- The FDIC’s 2023 auction of Signature Bank’s $6B rent-regulated loan portfolio revealed the winning bid was 36% lower than the highest offer.
- The winning bid of $129.3M, led by Community Preservation Corporation (CPC), was much lower than Brookfield’s $176.4M bid.
- The auction was for a 5% equity stake in Signature’s portfolio of nearly 35K rent-regulated units in the NYC metro area.
- The FDIC’s selection raised concerns, with critics pointing to potential bias due to political backing despite claims to the contrary.
In 2023, the FDIC auctioned off a 5% equity stake in Signature Bank’s vast $6B loan portfolio, tied mostly to rent-regulated properties in New York City.
The sale has since come under scrutiny with the release of official bid summaries, according to The Commercial Observer.
Behind The Deal
The FDIC’s documents reveal the $129.3M winning bid—led by Community Preservation Corporation (CPC) alongside Related Fund Management and Neighborhood Restore—was 36% lower than the highest offer of $176.4M.
That bid was made by Brookfield Asset Management (BN) with Tredway. Other bids near the $174.5M and $172.8M range, however, were also higher than the selected bid.
Sources familiar with the auction reported that several bids, including those from multifamily investor Skylight Real Estate Partners and others, offered more than 80 cents on the dollar, compared to the winning bid of 59 cents.
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Political Machinations
Signature Bank’s eyebrow-raising winning bid has raised questions about the fairness and transparency of the FDIC’s selection process.
Community Preservation Corporation received support from Mayor Eric Adams’ administration, citing the group’s expertise in managing rent-regulated housing. This political backing raised suspicions among critics, who questioned whether it played a role in the FDIC’s final decision.
Brookfield’s letter to the FDIC, sent in late November 2023, criticized the entire process, suggesting it was conducted in a “secretive” manner and raising concerns about the FDIC’s handling of the auction. The company emphasized its higher bid, asserting it should have been won, full stop.
The Bigger Picture
The Signature Bank loan sale involved 868 permanent loans secured by properties with approximately 35K rent-regulated units, making it a highly coveted asset. However, the portfolio faced many challenges due to New York’s 2019 rent law changes and rising interest rates.
While the FDIC did not immediately respond to inquiries about the lower-than-expected winning bid, the ongoing debate over the sale reflects concerns about how politics continue to influence financial decision-making in high-stakes asset auctions.
