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Blackstone's $271M Loan Backing 11 Manhattan Buildings Sent To Special Servicer

The Grove at 250 West 19th St.

A loan backing 11 apartment buildings Blackstone owns in Manhattan has been sent to special servicing.

The CMBS loan is for $271M and spans 637 units in Chelsea, the Upper East Side and Midtown South. The loan was current as of this month, Commercial Observer reported, but was on the servicer's watchlist in November.

"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 Blackstone spokesperson told Bisnow in a statement. “Rental housing remains a high conviction theme for us, including in New York City.”

Blackstone continues to operate the largely market-rate properties, but higher-than-anticipated expenditures and its floating-rate debt on the portfolio have created a cash flow shortfall, which the world's largest real estate owner has elected not to keep funding, a source said.

This CMBS loan was originated by Morgan Stanely in 2019, with South Korean investment firm Mirae Asset Daewoo providing $93M in mezzanine debt, per CO. The properties backing the $360M in total debt, according to CMBS tracking firm Trepp, are:

  • The Grove at 250 West 19th St.
  • 31 East 31st St.
  • 344 East 63rd St.
  • 451 East 83rd St.
  • 309 West 30th St.
  • 434 West 19th St.
  • 334 West 30th St.
  • 345 West 30th St.
  • 425 East 84th St.
  • 445 East 83rd St.
  • 162 East 61st St.

Blackstone acquired the properties in 2015 in a joint venture with Fairstead Capital from the Caiola family, CO reported.

In New York last year, Blackstone turned over the keys of 1740 Broadway, a 26-story office tower, to the special servicer on its $308M CMBS loan. It also made one of the city's largest purchases, spending $930M on the Frank Gehry-designed 8 Spruce St. rental tower in the Financial District over the summer.

But its global portfolio is far from immune to distress. This month, lenders on a $548M portfolio of Nordic office and retail assets owned by Blackstone refused to grant an extension on an expiring loan, Bisnow reported.

And while overall, Blackstone has been wildly profitable, it has seen the strained investment sales market take a bite out of its bottom line. It reported net income of $558M in the fourth quarter, down from $1.4B in the fourth quarter of 2021. 

It is also facing a rush to the exits from investors in one of its signature funds. In January, Blackstone’s nontraded REIT, Blackstone Real Estate Income Trust, paid out just 25% of the repurchase requests made by shareholders. Late last year, Blackstone said it was putting a freeze on investors drawing money out, after a jump in repurchase requests forced it to act to prevent “a liquidity mismatch."