Blackstone to take advantage of SocGen exit with early deal

The New York-based investment and advisory firm has agreed to take control of €100 million of real estate loans from French bank Société Générale, which last year signalled a retreat from the sector.

The Blackstone Group has agreed a deal to acquire US real estate loans with a face value €100 million from Société Générale.

Should a deal conclude, the New York-based investment and advisory firm would become one of the first buyers of loans from SocGen’s €4 billion global property loan book following the French bank’s decision to reduce its presence in the marketplace.

The deal for the loans, lent against offices and retail developments in the US, could conclude within a matter of weeks.

In addition to this loan sale, SocGen is also understood to be in the midst of offloading a €500 million distressed loan book held against properties in Europe. That book is also expected to attract private equity bids and European property media in the region has already tipped Dallas-based Lone Star among potential bidders.

The bank is understood also to have a €1.8 billion performing loan book in Europe on the market.

The loan sales are part of a wider strategy to withdraw from the property sector that also includes a halt to the writing of new loans. Announced last year, SocGen is said to have been deterred from being an active real estate player by incoming regulatory changes, particularly changes to the amount of capital needed to be held against property debt.

Other lenders have also been shedding their loan positions, often at discounts to face value, while some have also halted new lending. UK state-backed banks Royal Bank of Scotland and Lloyds Banking Group are among those to have offloaded loan books while Commerzbank-owned Eurohypo has curtailed its lending programme over the past year.

That has led private equity real estate firms, including Blackstone, to attempt to bridge the resulting funding gap. Via its real estate debt funds division Blackstone Real Estate Debt Strategies (BREDS) and its wider GSO credit business, the firm has become an active lender across the debt spectrum, including junior, senior and mezzanine loans.