The Blackstone Matter: Let's Have Real Questions by the Regents Next Time: No More Lovefests

Apart from the Blackstone BREIT, which UC bailed out with a $4.5 billion investment, Blackstone seems to be having problems with other real estate investments. See below. So it's time for the members of the Regents' Investment Committee in March to ask tough questions about the financial and legal aspects of the bailout by UC and not just have a lovefest* centered on landlord-tenant relations, as occurred at their last meeting. No more diversions. No more PR. And no more phony anonymous complaints to Blogger about this blog. Just straight, hard questions.

Is it really necessary to point out that the Regents have a fiduciary duty to ask such questions? 

From Commercial Observer, 2-16-23:

The $270.3 million commercial mortgage-backed securities (CMBS) loan on Blackstone’s Manhattan multifamily portfolio has been sent to special servicing,** according to a Trepp alert, CRED iQ data and sources familiar with the transfer. The loan backs the BX 2019-MMP CMBS deal and is collateralized by 11 multifamily properties totaling 637 units in Chelsea, the Upper East Side and Midtown South. “We continue to focus on delivering a best-in-class experience for our residents while we work with our lenders on the capital structure,” a  Blackstone spokesperson told Commercial Observer Thursday, declining to comment further. 

The loan was still marked as current as of this month, and — according to CRED IQ data— a specific transfer for the special servicing transfer wasn’t given in commentary. The loan was, however, put on the servicing watch list in November for tripping its floating-rate debt service coverage ratio (DSCR) trigger. As the real estate industry continues to grapple with a series of interest rate spikes, plus a scarcity of debt capital, Blackstone is currently facing a couple of struggles specific to the deal itself and the broader market environment. Specifically, sources said the portfolio currently requires higher capital expenditure than expected while the firm simultaneously faces higher borrowing costs associated with floating-rate debt.

One source said that while Blackstone continues to lean into multifamily overall as a high conviction theme, it doesn’t believe the best use of its capital is to continue to fund cash-flow shortfalls within this specific multifamily portfolio. As such, Blackstone transferred the loan to special servicer Mount Street to allow the firm time to work with its lenders and decide how best to move forward in today’s bumpy market environment, sources said...

Full story at https://commercialobserver.com/2023/02/blackstone-cmbs-loan-multifamily-special-servicing/. 

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*http://uclafacultyassociation.blogspot.com/2023/01/still-more-on-regents-blackstone.html; http://uclafacultyassociation.blogspot.com/2023/01/watch-regents-investment-committees.html.

**Special Servicing means the oversight and management of the resolution of Mortgage Loans by workout or modification of loan provisions, foreclosure, deed in lieu of foreclosure or otherwise, and the control of decisions with respect to the preservation of the collateral generally, including property management and maintenance decisions.

Source: https://www.lawinsider.com/dictionary/special-servicing#:~:text=Special%20Servicing%20means%20the%20oversight,generally%2C%20including%20property%20management%20and.