Blackstone and Hudson Pacific Properties are tapping the commercial mortgage-backed securities market to fund a joint venture to operate and develop Hudson's media studio lots and adjacent office towers in Hollywood, California.
The US$855m multi-part offering is backed by a US$900m loan on four office buildings and three studios that total over two million square feet, Moody's said in a pre-sale report on the transaction, GB 2020-FLIX.
The loan has an initial term of two years with three one-year extension options. Its initial interest rate is Libor plus 2.15% per year, Hudson Pacific said last week.
Goldman Sachs and Barclays are joint book managers of deal, which is set to price on Friday.
On June 29, the private equity firm and real-estate investment trust said Blackstone Property Partners will acquire a 49% stake of Hudson's media portfolio properties, while the REIT will retain a 51% interest and oversee operations, leasing and development. nL1N2E6136
Hudson's Hollywood properties has a gross valuation of US$1.65bn with Netflix as its the biggest tenant in three of the Hudson office buildings.
Netflix is also a tenant along with ABC, Disney, KTLA and CBS/Viacom on the Hudson studio properties.
Earlier this year, the joint venture said it aimed to raise up to US$900m in "asset-level financing" on or around the closing date of September 1.
Most of the proceeds Hudson receives would be used to pay down US$305m on its revolving credit lines and to retire US$475m in two unsecured term loans due in 2022.
The rest of the cash could be used for future investments, share buybacks and general corporate purposes.
Last week, Hudson said it collected 99% of office and 100% of studio rents in the second quarter amid the Covid-19 pandemic. It also had US$1.1bn in total liquidity.