Blackstone, Related Emerge as Frontrunners in FDIC’s Signature Auction
The prices these assets fetch are expected to set valuations in New York City and beyond.
Reports from the FDIC’s auction of Signature Bank’s commercial real estate backed loans last week are coming in and suggest that pricing for its rent-regulated apartment portfolio is as steep as expected, less than 70 cents of the loan’s face value. Also, a partnership between Blackstone and Rialto Capital is one of the leading bidders for at least one of the pools of Signature assets backed by commercial property, according to reports in the Wall Street Journal and Bloomberg.
A venture of two nonprofits and Related Fund Management is poised to win the apartment portfolio and could be formally announced Monday morning, a source told the Wall Street Journal.
Bloomberg, meanwhile, reports that Blackstone is the frontrunner to win a $17 billion portfolio of commercial-property loans, according to what a source told the publication.
Signature Bank’s $33 billion CRE loan portfolio went on sale in September. Earlier this month, the Wall Street Journal reported that the properties were expected to sell on the average at 15% to 40% lower than their face price, according to bidders that the Journal spoke with.
The majority comprises multifamily properties primarily located in New York City, as GlobeSt.com previously reported. The FDIC said that about $15 billion of the CRE loans secured by multifamily residences, more than 45%, are rent stabilized or rent controlled. They’re limited on how much rents can be increased, which limits the net operating income they can deliver, especially as costs of operations keep increasing.
The financial challenge for multifamily markets in New York is that price discovery has been missing for the last year, as so many sources have told GlobeSt.com. Buyers and sellers keep seeking signals to show how much properties should sell for — what they could both expect.
In addition to the multifamily properties, there are also office, retail, and hotel categories represented.
The financial challenge for markets in New York is that price discovery has been missing for the last year, as so many sources have told GlobeSt.com. Buyers and sellers keep seeking signals to show how much properties should sell for. The FDIC auction will likely establish a market price for these assets, one that is expected to be far lower than many owners would like.