Santander’s $1.1B bid nabs stake in rest of Signature’s rent-stabilized debt

Bank won 20% equity interest in venture holding $9B loan portfolio

Santander’s $1.1B Bid Nabs Signature Rent-Stabilized Debt
Santander's Tim Wennes (Getty)

The Federal Deposit Insurance Corporation on Wednesday awarded Santander Bank a stake in the balance of Signature Bank’s rent-regulated loan book for a winning bid of $1.1 billion.

Santander, a national bank, nabbed a 20 percent equity interest in a joint venture holding $9 billion in loans backed by rent-stabilized and rent-controlled properties. The FDIC will maintain an 80 percent stake in the venture. A Newmark team led by Doug Harmon and Adam Spies acted as financial advisor for the FDIC. 

The award concludes the auction of the $33 billion in loans marketed by the FDIC after the government agency seized Signature Bank in March.

Last week, a smaller slice of the total $15 billion in rent-stabilized loans, held in another joint venture, went to Related Fund Management, in partnership with nonprofits Community Preservation Corporation and Neighborhood Restore. The groups won a 5 percent stake in the joint venture. 

The FDIC also awarded Blackstone Real Estate Debt Strategies and BREIT a 20 percent stake in a joint venture holding Signature’s $17 billion non-regulated commercial real estate debt. The groups partnered with Rialto Capital and Canada Pension Plan Investment Board.

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The government agency has repeatedly cited its statutory obligation to preserve affordable housing throughout the rent-stabilized bidding process. Ahead of the sale, industry observers said some of Signature’s rent-stabilized loan book is likely underwater.

Since the 2019 rent law effectively capped revenues in rent-regulated buildings, owners facing rising expenses, have struggled to service their debt. The rent-regulated loans were split into nine different pools according to performance, sources said. 

Related’s move to partner with two non-profits may have made its reported bid of 68 cents on the dollar more attractive to the FDIC, outshining higher bids from a Brookfield team. 

Santander CEO TIm Wennes in a press release noted Santander’s standing as a multifamily lender, adding “this transaction will leverage that industry expertise.”

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