Tim Johnson, Katie Keenan, Jonathan Pollack and Michael Eglit

A rolling stone gathers no moss, or so they say, and one of our top firms has shown that a rolling Blackstone isn’t getting green and fuzzy, either.  

While many firms sat back on their laurels amid uncertain market conditions, Blackstone Real Estate Debt Strategies (BREDS) leaned in, deploying capital across the firm’s high-conviction sectors of logistics, multifamily and hospitality. At a time when speed and certainty of execution was key, BREDS not only helped its 500-plus borrower base navigate the choppy environment but also took advantage of it itself by buying up performing debt securities at compelling returns.

During the year ending March 15, BREDS racked up $6 billion in U.S. originations — $12 billion globally — and brought its assets under management to $58.8 billion. Lending to the creme de la creme of private equity real estate owners, developers and financial institutions, the team continued to deliver the white glove BREDS experience its client base is accustomed to, despite market headwinds.

Michael Eglit describes the past 12 months as “one of the most unique and interesting 12-month periods. We’ve seen economic turmoil, increased volatility and some really interesting changes in the market, and I’m very proud of the way our team navigated this challenging year.” 

With its flexible capital mandate, BREDS can provide first mortgages, subordinate debt, fixed-rate loans or floating-rate loans, but the platform was active in providing lower-leverage first mortgages — mainly through its insurance capital — and deploying private fund capital. 

Leveraging the substantial data resources and infrastructure it has at its fingertips, BREDS was able to make informed investment decisions in real time, extrapolating information from its portfolio companies to identify compelling lending opportunities. “We’re never guessing,” Eglit said. “As a result, during difficult times we have the opportunity to look at our extensive internal data to find great lending opportunities.”

At the height of  the fourth-quarter volatility, BREDS didn’t shy away from taking on whales of deals. Cases in point: providing $500 million of the Fontainebleau Las Vegas’ $2.2 billion construction loan in December, and a $700 million whole loan for Onni Group’s Onni South Lake Union luxury rental project in Seattle in November. 

The two deals happily fell into categories that are high-conviction themes for Blackstone. 

“We have strong conviction in the recovery of the global travel sector and in Las Vegas,” Eglit said of the Fontainebleau deal. “Additionally, have significant ownership and deep experience in the Las Vegas market.” 

As liquidity has dried up, an even more pronounced competitive advantage has materialized for BREDS as a non-bank lender. As such, the team is busy filling gaps in capital stacks and anticipates a more opportunistic pipeline ahead, given the pullback in traditional bank lending. “We’ve been doing this for more than a dozen years now and created our business to do exactly this,” Eglit said. “Institutions need liquidity, and we can provide it.” —C.C.