Blackstone Misses a Payment on US$274m Loan Re Four Club Quarters Hotels

Main Photo: The Club Quarters Chicago

Date: July 2020

Location: Chicago, Philadelphia, Boston and San Francisco, USA

Name: Club Quarters

No. of Keys: TBA

Owner: Investor Blackstone has missed a payment on a US$274m loan. The debt is against Club Quarters hotels in Chicago, Philadelphia, Boston and San Francisco, reports the Financial Times.

Blackstone says the properties were already facing operational issues, ahead of the coronavirus downturn. It bought the hotels from operator Club Quarters in 2016.

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.

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.

THPT Comment: Good lord…if Blackstone can default on their repayments…and Colony Capital…and Brookfield, surely the world is coming to an end!…or is it a ploy?

First Seen: The FT and Real Deal

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