New York Community Bank doubles down on multifamily lending

Half the bank’s multifamily portfolio is subject to the Housing Stability and Tenant Protection Act

New York /
Jan.January 29, 2020 11:00 AM
New York Community Bank CEO and president Joseph Ficalora (Credit: Facebook, iStock)

New York Community Bank CEO and president Joseph Ficalora (Credit: Facebook, iStock)

New York Community Bank has a message for the industry: Lending on rent-regulated buildings is still its bread and butter.

Officials from New York Community Bank on its fourth quarter earnings call this morning fired back at analysts scrutinizing the bank’s multifamily portfolio in light of the new rent law.

“We have been six months under new rent regulations, to date we are not seeing any negative asset-quality trends,” Joseph Ficalora, CEO of New York Community Bank, said on the Wednesday call. “50 percent or $18.7 billion of our total multifamily portfolio is subject to the Housing Stability and Tenant Protection Act. The average loan to value ratio is 53 percent.”

NYCB officials also said that despite headlines, property values are not plummeting.

Any changes to the values of multifamily properties have proven difficult to determine, as few large deals have been transacted in the six months following the upheaval. The largest rent-regulated portfolio to trade since the changes to the rent law were passed was purchased at a significant discount, sparking a discussion over valuations in the industry.

“We’re seeing cap rates of low five to mid five, even high four,” said Ficalora. “Each market is different.”

Some alternative lenders financed deals expecting future increases in rent rolls — a practice that the bank insists it has not engaged in. Future drops in value of rent-regulated assets “do not impact one iota our ability to loan,” Ficalora said.

The bank has also repurchased $771 million in multifamily mortgages that it previously originated and sold to other institutions. Now, according to Ficalora, some institutions are looking to divest from New York City’s rent-regulated market.

“We are multifamily, rent-regulated — this is our core business model,” Ficalora said. “We are far more comfortable with it than people who have never originated those loans.”

Officials from NYCB also noted that some landlords in New York City’s multifamily market are keeping units vacant in the hope of combining units to set a new first rent, a trend that has been widely reported , although data on the practice is unavailable.

“We’re seeing owners leave apartments vacant to join units together,” said Ficalora. “That’s something wealthier players can do, we’re seeing a lot of that.”


Related Articles

arrow_forward_ios
Blackstone CEO Steven Schwartzman and Stuyvesant Town (Credit: Getty Images)
After authorities vowed review of Stuy Town deal, Blackstone changes course on vacancies
After authorities vowed review of Stuy Town deal, Blackstone changes course on vacancies
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws
Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws
Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws
From left: 909 Third Avenue, 79 Fifth Avenue, 240 West 37th Street and 27 East 62nd Street (VNO, Cercone Exterior Restoration, Google Maps)
These were the largest Manhattan real estate loans in April
These were the largest Manhattan real estate loans in April
C-PACE gives landlords and developers cheap financing in exchange for making energy efficient improvements. (Getty)
Landlords can now retroactively tap financing tool for energy improvements
Landlords can now retroactively tap financing tool for energy improvements
11 East 26th Street with Henry and Justin Elghanayan (Google Maps, Getty)
Rockrose investment values Nomad office building at $235M
Rockrose investment values Nomad office building at $235M
Jamie Dimon, Steve Roth, Donald Trump and 555 California St. (Trump, Getty)
Vornado lines up $1.2B refi of SF tower co-owned with Trump
Vornado lines up $1.2B refi of SF tower co-owned with Trump
Ron Perelman and 35-39 East 62nd Street (Getty, Google Maps)
Big discounts on sale of Perelman properties and loans
Big discounts on sale of Perelman properties and loans
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...