Signature Bank’s real estate loans under scrutiny

Half of multifamily lending was to rent-stabilized buildings, yet it reported near-zero delinquency

Signature Bank’s real estate lending didn’t lead to its failure, but its book of loans may be a cause for concern as the FDIC looks to sell the shuttered institution.

Signature was one of the largest lenders to rent-stabilized buildings

Signature was one of the largest lenders to rent-stabilized buildings, which have seen their values drop since New York state lawmakers passed reforms in 2019 limiting rent increases. The legislation drastically reduced the amount of money that lenders could make from these loans — and increased the risk of delinquency.

“I’d venture to say there are a fair amount of problems there,” he added.

Signature executives downplayed its effect on their portfolio

A typical five-year loan made in 2018 will mature this year, meaning many of Signature’s customers who borrowed against properties at peak value will be forced to refinance this year at lower values and much higher interest rates.

Signature was the third largest commercial real estate lender in New York City. About 46 percent of its commercial real estate loans went to rent-stabilized multifamily, according to data analysis by Maverick Real Estate Partners.

Many of these apartment loans were spread across Manhattan and the outer boroughs. Some went to generational families like Abraham Fruchthandler’s FBE Limited and Douglas Eisenberg’s A&E Real Estate Holdings.

But the bank also didn’t shy away from lending to more controversial landlords, such as Steve Croman and Raphael Toledano, who faced allegations of attempting to harass tenants out of rent-stabilized apartments to convert the units to market-rate.

It was also an active lender to Moshe Piller, who consistently landed on the city’s worst landlord watchlist.