The Daily Dirt: What pension fund investment means for Signature loans

Fund for city retirees bought into venture overseeing debt

The Daily Dirt
From left: Mayor Eric Adams, Comptroller Brad Lander, CPC’s Rafael Cestero and Related's Jeff Blau (Getty)

No, the city’s main pension fund did not invest $60 million into 35,000 rent-stabilized buildings. Not directly, anyway.

Given the spin from elected officials, that wasn’t exactly clear.

Mayor Eric Adams, Comptroller Brad Lander and Public Advocate Jumaane Williams on Tuesday announced that the New York City Employees’ Retirement System was taking a 25 percent stake in a venture that bought a portion of Signature Bank’s loans backed by rental buildings, most of which are rent-stabilized.

“Today, we are proud to announce a $60 million investment from our NYCERS pension fund that will go toward preserving 35,000 units of affordable housing,” Adams said in a press release.

“Go toward” requires some breaking down:

  • The money is for a stake in the venture, which includes Community Preservation Corporation, Related Fund Management and Neighborhood Restore. The venture services 5 percent of Signature Bank’s $5.8 billion rent-stabilized loan portfolio. The Federal Deposit Insurance Corp. retained 95 percent.
  • The venture does not own the buildings.
  • The preservation of these “rent-stabilized” apartments really kicks in when the loans are in trouble and the venture works with owners to refinance — or takes over properties and sells them. 

Now, onto how the pension fund will make money, because that is something pension funds like to do.

It’s difficult to get a clear picture of that without info on the loans themselves. But Lander told me that most of the loans are performing, so the venture is collecting servicing fees and loan repayments and expects a net internal rate of return of 10.8 percent. Some mortgages will need to be reworked or will face foreclosure.

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