Flagstar Financial, the new moniker for the struggling New York Community Bank, is looking to unload a large batch of bad loans backing owners in New York like RXR and Stellar Management.
Flagstar, which NYCB changed its name to in October, has put up for sale the portfolio of eight sub-performing loans with an unpaid balance totaling $343 million, The Real Deal has learned.
The debt includes an $80 million loan NYCB provided to Stellar Management in 2022 to refinance its leasehold on the Flatiron District office building at 220 Fifth Avenue.
There’s also a $77 million loan the bank gave to the Olnick Organization the same year to refinance the office building at 130 Fifth Avenue, and a $66 million loan for RXR’s Standard Motors Building at 37-18 Northern Boulevard in Long Island City from 2014.
The package also includes loans on two other office buildings and a pair of retail condos in Manhattan, according to a marketing memo from Newmark, where a team led by Adam Spies and Josh King is handling the sales process.
Representatives for Flagstar and the borrowers did not immediately respond to requests for comment.
It’s not entirely clear what led the owners to struggle with their debts. The Olnicks’ 130 Fifth Avenue, for example, was reportedly 100 percent leased earlier this month following a 13,000-square-foot deal with Airbnb.
The marketing memo notes that the properties in the portfolio have “challenging capital stacks,” as do many owners who have to refinance loans in this high-rate environment.
A representative for Olnick said their loan is performing and they have no issues with it.
The former NYCB, meanwhile, has been struggling to regain its footing since nearly collapsing in March. The bank in October reported a 990 percent increase in loans with outsized default risk, marking $1.5 billion worth of loans in the third quarter that had not received payment in 90 days.
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New York Community Bank in October changed its name to Flagstar Financial. The company in February unexpectedly disclosed that it had discovered some “internal controls” issues stemming from an internal loan review, and replaced CEO Thomas Cangemi with executive chairman Alessandro DiNello.
DiNello had been CEO of Michigan-based Flagstar Bank, which NYCB acquired in late 2022.