And the Winner is...

Blackstone, in a bid to spread it's real-estate hegemony to multiple continents and asset classes has made Jonathan Gray a busy man.  Going long and strong real-estate, whether residential or commercial, has been a no-brainer since 2009 but much credit needs to be given to Jon Gray and his crew.  Actually,  the media has been covering his situation pretty thoroughly for a while now so The CRE Review is going to do a synopsis covering Blackstone's dominance in this area.

 Before we get started, here are some overviews of JG that are worth familiarizing yourself with.

1. Jonathan Gray, Blackstone’s Real Estate Wizard Behind the Curtain - New York Observer
2. Jon Gray Skips Party, Afraid Record Buyout Will Fail - Bloomberg
3. Blackstone's Gray Joins Board as Real Estate Rises to 71% of Firm's Profit - Businessweek 

Whether it has been getting involved in GGP's bankruptcy, loaning money to and then owning  Eagle Hospitality (Apollo and preferred shareholders got spanked on this one; more on this story another time), buying Centro, or any other (Emeritus' health-care portfolio) of it's lucrative joint-ventures (Glimcher); Blackstone has acquired an empire that spans beyond commercial buildings.

Jon Gray has also been busy acquiring a massive portfolio of residential houses; often times he is buying them in bulk.  Look no further than the mortgage team at Bloomberg and you will frequently see BX named in a story that excessively celebrates the genius of buying resi when it has never made more sense to do so.

1. Blackstone Sees Two-Year Window to Buy Houses: Mortgages - Bloomberg
2. Phoenix Picked Clean, Private Equity Descends on Atlanta - Bloomberg 
3. Blackstone Makes Foray Into Houses for Rent: Mortgages - Bloomberg
4. Blackstone Rushes $2.5 Billion Purchase as Homes Rise - Bloomberg

See what I'm saying here?   While not every purchase has been a winner (see: EOP restructurings, Hilton buyout), their aptitude to see trends just a few months before anyone (lol) else tells me that leaving the keys in the mail is just the price of doing business on such a massive scale. 

In case you haven't learned enough already.  A couple more to drive the point home.

1. The Hotel Hegemony Continues
1. Blackstone Said to Seek $450 Million for Hotel Financing - Bloomberg
2. Blackstone Said to Plan Sale of Miami Beach Resort - Bloomberg
3. Blackstone/Apple REIT Merger Signals New Wave of Private Equity Hotel Investment - CoStar

Maybe in the future we'll do a similar story on CRE investors who recently got it all wrong.  Any ideas?  Maguire, Lightstone, Macklowe might work.  Let us know.

~Jingle Male

Goldman working on Glimcher loan

Bloomberg reports.

I'm really just referencing the story for the quote below...

Restarting the commercial mortgage-bond market is “like recovering from a very bad motorcycle accident,” said William Glazer, president of Keystone Property Group of Bala Cynwyd, Pennsylvania

Blackstone & Glimcher JV on two Malls

CoStar notes

The Blackstone Group and mall REIT, Glimcher Realty Trust, entered into a joint venture agreement that would be seeded by two of Glimcher's best malls -- Lloyd Center in Portland and WestShore Plaza in Tampa.

Under terms of the joint venture, Blackstone would acquire a 60% stake in the properties, while Glimcher would maintain a 40% stake and continue to lease and manage the center. The gross value for the combined transaction is approximately $320 million, which includes $218 million in mortgage loans in place on the properties. At this value, Blackstone's 60% acquisition price would be approximately $192 million, including the assumption of $130.8 million in debt.

Although not confirmed, the Wall Street Journal cited an anonymous source that broke out the acquisition price by asset. Reportedly, Blackstone would pay $39 million in cash and assume $75 million in debt for its stake in the Lloyd Center mall and would pay $27 million in cash and assume $54 million in debt for its stake in the WestShore Plaza mall. The capitalization rate is estimated at 9.5% for the two malls, which are among only seven malls of the REIT's best malls that it classifies as "Market Dominant."

WestShore serves as collateral in two deals, BSCMS 2003-T12 and MSC 2003-IQ6, with $100mm ($59.677 outstanding) portion of the A note in each. The 2Q '09 NCF DSCR was 2.10x, occupancy at 97%. Matures 9/9/2012.

Lloyd Center is also in two deals, WBCMT 2003-C5 and WBCMT 2003-C6, with $140mm ($63mm outstanding) portion of the A note in each. The 2Q '09 NCF DSCR was 1.88x, occupancy at 97%. It matures 6/11/2013.

Closures and Layoffs

Sears is closing its store at Eastland Mall in Charlotte NC. The fact that it took so long (just 3 weeks ago, ESL was stating publicly how committed he was to that location) is smear against the company. This mall has disintegrated into an unsafe place responsible for a high level of crime and has no anchors (Sear's was the last), but this disintegration started before the turn of the century and it was in bad shape back then. After losing money for some significant period of time and working with local groups to come up with plans to revive the site, the former owner, Glimcher, bowed out and turned in the keys in 2008.

The comments in the Charlotte Observer story are mildly amusing if you're bored. Commentators call each other racists (the mall is located in predominantly minority part of town) and blame everyone for the Mall's failure (except the owner and manager of the property).
Regardless, it got me looking for other closures, of which I try to keep a close eye on. The list is really growing. David Bodamer has a nice one compiled at the bottom of his article on Sear's closures. However, Mark Herschmeyer has the best weekly update on closures and layoffs at CoStar.com, and I haven't found one that rivals the depth and quality - but let me know if I'm missing a good one.