FDIC Signature Bank Receivership Sells 20 Percent Equity Interest in Entity Holding $9 Billion Rent-Stabilized / Rent-Controlled Multifamily Loans
Background
In a recent transaction, the Federal Deposit Insurance Corporation (FDIC), as the Receiver of Signature Bridge Bank, N.A., completed the sale of a 20 percent equity interest in SIG RCRS A/B MF 2023 Venture LLC (Venture), a newly formed entity wholly owned by the FDIC-Receiver. The equity interest was sold to SBNA Investor LLC (SBNA), which is indirectly controlled by Santander Bank, N.A. The sale price amounted to $1.1 billion.
The Venture holds approximately $9 billion of loans that are collateralized by rent-stabilized or rent-controlled multifamily properties. This strategic sale is part of the FDIC’s efforts to manage and resolve the assets retained in receivership after the failure Signature Bank.
Preservation of Affordable Housing
One of the key considerations in this transaction was the FDIC’s statutory obligation to maximize the preservation of the availability and affordability of residential real estate for low- and moderate-income individuals. To fulfill this obligation, the FDIC carefully selected SBNA as the buyer, taking into account their ability to manage, service, and liquidate the Venture’s assets while maintaining the affordability of the underlying properties.
The terms of the transaction include requirements that facilitate the financial and physical preservation of the collateralized properties. This ensures that the rent-stabilized or rent-controlled multifamily properties continue to provide affordable housing options for individuals with low to moderate incomes.
Market Process and Due Diligence
The marketing process for the sale began in September 2023. The transaction was conducted on a competitive basis, with interested parties given a seven-week due diligence period to evaluate the opportunity. The FDIC-Receiver offered a 20 percent equity interest in the Venture for bidding.
Throughout the due diligence process, the FDIC engaged with New York City and New York State housing authorities, government agencies, and community-based organizations. Their input was sought to ensure that the FDIC’s marketing and disposition strategy aligned with the needs of the local community.
Responsibilities and Oversight
As part of the transaction, SBNA will assume responsibility for the management, servicing, and liquidation of the Venture’s assets. However, the FDIC-Receiver will retain an 80 percent equity interest in the Venture and maintain comprehensive monitoring and oversight.
This arrangement allows the FDIC-Receiver to ensure that the Venture’s assets are managed in accordance with the terms of the transaction, including the preservation of affordability for the residents of the properties.
Conclusion
The sale of a 20 percent equity interest in SIG RCRS A/B MF 2023 Venture LLC marks a significant step in the FDIC’s efforts to manage the assets retained in the receivership of Signature Bank. By partnering with SBNA, the FDIC ensures the preservation of affordable housing for low- and moderate-income individuals in rent-stabilized or rent-controlled multifamily properties.
This transaction demonstrates the FDIC’s commitment to fulfilling its statutory obligations while responsibly resolving assets from failed banks. Through careful market processes, due diligence, and engagement with relevant stakeholders, the FDIC-Receiver continues to make progress in its efforts to maximize the preservation of affordable housing.
Frequently Asked Questions
1. What is the FDIC Signature Bank Receivership?
The FDIC Signature Bank Receivership refers to the legal process in which the FDIC assumes control of a failed bank, Signature Bank, as its Receiver. The FDIC’s role is to manage and resolve the assets of the failed bank in a responsible manner, following statutory obligations and preserving the interests of depositors and the public.
2. What is the significance of the sale of a 20 percent equity interest in the Venture?
The sale of a 20 percent equity interest in the Venture represents a major milestone in the FDIC’s efforts to manage and resolve the assets retained in the Signature Bank receivership. This transaction allows for the preservation of affordable housing in rent-stabilized or rent-controlled multifamily properties, which is a key priority for the FDIC.
3. Who is SBNA Investor LLC?
SBNA Investor LLC is an entity indirectly controlled by Santander Bank, N.A. It was selected by the FDIC as the buyer for the 20 percent equity interest in the Venture. SBNA will be responsible for managing, servicing, and liquidating the assets of the Venture, while the FDIC-Receiver retains an 80 percent equity interest and oversees the process.
4. How will the FDIC ensure the preservation of affordability in the properties?
The terms of the transaction include requirements that facilitate the financial and physical preservation of the rent-stabilized or rent-controlled multifamily properties. SBNA, as the buyer, will be responsible for managing the portfolio in accordance with these terms and will be subject to comprehensive monitoring and oversight by the FDIC-Receiver.
To learn more about the FDIC-Receiver’s asset dispositions and ongoing efforts, please visit https://visbanking.com/.
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