(Bloomberg) — A joint venture that includes Blackstone Inc. and Canada Pension Plan Investment Board has won a stake in a nearly $17 billion portfolio of commercial-property loans from the failed Signature Bank.
The companies are also partnering with funds affiliated with Rialto Capital to acquire a 20% stake in the venture for $1.2 billion, according to a statement Thursday. The Federal Deposit Insurance Corp. is maintaining an 80% stake in the venture and providing financing equal to 50% of the value.
The FDIC has been trying to offload roughly $33 billion of real estate loans from Signature after the bank collapsed earlier this year. That also includes loans backed by rent-stabilized or rent-controlled apartments mostly in New York City, which aren’t part of the Blackstone deal. The FDIC said it expects to announce results for those transactions soon.
The commercial-property loan portfolio won by Blackstone and its partners includes more than 2,600 first-mortgage loans backed by retail, market-rate apartments and office properties largely located in the New York metropolitan area. The debt is mostly considered performing.
Blackstone will be the lead asset manager of the portfolio, and Rialto will be the loan servicer and operating partner.
“We are excited to invest in this compelling, large-scale opportunity,” Jonathan Pollack, global head of Blackstone Real Estate Credit, said in the statement. The venture includes Blackstone Real Estate Debt Strategies and Blackstone Real Estate Income Trust.
Bloomberg reported first in November that Blackstone was the frontrunner to win the portfolio.
Brokerage Newmark Group Inc. advised the FDIC during the process. Blackstone and its partners were advised by Jones Lang LaSalle Inc., Simpson Thacher & Bartlett LLP, Gibson, Dunn & Crutcher LLP, Ropes & Gray LLP, Davis Polk & Wardwell LLP and Bilzin Sumberg Baena Price & Axelrod LLP.
(Adds adviser in last paragraph.)
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