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Blackstone Set to Buy €900 Million of Loans From Germany’s PBB

Stephan Kahl and Jack Sidders
·2 min read

(Bloomberg) -- Blackstone Inc. is in talks with Deutsche Pfandbriefbank AG to buy €900 million ($971 million) in US and UK loans as the German real estate lender grapples with the fallout from deteriorating property markets.

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The private equity firm is in discussions for a portfolio that is spread across offices, hotels and residential properties, according to people familiar with the matter.

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The loans are performing and the transaction is expected to be signed shortly, PBB said in an earnings release on Tuesday, without naming the buyer. The deal is expected to sign as soon as tomorrow, the people said, asking not to be identified discussing private negotiations.

The sale is part of a wider strategy to manage the balance sheet, PBB also said Tuesday, adding that it may continue to divest assets.

PBB became one of the most prominent examples of European banks hit by fears that troubles in US commercial property markets are spreading to Europe. Bonds and shares of the lender slumped to record lows earlier this year.

The situation in commercial property markets remained tense in the first quarter of 2024 and prices for commercial real estate have not yet recovered, PBB said on Tuesday.

“The second quarter 2024 should remain challenging,” it also said. There will likely be “further valuation corrections for US office properties, but lower than 2023,” it said.

Read More: US Commercial Property Push Backfires for German Lender PBB

The bank has “sufficient long-term unsecured funding” and it doesn’t plan any senior unsecured bonds this year, it said.

PBB continues to target a portfolio size for the current financial year of between €30 billion and €31 billion, it added.

“We see 2024 as a transitional year in which the company will have to overcome the burdens arising from the challenging commercial real estate market and lay the foundations for a noticeable improvement in profitability in 2025 and 2026,” Warburg Research said in a note earlier this month.

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