Blackstone buys $2B in commercial loans from regional bank

Blackstone shows no signs of slowing its roll through the commercial real estate debt market.

The company bought $2 billion worth of performing commercial real estate loans from Virginia-based Atlantic Union Bankshares, the Wall Street Journal reported. The debt is backed by apartment buildings and retail properties.

Blackstone was able to snap up the loan book at a 7 percent discount from face value because they’ve lost value since their origination as a result of interest rates jumping. The loans were mostly made by Sandy Spring Bank, a regional lender that recently merged with Atlantic Union.

When the two companies merged in April, Atlantic Union adjusted the value of the loans on the balance sheet to better reflect today’s market conditions and didn’t record a loss when selling the portfolio to Blackstone.

In the last two years, Blackstone has emerged as one of the biggest buyers in the market, acquiring $20 billion worth of commercial property debt. The company’s been on the other side of plenty of deals, too.

Last month, Bayview Asset Management purchased a portfolio of loans from a Blackstone-led venture for a slight discount. It was at least the third time Blackstone ridded itself of commercial debt it inherited from the failed Signature Bank.

The joint venture of Blackstone, Rialto Capital and the Canada Pension Plan Investment Board began marketing $395 million worth of commercial property loans in the tri-state area in March. The portfolio features 121 loans backed by office, multifamily, retail and industrial properties, mostly situated in New York City.

Meanwhile, Flagstar Financial — the successor to New York Community Bank — is marketing a loan portfolio of 10 rent-stabilized buildings in the Bronx with a combined assessment of $7.8 million. 

In some cases, the loans were made after the 2019 rent reform, which has reduced revenues for rent-stabilized buildings. There’s fear those revenues could slip further should Democratic mayoral candidate Zohran Mamdani follow through on his proposed policy of a rent freeze.

— Holden Walter-Warner