- Some multifamily proptech vendors have been affected by the demise of Silicon Valley Bank, which collapsed on Friday. Firms like San Francisco–based short-term rental operator Sonder and New York City–based building software, devices, and services provider Latch had deposits with the lender.
- On Friday, the Federal Deposit Insurance Corp. took control of SVB due to liquidity concerns. The embattled bank was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver, the federal regulator said.
- SVB also held $896 million in multifamily and commercial residential loans in 2022, down from more than $1 billion in 2021, according to the bank’s 2022 annual report. Overall, the bank held $2.6 billion in commercial real estate loans at the end of 2022. It holds an additional $8.3 billion in residential mortgages.
SVB had been grappling with a sharp drop in deposits over the past year, as higher interest rates and inflation have significantly battered the technology sector.
SVB’s shuttering came two days after the startup- and tech industry–focused firm’s Wednesday announcement that it lost nearly $2 billion in the sale of U.S. treasuries and mortgage-backed securities, and amid reports the firm was seeking a buyer after an unsuccessful attempt to raise capital in a Thursday offering, CNBC reported Friday.
In an attempt to stem liquidity problems, SVB was forced to sell all of its available-for-sale bonds at a $1.8 billion loss, the bank announced Wednesday, adding it planned to raise $2.25 billion in fresh capital by selling stock.
That announcement caused its stock to tumble 60% by end of trading Thursday as spooked startup clients began to withdraw deposits from the bank. Several SVB clients that work with multifamily firms revealed their exposure in filings with the Securities and Exchange Commission, including:
- Sonder had approximately $2 million in an operating cash account and approximately $20 million in deposit accounts with the lender, according to a filing. The short-term rental operator also holds a $60 million line of credit facility with SVB issued in the ordinary course of business for the benefit of property owners. More than 20% of that, $13 million, is currently utilized in the form of letters of credit. “We continue to actively monitor the evolving situation with SVB and will take appropriate actions as needed,” the company said in its filing.
- Latch had deposits of approximately $3.1 million in various accounts at SVB. Overall, that represents less than 2% of its total cash and cash equivalents and current and non-current available-for-sale securities, according to a filing.
- New York City–based rental insurance provider Lemonade has less than $7,000 in cash at SVB and considers the effect on its business to be immaterial, according to a filing. “We believe our cash and assets are well diversified to minimize risk, and Lemonade uses large financial institutions for its commercial banking services that are not currently exposed to liquidity risk,” the company said in its SEC filing.
Multifamily Dive reached out to each of these companies for comment, but only Latch responded. The company Multifamily Dive to a press release acknowledging Treasury Secretary Janet L. Yellen’s decision to enable “the FDIC to complete its resolution of [SVB] in a manner that fully protects all depositors.”
“Upon receipt of all or a portion of its deposits held in SVB bank accounts, the company intends to transfer such deposits to an internationally recognized and reputable money center bank,” Latch said in a press release.
Anna Hrushka contributed to this report.
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