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Blackstone Exclusive: Potential $17bn Portfolio Acquisition Explained

Blackstone Inc. is currently leading the race to acquire a vast portfolio of commercial-property loans estimated to be worth around $17 billion.

Blackstone Inc., the lead contender for a $17 billion commercial-property loan portfolio, headquartered in New York.PHOTO: Mark Abramson/Bloomberg
Blackstone Inc., the lead contender for a $17 billion commercial-property loan portfolio, headquartered in New York. PHOTO: Mark Abramson/Bloomberg

These loans are being sold by the Federal Deposit Insurance Corp. (FDIC) on behalf of Signature Bank, which faced regulatory seizure in March.

The loans are backed by a variety of properties, including retail, industrial, office, and apartment buildings.

Negotiations are in their final stages, with sources indicating that the FDIC is favoring Blackstone’s bid due to its ability to offer the lowest costs to the agency.

However, it should be noted that the terms of the deal are still being finalized, and there is a possibility that another bidder may emerge or that the loan portfolio may be divided among multiple buyers.

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To enhance its bid, Blackstone is reportedly in talks with Rialto Capital, which could aid in servicing the loans. However, none of the involved parties have commented on these reports.

Signature Bank’s collapse earlier this year prompted the FDIC to offload approximately $33 billion worth of the bank’s real estate loans.

Particularly noteworthy are the loans associated with New York City apartment buildings with rent-stabilized or rent-controlled units, which are not included in the Blackstone deal.

The commercial real estate industry has been facing challenges as rising borrowing costs put downward pressure on property values and limit transaction activity.

The Signature sale has attracted particular attention from investors, who see it as a barometer for pricing trends in this challenging market.

In addition to Blackstone, other finance companies, such as Starwood Capital Group and Brookfield Asset Management Ltd., have shown interest in the bidding process.

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Though the exact number of bidders and their portfolios remain unclear, many companies have explored forming partnerships to strengthen their offers.

The sale is being facilitated by Newmark Group Inc., with Douglas Harmon and Adam Spies leading the team assisting the FDIC.

However, the brokerage declined to comment on the matter.

As negotiations progress, market watchers eagerly await the outcome of the Signature Bank loan sale, which could have significant implications for the commercial real estate sector and provide insights into pricing dynamics during a time of market uncertainty.

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