Blackstone-Led Venture Wins Stake In $17B Signature Bank Portfolio
The Federal Deposit Insurance Corp. has chosen a winning bid for the equity stake in Signature Bank’s loans, selecting the world's largest commercial real estate owner to take over the assets.
A joint venture led by Blackstone and the Canada Pension Plan Investment Board beat out other bidders with its $1.2B offer, the companies announced Thursday.
Blackstone Real Estate Debt Strategies and Blackstone Real Estate Income Trust, a CPPIB investment subsidiary and funds affiliated with Rialto Capital will take a 20% stake in the $16.8B loan portfolio, with the FDIC set to hold on to the remaining 80% ownership stake. The joint venture is named Hancock JV Bidco, per a release from the FDIC.
The loan portfolio consists of roughly 2,600 mortgages concentrated in the New York metro area spread across offices, market-rate apartments and retail, Bloomberg reported.
Around 90% of the loans are fixed-rate and are largely performing, according to Blackstone, which will act as the portfolio’s lead asset manager. Rialto will assume the role of loan servicer and operating partner.
“Blackstone’s extraordinary real estate insights and credit expertise positioned us to underwrite approximately $17 billion of senior mortgage loans, allowing us to acquire the entire commercial real estate loan portfolio at an attractive basis,” Blackstone Real Estate Credit Global Head Jonathan Pollack said in a statement. “We look forward to working with our borrowers and our partners to maximize the potential of these assets.”
Blackstone and the FDIC declined to comment further to Bisnow.
A Newmark team led by Doug Harmon and Adam Spies served as advisers to the FDIC on the deal. JLL and law firms Simpson Thacher & Bartlett; Gibson, Dunn & Crutcher; Ropes & Gray; Davis Polk & Wardwell; and Bilzin Sumberg Baena Price & Axelrod advised Blackstone.
Signature’s total loans amounted to approximately $33B at the time of the bank’s failure in March. The deal with Blackstone doesn’t include the loan portfolio that contains rent-stabilized apartments, the sale of which is expected to be announced soon.
A group led by Related Fund Management is rumored to have been selected as the winner of the 5% equity stake in the rent-stabilized portfolio. Rival bids came from Blackstone, Fortress and Brookfield Properties, which this week threatened to sue the FDIC if it accepted a bid below the sum that Brookfield offered.
The price Blackstone and CPPIB paid was expected to be an important signal for a market that has seen transaction volume plummet this year partly because of buyer and seller disagreements over property values, The Wall Street Journal reported.
