December 14, 2023
NEW YORK, MIAMI, WASHINGTON, TORONTO – Blackstone Real Estate Debt Strategies (BREDS), Blackstone Real Estate Income Trust, Inc. (BREIT), Canada Pension Plan Investment Board (CPP Investments) and 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) to acquire a 20% interest in the joint venture for $1.2 billion that holds a $16.8 billion senior mortgage portfolio in receivership following the failure of Signature Bank. The FDIC will retain 80% ownership of the joint venture and will provide capital equal to 50% of the value of the joint venture.
The commercial real estate loan portfolio consists of over 2,600 first lien loans on retail, market-rate multifamily and office properties primarily located in the New York metropolitan area. The loans are primarily well-performing and represent a wide range of credit profiles. Approximately 90% of the loans are fixed interest, have low coupons and have strong debt service capacities.
Jonathan Pollack, Global Head of Blackstone Real Estate Credit, said, “On behalf of our BREDS and BREIT investors, we are pleased to invest in this attractive, large-scale opportunity. Blackstone's exceptional real estate insight and credit expertise enabled us to underwrite approximately $17 billion in senior mortgage loans and acquire an entire commercial real estate loan portfolio on attractive terms. We look forward to working with our borrowers and partners to realize the full potential of these assets.”
“The current real estate credit market represents a promising source of long-term returns for the CPP Funds and we look forward to exploring further investment opportunities in this and other capital-constrained sectors,” said Jeffrey Sauter, Managing Director and Head of Real Asset Credit at CPP Investments. “This opportunity builds on our longstanding partnership with Blackstone and is a testament to CPP Investments' real estate credit expertise and demonstrates our ability to execute transactions at speed and scale.”
Jay Mantz, President of Rialto Capital, added, “We are excited to invest in this historic opportunity alongside Blackstone and CPP Investments, two of the most prominent global investors. The Rialto team has managed financing 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 for the portfolio, with Rialto Capital acting as loan servicing and operating partner. Blackstone is the world's largest owner of commercial real estate and has originated or acquired more than $170 billion in real estate loans and securities since the inception of its real estate credit business. Rialto Capital has overseen more than $100 billion of commercial real estate loans and has experience managing public-private partnerships.
Leveraging its scale, asset certainty and ability to provide long-term investment horizons, CPP Investments invests in public and private credit and credit-like instruments around the world. As of September 30, 2023, CPP Investments' credit portfolio totaled C$75 billion, including investments in corporate, consumer and real asset credit across the ratings spectrum.
Advisor
Jones Lang LaSalle acted 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 Bilgin Samberg Baena Price & Axelrod LLP served as legal counsel.
About Blackstone Real Estate
Blackstone is a global leader in real estate investments. Blackstone's real estate business was founded in 1991 with US$332 billion in assets under management. Blackstone is the world's largest commercial real estate owner, owning and managing assets across all major geographies and sectors, including logistics, residential, office, hospitality and retail. Our opportunistic funds seek to acquire under-managed, well-located assets around the world. Blackstone's Core+ business invests in significantly more stable real estate assets around the world through both institutional and income-focused retail strategies, including Blackstone Real Estate Income Trust (BREIT), a privately held U.S. REIT, and Blackstone's European Yield-Focused Strategy. Blackstone Real Estate also operates one of the world's leading real estate debt businesses, providing comprehensive financing solutions across the capital structure and risk spectrum, including managing Blackstone Mortgage Trust (NYSE: BXMT).
About CPP Investments
Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Canada Pension Plan's more than 21 million contributors and beneficiaries in their best interests. Investors invest globally in public equities, private equity, real estate, infrastructure and fixed income to build a diversified portfolio of assets. Headquartered in Toronto with offices in Hong Kong, London, Luxembourg, Mumbai, New York, 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. As of September 30, 2023, the fund has a total value of C$576 billion. For more information, visit www.cppinvestments.com or follow us on LinkedIn, Instagram or X. @CPP Investment.
About Rialto Capital
Rialto is a fully integrated real estate investment and asset management platform with a dedicated commercial real estate servicing firm. With $15.9 billion in assets under management as of September 30, 2023 and overseeing more than $100 billion in real estate loans as the designated special servicer, Rialto invests and manages assets across the capital structure in real estate, loans and securities. The company is headquartered in Miami, Florida, with offices in New York City, Santa Monica and nine other locations across the United States. For more information, visit rialtocapital.com.
Caution Regarding Forward-Looking Statements
This press release contains 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 terms such as “outlook,” “indicative,” “believe,” “expect,” “potential,” “continue,” “identify,” “potential,” “will,” “should,” “target,” “approximately,” “project,” “intend,” “plan,” “estimate,” “anticipate,” “confidence,” “confidence” and similar terms. These may include statements regarding financial estimates and their underlying assumptions, plans, objectives, intentions and expectations regarding positioning, including the impact of macroeconomic trends and market forces, future operations, repurchases, acquisitions, future performance, and acquisitions that have been identified but not yet completed. Such forward-looking statements are inherently uncertain, and there are or may be important factors that could cause actual results or outcomes to differ materially from those indicated in such statements. These factors include, but are not limited to, those factors set forth in the “Risk Factors” section of BREIT's most recent fiscal year prospectus and annual report, as well as any updates contained in BREIT's periodic filings with the SEC, which can be accessed at 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 contained herein (or in BREIT's public filings). Except as otherwise required by the 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.
contact address
Black Stone
Jillian Cali
212-583-5379
[email protected]
CPP Investments
Asher Levin
929-208-7939
[email protected]
Rialto Capital
Tom Scott
305-485-4196
[email protected]