Feelings of uncertainty have been swirling around the world of commercial real estate since the back-to-back collapse of SVB and Signature Bank. Now we are starting to get more clarity on how the Federal Deposit Insurance Corporation (FDIC) intends to handle the banks’ assets. News just broke that the federal government is relying on private businesses to assist in winding down the sizable portfolio of commercial real estate loans held by Signature Bank, with the FDIC tapping commercial real estate services firm Newmark to sell about $60 billion of loans that Signature originated.
It is anticipated that the loans would be organized into pools to sell, although the size of the pools has not yet been determined. With over $20 billion in loans, including roughly $15 billion for multifamily complexes, Signature was the third-largest commercial real estate lender in New York City, where it concentrated most of its lending operations. The majority of its $35.2 billion CRE portfolio consisted of properties in the city. Although the loan portfolio is performing well, many of the loans will likely be sold for less than what they are worth because they were made before the Fed raised interest rates.