Term Sheet: Blackstone plans Signature loans sale; UBS AM’s Hollick to head global real estate; 1740 Broadway loan back on block

Blackstone, Rialto and CPP Investments tap JLL to offload $1.8 billion of Signature Bank loans mere weeks after buying them; UBS Asset Management promotes Jon Hollick to head real estate globally; Midland puts defaulted $308 million 1740 Broadway loan out for sale at an estimated 50 percent discount; and more in today’s Term Sheet, exclusively for our valued subscribers.

They said it

“There’s just a lot of people who put on too much debt or paid too high a price for real estate in the last couple of years, and they’re all going to have to sell at the same time, and fewer buyers around means the pricing should get more attractive” 

Brian Kingston, chief executive of Brookfield’s real estate business, speaking on Brookfield’s Perspectives podcast last week.

What’s new

Hot stove: Blackstone, Rialto and CPPIB venture plan to sell a $1.8 billion Signature Bank loan portfolio. (Source: Getty)

Fast flip

The Blackstone Group-led venture that in December struck a deal to acquire a $16.8 billion portfolio of commercial and multifamily mortgages from the FDIC’s sale of the Signature Bank loan portfolio is now reportedly seeking a quick buyer for $1.8 billion of its performing market-rate multifamily loans. The venture, which includes Miami-based Rialto Capital and Toronto-based state pension platform CPP Investments, has hired Chicago-based advisory JLL to market the portfolio.

The sale is not unexpected, with market participants noting that the consortium is likely seeking to reduce its exposure after the initial acquisition. Likely buyers are expected to be New York-focused investors, potentially in the debt fund or even family office space, and pricing is not expected to be substantially different than what the venture paid. New York-based Blackstone and its partners paid $1.2 billion for a 20 percent stake in the portfolio, with the FDIC retaining the remainder and providing additional financing.

A new head for UBS

UBS Asset Management promoted Jon Hollick to head of global real estate, excluding Germany, Austria and Switzerland. According to an internal memo sent and seen by affiliate PERE last week (registration required), Hollick assumed the newly created role with immediate effect, overseeing the Zurich-based manager’s global business growth around specialized thematic and sustainable investing capabilities. Hollick previously oversaw the firm’s European real estate strategy and investments as head of real estate EMEA ex-DACH. UBS has not yet appointed a successor to Hollick’s former role.

The changes could be a sign of the times as managers gear up for new opportunities, as last week New York-based manager Blackstone moved Ken Caplan, former global co-head of real estate, to the new position of co-chief investment officer of the company. Blackstone’s current head of real estate Americas, Nadeem Meghji, was assigned to Caplan’s former role.

Goldman Sachs looks debt ahead

New York-based Goldman Sachs last week held a second close for its latest credit fund, West Street Real Estate Credit Partners IV (PERE registration required). The firm has so far raised $2.6 billion for the fourth credit strategy in its roster, according to a filing with the Securities and Exchange Commission. The fund was launched late in 2021 and held its close in August 2023 at $2 billion. The fundraise echoes a growing trend of private real estate groups focusing more efforts on their debt strategies, inspired partly by sponsors’ needs to refinance debt originated in the prior rate cycle that is now coming due.

Trending

Risk-off

Real estate investors will continue to take a risk-off stance in the coming year, although more liquidity will emerge as dry power starts to enter the market, according to Mark Roberts, managing director of research at Crow Holdings, a real estate developer and manager based in Dallas.

Despite that stance, Roberts believes the commercial real estate market could benefit from several tailwinds in the coming year. A key part of this thesis is the relative lack of construction lending, combined with population and income growth in certain metropolitan statistical areas. But one area that will definitely be active is value-add investments in commercial real estate capital stacks, with lenders and borrowers looking to recapitalize deals ahead of a looming maturity wall, he said.

Office leasing 101

Vacant and underused office space in major MSAs – including San Francisco – continue to cause headaches for local sponsors and governing bodies alike. But a report this week in the San Francisco Chronicle highlights a potential new tenant for some of the city’s vacant office space: the University of California.

Responding to a request from Mayor London Breed, the Oakland-based university system will look to expand operations of its 10 regional campuses – including UC Berkeley – into San Francisco’s downtown market. San Francisco’s office market has a 37 percent vacancy rate, and gaining an institutional academic tenant such as the University of California could be a boost for reviving leasing momentum. The strategy is bi-coastal: an example in New York was the local Rudin Family last year bringing in local university Touro College and University on a 32-year lease to help bolster its 2023 revitalization deal of 3 Times Square in the city.

Data snapshot

Delinquency dips

New York-based data provider Trepp this week tracked a modest drop in the Trepp Commercial Mortgage-Backed Securities Delinquency rate in December, logging a 7-basis-point fall to 4.51 percent during that period. Of note, the office segment saw its delinquency rate fall for the first time in several months.

People

Sixth Street stacks real estate platform

San Francisco-based manager Sixth Street this week hired Marcos Alvarado as partner and head of US real estate as the firm kicks off expansion plans for its national platform. Alvarado assumes the role on February 1 and will join from New York-based ground leasing specialist Safehold and its predecessor iStar, where he worked as president and chief investment officer. Sixth Street – a lender and equity investor – has been continually focused on growing its overall real estate business and portfolio since bringing Julian Salisbury on as co-chief investment officer from Goldman Sachs Asset Management.

Newmark adds to private capital business

New York-based advisory Newmark is continuing the build-out of its New York private capital group with the addition of Robert Ferman from advisory Marcus & Millichap. Ferman will help head up Newmark’s Brooklyn investment sales team and joins after a three-and-a-half-year span at MMI. The private capital group was launched in November 2023 with Brett Siegel and Dan O’Brien co-heading the team. The outfit works with the firm’s institutional investment group as well, which is run by co-heads of US capital markets Doug Harmon and Adam Spies.

Loan in focus

Box office discount: The defaulted $308 million loan on 1740 Broadway is back up for sale. (Source: Getty)

New York resolution

Resolution is coming for a defaulted $308 million loan on 1740 Broadway, a New York office tower that has been in flux since mega-manager Blackstone stopped making payments nearly two years ago. Midland Loan Services this week hired broker JLL to market the loan on the 600,000-square-foot property, with expectations of a discount of about 50 percent when it is sold, according to market participants who spoke to Real Estate Capital USA.

The sale would mark a significant milestone – as well as a path forward – for the property. Valued at $605 million when the CMBS loan was originated in 2014, the property is now valued at roughly a third of that due to ongoing trouble in the office market post-pandemic. This new basis could unlock a significant renovation or a new use for the property, REC USA understands.


Today’s Term Sheet was prepared by Randy Plavajka with Samantha Rowan and Shihao Feng contributing