Blackstone Inc. is poised to make a significant acquisition, nearing the final stages of securing a substantial $17-billion commercial property loan portfolio from the Federal Deposit Insurance Corporation (FDIC). This strategic move comes in the aftermath of the collapse of Signature Bank, which continues to reshape the regional banking landscape.
The transaction, part of the FDIC’s efforts to divest assets from the failed bank, holds particular importance for Blackstone. The company’s shares have experienced a noteworthy 23.5% climb over the past six months, and it currently holds a Zacks Rank #3 (Hold).
The acquisition follows the challenges faced by Signature Bank, alongside issues at Silvergate Bank and Silicon Valley Bank (SVB), leading to Silvergate’s self-liquidation phase. Responding to these disruptions, the FDIC enlisted Newmark Group to oversee the sale of approximately $60 billion in loans.
While parts of Signature Bank were absorbed by a subsidiary of New York Community Bancorp (NYSE:NYCB), it did not take on the entirety of the bank’s loan suite. Flagstar Bank played a role in the resolution process by acquiring specific assets from Signature Bridge Bank N.A., encompassing $25 billion in cash and other elements of the bank’s portfolio, excluding digital assets and specific loans. The transaction involved a $2.7 billion discounted bid on net asset value. Additionally, Silicon Valley Bank was successfully taken over by First Citizens BancShares Inc. following a competitive auction with 18 bidders and 27 bids.
The ongoing transaction between Blackstone and the FDIC excludes rent-stabilised properties but includes a partnership with Rialto Capital for loan servicing, reflecting a strategic approach to managing the acquired assets. The financial details of Blackstone’s economic bid are currently in the finalisation stage with the FDIC.
The broader implications of Signature Bank’s collapse have prompted regulatory measures aimed at fortifying financial stability. Major banks are now required to replenish the government’s deposit insurance fund by an additional $15.8 billion over the next two years.
Blackstone’s move to secure this substantial loan portfolio aligns with its expansive investment strategy and positions the company to potentially strengthen its presence in commercial real estate lending. This strategic move comes at a crucial time, offering opportunities for growth in the commercial real estate market amid the ongoing recalibration following recent challenges in the banking sector.