An ‘existential weekend’: How two bank collapses roiled real estate

First, Silicon Valley Bank collapsed. Then Signature Bank shut down. A few days later, 11 banks extended First Republic Bank a $30 billion lifeline — which proved insufficient.

Real estate investors, brokers and developers were left asking, “How does this affect me?”

On the latest episode of The Real Deal’s podcast Deconstruct, hosts Isabella Farr and Suzannah Cavanaugh and senior reporter Keith Larsen explain the catalysts behind the bank collapses and the lasting impact on regional banks, real estate lending and the Fed’s next steps.

From what happens to the banks’ letters of credit to landlords’ scramble to move deposits from Signature, Deconstruct breaks down how these two banks were intertwined in the real estate industry.

For many multifamily owners in New York, Signature Bank was one of the main sources of capital. That could wreak havoc with the normal course of business for many landlords.

“If other regional lenders don’t have enough deposits on hand to make loans, landlords will have to go to the big banks,” Cavanaugh said on the podcast. “The problem, though, is that in a high-interest-rate environment, regional banks were offering really competitive rates.”

In San Francisco, all eyes are still on First Republic Bank and whether the $30 billion deposit infusion will be enough to keep the regional bank, and major real estate lender, afloat. Early indications are that it won’t be.

Tune into the full episode, now streaming on Apple, Spotify and wherever else you get your podcast fix.

Note: After this episode was recorded, the Federal Deposit Insurance Corporation announced New York Community Bank would assume all of Signature Bank’s deposits and a portion of its loan portfolio.