Blackstone misses payment on $274M hotel loan

Debt is secured by properties in Chicago, Philadelphia, Boston and San Francisco

National /
Jun.June 29, 2020 03:00 PM
Blackstone COO Jonathan Gray and Club Quarters Chicago at 111 W Adams Street (Getty, Google)
Blackstone COO Jonathan Gray and Club Quarters Chicago at 111 W Adams Street (Getty, Google)

As the hospitality sector struggles to regain its footing, Blackstone skipped a payment on a $274 million hotel loan.

The mammoth firm described the hotel deal as “a very small investment that had been written down prior to Covid-19 as a result of unique operational challenges,” the Financial Times reported.

Blackstone added that it would work with its lenders and Club Quarters, the company managing the four hotels securing the loan, “to create the best possible outcome under the circumstances for all parties, including the employees.”

An April report showed the firm requested “various modifications and forebearances” from the administrator of the loan, which was already delinquent at that point.

The hotels at issue are in Chicago, Philadelphia, Boston and San Francisco. Blackstone acquired them in 2016 from Club Quarters. A portion of the debt has been trading at levels that indicate investors have long-term concerns about the sector. The lowest-rated portion of the loan trades at 76 cents on the dollar, down from 100 cents at the beginning of March.

Hotels took a hit when the coronavirus pandemic brought travel to a crawl in March. As some states reopen, business travel — the bread and butter for many hotels — has been slow to recover, and some predict it will not return to pre-Covid levels.

Blackstone is not the only real estate investment firm that has struggled to make payments in recent months.

Tom Barrack’s Colony Capital defaulted on $3.2 billion of debt backed by hotels and health care properties. Canadian asset manager Brookfield was also not immune to the impacts of the pandemic, missing payments to lenders while it asked mall tenants to pay up.

Meanwhile, Blackstone has downplayed its exposure to hotels.

In May, Blackstone touted its portfolio’s focus on logistics and warehouses, which now represent more than one-third of the firm’s global portfolio. But hotels account for almost as much revenue for Blackstone’s REIT as its industrial portfolio. Last year, hotels brought in $441.8 million, or 26 percent of total real estate revenue. [Financial Times] — Georgia Kromrei


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