Blackstone trucks $3.4 billion logistics centers loan into CMBS market
Blackstone Real Estate Partners (REP) is financing another mega-portfolio of newly acquired logistics and light industrial properties through the mortgage-backed securities market.
According to presale reports, Blackstone REP affiliates are securitizing a $3.4 billion loan secured by its fee simple and leasehold interests in 349 industrial properties – mostly trucking and logistics operations in major U.S. transportation hubs – which Blackstone (NYSE: BX) acquired in September from Colony Capital (NYSE: CLNY) in a $5.4 billion deal.
Blackstone is taking out the interest-only, two year loan along with $550 million in mezzanine debt that will be held outside the BX Commercial Mortgage Trust 2020-BXLP trust. BlackRock acquired the properties with $1.5 billion in upfront equity along with the first-lien and mezzanine financing, according to a presale report from Fitch Ratings.
Blackstone’s deal including the subordinate loans is heavily leveraged with a loan-to-value ratio range of 144.8%-145.5%, as estimated by ratings agency presale reports.
The notes in the transaction include a $1.65 billion Class A tranche with preliminary AAA ratings from Fitch and Kroll Bond Rating Agency, is backed the two-year, floating interest-rate loan secured by the 49.7 million square feet of industrial properties.
The interest-only loan pays an initial spread of 1.45% plus one-month Libor. The first 30% of the loan ($1.02 billion) is freely prepayable, according to Fitch.
Kroll cautions the deal has a lower estimated debt yield (6.1%) that the average 9.6% rate of other single-asset/single-borrower deals rated by Kroll. Such a low yield could impact the changes of refinancing the debt at maturity if occurring during a high-rate, low-liquidity market environment.
The portfolio is spread across 18 states, with the primary exposure in Texas (75), Georgia (51), Florida (32) and Illinois (36), accounting for $2.67 billion of the portfolio’s appraised value of $4.97 billion.
About 47.1% of the pool consists of 184 properties located in primary market locations like Dallas/Fort Worth and Atlanta that provide with well-established transportation hubs, according to Kroll. The diverse economies and population clusters of the primary markets catering to tenants looking to build out last-mile delivery centers for customers, primarily in the e-commerce sector.
The largest properties are leased to tenants such as UPS, Home Depot (Interline Brands) and Walgreens.
The deal is the latest in an industrial property buying spree that Blackstone has undertaken. Last fall, Blackstone sponsored one of the largest single-loan MBS transactions of the post-crisis era in a $5.4 billion deal behind its $18.7 billion purchase of 170 million square feet of U.S. industrial properties from Singapore-based GLP.
At year’s end, Blackstone Group’s real estate portfolio included about 404.2 million square feet of U.S. industrial assets, making it the largest holder of logistics and industrial warehouse distributions properties globally, according to ratings agency reports.