Dive Brief:

• A $270.35 million loan backing 11 apartment properties — totaling 637 units — owned by Blackstone has gone into special servicing, according to Trepp.  
• Blackstone’s loan, known as BX 2019-MMP, is the securitized portion of a $363.65 million financing package backing the primarily market-rate apartment portfolio in Manhattan. In 2019, Blackstone tapped into the commercial mortgage-backed securities market to finance the 11 apartment buildings, according to American Banker.
• The portfolio was put on the servicing watchlist in November for tripping its debt service coverage ratio, according to Commercial Observer. However, the loan was marked as current earlier this month. No reason was given for sending it to special servicer Atlanta-based Mount Street. 

Dive Insight:

Sources told Multifamily Dive that Blackstone’s 11-property portfolio faced certain deal-specific headwinds, including higher-than-expected capital expenditures and increased borrowing costs for floating-rate debt.

Although Blackstone remains committed to apartments, sources said the company believed it was not in its best interest to continue to fund shortfalls at the Manhattan properties. By letting the assets go into servicing, the company can engage its lenders about how to best move forward.

Still, the properties will be operated as usual. “We continue to focus on delivering a best-in-class experience for our residents while we work with our lenders on the capital structure,” a Blackstone spokesperson told Multifamily Dive.

The firm sees increasing for-sale costs driving demand for rentals. Last summer, the company purchased 8 Spruce, an 899-unit Frank Gehry–designed luxury residential building in Manhattan. “Rental housing remains a high conviction theme for us, including in New York City,” the spokesperson told Multifamily Dive.

Recently, Blackstone purchased the 473-unit Ellington Midtown in Atlanta from Goldman Sachs Asset Management.

“Located in one of the most dynamic submarkets in Atlanta, our purchase of Ellington Midtown illustrates our ability to deploy capital in our high conviction investment themes even during volatile times,” Asim Hamid, senior managing director for Blackstone Real Estate, said in a statement shared with Multifamily Dive.

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