Blackstone Lands $2.8B CMBS Loan to Purchase Grocery-Anchored REIT
By Andrew Coen February 27, 2025 6:17 pm
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Investor appetite for retail will be put to the test late this winter in one of the largest commercial mortgage-backed securities deals for the sector.
A $2.8 billion CMBS deal is slated to hit the market soon that will finance the bulk of Blackstone (BX) Real Estate Partners’ $4 billion acquisition of Retail Opportunity Investments Corporation (ROIC), according to a Thursday afternoon presale report from KBRA.
ROIC is a real estate investment trust (REIT) focused on grocery-anchored shopping centers. The REIT was taken private in the Blackstone deal, which was announced last November and closed Feb. 12, and which also includes $1.18 billion of cash equity.
Eighty-five of the 93 ROIC retail assets that comprise the loan’s collateral are grocery-anchored shopping centers concentrated in Los Angeles, Seattle, San Francisco and Portland, Ore., the KBRA report shows, The single-borrower CMBS loan will be led by Morgan Stanley (MS), Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC).
The retail portfolio is 95.6 percent leased as of December 2024 with more than 1,400 unique tenants. Only two tenants account for more than 2 percent of total base rent in Ralphs (2.4 percent) and Safeway (2.1 percent), both supermarket chains. The largest asset in the loan is the 755,164-square-foot Fallbrook Shopping Center in Los Angeles, which is 84 percent occupied, according to the KBRA report.
KBRA noted that the strength of the grocery-anchored stores in the portfolio differentiates it from other brick-and-mortar retail investments around the country, with the properties also benefiting from low levels of new supply in their respective markets since the Global Financial Crisis of 2008. Blackstone also stressed a belief that the retail sector has “been overlooked” in a number of West Coast markets due to lockdowns that persisted during the height of the COVID-19 pandemic longer than in other parts of the country, according to the KBRA report.
Blackstone is expected to enter into an interest rate cap agreement with a strike rate of 5.00 percent as part of the two-year, floating-rate loan, which includes three one-year extension options, according to KBRA.
Officials at Blackstone did not immediately return a request for comment.
Andrew Coen can be reached at acoen@commerialobserver.com
