Blackstone Seeks Piece of CRE Distress

A unit of Blackstone Group has acquired a stake in Mavik Capital Management, which, according to Bloomberg, is seeking to capitalize on “significant stress” brought on by the Covid-19 pandemic. The stake is described as a “small, passive” one through its secondaries business, people familiar with the transaction told Bloomberg. 

Separately, a Securities and Exchange filing shows that MAVIK Capital Management, an entity controlled by Vikram S. Uppal, the CEO of Terra Property Trust, acquired the outstanding interests in Terra Capital Partners. As part of the recapitalization, “a private fund managed by a division of a publicly-traded alternative asset manager with more than $500 billion in assets under management, acquired a passive interest consisting of “non-voting securities,”….in MAVIK.” 

Blackstone, of course, has stakes in a wide array of commercial real estate interests from logistics to hospitality to single family homes. And distress in the commercial real estate market has been widely expected since the start of the pandemic.

CoStar Group, for instance, expects a large scale of distressed sales to hit mid-2021. The company modeled 16 different scenarios to determine how bad the carnage would be from this recession. In those exercises, the amount of distress landed between $92 billion to $370 billion, though it will likely be $126 billion.

But so far the pace of distressed assets coming to market has been agonizingly slow for funds that accumulated capital with this goal in mind. There is one school of thought that widespread distress may have missed its moment now that vaccines are rolling out and lenders continue, for the most part, to show patience with borrowers. 

Mavik clearly falls in the former camp. It has about $800 million under management, Bloomberg says and expects “unprecedented distress that will take many years to resolve,” according to an investor presentation viewed by the publication.