Blackstone Real Estate Debt Strategies, Blackstone Real Estate Income Trust, CPP Investments and Rialto Capital Acquire a 20% Equity Stake in a Venture Holding Approximately $17 Billion Commercial Real Estate Loan Portfolio of Former Signature Bank

Rhea-AI Summary

Blackstone Real Estate Debt Strategies (BREDS), Blackstone Real Estate Income Trust, Inc. (BREIT), Canada Pension Plan Investment Board (CPPIB) and Rialto Capital form a joint venture with the FDIC to acquire a 20% equity stake for $1.2 billion in a $16.8 billion senior mortgage loan portfolio following the failure of Signature Bank. The commercial real estate loan portfolio consists of over 2,600 first mortgage loans on properties in the New York metropolitan area. Blackstone will be the lead asset manager, and Rialto Capital will act as the loan servicer and operating partner.

Positive

• The joint venture provides a compelling investment opportunity for BREDS, BREIT, and CPPIB, with Blackstone's real estate insights and credit expertise positioning them to underwrite approximately $17 billion of senior mortgage loans.
• Approximately 90% of the loans in the portfolio are fixed rate with low in-place coupons and strong in-place debt service coverage, which is a positive indicator of the portfolio's stability and potential for returns.
• CPP Investments' expertise in real estate credit and ability to transact quickly and at scale demonstrate their strong position in the real estate credit market.

Negative

• None.

 

NEW YORK & MIAMI & WASHINGTON & TORONTO--(BUSINESS WIRE)-- Blackstone Real Estate Debt Strategies (“BREDS”), Blackstone Real Estate Income Trust, Inc. (“BREIT”), Canada Pension Plan Investment Board (“CPP Investments”) through its subsidiary CPPIB Credit Investments III Inc., and funds affiliated with Rialto Capital (“Rialto”) today announced that they have entered into a newly formed joint venture with the Federal Deposit Insurance Corporation (“FDIC”) and acquired a 20% equity stake for $1.2 billion in the venture which holds a $16.8 billion senior mortgage loan portfolio retained in receivership following the failure of Signature Bank. The FDIC is maintaining an 80% ownership stake in the venture and provided financing equal to 50% of the venture’s value.

The commercial real estate loan portfolio comprises more than 2,600 first mortgage loans on retail, market rate multifamily and office properties primarily located in the New York metropolitan area. The loans are predominantly performing and encompass a wide range of credit profiles. Approximately 90% of the loans are fixed rate with low in-place coupons and strong in-place debt service coverage.

Jonathan Pollack, Global Head of Blackstone Real Estate Credit, said, “We are excited to invest in this compelling, large-scale opportunity on behalf of our BREDS and BREIT investors. Blackstone’s extraordinary real estate insights and credit expertise positioned us to underwrite approximately $17 billion of senior mortgage loans, allowing us to acquire the entire commercial real estate loan portfolio at an attractive basis. We look forward to working with our borrowers and our partners to maximize the potential of these assets.”

Geoffrey Souter, Managing Director, Head of Real Assets Credit at CPP Investments, said, “The current real estate credit market is a promising source of long-term returns for the CPP Fund and we look forward to exploring further opportunities to invest in this and other capital-constrained sectors. This opportunity builds on our longstanding partnership with Blackstone and is a testament to CPP Investments’ expertise in real estate credit, demonstrating our ability to transact quickly and at scale.”

Jay Mantz, President of Rialto Capital, added, “We are incredibly excited to invest in this historic opportunity with two of the most preeminent global investors, Blackstone and CPP Investments. The Rialto team has managed loans through multiple CRE market cycles, and we look forward to working with our partners to maximize value for all stakeholders.”

Blackstone will be the lead asset manager of the portfolio and Rialto Capital will act as the loan servicer and operating partner. Blackstone is the largest owner of commercial real estate globally and has originated or acquired more than $170 billion of real estate loans and securities since the inception of its real estate credit business. Rialto Capital has oversight of over $100 billion of commercial real estate loans and has experience managing public private partnerships.

CPP Investments invests in both public and private credit and credit-like products globally, leveraging its ability to provide scale, certainty of assets and a long investment horizon. As of September 30, 2023, CPP Investments’ credit portfolio totaled C$75 billion, including investments across corporate, consumer and real assets credit along the rating spectrum.

Advisors

Jones Lang LaSalle served as real estate advisor to Blackstone, CPP Investments and Rialto Capital. Simpson Thacher & Bartlett LLP; Gibson, Dunn & Crutcher LLP; Ropes & Gray LLP; Davis Polk & Wardwell LLP and Bilzin Sumberg Baena Price & Axelrod LLP served as legal advisors.

About Blackstone Real Estate

Blackstone is a global leader in real estate investing. Blackstone’s real estate business was founded in 1991 and has US $332 billion of investor capital under management. Blackstone is the largest owner of commercial real estate globally, owning and operating assets across every major geography and sector, including logistics, residential, office, hospitality and retail. Our opportunistic funds seek to acquire undermanaged, well-located assets across the world. Blackstone’s Core+ business invests in substantially stabilized real estate assets globally, through both institutional strategies and strategies tailored for income-focused individual investors including Blackstone Real Estate Income Trust, Inc. (BREIT), a U.S. non-listed REIT, and Blackstone’s European yield-oriented strategy. Blackstone Real Estate also operates one of the leading global real estate debt businesses, providing comprehensive financing solutions across the capital structure and risk spectrum, including management of Blackstone Mortgage Trust (NYSE: BXMT).

About CPP Investments

Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Fund in the best interest of the more than 21 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At September 30, 2023, the Fund totalled C$576 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Instagram or on X @CPPInvestments.

About Rialto Capital

Rialto is a fully integrated real estate investment and asset management platform with a dedicated commercial real estate servicer. With $15.9 billion of assets under management as of September 30, 2023 and oversight of over $100 billion of real estate loans as named special servicer, Rialto invests and manages assets throughout the capital structure in real estate properties, loans, and securities. The company is headquartered in Miami, FL with offices in New York City, Santa Monica, and 9 other locations across the US. For more information, please visit rialtocapital.com.

Cautionary Note Regarding Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of forward -looking terminology such as “outlook,” “indicator,” “believes,” “expects,” “potential,” “continues,” “identified,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”, “confident,” “conviction” or other similar words or the negatives thereof. These may include financial estimates and their underlying assumptions, statements about plans, objectives, intentions, and expectations with respect to positioning, including the impact of macroeconomic trends and market forces, future operations, repurchases, acquisitions, future performance and statements regarding identified but not yet closed acquisitions. Such forward-looking statements are inherently uncertain and there are or may be important factors that could cause actual outcomes or results to differ materially from those indicated in such statements. These factors include but are not limited to those described under the section entitled “Risk Factors” in BREIT’s prospectus and annual report for the most recent fiscal year, and any such updated factors included in BREIT’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein (or in BREIT’s public filings). Except as otherwise required by federal securities laws, BREIT undertakes no obligation to publicly update or revise any forward -looking statements, whether as a result of new information, future developments or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231214564382/en/

Blackstone

Jillian Kary

212-583-5379

Jillian.Kary@Blackstone.com

CPP Investments

Asher Levine

929-208-7939

alevine@cppib.com

Rialto Capital

Tom Scott

305-485-4196

Tom.scott@rialtocapital.com

Source: Blackstone

FAQ

What companies are involved in the joint venture with the FDIC?

Blackstone Real Estate Debt Strategies (BREDS), Blackstone Real Estate Income Trust, Inc. (BREIT), Canada Pension Plan Investment Board (CPPIB) and Rialto Capital.

How much equity stake did the joint venture acquire and at what cost?

The joint venture acquired a 20% equity stake for $1.2 billion in a $16.8 billion senior mortgage loan portfolio.

What type of properties are included in the commercial real estate loan portfolio?

The portfolio includes over 2,600 first mortgage loans on retail, market rate multifamily, and office properties primarily located in the New York metropolitan area.

Who will be the lead asset manager of the portfolio?

Blackstone will be the lead asset manager of the portfolio.

What role will Rialto Capital play in the joint venture?

Rialto Capital will act as the loan servicer and operating partner in the joint venture.