Blackstone Defaults On $562M European Office Bond

(CTN News) – According to Blackstone, due to Russia’s war against Ukraine, which Blackstone said was exacerbated by the conflict with Ukraine, the company has failed to repay a $562 million bond issued by Finnish landlord Sponda Oy, which it acquired in 2018.

It was Blackstone’s intention to request an extension from holders of the notes to allow time to liquidate the retail and office assets owned by Sponda Oy in order to repay the debt — which Blackstone bought for $1.9 billion in 2018 — for the purpose of paying back the debt.

However, since ongoing warfare is disrupting markets and sales, bondholders voted against the investment firm’s bid, Bloomberg first reported.

It was reported by Mountstreet that the debt would be transferred to a special servicer, with Blackstone expressing hope that the value of Sponda Oy’s retail and office assets would give them a chance to win.

According to Blackstone, “This debt represents roughly one percent of the total portfolio of Sponda,” the company said in a statement.

It is disappointing to learn that the servicer has not advanced our proposal, which reflects our best efforts and we believe would provide the best outcome for noteholders.

As a company, we continue to have total faith in the core Sponda portfolio as well as its management team, whose top priority remains delivering high-quality retail and office space.”

As part of its portfolio, Sponda Oy has about 3.6 million square feet of office and retail properties spread across the whole of Finland.

Despite the fact that Blackstone is in the process of paying back the debt on the properties, the conflict in Ukraine and the ongoing consequences of disruptions caused by COVID have made it difficult for them to do so.

As the likelihood of Finland joining NATO increased Thursday morning, it has been viewed as one of the most crucial factors in determining the outcome of the conflict with Russia, as the country’s close proximity to St. Petersburg might give the alliance an advantage in the event of widespread conflict.

As a result of the downgrade, Blackstone found it very difficult to find lenders that were willing to help them refinance their debt against “illiquid assets” with the maturity date of that debt rapidly approaching.

The recent trend of Scandinavian investors using short-term debt to raise capital has also drawn the attention of onlookers who are concerned about its vulnerability to rising interest rates, which has been compounded by the war in Ukraine.

A rapid 3 percentage point drop was seen in Blackstone’s stock Thursday morning, but it quickly recovered some of the progress it has made since it reached a 52-week low of around $72 per share in the last days of December 2022, after which it reached a 52-week high of about $72 per share in the following weeks.

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