The Blackstone Group owns the single-largest specially serviced loan in the country – a notable distinction, given that the holdings in question aren’t particularly troubled.

Roughly $4.9 billion in securitized debt tied to Blackstone’s blockbuster $39 billion buyout of Equity Office Properties landed with Bank of America’s securitized mortgage workout group at the end of May. The scope of the loan workout looks staggering, even by the standards of the real estate boom’s market-topping deals: The Equity Office loan is $800 million bigger than the next-largest loan in restructuring talks.

Blackstone’s Equity Office holdings aren’t in trouble, though. They’re actually weathering the commercial real estate downturn quite well. That appears to be one of the primary factors driving the current round of loan workout talks: Blackstone’s Equity Office portfolio is performing so well that if it were refinanced today, Blackstone would lose out on hundreds of millions of dollars in profit.

Local Heavyweight

Equity Office’s fate weighs heavily on the Boston office market. The firm controls 13 trophy office buildings in Boston, as well as another 10 properties in Cambridge and along Route 128. Equity is the city’s biggest landlord, and Greater Boston is the single biggest office market in Blackstone’s $4.9 billion commercial mortgage-backed securities (CMBS) deal.

Blackstone asked Bank of America to rework its Equity Office debt because it’s facing a 2012 mortgage maturity. It’s a common request, as borrowers of all sizes are having difficulty refinancing CMBS-backed loans from the market’s peak.

“There’s a lot more liquidity in the marketplace today for well-underwritten properties, but most of the liquidity is under the $75 million range,” said John Gorga, president of the Boston-based commercial real estate finance firm Fantini & Gorga. “There are a number of portfolio lenders willing to do slight incremental pricing because they’re willing to do $200 million. There are very few people who would take on a $1 billion refinancing.”

Loan servicers have generally been willing to extend loan maturities for borrowers still capable of meeting their interest payments, so long as borrowers also pay down a portion of their mortgage. Bloomberg previously reported that Blackstone is willing to pay down its debt load by 5 percent in exchange for a longer maturity window.

“It’s a strategic move,” said Paul Mancuso, a vice president at the debt-tracking firm Trepp. “Because of the volume of loans in special servicing, this will take some time to work through. These are prime properties in prime markets. It fits the profile of loans being either refinanced or modified in the current environment.”

Strong Fundamentals, Favorable Rates

Blackstone didn’t buy Equity Office because it wanted to be one of the country’s biggest commercial landlords. The private equity firm makes money buying companies, and then re-selling them.

After its record-setting $39 billion Equity Office takeover, Blackstone was able to quickly flip $21 billion in Equity properties to firms like Tishman Speyer, Beacon Capital Partners and Macklowe Properties. Those 2007 deals signaled the commercial boom’s peak, and in a country full of commercial real estate distress, buyers who swallowed up pieces of the old Equity empire have been among the most distressed.

By contrast, the Equity deal has been a cash cow for Blackstone. The firm has struggled with other market-topping real estate acquisitions, including its $26 billion buyout of Hilton Hotels. But according to data from Trepp, Equity Office has been a money-maker from the start.

“The fundamentals of the overall portfolio remain strong,” Mancuso said. “They’re able to service the debt quite handily.”

Last year, the Equity Office portfolio turned a $713 million profit, according to financial data Blackstone reported to Bank of America. After interest payments, Blackstone pocketed north of $500 million last year, and it is on pace to repeat that feat again. That’s a healthy return in a down market, since Blackstone only put $5 billion of its own cash into the $39 billion takeover.

Data from Trepp shows that Blackstone’s Equity Office returns are being driven by favorable interest rates.

Goldman Sachs, the investment bank that securitized Blackstone’s Equity Office debt, handed the private equity group low floating interest rates on its CMBS and mezzanine loans; current rates have Blackstone paying just 1.35 percent on its $4.9 billion CMBS loan, and 2.02 percent on $3.9 billion in mezzanine debt. The Equity Office portfolio is currently generating 4.9 times the amount of cash Blackstone needs to service its debt, and the rest is pure profit.

However, if that debt were refinanced at today’s prevailing fixed interest rates, the debt service coverage ratio on the Equity Office portfolio – the ratio of net income to interest payments – would drop from 4.9 to under 1.3.

The fall wouldn’t put Blackstone underwater on its Equity Office debt service, but higher interest rates (a first mortgage around 5 percent, and mezzanine rate between 7.5 percent and 9 percent) would take cash that’s currently flowing into Blackstone coffers, and re-route it to Wall Street investors.

Blackstone and Bank of America did not return calls for comment.