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Blackstone's $5.6B CMBS largest single-borrower deal since crisis

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Blackstone Real Estate Partners is marketing $5.6 billion in bonds backed by a portfolio of mostly logistics and light industrial properties, in what analysts say is the largest single-loan commercial mortgage securitization of the post-crisis era.

BX Commercial Mortgage Trust 2019-XL, via Citigroup Commercial Mortgage Securities, features nine classes of certificates (as well as two tranches of interest-only notes) backed by a floating-rate, first-lien mortgage on 406 Blackstone-owned properties with a tenant roster of over 2,000 lessees — including major tenants like Home Depot, UPS, FedEx and Amazon.

The properties were part of the Blackstone Group’s $18.7 billion acquisition of more than 170 million square feet of U.S. industrial properties from Singapore-based GLP — making Blackstone the largest owner of industrial and warehouse distribution properties globally totaling more than 356 million square feet, according to Morningstar Credit Ratings.

According to Moody’s Investors Service, the transaction is the largest single-borrower deal since the crisis.

The bonds will be supported by cash flow from over $400 million in base annual rent, according to presale reports from Moody’s and Morningstar.

Moody’s and Morningstar have each assigned preliminary triple-A ratings to the $2.57 billion Class A tranche of notes.

Blackstone is the leading sponsor this year of large-loan commercial mortgage securitizations, pricing six deals for a total of $2.89 billion, according to data from Finsight. (Brookfield Asset Management has also issued six single-asset, single-borrower transactions totaling $2.81 billion.)

The BX 2019-XL trust was assigned the loan distributed among 74 special-purpose Blackstone affiliates, and underwritten by a consortium of large lenders: Citi Real Estate Funding, Bank of America, Barclays Capital Real Estate, Deutsche Bank’s German American Capital Corp., Goldman Sachs Mortgage Co. and JPMorgan.

The two-year loan (with three one-year extension options) is an interest-only loan, priced at a variable rate of 1.55% plus one-month Libor. The deal includes provisions for a transition to an alternative reference rate in the event Libor (the London interbank offered rate) becomes unavailable during the life of the deal. (Regulatory authorities at the Financial Conduct Authority have plans to sunset Libor after 2021 when they will no longer require global banks to quote daily rates on fund borrowing costs between institutions.)

Moody’s estimates the total property value of the portfolio at $4.3 billion, providing a loan-to-value ratio of 129.7%.

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CMBS Blackstone