Term Sheet: Bidders line up for Signature Bank portfolio; Ready Capital and NewPoint launch BTR lending platforms; Cottonwood Group originates $240m Boston development loan

Blackstone, Related Fund Management and Starwood Capital Group among the bidders for parts of the Signature loan portfolio; Ready Capital identifies build-to-rent construction lending niche with latest strategy; Cottonwood originates a $240 million Boston luxury apartment development loan; and more in today’s Term Sheet, exclusively for our valued subscribers.

They said it

“Once you find yourself in a hole, job number one is to stop digging” 

Rohit Aggarwala, commissioner of the New York City Department of Environmental Protection and the city’s chief climate officer, speaking at the PERE America Forum in New York last week, explains why building owners in the city must work to reduce their carbon footprints.

What’s new

Bidders are circling the Signature Bank portfolio. (Source: Getty images)

The usual suspects 

Private equity firms including Blackstone, Brookfield Asset Management, Starwood Capital Group and Related Fund Management are said to be leading bidders for portions of the $60 billion Signature Bank portfolio. While New York-based Blackstone is said to be in the lead to acquire the $17 billion commercial property loan portfolio, Related Fund Management and two non-profits are believed to have the edge for the bank’s residential loans, according to a report this week from Bloomberg.

John Murray, managing director, global private real estate at Los Angeles-based PIMCO, speaking at last week’s PERE America Forum, believes it is unlikely the sale will provide much clarity for the wider market. “I’ve heard people say the sale of the Signature Bank portfolio will be the catalyst for value, but that won’t really tell you anything,” Murray said. “If you’re on the outside, you don’t even know what the assets are. If Company X buys Portfolio Y from Signature Bank for 70 cents on the dollar, you don’t know the structure of their financing or the business plan. That won’t be a catalyst,” he added.

Built to lend 

Ready Capital and NewPoint Real Estate Capital each have rolled out lending programs that aim to provide bridge financing to a specific niche within the multifamily market: built-to-rent communities. Ready Capital, a New York mortgage real estate investment trust, sees a significant dearth of capital for sponsors seeking construction financing of $5 million to $20 million for build-to-rent projects. Meanwhile, Dallas-based manager NewPoint sees a similar value proposition to acquire or refinance projects of $10 million-$50 million.

Adam Zausmer, chief credit officer of Ready Capital, says in addition to wanting to fill a short-term liquidity need, there is another factor at play. “These construction projects will be delivered in the early stages of a recovering market when there will be little competitive new supply,” he said in a story posted on Real Estate Capital USA this week.

Trending

Alternative lender-palooza  

Reduced appetite from traditional lenders will open more opportunities for alternative lenders in commercial real estate and beyond, according to a webinar held this week by Frankfurt-based manager DWS Investments. While investment activity in the real estate landscape is about a third less than this time last year, DWS sees opportunities in value-add strategies, counter-cyclical sectors and the conversion of obsolete properties in the coming year. “ESG is becoming more important for equity investors and lenders. [They] are also now thinking about how they want to position their book from a quality of asset perspective,” said Jessica Hardman, head of European real estate portfolio management at DWS.

Data snapshot

Creeping up 

Office visitation is slowly rising in New York, with levels through September 2023 slightly higher than during the same period in 2022, according to a report published this week by the Real Estate Board of New York. The local trade organization found all office visitation was at 66 percent year-to-date compared with 2019, with visitation levels of 67 percent for class A+ offices. Interestingly, visitation levels for A/A- and B/C buildings saw more marked increases year-over-year.

People

Colliers bolsters Los Angeles finance platform 

Colliers Mortgage, the debt financing arm of Toronto-based advisory Colliers, last week hired Tommy Adelson as a vice-president, transactions, and Jessica Mania as vice-president, research and marketing. The move follows the firm’s hire last month of Jonathan Lee and Shahin Yazdi to co-lead Colliers Mortgage’s structured finance group. The group is responsible for sourcing debt and equity for sponsors throughout the West. Adelson joins the firm from New York-based Institutional Property Advisors, while Mania comes on board from Los Angeles-based George Smith Partners.

Borrower’s Corner

Nelson Management sees security on the sidelines 

For Nelson Management, a New York-based multifamily owner and operator, the safest place for an investor to be in today’s volatile interest rate market is on the sidelines. The firm, which in June re-acquired a pair of local properties totaling about 1,200 units that it sold many years ago, has not moved forward with new acquisitions since that time. “Since we were able to secure financing on that property, interest rates are up significantly, which has made it hard for us to do anything. You’re seeing a lot of people on the sidelines because they don’t really understand where this risk is going,” Robert Nelson, president, told Real Estate Capital USA this week.

Loan in focus

A rendering of the planned St Regis Residences in Boston. (Source: Cottonwood Group)

In-filling 

Los Angeles-based real estate private equity manager Cottonwood Group has been originating senior and subordinate debt to finance the construction of luxury apartment complexes in urban infill areas. The firm this week originated a $240 million senior mortgage for the St Regis Residences in Boston, a luxury multifamily property in the city’s Seaport District. Earlier this month it provided a $50 million mezzanine loan for the Five Points Development at 262 Fifth Avenue. Alexander Shing, chairman and chief executive of Cottonwood Group, said the firm’s previous work in Boston, including the nearby Echelon Seaport project, helped to bolster Cottonwood’s confidence in the city’s luxury rental market. “The St Regis residences is just one of our many ongoing investments in the city,” Shing added.


Today’s Term Sheet was prepared by Randy Plavajka, with Samantha Rowan and Shihao Feng contributing