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Blackstone’s $271M multifamily loan in special servicing

Loan backs CMBS deal collateralized by 11-property portfolio

Blackstone's Stephen Schwarzman and 250 West 19th Street (Getty, Google Maps)
Blackstone's Stephen Schwarzman and 250 West 19th Street (Getty, Google Maps)
By
Feb 17, 2023, 11:18 AM

UPDATED Feb. 17, 2:30 p.m.

A loan on Blackstone’s Manhattan multifamily portfolio has been sent to special servicing.

The $271 million loan backs a CMBS deal and is collateralized by 11 properties in Chelsea, Midtown South and the Upper East Side, the Commercial Observer reported. The transfer was first disclosed in a Trepp alert and CRED iQ data.

There are 637 units in the portfolio, all but 25 of which are market rate.

The loan was still considered current as of this month, according to CRED iQ, and a reason for being put into special servicing wasn’t reported. It was placed on the servicing watchlist in November after tripping the floating-rate debt service coverage ratio trigger.

Blackstone and Fairstead Capital paid the Caiola family $690 million in 2015 for the portfolio. That purchase included 24 properties with 978 assets, approximately a third of which have been sold since.

Morgan Stanley originated the CMBS loan in 2019. The bank and South Korean firm Mirae Asset Daewoo originated an additional $93 million of junior and senior mezzanine debt, according to CRED iQ. The two-year loan included three one-year extension options, giving it a final maturity date of August 2024.

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In the fourth quarter, weakened profits dragged down the value of Blackstone’s real estate portfolio. The firm reported net profits of $558 million or 75 cents per share, down 60 percent from the final quarter of 2021.

Multifamily is a core investment class for the firm, but it has had to juggle its priorities related to the sector. The firm in recent months has moved to prevent investors from pulling funds from its real estate income trust in droves, and higher interest rates appear ready to dampen New York City’s multifamily market after a banner year.

“We continue to focus on delivering a best-in-class experience for our residents while we work with our lenders on the capital structure,” a spokesperson for Blackstone said. “Rental housing remains a high conviction theme for us, including in New York City.”

This article has been updated with a statement from Blackstone.

— Holden Walter-Warner