Blackstone Puts $1.3B CRE-Backed Bond Deal on Hold
The pricing wasn’t attractive enough as spreads on the bonds became too wide.
A $1.275 billion bond deal, anchored by commercial real estate debt, that Blackstone was going to sell is on hold, according to reporting by Bloomberg.
“A group of banks including Morgan Stanley and Bank of America Corp. were in the process of selling the single-asset, single-borrower bond, which was backed by mortgage debt tied to more than 60 industrial properties located across 13 states,” they wrote. “But the spread on the bonds became too wide and the sponsor decided to halt the sale process, said people with knowledge of the matter who asked not to be identified as the details are private.”
A person familiar with the situation who communicated with GlobeSt.com said that it was an opportunistic refinancing deal that Blackstone would ultimately undertake only if the pricing were attractive, and it was not. The person also noted that there were no upcoming maturities involved, but that the company continues to be active in the market and has refinanced nearly $15 billion in CMBS loans since the start of 2024.
According to Bloomberg, other banks involved were Barclays, Goldman Sachs Group, and JPMorgan Chase. However, Fitch Ratings reportedly withdrew its ratings of the bonds because the deal was then off the market.
A Bloomberg News analysis says that issuance of private label deals this year is currently at $42.8 billion, year to date. That’s 80% higher than the same period in 2023. The deal was backed by interest-only loans with, among other things, the proceeds to refinance about $714 million in existing debt and a return of $182 million in equity to a Blackstone affiliate.
Financial pressures on banks and their significant pullbacks from CRE lending had already created concern about the riskiness of CRE debt. Recent information like April’s biggest monthly jump in CMBS special servicing in the last four years have driven concerns higher, affecting spreads on CMBS.
“Spreads on newly issued CMBS bonds rated BBB- were 6.65% percentage points over SOFR swaps as of June 7, down from over 9% percentage points at the start of the year, according to data from JPMorgan,” Bloomberg wrote.