Blackstone Emerges as Leading Bidder for Signature’s Commercial Property Loans

It started to become clear this week that Blackstone is the leading contender in the bidding war for Signature Bank’s commercial property loans, according to sources cited by Bloomberg News. The FDIC has been working to sell the approximately $17 billion loan portfolio since taking over Signature in March. Discussions are reportedly in the final stages, with the FDIC aiming to declare Blackstone's bid as the most cost-effective. Blackstone is in talks with Rialto Capital to service the loans if the deal goes through.

Commercial property owners have faced challenges this year due to rising borrowing costs, impacting property values. Investors are closely watching the Signature sale to gain insights into pricing dynamics. Signature Bank collapsed in March, following the high-profile downfall of Silicon Valley Bank and the self-liquidation of Silvergate. The FDIC took over Silicon Valley Bank, marking the second-largest bank failure in U.S. history since the 2008 financial crisis.

Signature Bank was eventually sold to a subsidiary of New York Community Bancorp, but not all of its loans were included in the transaction. In a related development, the FDIC announced that the largest U.S. banks would bear the majority of the costs for replenishing the government deposit insurance fund after it was used to assist uninsured depositors during the banking crisis. The plan requires banks with $50 billion or more in assets to contribute 95% of the fees, with exemptions for banks with assets under $5 billion. The government aims to generate $15.8 billion in additional fees over two years, with J.P. Morgan Chase, Bank of America, Wells Fargo, and Citigroup shouldering a significant portion of the costs. It will be very interesting to see the impact on future commercial lending.