Santander’s $1.1B Bid Nabs Signature Rent-Stabilized Debt

The Federal Deposit Insurance Corporation on Wednesday awarded Santander Bank a stake in the balance of Signature Bank’s rent-regulated loan book for a winning bid of $1.1 billion.

Santander, a national bank, nabbed a 20 percent equity interest in a joint venture holding $9 billion in loans backed by rent-stabilized and rent-controlled properties. The FDIC will maintain an 80 percent stake in the venture. A Newmark team led by Doug Harmon and Adam Spies acted as financial advisor for the FDIC.

The award concludes the auction of the $33 billion in loans marketed by the FDIC after the government agency seized Signature Bank in March.

Last week, a smaller slice of the total $15 billion in rent-stabilized loans, held in another joint venture, went to Related Fund Management, in partnership with nonprofits Community Preservation Corporation and Neighborhood Restore. The groups won a 5 percent stake in the joint venture.

The FDIC also awarded Blackstone Real Estate Debt Strategies and BREIT a 20 percent stake in a joint venture holding Signature’s $17 billion non-regulated commercial real estate debt. The groups partnered with Rialto Capital and Canada Pension Plan Investment Board.

The government agency has repeatedly cited its statutory obligation to preserve affordable housing throughout the rent-stabilized bidding process. Ahead of the sale, industry observers said some of Signature’s rent-stabilized loan book is likely underwater.

Since the 2019 rent law effectively capped revenues in rent-regulated buildings, owners facing rising expenses, have struggled to service their debt. The rent-regulated loans were split into nine different pools according to performance, sources said.

Related’s move to partner with two non-profits may have made its reported bid of 68 cents on the dollar more attractive to the FDIC, outshining higher bids from a Brookfield team.

Santander CEO TIm Wennes in a press release noted Santander’s standing as a multifamily lender, adding “this transaction will leverage that industry expertise.”