Blackstone forfeits $20M deposit and pulls out of $400M single-asset purchase

Merchant_of_Debt's picture
Rank: King Kong | 1,490

https://news.theregistrysf.com/blackstone-backs-aw...
"New York City-based Blackstone has made the decision to walk away from its planned $405 million acquisition of the Uptown Station office project in Oakland. As a result, the global investor will have to forgo the $20 million non-refundable deposit it made on the acquisition earlier this year, according to multiple sources that are aware of the situation."

The article goes to further say that BX pulled out to volatility and financing uncertainty. Wild. They must be anticipating a repricing or market-to-market loss far exceeding their breakup costs.

Has anyone heard anything from blackstone on their post-covid outlook?

Region: 
United States - West
United States - Northeast

Comments (30)

Apr 1, 2020

Not that ridiculous.. $40 MM is only 5% $200 MM

    • 1
    • 4
Apr 2, 2020

walking away from a hard deposit isn't ever nbd

    • 3
Apr 2, 2020

Is everyone tied up in lawsuits right now? Because don't you have to sue and default someone to actually keep their deposit?

Apr 2, 2020

I hope you're not in a quant role lol

    • 3
Apr 2, 2020

my name rhymes with day ralio

    • 1
Apr 2, 2020

Nope. That feels like many lifetimes ago

Apr 1, 2020

Drop in the bucket for BX - cost of DD.

Funniest
Apr 1, 2020

Cost of 3 billable attorney hours.

    • 5
Apr 2, 2020

how many n95 masks is that these days?

    • 1
Apr 2, 2020

They pulled out of one of our office deals just before going hard.

Heard that they pulled out of over $1b worth of deals they were in contract on and are only closing on an $80mm multifamily deal at the moment

Array

Apr 2, 2020

Interesting - were these in BREIT as well? I know they use leverage to juice CF, wonder if this was inability to close on loan?

Apr 2, 2020

On the multifamily side, they said it stemmed from an inability to accurately price risk in today's environment.

  • Analyst 2 in PE - Other
Apr 2, 2020

Half our 2020 sale pipeline was earmarked potential portfolio sale to BX.... RIP promoted interest.

    • 2
Apr 2, 2020

Yes, they were buying our office deal through BREIT. The guidance we had from them was more along the lines that they took all of their deals back to IC and decided to pull out as they've now re-evaluated the risks in the market. Would assume that debt plays a role in that, but I think it was generally broader than that.

Array

    • 1
Apr 2, 2020

Kam Sang Company also pulled out of a multi-asset purchase of some hotels from Blackstone

    • 1
Most Helpful
Apr 2, 2020

This Biz Journal article below suggests BX was prepared to pay way over market for this, so they may have just come to their senses.

The now-defunct deal had worked out to around $1,020 per square foot, according to the Registry, which would have set a new record in Oakland. Uptown Station fetching more than $800 per square foot would have been well above what other investors had been paying for Oakland office buildings before the coronavirus shutdown occurred: 180 Grand came in at $646 per square foot in July and 1901 Harrison St. sold in March for $147.2 million, or $510 per square foot, according to PropertyShark.

https://www.bizjournals.com/sanfrancisco/news/2020...

    • 3
Apr 3, 2020

180 Grand and 1901 Harrison are both 80's multi-tenant properties that generally lease to a smaller tenant base.

Uptown Station has been fully redone and has something like $25MM of recent improvements under the hood. It is also leased fully to square.

Not saying 1K PSF is logical but you definitely get a healthy cap rate and thus PSF premium for single tenant and level of improvements.

    • 1
Apr 3, 2020
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