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.
Sources:
- Current Commercial Loan Pricing Trends for 3Q 2025 | SouthState Correspondent Division
- First Internet Bancorp to sell $869M in loans to Blackstone Real Estate
- 2025 Commercial Real Estate Trends | JPMorganChase
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.
Our Opinion
Smart alternative business lenders recognize that Blackstone's $22 billion acquisition spree signals a fundamental market shift, not a temporary disruption. With spread compression already evident and mega-funds setting new pricing benchmarks, the days of easy margins on vanilla commercial deals are ending.
The winning strategy requires immediate action: alternative lenders must either move up-market to compete directly with institutional capital, or pivot toward the complex, relationship-driven deals that large asset managers avoid. This means focusing on borrowers with unique circumstances, non-standard collateral, or time-sensitive financing needs where speed and flexibility still command premium pricing.
Regional bank portfolio sales will continue accelerating through 2025, creating both opportunity and competition. Alternative lenders with strong underwriting capabilities and efficient capital deployment will capture market share from traditional banks struggling with regulatory pressure. Those clinging to outdated pricing models or passive origination strategies will find themselves squeezed out by both institutional buyers above and desperate competitors below.
The market is rewarding scale, specialization, and speed. Alternative lenders that adapt their value proposition accordingly will thrive in this environment. Those that don't will become acquisition targets themselves.
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