FDIC kicks off $33 billion sale of seized assets from Signature Bank

The seized assets, backed by multifamily, office, retail and other commercial properties, will be offered in 14 pools, six of which will include an offer of leverage, or financing, while two pools will be limited to bank bidders, according to the FDIC.

The offer of leverage has been used during periods of stress in the banking system, including the 1980s and early 1990s, when the FDIC established the Resolution Trust Corporation to entice investors to sop up soured real-estate assets from failed banks and savings-and-loan associations. It also can help limit assets from fetching fire-sale prices, which could cause additional headaches at banks loaded up with commercial-property loans.

The new transaction is being closely followed by the commercial-real-estate industry as owners reel from higher rates, wobbling property prices and a wall of debt coming due. The benchmark 10-year Treasury yield
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was climbing again Tuesday to near 4.26%, close to the highs of 2023.

More multifamily landlords with floating-rate or maturing loans have begun to experience defaults this year. Unlike the office sector with the rise of hybrid work, however, occupancy levels at apartment buildings have held up, in large part because of the continued U.S. housing and affordability crises.

Initial bids on the New York-centric pool of loans from Signature Bank will be due on Nov. 1, 2023, with the closing anticipated on or before Dec. 14, 2023.

Newmark didn’t immediately respond to a request for comment.

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