The Federal Deposit Insurance Corp. has lined up two more buyers for commercial real estate loans that once belonged to the failed Signature Bank.
The government has been selling off $33 billion in property loans belonging to the troubled financial institution for much of the year after the collapse and the failure of Silicon Valley Bank rattled markets and put a chill on lending. The FDIC on Thursday said it had sold a stake in half the portfolio to Blackstone Group.
The newest buyers to emerge include Axos Financial, a bank holding company in San Diego, and Community Preservation Corp., a nonprofit multifamily finance company in New York.
Axos Financial’s wholly-owned subsidiary Axos Bank completed the all-cash acquisition of two performing loan portfolios totaling 58 primarily multifamily loans.
The two portfolios totaled loans with an unpaid principal balance of $1.25 billion. Axos paid $789.5 million for the portfolio, according to FDIC data. The purchase price represented a 37% discount to the outstanding balance.
“We believe that we purchased these performing loans at an attractive valuation,” Greg Garrabrants, president and CEO of Axos, said in a statement. “We performed extensive due diligence and valuation analysis on each of the properties in the acquired loan pools.”
All 58 loans are current on principal and interest payments. The most recent property appraisals received from the FDIC indicated that the weighted average loan-to-value ratio is about 59%, according to Axos. That would equate to a property value of $2.1 billion backing the loans.
The loan-to-value ratio on just the multifamily loans averages 67%, while the LTV on the nonresidential commercial loans averages 50.2%.
The transaction value was enhanced by the inclusion of a series of back-to-back interest rate swaps that allow the borrowers to pay an average fixed rate of 3.8%, while Axos receives a primarily variable note rate of 6.9%, the firm said.
Axos Bank is the 97th largest bank in the country by asset size with $20 billion in assets as of Sept. 30, 2023, according to FDIC data. It held the 63rd largest commercial real estate loan portfolio with $7.7 billion.
Meanwhile, Community Preservation completed two separate transactions with the FDIC, acquiring a 5% ownership interest in two separate FDIC-controlled joint ventures. CPC paid $129 million for a 5% stake in one joint venture and $42 million for the other.
The FDIC retained a 95% equity interest in each venture, contributing a total of $5.8 billion of loans collateralized by rent-stabilized or rent-controlled multifamily properties primarily in New York City.
The ventures include 868 permanent loans, secured by properties containing nearly 35,000 units, according to CPC.
“As a nonprofit housing finance company with five decades of work in New York City, CPC understands the unique role that rent regulated housing plays in our neighborhoods, the distinct financial challenges facing its owners and operators in today’s market, and its importance as a haven of affordability to its tenants,” Rafael E. Cestero, CEO of the Community Preservation, said in a statement. “We are committed to a mission of preserving the long-term affordability as well as the physical and financial stability of these properties.”
CPC is partnering with Neighborhood Restore Housing Development Fund Corp. and Related Fund Management in the FDIC ventures.