NYCB Confident Rents Law Won’t Hurt Multi-Family Portfolio
Despite a slow quarter of loan growth, New York Community Bank, the state’s largest multi-family lender, assured investors on Wednesday that its heavily regulated rent portfolio was well protected against the state’s rent laws. ‘State.
The bank’s total loans, about three-quarters of which are for multi-family properties, increased about 1% to $ 43.7 billion on an annualized basis. The increase in the second quarter was 4 percent.
CEO Thomas Cangemi called the growth “modest,” but assured the bank’s multi-family loans were not to blame. Multi-family loans, in fact, repeated their second quarter performance, jumping 4% on an annualized basis, quarter over quarter.
Declines in other segments of the business, the largest of which is commercial real estate, offset growth in multi-family, Cangemi said.
With an investor presentation accompanying the third quarter results, NYCB showcased the health of its rent-regulated portfolio on a slide titled, “Our multi-family portfolio is well protected against recent changes in rental regulation laws.”
The slides clarified that $ 19.2 billion or 58% of the companies’ multi-family portfolio is subject to state rent stabilization law; however, the weighted average loan-to-value ratio on this part of the portfolio is 55 percent, already low risk, and about 3 percentage points lower than that of its overall multi-family portfolio.
Carry-overs, which reached $ 6.1 billion a year ago, have since declined considerably. In the third quarter, they fell another 9% to $ 914 million from the previous quarter. Full payment references remained stable at zero.
A problematic borrower, whom the CEO did not identify, pushed total 30- to 89-day loans to $ 447 million, more than double than in the second quarter.
Cangemi said the borrower owns several multi-family and mixed-use properties in Manhattan. He assured analysts that all defaults are within the 30-day bucket and that the bank is working with the borrower, who took advantage of the CARES Act loan modification program.
“We do not expect to suffer losses on this relationship,” he added.
The New York Community Bank has pointed out that Manhattan’s residential real estate market is “on track to normalize,” particularly in its segment – non-luxury, rent-regulated multi-family homes.
“We are seeing a supply and demand situation where there is not enough supply and huge demand on the housing side, so we are very confident,” Cangemi said.
In the months following the pandemic in early 2020, reports noted an increase in vacant housing among New York City’s more than 900,000 rent-stabilized units, which would normally be immediately filled by tenants. . But the biggest concern for owners of stabilized rent apartments has remained the 2019 law which severely limited rent increases for these units and, unlike previous iterations, has no expiration date.