The after-effects of the COVID-19 pandemic are still being felt throughout the New York City real estate market, particularly in the multifamily sector. With many tenants struggling to pay rent and vacancy rates on the rise, landlords are facing increasing financial pressure. The latest example is that the $270.3 million commercial mortgage-backed securities (CMBS) loan on Blackstone's Manhattan multifamily portfolio has been sent to special servicing.
What is Special Servicing?
Special servicing is a process in which a third-party company takes over the management of a loan that is experiencing issues such as late or missed payments. The goal is to work with the borrower to find a solution that benefits both parties. This development is significant, as it indicates that the loan is currently in default or at risk of defaulting.
Moving to special servicing does not necessarily mean the loan will default. There are other potential outcomes: the special servicer may work with Blackstone to modify the loan terms, such as extending the maturity date or adjusting the interest rate, or the servicer may choose to foreclose on the properties and sell them to recover the outstanding balance on the loan.
It is also worth noting that Blackstone is not the only real estate firm to experience issues with CMBS loans during the pandemic. Many landlords nationwide have struggled to keep up with payments, leading to increased loan delinquencies and defaults. As the industry navigates these challenging times, more loans will likely be sent to special servicing.
Why is this Significant?
Blackstone is a major player in New York real estate. The Blackstone multifamily portfolio consists of 11 buildings in Manhattan, with a total of 2,646 units. The loan originated in 2017 and was securitized into a CMBS transaction in 2018. The loan has a current balance of $257.6 million and is due to mature in September 2027.
For home buyers and particularly for investors, the Blackstone situation is certainly one to watch. The properties currently held by Blackstone could soon be up for grabs and possibly could sell for less than they would normally.
If you want to learn more about this or other New York real estate opportunities, contact The Law Offices of Melvin Monachan today. With decades of experience navigating New York's unique real estate market, we can help you weigh your options and make smart decisions. Contact us online or call us at (347) 389-1682 today.