Blackstone to Refi AIR Acquisition Note With $3.3B Loan
Proceeds will retire part of the debt used in the 2024 deal.
Blackstone’s Apartment Income REIT Corp. is set to secure a $3.3 billion CMBS refinancing loan for a 29-property collection comprising 9,389 units across eight states and Washington, D.C., according to a presale report by KBRA.
A consortium of Goldman Sachs, JP Morgan, Barclays, Bank of America, Citi Real Estate Funding, Royal Bank of Canada and The Bank of Nova Scotia will co-originate the debt on or about Nov. 24. The two-year, floating-rate, interest-only note will include three one-year extension options.
The loan is slated to refinance $3.1 billion in existing debt and return $156.5 million of equity to Blackstone, as well as pay closing costs. All the properties previously backed two CMBS loans securitized in 2024, the proceeds of which Blackstone used to partly fund the purchase of AIR Communities in a deal valued at $10 billion.
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The properties are spread across Florida, California, Pennsylvania, Maryland, Washington, D.C., Colorado, Massachusetts, North Carolina and Georgia. By allocated loan amount, Florida and California have the highest exposure at 34.2 and 30.6 percent, respectively.
More than 83 percent of properties by ALA are in primary markets, with the remainder found in secondary markets. Miami communities will receive the highest share at 27.1 percent, followed by Los Angeles (13.4 percent), Washington, D.C. (13.0 percent) and Orange County (9.3 percent). All other markets are at 6.0 percent and below.
The communities debuted between 1958 and 2022, being on average 37 years old. Since 2021, $441 million has been invested in capital improvements across the collection. The assemblage was 94.2 percent occupied on average as of October, with individual rates ranging between 90.4 and 99.2 percent.
The collection includes communities between 78 and 770 units, including four income-restricted properties that amount to 8.7 percent of the ALA. The largest two properties are Flamingo Point–Center Tower in Miami Beach, Fla., (512 units, 9.6 percent of ALA) and 3400 Avenue of the Arts in Costa Mesa, Calif., (770 units, 9.3 percent of ALA).
Special servicing rates reach new record
There are no reports of the properties’ previous securitizations, BX 2024-AIRC and BX 2024-AIR2, reaching delinquency. However, multifamily distress has reached other Blackstone CMBS loans.
Last month, a $1.3 billion CMBS note entered special servicing after Blackstone missed the Oct. 9 maturity payment. Barclays and Morgan Stanley issued the floating-rate debt in 2021, which at the time was backed by 21 properties encompassing 6,671 units. Over time, the pool dropped to just six communities comprising 1,842 apartments as the borrower offloaded properties, paying 60 percent of the loan. Lastly, Blackstone received a three-month forbearance to sell the remaining assets.
As much of the cheap debt originated earlier in the decade reaches maturity, CMBS delinquency rates and other signs of distress warrant attention beyond the multifamily sector. Overall CMBS special servicing rate reached 11.5 percent in September, the highest reading since February 2013, according to a Trepp report.
