The Blackstone Group has a new collateral option for CMBS investors: the newly built Hollywood film studios used by Netflix and Walt Disney to support original production programs for their popular entertainment streaming services.
According to rating agency presale reports, Blackstone is entering the securitization market to fund a $ 900 million commercial mortgage that will purchase a 49 percent stake in the private equity firm in a studio / office portfolio of $ 1 , $ 65 billion, majority-owned by Hudson Pacific Partners (NYSE: HPP), a public REIT specializing in media / entertainment real estate.
The deal, known as the GB Trust 2020-FLIX, includes five classes of notes backed by a two-year floating rate loan (with three optional one-year extensions) and a one-month Libor.
The loan is secured for the lease receivables of three main tenants: Netflix (31.7% of the base rent), Disney (25.9%) and CBS / Viacom (3.7%), all with long-term leases for more than 2 million square feet of Hollywood -Studios and associated office properties.
The transaction is sponsored by Blackstone Property Partners and Hudson Pacific Partners, who have entered into a joint venture in the studio portfolio.
The facilities provide a single point of contact for Netflix and Disney to film, produce and edit new programs that will be broadcast on their respective in-home services. Netflix alone spent around $ 14.7 billion in 2019 producing new content for its service.
Sunset Bronson Studios, which show Netflix productions, is one of three new studios operated by the Blackstone / HPP joint venture
The studio properties also serve as a rare new build project for the crowded Hollywood studio market.
Little additional stage space has been added to the Hollywood market in the past 20 years, according to Moody & # 39; s. Three new studio lots that opened last year with a total of 240,000 square meters of stage space and 14 stages. "Aside from these recent developments," the Moody & # 39; s report said, "has been around since the Los Angeles Center Studios (450,000 sf) and Manhattan Beach Studios (587,000 sf) media campus opened in the late 1990s no new deliveries. "
All long-term leases from Netflix, Disney, and other tenants have a term of more than five years.
The MBS transaction includes a total of $ 419.5 million in Class A debt with preliminary triple A ratings from Moody & # 39; s and DBRS Morningstar.
Goldman Sachs and Barclays are lead managers and joint bookrunners of the loan syndication.