Blackstone Inc has defaulted on a 531 million euro ($562.5 million) bond backed by a portfolio of offices and stores owned by Finnish company Sponda Oy, as rising interest rates hit European property values.
The private equity firm sought an extension from the bondholders to repay 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 portion of the Sponda portfolio. We are disappointed that the Servicer has not advanced our proposal,” Blackstone said in an emailed statement on Thursday.
“We continue to have full confidence in the core Sponda portfolio and its management team,” the company added.
The bond, which was underwritten by Citigroup and Morgan Stanley, was originally secured against 63 mostly office buildings in Finland. But Blackstone had sold off about 16 buildings to pay down nearly half of 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 hot water. On Wednesday, the BREIT said it was forced to limit withdrawals for the fourth straight month.
($1 = 0.9440 euros)