Blackstone, the world’s largest commercial property owner, has purchased a billion-dollar senior mortgage loan portfolio from a major German lender.
The New York-based investment firm said in a statement Tuesday that it had acquired the portfolio of 11 loans from Deutsche Pfandbriefbank, known as PBB. The loans are secured against performing multifamily, office and hospitality properties across the United Kingdom and the United States. They were originated by PBB.
The deal comes as PBB grapples with what executives have called “the greatest real estate crisis since the financial crisis.” About 15% of the lender’s overall portfolio is in U.S. commercial real estate loans. That’s left the firm in a bad spot as commercial real estate struggles to recover from the pandemic, media outlets have reported.
Now, PBB is attempting to divest some of its riskier assets, optimize its balance sheet and “diversify its business model, establishing a broader foundation for future revenue growth and increased profitability,” the lender said in November.
The deal also follows Blackstone’s December acquisition of a 20% stake in Signature Bank’s commercial real estate debt portfolio, including more than 2,600 first mortgage loans on retail, multifamily and office properties.
Blackstone executives have referenced reaching a bottom in the commercial real estate market and spotting opportunities to spend capital despite uncertainty about when the Federal Reserve may cut interest rates.
We see an “improving external environment,” Stephen Schwarzman, Blackstone’s chairman and CEO, said on the company’s first-quarter earnings call. He added that 2023 marked a “cyclical bottom” even as “changing market conditions take time” to translate into performance.
