Blackstone buys $22B Loan Portfolios in 24mos

Blackstone has agreed to purchase up to $869 million in performing single-tenant lease financing loans from First Internet Bank, marking the largest loan sale in the digital bank’s history.

• The portfolio consists of commercial real estate loans for retail properties across the U.S., with tenants ranging from pharmacies and car washes to restaurant and food chains.

• This move allows First Internet Bank to free up capital, decrease its CRE concentration, and improve its regulatory capital ratios by reducing risk-weighted assets while moving about $550 million of deposit balances off the balance sheet.

• Proceeds from the transaction are intended to support new loan growth opportunities and enhance net interest margin.

Blackstone’s Commercial Real Estate Strategy

• For Blackstone, this deal is part of a larger strategy, having acquired over $22 billion of real estate loan portfolios in the past 24 months.

• Signature Bank: Around $17 billion stake in CRE loans, acquired in partnership with CPPIB and Rialto Capital after the bank's collapse in 2023.

• Atlantic Union Bank: About $2 billion portfolio of performing CRE loans, following the acquisition of Sandy Spring Bank.

• Deutsche Pfandbriefbank (PBB): $1 billion senior mortgage loan package, acquired in 2024–2025.

• Santander: $1 billion infrastructure loan portfolio, focusing on digital infrastructure, renewables, and utility-scale assets across Europe and the US.

Asset Types and Strategy

• Most acquired portfolios are performing or distressed CRE loans, including single-tenant retail debt, office, industrial real estate, and hospitality.

• Infrastructure loans include financing for digital infrastructure, renewable energy, and transportation, representing diversified exposure outside pure real estate.

• Blackstone Real Estate Debt Strategies (BREDS) spearheaded these deals, expanding its AUM to roughly $76 billion, with $8 billion raised for its fifth flagship real estate debt fund in 2025.

Geographic and Sector Diversity

• Most CRE loans were sourced from US-based regional banks under pressure from changing market conditions and regulatory capital demands.

• Infrastructure assets span Western Europe and the US, broadening Blackstone’s exposure.

These purchases highlight Blackstone’s role as an opportunistic provider of liquidity to financial institutions seeking to offload real estate and infrastructure assets, frequently transacting at a discount to par.

How does this consolidation impact pricing for alternative lenders?

Blackstone’s aggressive acquisition of loan portfolios is lowering competition and putting pressure on alternative lenders to adjust pricing, while deal flow for Q4 2025 is expected to accelerate as a result of increased liquidity and improving market sentiment.

• Consolidation by large asset managers like Blackstone means fewer distressed sellers and discounted portfolios available, which pushes loan prices higher and compresses yields for alternative lenders.

• Pricing for commercial loans saw notable tightening, with spreads declining from 2.63% in Q2 to 2.31% in Q3 2025; this trend is projected to continue, reducing margins for non-bank lenders and debt funds in Q4.

• As Blackstone acquires portfolios at a discount, it sets a benchmark for future deals, forcing alternative lenders to offer more competitive structures, accept lower returns, or focus on higher-risk segments.

What this means for deal flow in Q4 2025?

• A stabilizing interest rate environment and a rebound in market sentiment are fueling higher transaction volumes, with larger institutional buyers—including alternative lenders—re-entering the market.

• CRE lending momentum surged in Q1 and Q2, and is expected to remain strong in Q4, driven by upbeat economic indicators and anticipation of further bank balance-sheet cleanups.

• There is pent-up demand for both primary and secondary market deals, as banks and lenders continue to offload non-core assets. This will lead to robust deal activity across private debt, real estate, and opportunistic lending in Q4 2025.

The result is a market with tighter pricing, more competitive lending structures, but greater overall volume—especially for alternative lenders willing to innovate and adapt to the evolving real estate debt landscape.

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