As the former Silicon Valley Bank and its 17 branches reopen Monday under federal receivership, what happens to its 160,000-square-foot headquarters?
Following the bank’s failure on Friday, the fate of its Santa Clara offices at 3003 Tasman Drive and its 55 other U.S. offices depends on whether the Federal Deposit Insurance Corp. can secure a buyer for the bank,the San Francisco Business Times reported, citing a banking consultant.
SVB’s headquarters lease, part of a seven-building office campus known as The Quad, is set to expire Sept. 30, 2024. Leases for other office properties expire at various dates through 2057, according to regulatory filings. The bank had $101 million in net occupancy costs last year.
The bank has long been an anchor tenant at The Quad, which San Francisco-based TMG Partners bought in 2020 for $152 million.
Michael Wick, a 30-year veteran of the banking industry who spent six years as senior counsel at SVB and served as lead closing attorney for the FDIC’s division of resolutions and receivership before that, said it’s all about what future ownership will dictate.
He said if the FDIC can’t find a buyer, it would likely negate Silicon Valley Bank’s leases, a power granted to the agency by federal law.
“When banks were being closed in the 2008 period, the FDIC worked hard to find a buyer, and buyers typically, though not always, would acquire the bank and its real estate,” Wick, who oversaw more than a dozen bank closures between 2009 and 2011, told the newspaper.
“But ultimately it was up to that buyer what they would keep and what they would reject.”
Wick said it was likely the FDIC had already begun working to gauge industry interest in such a deal.
If a buyer does emerge, he said, whether or not it would be inclined to keep SVB’s leases for its headquarters in Santa Clara and for the 55 offices it operates across the U.S. may depend on the buyer’s existing geographical footprint.
An out-of-state buyer might appreciate the ability to simply assume SVB’s existing leases, Wick said, while a California-based buyer might see them as unnecessary.
The stunning failure of Silicon Valley Bank, which wasshut down by regulators and taken over by the FDIC on Friday, sent shockwaves through the tech industry. But it could also have major implications for real estate.
Though the bank primarily lent to venture capital and private equity firms, about 15 percent of the loans on its books were secured by residential mortgages and commercial real estate, based on its 2022 financial report, according to an analysis by The Real Deal.
As the FDIC works to sell off SVB’s assets and pay out insured and uninsured deposits, these loans will have to change hands. In addition, the bank’s fall has led to a broader stock selloff that prompted stock exchanges tohalt trading on a number of regional banks, including prominent commercial real estate lenders Signature Bank and First Republic Bank.
SVB held about $8.3 billion worth of loans secured by personal residence mortgages at the end of last year, and another $138 million linked to home equity credit lines.
The bank also held about $2.6 billion in commercial real estate loans. Some 35 percent of its commercial-backed loans were on multifamily properties. Office properties accounted for 21 percent.
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In its annual report, SVB said its commercial-backed loans “may involve a higher risk of default compared to our other types of loans,” given uncertainty around the economy and residual effects of the pandemic on retail, hotels and offices.
SVB’s collapse marks the second-biggest bank failure in U.S. history and the largest since the 2008 financial crisis.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
