$315M Blackstone Portfolio Loan Goes Into Default
A €297M ($315M, £267M) loan secured against a portfolio of secondary European properties owned by Blackstone has gone into default after it was not repaid when it matured.
A notice to bondholders earlier this week said that the loan had gone into default on 1 March after Blackstone and the servicer could not agree on proposals to extend the maturity of the loan, which expired last month.
Bondholders rejected an extension and workout proposal put forward by Blackstone last month. The loan will now be transferred to special servicing, the notice said.
The properties are part of the portfolio of Sponda, the listed Finnish property company Blackstone took private in 2018 in a deal that gave the company an enterprise value of €3.8B (£3.4B).
The loan was secured against a portfolio valued at €513M last August. The portfolio is 77% offices, 17% retail and 6% storage, comprising 418 tenants. It produces rent of €41M.
“This debt relates to a small portion of the Sponda portfolio,” said a Blackstone spokesperson in an emailed statement, as reported by CoStar. “We are disappointed that the servicer has not advanced our proposal, which reflects our best efforts and we believe would deliver the best outcome for noteholders. We continue to have full confidence in the core Sponda portfolio and its management team, whose priority remains delivering high-quality retail and office assets.”
The portfolio secured by the loan is made up of noncore assets owned by Sponda that Blackstone planned to sell off. The original portfolio included 63 assets, but 17 have been sold over the past four years, raising about €280M. That was used to reduce the original €577M loan, provided by Citibank and Morgan Stanley, to €297M.
What remains of the portfolio consists of small, secondary assets around the Finnish capital Helsinki that have very high vacancy. A report from loan servicer Mount Street in November last year said the portfolio was 46% vacant, with an average lease length of 2.5 years.
Blackstone and Sponda put forward a business plan alongside the loan maturity extension request, outlining how they proposed to either sell or refinance the portfolio in the next year, the notice said. The proposal meant lenders would get a better return than enforcing the loan now, they said.
The business plan involved splitting the assets into two groups, with 27 assets earmarked for sale as soon as possible and the other 19 earmarked for sale after asset management had been undertaken.
