent a warning signal about potential toxicity in that portfolio.
“It may speak to broader problems within the multifamily industry,” Jay Martin, executive director of landlord group the Community Housing Improvement Program, said at the time.
Multifamily distress has indeed increased nationwide. But rent-stabilized buildings have a particular problem that helps explain the FDIC’s decision to put those loans in their own pile: a 2019 law severely limiting rent hikes in those apartments. Valuations have since plummeted by 20 to 45 percent.
The FDIC will maintain a majority stake in the rent-regulated loan book, which it explained by citing its mission to preserve affordable housing. There seems to be a fear that a private buyer could foreclose on the rent-stabilized buildings and make things worse for tenants.
At the same time, separating out the market-rate buildings’ loans may fetch a more attractive price for them.
Aside from the FDIC’s announcement, the process has taken place behind closed doors. Even the borrowers have been kept in the dark. The eventual sale could provide a shocking insight into just how far valuations have fallen in the rent-stabilized sector.
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What we’re thinking about: Labor Day was supposed to bring a new wave of workers back to the office as employers throughout the city demanded they return to their cubicles. As we wrap up the shortened week, I’m curious: Did you see any change in your company’s/colleagues’ remote working habits? Send a note to david.westenhaver@therealdeal.com.
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Closing Time
Residential: The priciest residential closing Friday was $11.5 million for a condo at 70 Greene Street in Soho.
Commercial: The most expensive commercial closing of the day was $24 million for a two-story building at 80 North Sixth Street in Williamsburg.
New to the Market
The priciest residence to hit the market Friday was a condo at 200 11th Avenue in West Chelsea asking $27 million. Compass has the listing.
A thing we’ve learned: We’ve long known that the phrase “money doesn’t buy happiness” is not entirely true. Now, there’s a number to quantify exactly how much it costs in each major city across the country. In New York, it’s $145,028 per year, the third highest in the country.
Elsewhere in New York
— Almost 1 million NYC children returned to the classroom yesterday. A looming threat of a strike by a bus driver union could leave 80,000 students without proper transportation to and from school. But that’s not the only issue public schools will face this year. The City compiled a list of the biggest issues for educators.
— Donald Trump has sold his stake in a Bronx golf course that has carried his name since 2015, the Post reported. Casino chain Bally’s purchased the contract to operate the Trump Golf Links Ferry Point for an amount reportedly in the tens of millions. The course became a battleground for Trump and then-Mayor Bill de Blasio in 2021 following the January 6 Capitol riot. Bally’s purchase is considered part of its effort to get a license to operate a casino within the city.
— Climate protesters caused a 49-minute delay at the US Open last night, as American Coco Gauff faced off against — and eventually defeated — Karolina Muchova. The protest came a day after US Open officials decided to partially close the main court’s roof in an attempt to reduce sweltering conditions at the USTA Billie Jean King National Tennis Center in Queens.
