Blackstone is planning to secure an $800 million loan to acquire a stake in a 50-story office building in New York City, as disclosed by two informed sources. The deal is expected to be finalized before any new financing is arranged, stated the first source anonymously due to the nature of the discussions.
The world's largest alternative asset manager is negotiating the acquisition of a Manhattan property from investors advised by JPMorgan Global Alternatives, according to sources cited by Reuters last month. The investors linked to JPMorgan own 49% of the building, while Fisher Brothers possess the remaining 51%, according to a third source familiar with the matter.
Blackstone's focus on New York office real estate has been rekindled following portfolio adjustments diversifying into logistics, data centers, and rental housing. Currently, Blackstone's office investments represent less than 2% of its real estate assets, a significant drop from over 60% in 2007.
The building already has an existing loan of around $600 million, disclosed the third source.
Initially considering a refinancing role, Blackstone shifted course to purchase an equity stake in the deal, as confirmed by the first and second sources.
With the current loan set to mature in August, Morningstar Credit Analytics reported the looming deadline for the 2005 loan package.
Blackstone's interest in the purchase aligns with recent trends in the real estate market, adapting to challenges posed by interest rate fluctuations and the shift to remote work.
Despite a decline in occupancy post-pandemic, the 1345 building managed to regain its stability by the end of 2023, with occupancy reaching 96%, as confirmed by Morningstar. Notably, AllianceBernstein, the largest tenant, left in 2024, but was replaced by a lease with global law firm Paul, Weiss, Rifkind, Wharton & Garrison on a long-term basis, along with a pending lease agreement to fill the remaining space.
The decision to pursue the New York office building deals coincided with the U.S. Federal Reserve's reduction of interest rates last year, according to the first source.
The anticipated debt financing will be subject to floating rates, with the first source indicating a reasonably standard basis of 425 to 450 basis points tied to the current Fed funds rate.