Rialto, Blackstone Ramp Up Foreclosure Suits On Signature Bank's Former Borrowers
Since taking over Signature Bank’s $17B commercial real estate loan book last year from the Federal Deposit Insurance Corp., the joint venture helmed by Blackstone and Rialto Capital has stepped up the pressure on borrowers in default.
In the past month, the joint venture has hit at least three different New York City property owners with foreclosure suits at four properties tied to loans totaling more than $200M. The properties include commercial condominiums and a landmarked Midtown office tower.
Blackstone and the Canada Pension Plan Investment Board paid $1.2B to the FDIC in December for a 20% equity stake in the $16.8B Signature Bank loan portfolio tied to office and retail buildings and market-rate apartments, with Rialto serving as the loan servicer in the joint venture.
The FDIC seized Signature's assets last March and broke up its $33B commercial real estate loan book into three pieces. Santander Bank and a partnership of Related Cos. and Community Preservation Corp. bought stakes in the other portfolios, which were largely loans tied to rent-stabilized or subsidized housing.
Now, eight months since Blackstone and Rialto bought Signature's commercial loans, they have ratcheted up the pressure on borrowers who they claim have been in long-term default.
Most recently, Rialto filed two lawsuits against RFR for loans totaling around $22M that cover 122 Greenwich Ave. in the West Village and 219 E. 67th St. in Lenox Hill, according to New York Supreme Court filings reported by The Real Deal.
The firm, run by Aby Rosen and Michael Fuchs, owes more than $27M in principal debt tied to the commercial condos, in addition to interest and other fees. RFR took out a $20M loan in 2018 covering eight condos at 122 Greenwich Ave. but allegedly hasn’t made its $98K monthly payment since April 2023.
Fuchs and Rosen also borrowed $2M for the Upper East Side retail condo at 219 E. 67th St. in 2022 and allegedly stopped making debt payments less than a year later. An RFR spokesperson declined to comment.
“We continue to engage with borrowers to find the best resolutions possible,” a Blackstone spokesperson told Bisnow in a statement.
Last week, Rialto also filed to seize a Sunset Park site where Watermark Capital Group and Maguire Capital Group hoped to build a 28-story tower containing almost 500 residential units and a grocery store, Crain's New York Business reported.
The developers defaulted on the $45.3M loan issued by Signature in January 2023, with Rialto claiming it hadn't received payments since December. Rialto is the loan's servicer and is seeking to sell the site, according to Crain's.
Last month, the joint venture also filed two suits alleging that the owners of the McGraw-Hill Building at 330 W. 42nd St. defaulted on a $140M floating-rate loan, PincusCo reported at the time.
The first suit covers a $115M mortgage provided by Signature in May 2019. The second suit is for a $25M construction loan Signature Bank gave in February 2022, which was intended to fund the conversion of more than a dozen of the 650K SF office tower’s floors into residential units.
While the lender isn't seeking a foreclosure judgment for the second case, the filing alone may halt conversion plans, Commercial Observer reported at the time. The loans had all matured between October 2023 and May 2024, according to Commercial Observer. The property owner, Deco Towers Associates, lists ASI Management’s Alex Schwartz as its guarantor for the $115M loan.
