Dive Brief:
- A $1.3 billion loan originally backed by 21 multifamily properties sponsored by Blackstone Real Estate Partners IX LP has moved into special servicing after missing its October 2026 maturity date, according to a Morningstar report shared with Multifamily Dive.
- The loan, which was backed by The Blackjack Portfolio, matured with a balance of $517.7 million, according to Morningstar. At the time the loan transferred to servicing, only six properties remained in the portfolio. Blackstone did not reply to Multifamily Dive’s request for comment as of publication time.
- Blackstone has “been selling off properties to repay the loan for a while now,” David Putro, associate managing director at Morningstar Credit, told Multifamily Dive in emailed comments. The firm agreed to a three-month extension to sell the remaining assets, according to Morningstar.
Dive Insight:
The 6,671-unit Blackjack Portfolio originated in October 2021 and is backed by properties located across seven states and 10 markets, according to Morningstar.
After the asset dispositions, 1,842 units remain. They include: West Oaks with 352 units in San Antonio; Ascent with 251 units in Seattle; Alexan 20th St. Station with 354 units in Denver; Marlowe with 181 units in Seattle; Aslan on the River with 324 units in Jonesboro, Georgia; and Hue Watercolor Place with 380 units in Bradenton, Florida.
The Blackstone properties entered servicing a month after the commercial mortgage-backed securities delinquency and servicing rates increased.
The multifamily CMBS special servicing rate rose 17 basis points to 8.54% in September, according to Trepp. The delinquency rate rose 35 basis points to 8.04%.
Blackstone is facing issues similar to many apartment owners who took out loans at the height of the market in 2021 and 2022, before interest rates rose. As those loans reach maturity, apartment owners are facing some tough choices.
“The billions of loan dollars that were originated in 2021 and 2022 are coming due, and if lenders believe that rates will remain higher with stagnant operations at the property-level, they may decide to rip the bandage off as opposed to extending with current sponsors,” Ian Symington, vice president and head of acquisitions at Lion Real Estate Group, told Multifamily Dive in emailed comments.
According to Trepp, multifamily is just behind office and retail in hard CMBS maturities for October. Multifamily accounts for 51.86% of the “severely impaired balance,” according to the firm. Many of those loans will eventually have to be addressed by banks.
“You can't have had the amount of investment volume that we had in 2019, 2020 and 2021, and still be having a significant pig that needs to go through the python,” Michael Lynd, CEO of San Antonio-based apartment investor, owner and manager Kairoi Residential, told Multifamily Dive.
However, Stephen Buschbom, Trepp’s head of applied research and analytics, thinks The Blackjack Portfolio is in better shape than other distressed apartments because the properties are newer. He also thinks the portfolio’s stint in servicing may be short lived.
“I'd argue that this is an atypical transfer that is more symptomatic of strategic timing issues rather than correlating to broader credit issues that exist in the multifamily sector, such as the elevated delinquency rate for older apartments in the Sun Belt,” Buschbom told Multifamily Dive in emailed comments.
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