Banks Collapse Affecting Mortgage Rates, VC, PropTech

March 15, 2023 – Media Mention

Morris DeFeo, chair of Herrick's Corporate Department spoke to GlobeSt about the recent bank collapses, including Silicon Valley Bank and Signature Bank, and the potential effect on commercial real estate companies and venture capital groups. The article notes that both banks had billions of CRE private bank loans that include multifamily, commercial property, acquisition, development, construction and home equity lines of credit.  The article also refutes reports that the bank collapse will spell disaster for proptech, noting that the banks were not the only ingredient to continued success in that industry.

According to the article, "[s]ome venture capital groups focused on proptech are mostly taking it in stride, say it won't have any significant impact." DeFeo told that the collapse of SVB, the second largest bank failure in the US, and one of the very few since the financial crisis of 2008, may affect access to liquidity for some tech companies for a limited time.

“However, it is very unlikely to cause any significant impact unless it were to spread to the banking industry much more broadly, which seems very unlikely,” DeFeo said. “Very few banks have concentrated risk exposure in the tech space, and fewer, if any, have anything comparable to SVB’s position."

“I have no doubt that shareholders and board members in some tech companies are reaching out to management with varying degrees of anxiety, but this too will pass.”

Read the full article in GlobeSt here. Access may require a subscription.