Recent banking failures impacting California affordable housing projects.
March 20, 2023 |
Updated March 20, 2023
Startups and technology companies aren’t the only ones feeling the pain of the recent banking failures in the U.S. The rental housing industry has felt the ripple effect from the collapse of Silicon Valley Bank (SVB).
“SVB had $1.3 billion in investments in affordable-housing projects in 2022, according to SEC filings, and $754 million committed to affordable-housing projects over the next five years,” according to MarketWatch.
There are 13 affordable housing projects in California including 11 in the Bay Area that face an uncertain future after the collapse of SVB, according to The Bay Area News Group. One San Francisco-based developer was set to close on a $52 million construction loan from SVB for a 112-unit affordable community; they now must find a new lender.
SVB has contributed roughly $1.1 billion in investments and $1.6 billion in loans for nearly 10,000 affordable housing units in the Bay Area between 2002 and 2021, according to its 2022 Environmental, Social and Governance Report.
Meanwhile, nearly a third loans as a percent of total assets of Signature Bank were tied to real estate loans, and roughly half of that were multifamily loans, according to John Burns Real Estate Consulting. Signature and SVB were taken over by the FDIC earlier this month, and it was announced Flagstar Bank agreed to purchase Signature. About 40% of Flagstar’s loans are tied to multifamily, while nearly two-thirds are real estate loans.