Related, Community Preservation Corp win stake in Signature rent-stabilized loans

Big firm partners with nonprofits to nab 5% interest in $5.8B of failed bank’s debt

Community Preservation Corp Wins Signature Multifamily Debt
Related Companies, Community Preservation Corporation and Neighborhood Restore Won Signature Multifamily Debt

Related Fund Management and Community Preservation Corporation on Friday were chosen to buy a stake in $5.8 billion in Signature Bank’s rent-stabilized loans.

Nonprofit Neighborhood Restore is also a partner in the deal.

The Federal Deposit Insurance Corporation awarded a 5 percent equity interest in the ventures formed to hold the debt, according to a release from the government agency. The FDIC retained the remaining 95 percent. 

The team reportedly bid 68 cents on the dollar for a $6 billion pool of rent-stabilized debt, according to the Wall Street Journal. The FDIC release did not include a bid amount, but the reported figure prompted rival bidder Brookfield Property Group to warn the agency against not choosing its higher bid.

Canada-based Brookfield, in partnership with local affordable housing developer Tredway, bid more than 80 cents on the dollar on a $4.4 billion pile of rent-stabilized loans, according to the Financial Times. Those loans were part of the $5.8 billion pool awarded to the Related-led group.

The pool that CPC and Related will co-own makes up a little over one-third of the $15 billion in rent-stabilized debt from the collapsed Signature Bank.

The loans were broken up into nine pools, according to sources. CPC’s awarded equity stake is in two joint ventures. A team at Newmark led by Doug Harmon and Adam Spies brokered the deal.

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CPC will lead the partnership and service the debt, according to the firms.

Community Preservation Corp. cut its teeth rehabilitating rent-stabilized buildings during the housing crisis of the 1970s. Related owns rent-stabilized housing throughout the city. Neighborhood Restore is a housing development fund corporation, or HDFC, that seeks to create affordable homeownership opportunities and works with a New York City program to move neglected properties to new ownership.

The FDIC, in marketing the rent-stabilized loans, had cited its statutory obligation to maintain affordable housing for lower-income tenants. Tenant groups pushed the government agency to award the regulated loans to a nonprofit in hopes that such a lender would look out for tenants’ interests, for example by pushing landlords to maintain their buildings.

Related, CPC and Neighborhood Restore in a joint release said it would “work to ensure the preservation of long-term affordability for properties securing the loans in the venture.”

Many rent-stabilized buildings have deteriorated in the wake of the 2019 rent law, which effectively capped rents on regulated assets.

The FDIC on Thursday awarded two Blackstone affiliates — in a partnership with Rialto Capital and the Canada Pension Plan Investment Board — a 20 percent stake in a venture holding all of Signature’s non-rent-regulated loans. That debt totals about $17 billion. 

Also, on Dec. 7, Axos Bank bought two Signature loan pools holding $1.2 billion in non-regulated commercial real estate loans from the FDIC for 63 cents on the dollar. The FDIC marketed those pools to bank bidders only and did not offer ownership through a joint venture, as it did with the other pools.

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