© Reuters. FILE PHOTO: Signage is seen outside the Blackstone Group headquarters in New York City, U.S., January 18, 2023. REUTERS/Jeenah Moon
(Reuters) – Blackstone Inc defaulted on a 531 million-euro ($562.5 million) bond backed by a portfolio of offices and shops owned by Finnish company Sponda Oy as rising interest rates hit securities of European properties.
The private equity firm sought an extension from bondholders to pay down the debt, but they voted against it, a source familiar with the matter told Reuters.
Shares of the private equity firm fell 1.6% after news of the default was first reported by Bloomberg.
“This debt relates to a small part of Sponda’s portfolio. We are disappointed that the servicer has not submitted our proposal,” Blackstone (NYSE:) said in an emailed statement on Thursday.
“We continue to have full confidence in Sponda’s core portfolio and its management team,” the company added.
The bond, which was subscribed by Citigroup (NYSE:) and Morgan Stanley (NYSE:), originally insured against 63, mostly office buildings in Finland. But Blackstone had sold some 16 buildings to pay off almost half the note, which now has an outstanding balance of 297.1 million euros, according to Fitch Ratings.
Blackstone’s $71 billion Unlisted Real Estate Income Trust (BREIT) has also been in trouble. On Wednesday, BREIT said it had been forced to cap withdrawals for the fourth straight month.
($1 = 0.9440 euros)