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Blackstone has acquired around USD 2 billion worth of performing commercial real estate (CRE) loans from Atlantic Union Bank, which had inherited the portfolio from Sandy Spring Bank. This transaction, executed at a slight discount, enables Atlantic Union to redirect capital towards reducing high-cost deposits and scaling its securities portfolio. The loans, largely backed by apartment and retail assets, were seen as low-risk and attractively priced. Blackstone's Real Estate Debt Strategies arm executed the purchase as part of its broader plan to acquire discounted CRE debt amid regional banks' retreat. The move drew positive reactions from financial analysts and advisors alike.
Blackstone has bolstered its real estate debt portfolio by acquiring approximately USD 2 billion in performing commercial real estate loans from Atlantic Union Bank. These loans were initially part of the Sandy Spring Bank's lending portfolio, which Atlantic Union absorbed through a recent acquisition. Most of the loans in this pool are secured by multifamily residential and retail properties asset classes currently regarded as relatively stable in an otherwise cautious CRE market. Advertisement
The transaction was carried out at a slight discount to par value, allowing Atlantic Union to free up capital without recording a loss. Since it had already marked these assets down to market value during its acquisition of Sandy Spring, the bank avoided any write-downs while boosting liquidity. This capital is now being redirected to pay down expensive deposits and grow the bank's securities holdings, a strategic move to improve balance sheet resilience in a high interest rate environment.
For Blackstone, the deal adds to a growing list of distressed or discounted debt acquisitions carried out by its Real Estate Debt Strategies division. The firm currently manages around USD 76 billion in real estate debt assets and has been actively acquiring high-quality loan books from banks looking to shed CRE exposure. This includes its earlier takeovers of parts of Signature Bank's USD 17 billion loan book and nearly USD 1 billion in CRE loans from German lender PBB.
The latest deal underscores how Blackstone is stepping into a gap left by regional and mid-sized banks that are struggling to manage CRE risks, particularly in the office sector. However, the loan pool acquired from Atlantic Union had limited exposure to office assets, which may have helped in negotiating favourable terms for both parties.
Industry sources indicated that Morgan Stanley acted as financial advisor to Atlantic Union, while Blackstone was advised by Citigroup Global Markets and CBRE. The transaction has been welcomed by market observers. Analysts at Raymond James reaffirmed a strong buy rating for Atlantic Union Bankshares, stating the sale was well-executed and would improve the bank's strategic positioning.
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