In a fitting ending note to a year in which commercial real estate financing sprang back to life, Blackstone has secured a mammoth new loan for its largest asset in New York City.
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Wells Fargo originated a $3.15B mortgage to Blackstone for Stuyvesant Town and Peter Cooper Village, two housing projects with a combined 11,200 units that encompass their own neighborhood on Manhattan's Lower East Side. The loan closed Nov. 26 and was recorded in the New York City register on Tuesday.
Blackstone co-owns the complexes with La Caisse, the investment arm of Canadian pension fund Caisse de dépôt et placement du Québec. The investment giants paid $5.4B in 2015 for the properties after prior ownership led by Tishman Speyer defaulted on its mortgage and lost them to lender CWCapital.
To finance the 110-building acquisition, Blackstone took out a $2.7B, 10-year Fannie Mae loan in December 2015. Its new financing retires that maturing debt and replaces it with an even bigger mortgage.
In addition to the $3.15B loan, a $167M mortgage from Wells Fargo was recorded in city records on Monday.
“StuyTown is a thriving community that provides thousands of New Yorkers with an exceptional place to call home,” a Blackstone spokesperson told Bisnow in a statement. “Blackstone has invested $460 million to improve StuyTown since purchasing the property, and this successful refinancing reflects its unique and high-quality nature.”
Spokespeople for Wells Fargo and Fannie Mae didn't respond to Bisnow's request for comment.
StuyTown-Peter Cooper Village was developed by MetLife in the 1940s as middle-class housing for returning World War II veterans. The life insurance giant had been converting some units to luxury apartments when it sold the complex to Tishman and BlackRock for $5.4B in 2006, the largest sum ever paid for a single real estate asset, The Wall Street Journal reported.
But the Global Financial Crisis and tenant lawsuits torpedoed the investment. By 2009, Fitch Ratings valued the complex at $1.8B, a third of its sale price just three years prior. Tishman defaulted on its $4.4B loan the next year and handed control of the asset to CWCapital.
New York City provided Blackstone and La Caisse — then called Ivanhoé Cambridge — $225M toward their 2015 purchase in exchange for the owners agreeing to keep 5,000 of the apartments permanently affordable. Fannie Mae worked with the city and StuyTown's tenants before approving the deal, the WSJ reported.
But after the state passed sweeping rent stabilization reforms in 2019, StuyTown tenants sued Blackstone to prevent it from lifting the rest of the property's units from rent stabilization. A judge ruled in their favor, and last year Blackstone dropped its appeal, keeping all of the complex's units permanently rent-stabilized.
In addition to making updates to the units, Blackstone also brought Whole Foods on as a tenant at the complex and has installed more than 9,000 solar panels, a spokesperson said.
Its refinancing underscores how much debt markets have opened up for deep-pocketed landlords of New York City commercial real estate, even in the troubled rent-stabilized market.
Vornado and Stellar Management refinanced the 1,328-unit Independence Plaza apartments in Tribeca, where 40% of the units are stabilized or subsidized, with a $675M CMBS loan in June. Stellar and the beleaguered Chetrit Organization also modified a $714M CMBS loan last month tied to two Upper East Side apartment towers that had struggled to cover renovations to the 305 rent-stabilized units in the complex, Commercial Observer reported.
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