B
enzinga and Yahoo Finance may earn commissions or revenue through the links below. Blackstone, a private-equity giant, has acquired $2 billion in discounted commercial real estate loans from Richmond-based lender Atlantic Union Bankshares (NYSE:AUB). This purchase brings Blackstone's total acquisition value to $20 billion over two years of aggressive buying. The loans were made before interest rates increased, significantly diminishing their value, allowing Blackstone to negotiate a 7% discount off face value.

    Buying discounted commercial loans is one of Blackstone's major profit centers, and the current state of the market creates opportunities for new acquisitions. Regional lenders are struggling due to rising interest rates and decreased property values caused by the COVID crisis. Many banks got overextended in the commercial sector after the 2008 financial crisis, leading to unrealized losses that exceeded their total assets. Some regional banks went under, while others sold off large tranches of commercial loan portfolios at a discount.

    Blackstone's purchase comes on the heels of Atlantic Union's April merger with Maryland-based lender Sandy Spring Bancorp. A majority of the discounted portfolio purchased by Blackstone consists of loans originating from Sandy Spring, which was required to discount its portfolio as part of the merger agreement.