{"id":12402,"date":"2023-05-23T01:06:19","date_gmt":"2023-05-23T05:06:19","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/blackstone-meets-with-lenders-on-chicago-office-building-an-investment-it-wrote-down-to-zero-last-year\/"},"modified":"2023-05-23T01:06:21","modified_gmt":"2023-05-23T05:06:21","slug":"blackstone-meets-with-lenders-on-chicago-office-building-an-investment-it-wrote-down-to-zero-last-year","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=12402","title":{"rendered":"Blackstone meets with lenders on Chicago office building, an investment it wrote down to zero last year"},"content":{"rendered":"
\n

Blackstone Inc. began talks with its lenders about options on a maturing $309.8 million senior loan on a 1.3 million-square-foot office complex in Chicago\u2019s largely desirable River North neighborhood.<\/p>\n

Blackstone
\n BX,
\n +2.32%<\/bg-quote>
\n remains current as of its last May 9 payment on the Class-A office complex at 350 North Orleans Street, which competes with high-premium addresses in its location just north of the central business center known as the Loop. But the debt has transferred to special servicing, according to credit-rating firm KBRA.<\/p>\n

\n

Transferring a loan to special servicing signals the kickstart of discussions between a borrower and a lender when loans in bond deals look at risk of defaulting. The loan comes due in July. <\/p>\n

Blackstone, one of the world\u2019s largest investors in commercial real estate, has long been a favored borrower for Wall Street, often receiving the lowest rates available and ample access to debt. <\/p>\n

But more borrowers with maturing debt this year have been seeking debt extensions, loan modifications or simply handing back properties to lenders as an era of cheap and abundant credit ends.<\/p>\n

Related<\/strong>: Debt on trophy office buildings is starting to buckle as loans come due<\/p>\n

<\/p>\n
\n

\n \u201c<\/span>\u2018The property is experiencing the well known headwinds facing U.S. traditional office buildings lacking first-class modern amenities and this location in the [Chicago] River North submarket has been particularly challenging.\u2019\u201d<\/span>\n <\/p>\n


\n \u2014 Blackstone<\/span>
\n <\/small><\/p><\/div>\n<\/p><\/div>\n

In a sign of the times for beleaguered office buildings as more workers take advantage of work-from-home or home\/office hybrid arrangements with employers, Blackstone wrote down its investment in the Chicago property to zero last year. That means it no longer has an economic value, which can occur when the debt on a building exceeds the value of the property.<\/p>\n

\u201cThe property is experiencing the well known headwinds facing U.S. traditional office buildings lacking first-class modern amenities and this location in the River North submarket has been particularly challenging, which is why we effectively wrote this investment down to zero last year,\u201d Blackstone said in a statement.<\/p>\n

The building\u2019s occupancy was last pegged at 75.4% in December, but down from 92.1% when the floating-rate loan was originated five years ago by Goldman Sachs
\n GS,
\n -0.38%<\/bg-quote>,<\/span>
\n according to KBRA. Nationally, office buildings sit roughly half-empty three years since the pandemic shutdowns of 2020.<\/p>\n

The borrower is a Blackstone affiliate, the Blackstone Real Estate Partners VIII fund, which reported a 16% return for the fund through the first quarter of 2023. Globally, Blackstone manages $585 billion in real estate.<\/p>\n

\u201cWhat you own matters, and U.S. traditional office represents less than 2% of our global portfolio today vs. more than 60% in 2007, Blackstone said about its exposure to the office sector. \u201cWe intentionally pivoted toward sectors like logistics and data centers, which are benefitting from exceptionally strong macro-tailwinds and supply\/demand fundamentals.\u201d<\/p>\n

A Blackstone spokesperson said the transfer didn\u2019t signal the borrower was handing back the keys to its lender. Meanwhile, the original $310 million loan is nonrecourse, meaning the lender can\u2019t pursue any other of Blackstone collateral to repay the debt.<\/p>\n

Related<\/strong>: \u00a0Losing the trophy? A $45 billion mortgage bill is coming due for some of America\u2019s signature commercial properties<\/p>\n

Stocks closed mostly higher on Monday, with the Dow Jones Industrial Average
\n DJIA,
\n -0.42%<\/bg-quote>
\n 140 points lower, the S&P 500 index
\n SPX,
\n +0.02%<\/bg-quote>
\n clinching its second-highest close of 2023 and the Nasdaq Composite Index
\n COMP,
\n +0.50%<\/bg-quote>
\n scoring its highest finish since August, according to Dow Jones Market Data. Blackstone Inc. shares were up 2.3% Monday, but are down some 21% over the past year.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Blackstone Inc. began talks with its lenders about options on a maturing $309.8 million senior loan on a 1.3 million-square-foot office complex in Chicago\u2019s largely desirable River North neighborhood. Blackstone BX, +2.32% remains current as of its last May 9 payment on the Class-A office complex at 350 North Orleans Street, which competes with high-premium […]<\/p>\n","protected":false},"author":1,"featured_media":12403,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-12402","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nBlackstone meets with lenders on Chicago office building, an investment it wrote down to zero last year | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Blackstone Inc. began talks with its lenders about options on a maturing $309.8 million senior loan on a 1.3 million-square-foot office complex in\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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