(Bloomberg) — Blackstone Inc. emerges as the top contender to acquire a portfolio of commercial-property loans valued at approximately $17 billion from the Federal Deposit Insurance Corp.’s sale of Signature Bank debt, as per sources familiar with the situation.
Regulators seized the failed bank in March and have been marketing loans backed by retail, industrial, office, and apartment buildings. FDIC officials are now in final discussions to declare Blackstone’s bid as offering the lowest costs to the agency, some of the insiders disclosed.
Such transactions can be intricate, and while the final details are still being ironed out by bank regulators, the specific terms remain in flux. As is typical with any unfinished transaction, it is possible for another bidder to prevail or for the loan pool to be divided among multiple suitors.
Blackstone is currently in negotiations to partner with Rialto Capital, which would assist in servicing the loans, according to sources.
A Blackstone spokesperson did not immediately respond to a request for comment. An FDIC representative declined to comment, and a representative for Rialto did not immediately return a message seeking comment.
The FDIC aims to offload approximately $33 billion of Signature’s real estate loans after the bank’s collapse earlier this year. A significant portion of the loans backed buildings with rent-stabilized or rent-controlled units, particularly in New York City, though these units are not part of the Blackstone deal.
Commercial real estate owners are facing pressure due to a surge in borrowing costs, which is causing property values to decline and hindering transactions. Investors have been closely monitoring the Signature sale for insights into pricing as the market remains largely stagnant.
The bidding process attracted interest from finance companies such as Starwood Capital Group and Brookfield Asset Management Ltd. while the number of bidders for each portfolio remains unknown, several companies planned to join forces with other firms to make offers.
A team from Newmark Group Inc., led by Doug Harmon and Adam Spies, is collaborating with the FDIC on the sale. A representative for the brokerage declined to comment.
–With assistance from Patrick Clark and Katanga Johnson.
(Updates with potential partner in fourth paragraph.)
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