Blackstone to buy $300m US loan portfolio

The New York-based private equity giant will acquire a nine-loan portfolio, backed by US hotel, retail and office properties, from struggling German bank Eurohypo on behalf of the firm’s latest global real estate fund.

The Blackstone Group has agreed to purchase a portfolio of nine commercial real estate loans with a total face value of $300 million from Eurohypo, the troubled commercial real estate finance unit of Germany’s Commerzbank, according to sources familiar with the deal.

The loans, which were purchased at a discount, comprise a mix of performing and nonperforming mortgages backed by $700 million of underlying hotel, office, retail and mixed-use assets in the US.

Performing loans include a $64.6 million repurchase facility on four Sofitel hotels in Chicago, San Francisco, Miami and Minneapolis; a $59.5 million first mortgage and $28 million mezzanine loan on the Mondrian South Beach hotel in Miami. A $35 million mezzanine loan on Solana, a massive mixed-use development in Westlake, Texas, and a $28 million B-note on an office portfolio in Melville, NY are among the distressed mortgages.

It is unclear how much Blackstone, which declined to comment, is to pay for the portfolio, which was acquired on behalf of the firm’s current global real estate fund, Blackstone Real Estate Partners (BREP) VII. The fund is expected to close on $6 billion in commitments by year-end and raise at least $10 billion by next year, although PERE understands the fund in fact has a $13 billion hard cap.

The Eurohypo portfolio acquisition is expected to close by the end of the year or the first half of January, which would likely make it the third transaction to be funded by BREP VII. Earlier this month, Blackstone closed on its $473 million purchase of 36 shopping centres from Equity One, as well as the $1 billion acquisition of a 10.1 million-square-foot office portfolio from Duke Realty.

Eurohypo’s parent company, Commerzbank, could not be reached at press time.

Commerzbank has been ordered by the European Union to sell its money-losing subsidiary –which currently holds some $6 billion of commercial real estate loans in the US – by 2014 as a condition of receiving rescue funds during the credit crunch. The portfolio being acquired by Blackstone is believed to be the first of those US mortgages to be sold.