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Alternative asset manager Blackstone has bought nearly $2 billion worth of commercial real estate loans from regional lender Atlantic Union Bankshares, further extending its aggressive push into the CRE sector.
The loans were bought at a slight discount to their face value, the companies said on Thursday. The loans originated from Sandy Spring Bank, which Atlantic Union bought in a $1.6 billion deal in April.
The sale enables Atlantic Union to swiftly reduce its exposure to CRE loans, a segment that has been under pressure due to elevated interest rates and increasing office vacancies driven by the rise of remote work.
Proceeds from the sale will enable Atlantic Union to pay down costly deposits and expand its portfolio of securities investments, the company said.
“We view the sale as a positive, as completion of the transaction at a reasonable price had been a question for some,” Raymond James analysts wrote in a note, reiterating their “strong buy” rating on the stock.
Meanwhile, for Blackstone, the deal was another opportunity to acquire CRE assets at a discount. The company has been ramping up its exposure to the sector over recent years, notably through the acquisition of a stake in the $17 billion CRE debt portfolio of Signature Bank, a lender that failed in 2023.
Blackstone has pushed into the sector to capitalize on banks’ retreat, deploy capital and secure higher-yielding investment opportunities.
The company is executing the deal through its Blackstone Real Estate Debt Strategies arm, which currently manages $76 billion of assets, including $8 billion it raised in March for one of the largest real estate debt funds ever.
Morgan Stanley served as the sole structuring adviser to Atlantic Union, while Citigroup Global Markets and CBRE National Loan & Portfolio Sale Advisors acted as financial advisers to Blackstone.
(Reporting by Niket Nishant in Bengaluru; Editing by Mohammed Safi Shamsi and Shinjini Ganguli)
