Blackstone Refinancing 8 Spruce Street With Municipal Bonds

Apartments at Blackstone’s 8 Spruce Street are decidedly not “affordable housing for low-, moderate-, and middle-income New Yorkers,” to quote from the mission statement of New York City’s Housing Development Corporation.

They feature Douglas fir cabinetry and wine fridges. Building amenities include a sundeck, screening room, golf simulator, indoor pool, and a fitness center with a sauna, yoga room and spin studio. The average monthly base rent is more than $6,000.

But, Bloomberg reported, HDC is issuing $550 million of municipal bonds for Blackstone to refinance the 900-unit property, which was 97 percent occupied as of August, according to Moody’s Ratings.

Roughly $204 million of the securities are tax-exempt and offered under the Liberty Bond program, created to help Lower Manhattan’s recovery from the 9/11 attacks, which were 23 years ago.

Lower Manhattan is in good shape, according to the Downtown Alliance, its business improvement district. Its office market has stabilized, the BID reported in August, and its hospitality sector is surging. Strong demand for apartments has spurred conversion projects at buildings including 111 Wall Street and 222 Broadway.

Blackstone acquired 8 Spruce Street, formerly known as Beekman Tower, from Brookfield Asset Management and Nuveen in 2022 for $930 million. Its last appraisal by the city came in at $802 million.

Bank of America is the lead manager of the bond sale for the 76-story tower’s debt. The bonds will be fixed-rate debt with multiple classes, three of which take payment priority over the Liberty Bonds. All of the bonds mature in 2031.

“The significant demand for this refinancing reflects the high-quality nature of the property,” a spokesperson for Blackstone said in a statement.

Frank Gehry designed the building for Forest City Ratner, which launched construction during the Great Recession, leading to a lengthy delay. In 2008, Forest City received approval to issue the Liberty Bonds, which were refinanced in 2014 as interest-only securities set to expire last month.

The building opened as the tallest residential tower on the continent in 2011. Brookfield gained control in 2018 upon its acquisition of Forest City.

— Holden Walter-Warner