In the world of property debt, all eyes are on the Federal Deposit Insurance Corporation and its marketing of failed Signature Bank’s $33 billion commercial real estate loan book. This week, a suitor emerged.
Bruce Richards’ Marathon Asset Management plans to bid on the loan portfolio, the chief executive officer revealed to Bloomberg. The leader of the global firm, which has $20 billion in assets under management, didn’t reveal a ballpark figure for his bid, though he did note that the market’s “real dislocation hasn’t quite happened yet.”
Marathon dabbles in real estate in both the United States and Europe, investing in multifamily, office, industrial, hospitality and retail properties. In the U.S., Marathon originates senior loans, mezzanine loans and preferred equity for commercial real estate.
Richards is on the short side of the CMBX market, betting that office owners are going to default on their loans.
As for the Signature portfolio, the FDIC began marketing it at the beginning of the month, kicking things off with the revelation that it would split the portfolio into two main buckets: rent-stabilized and not. The FDIC is planning to keep a majority stake in the loans backed by rent-stabilized properties.
The $15 billion rent-stabilized loan book has been dubbed potentially “toxic” because New York Community Bank declined to buy it when it acquired other Signature assets.
The rent-stabilized loans will be split into one or more joint ventures controlled by the FDIC, while the forthcoming minority owners will act as managing partners, in charge of servicing and eventually selling the loans.
The FDIC cited its “statutory obligation…to maximize the preservation of the availability and affordability” of homes for low- and moderate-income families. Private interests might otherwise foreclose on the rent-stabilized buildings.
The FDIC didn’t offer details on how it would market the remainder of Signature’s commercial real estate loans, largely backed by market-rate rentals. Newmark is leading the marketing process for the debt, which could set the tone for other commercial real estate debt deals in a challenged market.
— Holden Walter-Warner
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