Financing is becoming increasingly difficult for older commercial properties in poor locations.
(Photo: Volkmar Schulz / Keystone Press)
Dusseldorf In the past week, in a niche of the real estate market far north in Europe, something worrying has happened. Ironically, Blackstone, one of the largest private equity firms in the world, was forced to let a commercial real estate loan default.
The EUR 297 million loan is the basis of a EUR 531 million loan secured by commercial real estate, also known as a securitized commercial real estate loan. In a securitization, a lender, such as a bank, or in this case Blackstone, converts one or more loans, such as a mortgage, into securities that can be sold to investors.
Two-thirds of the secured properties in this paper were Finnish office buildings from the 1980s, located in the suburbs of large cities. It is precisely this real estate category that is currently suffering from sharp price reductions, because they are in much less demand both because of their location and because of their energetic condition. 40 percent of the area of the Blackstone buildings in the affected sub-portfolio was recently empty.
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