Blackstone JV Buys Stake in $17B Signature Bank Portfolio

Blackstone, CPP and Rialto have agreed to pay $1.2 billion for their stake in the Signature Bank loan portfolio secured by a collection of mostly NYC properties. Image by Todd Quackenbush/Unsplash.com

Blackstone subsidiaries Blackstone Real Estate Debt Strategies and Blackstone Real Estate Income Trust, together with the Canada Pension Plan Investment Board and Rialto Capital, entered into a joint venture with the Federal Deposit Insurance Corp. to acquire a 20 percent stake in the $16.8 billion senior mortgage loan portfolio retained following Signature Bank’s failure, paying $1.2 billion. The FDIC will maintain 80 percent ownership and has provided 50 percent of the venture’s value in financing.

The portfolio encompasses more than 2,600 loans for retail, office and multifamily properties mainly concentrated in the New York City area. Some 90 percent of the loans are fixed-rate with low in-place coupons and strong in-place debt service coverage, according to Blackstone. The company will act as the lead asset manager and Rialto Capital will be the loan servicer and operating partner.

The $16.8 billion debt portfolio is a fraction of the overall collection of 5,137 real estate loans worth $33.2 billion, referred to as SIGCRE-23. Blackstone has been considered, for a while now, the lead bidder on the tranche. That is, in turn, part of an even larger $60 billion portfolio in Signature Bank loans being sold by Newmark on behalf of the FDIC.

Beyond the Signature Bank portfolio, Blackstone has continued to close deals worthy of the largest real estate owner in the world, most recently entering a $7 billion joint venture with Digital Realty aiming to develop data centers.

A competitive bidding process

The marketing for the Signature Bank portfolio started in September and included a seven-week due diligence period, Connect CRE reported. At the time of its collapse in March, Signature Bank held assets worth $110.4 billion, of which $88.6 billion were in deposits.

JLL worked as real estate advisor for Blackstone, CPP and Rialto. Legal advisors for the partners included Simpson Thacher Bartlett LLP, Gibson, Dunn & Crutcher LLP, Ropes & Gray LLP, Davis Polk & Wardwell LLP, along with Bilzin Sumberg Baena Price & Axelrod LLP.