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Blackstone REIT Leads JV with FDIC for Mortgage Loans Formerly Held by Signature Bank

Blackstone REIT Leads JV with FDIC for Mortgage Loans Formerly Held by Signature Bank. Alternative investments, Blackstone, Blackstone REIT, investment, NAV, net asset value, real estate, real estate investment trust, Realty Income Corporation, redemptions, REIT, share, shareholders

Blackstone Real Estate Income Trust Inc., along with Blackstone Real Estate Debt Strategies, the Canada Pension Plan Investment Board, and funds affiliated with Rialto Capital announced that they have entered into a newly formed joint venture with the Federal Deposit Insurance Corporation and acquired a 20% equity stake for $1.2 billion in the venture which holds a $16.8 billion senior mortgage loan portfolio retained in receivership following the failure of Signature Bank.

According to Blackstone, the FDIC is maintaining an 80% ownership stake in the venture and provided financing equal to 50% of the venture’s value.

The commercial real estate loan portfolio comprises more than 2,600 first mortgage loans on retail, market rate multifamily and office properties primarily located in the New York metropolitan area. The loans are predominantly performing and encompass a wide range of credit profiles. Approximately 90% of the loans are fixed rate with low in-place coupons and strong in-place debt service coverage.

“We are excited to invest in this compelling, large-scale opportunity on behalf of our BREDS and BREIT investors,” Jonathan Pollack, global head of Blackstone Real Estate Credit, said. “Blackstone’s extraordinary real estate insights and credit expertise positioned us to underwrite approximately $17 billion of senior mortgage loans, allowing us to acquire the entire commercial real estate loan portfolio at an attractive basis. We look forward to working with our borrowers and our partners to maximize the potential of these assets.”

Blackstone says they will be the lead asset manager of the portfolio and Rialto Capital will act as the loan servicer and operating partner. Blackstone is the largest owner of commercial real estate globally and has originated or acquired more than $170 billion of real estate loans and securities since the inception of its real estate credit business. Rialto Capital has oversight of over $100 billion of commercial real estate loans and has experience managing public private partnerships.

CPP Investments invests in both public and private credit and credit-like products globally. As of Sept. 30, 2023, CPP Investments’ credit portfolio totaled C$75 billion, including investments across corporate, consumer and real assets credit along the rating spectrum.

Jones Lang LaSalle served as real estate advisor to Blackstone, CPP Investments and Rialto Capital. Simpson Thacher & Bartlett LLP; Gibson, Dunn & Crutcher LLP; Ropes & Gray LLP; Davis Polk & Wardwell LLP and Bilzin Sumberg Baena Price & Axelrod LLP served as legal advisors.

As The DI Wire previously reported, BREIT announced that they’ve reached the threshold limit for redemptions in November 2023, after twelve consecutive months of prorations.

Blackstone Real Estate Income Trust’s initial offering launched in August 2016 and the company had received net proceeds of $72.8 billion from selling shares of its common stock via three public offerings as of June 30, 2023. The current offering has raised $12.5 billion, including shares issued pursuant to its distribution reinvestment plan, as of Sept. 19, 2023. Its aggregate NAV is currently $66.6 billion.

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