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Blackstone eyes regional bank assets, loans

Investment giant looks to fill gaps as burdened players retreat

Blackstone chair Stephen Schwarzman (Photo Illustration by Steven Dilakian for The Real Deal with Getty)

Blackstone chair Stephen Schwarzman (Photo Illustration by Steven Dilakian for The Real Deal with Getty)

Blackstone is looking to fill the lending gaps left by troubled regional banks that are reassessing their priorities. 

The investment firm is in talks with several regional banks about purchasing assets and loans, CEO Stephen Schwarzman said in comments reported by Bloomberg. 

Schwarzman said at the Qatar Economic Forum in Doha Blackstone could “fill [a] void” as regional banks reconsider their participation in certain economic activities after several lenders failed across the country.

Blackstone, one of the world’s largest nonbank lenders, has had a rocky few months for its loans. 

The firm’s commercial mortgage arm recently increased its estimate of future bad loans from $125 million at the end of 2021 to $326 million last year. Office loans are a critical part of that upgraded estimate, with rising interest rates also appearing to be a culprit.

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In the first quarter, Blackstone reported a 36 percent decrease in distributable earnings as the firm struggled to offload commercial assets in a frozen investment sales market. The firm also spent months limiting withdrawals from its real estate investment trust.

Some regional banks are cutting deals to avoid the same fate as failed regional lenders of late, including Silicon Valley Bank, Signature Bank and First Republic Bank. 

Beverly Hills-based Pacific Western Bank this week agreed to sell $2.6 billion in construction loans to Kennedy-Wilson Holdings. The real estate investment firm picked up 74 loans from the troubled lender at a discounted price of $2.4 billion.

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From left: Pacific Western Bank CEO Paul Taylor and Kennedy Wilson CEO William McMorrow (Getty, Pacific Western Bank, Kennedy Wilson)
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Kennedy Wilson paying $2.4B for PacWest CRE loans

Days later, PacWest agreed to sell its multifamily lending division, Civic Financial Services, to Roc360 for an undisclosed price. While Roc360 is assuming the division’s business operations, the deal does not include previously extended loan or loan servicing operations; the division extended roughly $3 billion loans last year.

— Holden Walter-Warner

Tags
Bank FailuresBlackstone GroupReal Estate FinanceStephen Schwarzman
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