A Texas private equity firm has acquired a troubled New York City loan portfolio from Flagstar Financial.
Flagstar, previously New York Community Bank (NYCB), sold eight subperforming loans on New York City office and retail assets totaling $343 million to Dallas-based Loan Star Funds, according to a source familiar with the deal. Lone Star purchased the debt at a small discount to par, the source said.
Bloomberg first the deal Friday, which was completed just over two months after Flagstar put the loan portfolio up for sale in December.
Newmark (NMRK) arranged the sale with a team led by Adam Spies and Josh King.
The debt package sold by Flagstar, which changed its name from NYCB in October 2024 seven months after nearly collapsing, includes an $80 million loan in 2022 tied to the leasehold for Steller Management’s office building at 220 Fifth Avenue.
Other loans that are part of the sale involve a $77 million loan on Olnick Organization’s office property at 130 Fifth Avenue, originated in 2022, and a $66 million loan on RXR’s Standard Motors Building at 37-18 Northern Boulevard in Long Island City, Queens, from 2013.
The $343 million loan sale occurred a month after Flagstar sold $142 million in rent-stabilized loans to Cantor Fitzgerald, as PincusCo reported.
Flagstar, which in March 2024 received a $1 billion capital infusion from investors tied to former Treasury Secretary Steve Mnuchin, reported in its fourth-quarter earnings that it had $749 million in multifamily loans considered 30 to 89 days past due, compared to $124 million in the third quarter.
It has been a busy February for Lone Star Funds, which earlier this month secured a $145 million acquisition loan from Deutsche Bank and J.P. Morgan Chase to purchase
Bank of America Plaza at Las Olas City Centre, a 23-story office complex in Downtown Fort Lauderdale, Fla., CO first reported at the time.
Officials at Flagstar, Lone Star Funds and Newmark did not immediately return requests for comment.
Andrew Coen can be reached at [email protected]
