PERE FORUM EUROPE: Blackstone sees ‘trickle of deals’ becoming a ‘stream’

Chad Pike, senior managing director and co-head of real estate at The Blackstone Group, said a ‘long, steady flow of deals was inevitable’, as he revealed the firm was about to close on a deal in Germany that went into bankruptcy in 2008.

The Blackstone Group said today that the European real estate market was going to see a “long steady flow of deals” thanks in part to the inevitable maturities of loans taken out in years such as 2006 and 2007.

Chad Pike, London-based senior managing director and co-head of real estate, told delegates during a keynote address at the PERE Forum: Europe that Blackstone had started seeing the “trickle becoming a stream” from September last year.
Revealing the firm was about to close on a deal in Germany which went into bankruptcy in 2008 but that was only now coming out of the process, Pike said: “We are starting to see a lot of transactions either coming to the point where they need to be refinanced and recapitalized, or will have to go into bankruptcy.”

Highlighting a “wall of maturity”, Pike also referred to levels of stated non-performing loans. In the US, that was put at some €96 billion, while in Europe the figure was even greater at €380 billion.

He added: “A lot of people are saying we are going to have to drop our returns, but we are seeing a steady loading of the cannon, if you will, of transactions that will be out there for all of us to do over the years. It will just take a while.”

Apart from deal flow, there were some other encouraging aspects to transacting in Europe, he said. Next week, for example, there is expected to be one of the first, if not the first, bond issuance in Europe of a commercial real estate deal since the credit crisis. Deutsche Bank is placing a CMBS backed by Chiswick Park, an office park near central London which Blackstone reportedly agreed to buy in January for £480 million (€573 million; $744 million).