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City Hall backs Related’s bid for Signature Bank’s loans

In unusual move, Adams administration weighs in on auction for rent-stabilized debt

Adams Administration Backs Related Signature Bank Bid
Deputy Mayor Maria Torres-Springer, Related's Jeff Blau, CPC's Rafael Cestero (LinkedIn, Getty)

In an unusual move, City Hall is weighing in on the competition for Signature Bank’s commercial loans. 

The Adams administration sent a letter to the Federal Deposit Insurance Corp. this month, supporting a bid submitted by Related Fund Management, the Community Preservation Corp. and Neighborhood Restore. The trio emerged last week as the top contender for a portion of the failed bank’s loans backed by rent-stabilized properties.   

The two nonprofits asked City Hall for a letter of support and the administration obliged, given the city’s long history of working with both groups to finance and stabilize housing, according to a city official. 

In a letter obtained by The Real Deal, Deputy Mayor Maria Torres-Springer writes that the team “bring decades of deep experience in multifamily, rent regulated, and affordable housing finance in the city of New York” and that the proposed partnership would “deliver stable, long-term management to the servicing of the loan portfolio.” 

Representatives for Related, CPC and Neighborhood Restore did not return messages seeking comment.

The participation of the two nonprofits was key in securing the city’s support. The administration wrote another letter backing another bid by nonprofit Enterprise Community Partners, which is part of a team bidding on another portion of Signature’s rent stabilized debt, according to a city official. 

CPC, founded in 1974, bills itself as the largest Community Development Financial Institution in the country exclusively focused on investing in multifamily housing. 

Neighborhood Restore has preserved more than 10,500 units of affordable housing since 1999, according to its website. The nonprofit also acts as an intermediary in the city’s controversial third-party transfer program, temporarily taking over management of properties seized by the city for unpaid taxes. The firm helps address immediate needs at a property before the new owner takes control.

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In other words, these nonprofits have experience working one-on-one with property owners in distress, financing renovations and taking over management of stabilized properties. The last of those may come into play if owners default on their loans. 

Changes to the state’s rent law in 2019 closed off most avenues for landlords to increase rents on regulated apartments. At the same time, inflation has driven up operating costs and mortgage rates have soared. As a result, many owners have struggled to maintain their buildings and are facing rapidly approaching debt due dates, some without much hope of refinancing. 

A City Hall spokesperson said “providing safe, high-quality, affordable housing” is the administration’s “north star as the FDIC determines the future of Signature Bank’s rent-regulated housing portfolio.”

“The Community Preservation Corporation and Neighborhood Restore have decades-long track records of partnering with the city to provide and protect much-needed affordable housing for New Yorkers, and we are confident they, and their partners at Related Companies, would be faithful stewards of this critical portfolio if they win,” the spokesperson said in a statement. 

Related is reportedly providing most of the financing in the proposed deal. The company is the developer behind high-end Hudson Yards, but got its start in affordable housing. The letter of support from the city shows that pairing up with the nonprofits gave Related’s bid a boost.

The FDIC indicated in September that it consulted with city and state housing agencies and community-based groups to develop its marketing strategy for the portfolio. When asked about the letters, the agency indicated that it is guided by various statutory mandates, including maximizing the return on the sale of the loan portfolio and the availability of affordable housing. 

Related reportedly bid 70 cents on the dollar for just over a third of Signature’s rent-regulated loans. The offer was not the highest received by the FDIC, with Brookfield Asset Management and Tredway, Brooksville and Sabal, and Skylight Real Estate Partners and Rithm Capital all bidding more than 80 cents on the dollar, according to the Commercial Observer. 

The agency has not officially named any winners.   

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Affordable HousingFDICRelated CompaniesSignature Bank