Santander Closes on Transaction with the FDIC to Service Signature Bank';s Multifamily Real Estate Assets

Rhea-AI Summary

Santander Bank, N.A. (SAN) acquires a 20% equity stake in a joint venture to service a $9 billion multifamily portfolio. The FDIC partnership leverages Santander's expertise and scale in the multifamily sector. The Bank acquired the stake for $1.1 billion at an attractive basis and will service 100% of the assets in the portfolio. The transaction is accretive starting in 2024 and will consume approximately two basis points of Santander Group CET1, to be paid back within three years.

Insights

Financial Analyst

The acquisition of a 20% equity stake by Santander in a joint venture to service a $9 billion multifamily portfolio is a strategic expansion that leverages the bank's established presence in the multifamily real estate sector. The deal, which involves assets from the recently failed Signature Bank, represents a significant investment at $1.1 billion. A critical aspect to consider is the transaction's accretive nature starting in 2024, suggesting it will contribute positively to earnings per share upon integration. Furthermore, the impact on the Santander Group's CET1—a key measure of financial stability—is minimal, at two basis points, with a recovery plan within three years.

Investors should note the potential for increased market share and revenue growth in the U.S. multifamily space, particularly within the New York metro market. However, the servicing of 100 percent of the assets also implies a concentration of risk. The multifamily sector can be sensitive to economic cycles and rent-controlled or rent-stabilized loans may have specific regulatory considerations. The long-term success of this venture will likely hinge on the robustness of the U.S. housing market and regulatory environment.

Industry Analyst

The transaction highlights Santander's commitment to the U.S. as a strategic market, enhancing its position as a top-tier player in the multifamily real estate lending and servicing niche. With an existing $13.5 billion multifamily real estate portfolio and an Outstanding Community Reinvestment Act (CRA) rating, the bank is poised to capitalize on synergies and expertise in this sector.

Market observers should consider the broader implications of such a deal on the competitive landscape. Santander's increased capabilities in servicing these loans could pressure other market participants, potentially leading to consolidation or strategic partnerships within the industry. Moreover, the involvement of the FDIC in retaining assets post-bank failure signals a proactive approach to stabilizing the financial system, which may have ripple effects on investor confidence in the sector.

Real Estate Market Analyst

The focus on rent-controlled and rent-stabilized multifamily loans within the joint venture's portfolio is noteworthy. These types of loans are subject to specific regulations that can affect profitability and operational complexity. Given the current economic climate and debates around housing affordability, stakeholders should monitor regulatory changes that could impact the performance of such assets.

Additionally, the New York metro market is known for its high demand and limited supply of multifamily housing, which may provide a buffer against market downturns. However, the reliance on a single geographic market increases exposure to local economic shifts and policy changes. The diversification of Santander's existing portfolio with these New York-based assets could either mitigate or amplify systemic risks, depending on market developments.

• Santander to acquire a 20% equity stake in a joint venture to service a $9 billion multifamily portfolio.

• FDIC partnership builds on Santander's deep expertise and scale in the multifamily sector.

BOSTON--(BUSINESS WIRE)-- Santander Bank, N.A. ("Santander" or "the Bank") today announced that it has closed a transaction with the Federal Deposit Insurance Corporation (FDIC) to participate in a joint venture that consists of a $9 billion portfolio of New York based multifamily real estate assets retained by the FDIC following the failure of Signature Bank. The Bank acquired a 20 percent equity stake of the joint venture for $1.1 billion at an attractive basis and will service 100 percent of the assets in the portfolio.

"This transaction underscores our strength and scale, leveraging our considerable expertise in the sector," said Ana Botín, Banco Santander executive chair. "We are a major participant in the U.S. multifamily space and this transaction plays to our strengths."

The Bank has a $13.5 billion multifamily real estate portfolio, is a leading multifamily bank real estate lender in the United States and holds an Outstanding Community Reinvestment Act (“CRA”) rating.

"Santander US is a top-ten multifamily bank real estate servicer and lender and this transaction will leverage that industry expertise while also deepening our franchise in the New York metro market," said Tim Wennes, Santander US country head and Santander Bank president and CEO.

The U.S. remains a strategic market for Banco Santander, as demonstrated by this transaction. The portfolio of loans in the joint venture consists of three pools of rent-controlled and rent-stabilized multifamily loans. The transaction will be accretive starting in 2024 and consume approximately two basis points of Santander Group CET1, to be paid back within three years.

Santander was advised in this transaction by Wachtell, Lipton, Rosen & Katz, Davis Polk, and Chain Bridge Partners.

About Santander US

Santander Holdings USA, Inc. (SHUSA) is a wholly owned subsidiary of Madrid-based Banco Santander, S.A. (NYSE: SAN) (Santander), a global banking group with 166 million customers in the U.S., Europe and Latin America. As the intermediate holding company for Santander’s U.S. businesses, SHUSA is the parent company of financial companies with approximately 13,700 employees, 4.5 million customers, and $168 billion in assets, as of December 2022. These include Santander Bank, N.A., Santander Consumer USA Holdings Inc., Banco Santander International, Santander Securities LLC, Santander US Capital Markets LLC and several other subsidiaries. Santander US is recognized as a top 10 auto lender, a top 10 multifamily bank lender, and has a growing wealth management business. For more information about Santander US, please visit www.santanderus.com.

About Santander Bank, N.A.

Santander Bank, N.A. is one of the country’s largest retail and commercial banks with $99 billion in assets. With its corporate offices in Boston, the Bank’s nearly 9,000 employees and more than 2 million customers are principally located in Massachusetts, New Hampshire, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania and Delaware. The Bank is a wholly owned subsidiary of Madrid-based Banco Santander, S.A. (NYSE: SAN) – one of the most respected banking groups in the world with 166 million customers in the U.S., Europe, and Latin America. It is overseen by Santander Holdings USA, Inc., Banco Santander’s intermediate holding company in the U.S. For more information on Santander Bank, please visit www.santanderbank.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231220754880/en/

Media:

Laura Burke

Laura.Burke@santander.us



Andrew Simonelli

Andrew.Simonelli@santander.us

Source: Santander Bank, N.A.

FAQ

What is the joint venture Santander Bank, N.A. has acquired a stake in?

Santander Bank, N.A. has acquired a 20% equity stake in a joint venture to service a $9 billion multifamily portfolio.

How much did Santander Bank, N.A. pay for the 20% equity stake?

Santander Bank, N.A. acquired the stake for $1.1 billion at an attractive basis.

What are the expected financial impacts of the transaction for Santander Group?

The transaction will be accretive starting in 2024 and will consume approximately two basis points of Santander Group CET1, to be paid back within three years.

Who advised Santander Bank, N.A. in this transaction?

Santander Bank, N.A. was advised in this transaction by Wachtell, Lipton, Rosen & Katz, Davis Polk, and Chain Bridge Partners.