B
lackstone's luxury apartments at 8 Spruce Street in Lower Manhattan are a far cry from the "affordable housing" promised by New York City's Housing Development Corporation. The high-end units feature upscale amenities such as Douglas fir cabinetry, wine fridges, and a golf simulator. With an average monthly base rent of over $6,000, these apartments cater to a different demographic.

    Despite this, the city is issuing $550 million in municipal bonds for Blackstone to refinance the 900-unit property, which remains 97% occupied according to Moody's Ratings. The bond sale includes roughly $204 million in tax-exempt Liberty Bonds, created to aid Lower Manhattan's recovery from the 9/11 attacks.

    Lower Manhattan has made significant strides since then, with its office market stabilizing and hospitality sector booming. Strong demand for apartments has driven conversion projects at buildings like 111 Wall Street and 222 Broadway. Blackstone acquired 8 Spruce Street in 2022 for $930 million, valuing it at $802 million.

    The bond sale will be led by Bank of America, with fixed-rate debt maturing in 2031. While the tax-exempt Liberty Bonds offer a lower interest rate, HDC benefits from origination and other fees that can be used to finance affordable housing. Blackstone's spokesperson attributed the strong demand for refinancing to the property's high quality.

    The building, designed by Frank Gehry, was originally financed under the Liberty Bond Program in 2008 and refinanced in 2014 as interest-only securities. It opened as the continent's tallest residential tower in 2011 before being acquired by Brookfield in 2018.