Morgan Stanley Eyes $700M of Signature’s Distressed CRE Loans

Morgan Stanley is in talks to acquire $700M of Signature Bank’s distressed CRE loans from a Blackstone-led consortium, prompting speculation.
May 19, 2024
Morgan Stanley is in talks to acquire $700M of Signature Bank's distressed CRE loans
  • Morgan Stanley (MS) may soon acquire $700M of Signature Bank’s distressed CRE loan portfolio.
  • The sellers are Blackstone, Canada Pension Plan Investment Board, and Rialto Capital, which bought the loans in December.
  • The sudden sale has prompted speculation into what made the Blackstone-led consortium change its mind.
Key Takeaways

Morgan Stanley (MS) may soon acquire $700M of Signature Bank’s distressed CRE loans. The portfolio was originally held by a consortium that included Blackstone (BX) Canada Pension Plan Investment Board and Rialto Capital.

Setting The Scene

In 2023, Signature Bank was among three banks, including Silicon Valley Bank and First Republic Bank, closed by the Federal Deposit Insurance Corporation (FDIC). The closures were triggered by the banks’ failure to hedge against rising interest rates, which led to significant devaluations in their bond assets. Consequently, the FDIC put Signature Bank’s $33 billion CRE loan portfolio, largely comprising multifamily properties, up for sale.

The First Bid

The group led by Blackstone won a 20% stake in nearly $17 billion of Signature loans in December 2023. Surprisingly, they opted to sell that portion in January, prompting speculation about their motives. Concerns in November 2023 suggested that Signature’s portfolio might sell at 15% to 40% below face value due to market uncertainties and a lack of price discovery.

Large transactions like these often impact broader markets. According to Matt Reidy, director of commercial real estate economics for Moody’s, such sales set prices for existing loans and influence market valuations. Depending on the underlying loans and their performance, the impact varies across different markets.

Why It Matters

For Morgan Stanley, this acquisition could serve as a strategic hedge. The firm positions itself for a rebound in CRE by purchasing these properties at potentially lower prices for future property acquisitions. As Bloomberg noted, transactions like Signature’s loan sales clarify property values and debt worth, influencing market outlook and health.

I’m an award-winning copywriter and digital marketing consultant who co-founded Tailored Ink. I help business owners and marketers craft the right messaging and create content at scale to grow their brands, generate leads, convert them into customers—and even get acquired by their competitors. As a member of Young Entrepreneur’s Council (YEC) and a columnist for sites like Forbes, Entrepreneur, and Business Insider, I also help mentor current and aspiring entrepreneurs and marketing professionals.
CRE Daily is a digital media company covering the business of commercial real estate. Our mission is to empower professionals with the knowledge they need to make smarter decisions and do more business.
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