8-K: Atlantic Union Bank Completes $2 Billion Commercial Real Estate Loan Sale to Blackstone, Bolstering Financial Position

Atlantic Union Bankshares Corporation announced the successful closing of the sale of approximately $2 billion in commercial real estate loans to Blackstone, a strategic move aimed at reducing CRE concentration and optimizing its balance sheet.

Summary

• Atlantic Union Bankshares Corporation (Atlantic Union) closed the sale of approximately $2 billion of performing commercial real estate (CRE) loans.
• The loans were sold to vehicles affiliated with Blackstone Real Estate Debt Strategies (BREDS).
• This sale was a pre-planned component of Atlantic Union's merger with Sandy Spring Bancorp, Inc., which concluded on April 1, 2025.
• The CRE loan pool was sold at a price in the low 90s as a percentage of par value.
• Atlantic Union Bank will retain customer-facing servicing responsibilities for the sold loans.
• Proceeds from the sale are intended to be used to pay down high-cost deposits and other high-cost funds, and to increase the company's securities portfolio.

Sentiment

Score: 8

Explanation: The announcement is highly positive, detailing the successful execution of a pre-planned strategic transaction that reduces risk, frees up capital for growth, and improves the bank's funding structure. Management comments are confident and highlight value creation.

Positives

• The transaction reduces Atlantic Union's commercial real estate concentration, enhancing portfolio diversification and risk management.
• It frees up capacity for potential future growth, allowing the bank to pursue new opportunities.
• The sale demonstrates Atlantic Union's ability to execute and deliver on strategic transactions that create long-term value for shareholders.
• The proceeds will be used to pay down high-cost deposits and funds, which is expected to improve the bank's funding cost structure.
• The addition to the securities portfolio can enhance liquidity and potentially generate stable income.

Risks

• The intended use of proceeds from the loan sale may change due to shifts in economic conditions, market interest rates, or volatility within the financial services sector.
• Changes in Atlantic Union's capital position or other unexpected factors or events could alter the deployment of proceeds.
• There is a risk that Atlantic Union may not be able to deploy the net proceeds in the manner it expects.
• Other factors, many of which are beyond Atlantic Union's control, could cause actual results to differ materially from anticipated outcomes.

Future Outlook

Atlantic Union intends to utilize the proceeds from the loan sale to reduce high-cost deposits and other high-cost funds, and to expand its securities portfolio. This strategic deployment is expected to optimize the bank's funding structure and enhance its financial flexibility for future growth.

Management Comments

• "After closing our acquisition of Sandy Spring, we have been focused on integration and execution. Today’s announcement is another proof point of Atlantic Union’s ability to execute and deliver on transactions that create long-term value for our shareholders. We were pleased to work with Blackstone Real Estate on this transaction, which both sides executed seamlessly. The loan sale transaction reduces our CRE concentration and frees up capacity for potential future growth." John Asbury, President and CEO of Atlantic Union.
• "This transaction demonstrates the breadth of our market-leading platform and deep expertise providing solutions to financial institutions for their commercial real estate portfolios. With $76 billion of AUM, including the recent closing of one of the largest real estate debt funds ever, we believe we are well-positioned to access differentiated real estate credit investment opportunities on behalf of our institutional, insurance and individual investors." Tim Johnson, Global Head of Blackstone Real Estate Debt Strategies.

Industry Context

This transaction highlights a trend among financial institutions to strategically manage their commercial real estate exposure, especially following mergers or in response to evolving market conditions. For Blackstone, it reinforces its position as a dominant player in real estate debt strategies, actively acquiring large loan portfolios and providing liquidity solutions to banks, aligning with its recent significant fund closings and substantial AUM in the sector.

Comparison to Industry Standards

• Blackstone Real Estate Debt Strategies (BREDS) has acquired $20 billion of CRE loan portfolios in the last 24 months, demonstrating a significant and active presence in the market for such assets.
• This includes a notable acquisition of an approximately 20% stake in the $17 billion Signature Bank CRE debt portfolio, indicating their capacity for large-scale, complex transactions.
• BREDS also acquired a $1 billion performing senior mortgage loan portfolio from PBB, further showcasing their consistent activity in the performing loan market.

Stakeholder Impact

• Shareholders: The transaction is expected to create long-term value by reducing CRE concentration, freeing up growth capacity, and optimizing the balance sheet.
• Customers: Atlantic Union Bank will retain customer-facing servicing responsibilities, ensuring continuity and potentially minimizing disruption for affected loan customers.
• Creditors/Depositors: The use of proceeds to pay down high-cost deposits and funds could improve the bank's financial stability and cost of funds.

Next Steps

• Atlantic Union intends to use the proceeds from the loan sale to pay down certain high-cost deposits and other high-cost funds.
• Atlantic Union intends to add the proceeds to its securities portfolio.

Key Dates

Recommendation

Keywords

Commercial Real Estate Loans, Loan Sale, Blackstone, Atlantic Union Bankshares, CRE Concentration, Balance Sheet Optimization, Financial Services, Banking, Asset Management, Merger Integration, High-Cost Deposits, Securities Portfolio