Blackstone CMBS Default Presages Bad Times for Property Owners
Owners of lower-quality European real estate face a rough ride.
European property owners face a rough ride.
Photographer: Scott Eells/Bloomberg
Blackstone Inc.’s clash with lenders backing a small portion of its European real-estate portfolio is more than just a little local difficulty in a market with specific problems. It could well be a pivotal moment in the property cycle, serving as a warning of the grim prognosis for lower-quality office and retail assets everywhere.
At issue is Blackstone’s default on around €300 million ($319 million) of the remaining principal of €531 million of commercial mortgage-backed securities financing properties in Finland. The CMBS supported assets acquired in the 2017 purchase of Sponda Plc. Pandemic travel restrictions, the popularity of hybrid working, rising rates and neighboring Russia’s war in Ukraine have lowered Finnish rents and valuations. So a refinancing by the time the debt matured in the middle of last month wasn’t possible.