The Federal Deposit Insurance Corp. (FDIC) on Tuesday announced the planned sale of seized assets from the collapsed New York-based Signature Bank (OTC:SBNY). The assets, worth approximately $33 billion, consist of commercial real estate loans and will be offered in 14 pools. The initial bids for the New York-centric pool of loans are due on Nov. 1, 2023, with the sale expected to close on or before Dec. 14, 2023.
The FDIC stepped in to protect depositors in Signature Bank and Silicon Valley Bank in March and introduced a new backstop to prevent other banks from collapsing. Newmark Group (NASDAQ:NMRK) NMRK was hired by regulators to generate interest in the loan pools. The company has yet to respond to requests for comment.
Six of the asset pools will include an offer of leverage or financing, a tactic previously used during periods of banking system stress, such as the 1980s and early 1990s. The FDIC established the Resolution Trust Corporation during these periods to attract investors to purchase soured real-estate assets from failed banks and savings-and-loan associations. This strategy can also help prevent assets from being sold at fire-sale prices, which could pose further challenges for banks burdened with commercial property loans.
Two of the asset pools will be restricted to bank bidders, according to the FDIC. The commercial real estate industry is closely watching this transaction as property owners grapple with higher rates, fluctuating property prices, and upcoming debt payments.
On Tuesday, the benchmark 10-year Treasury yield rose again to nearly 4.26%, close to its 2023 peak. This year has seen an increased number of defaults among multifamily landlords with floating-rate or maturing loans. However, occupancy levels in apartment buildings have remained stable, largely due to the ongoing U.S. housing and affordability crises.
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