First Internet Bank Sells Funding Loans to BREDS

First Internet Bancorp, the parent company of First Internet Bank, and Blackstone have jointly announced that the Bank has entered into an agreement to sell up to $869 million of performing single tenant lease financing loans to vehicles affiliated with Blackstone Real Estate Debt Strategies (BREDS).

The Bank will retain customer-facing servicing responsibilities for all loans sold as part of this transaction.

First Internet Bancorp CEO and Chairman David Becker said that this proposed transaction is a decisive step that advances key strategic priorities, including strengthening their capital position, accelerating operating performance towards the bank’s near-term target of 1% return on average assets, and significantly enhancing net interest margin.

He said that reducing the bank’s exposure to fixed rate, lower-coupon loans is a meaningful component towards further optimising their earning asset base, providing balance sheet flexibility and a resilient earnings profile regardless of the interest rate environment.

“With stronger capital generation capabilities and balance sheet capacity, First Internet Bancorp will be well-positioned to capitalise on future growth opportunities. It was a pleasure to work with Blackstone Real Estate on this transaction, and we look forward to building a strong relationship with them going forward,” Becker added.

Tim Johnson, Global Head of Blackstone Real Estate Debt Strategies, said that they were pleased to acquire this portfolio of high-quality, performing commercial real estate loans.

With a market-leading platform, deep expertise and $77 billion of assets under management (AUM), they were able to provide innovative solutions to financial institutions for their commercial real estate portfolios, he said.

These performing single tenant lease financing loans are expected to be sold at a price approximating 95% of the unpaid principal balance, inclusive of transaction costs.

Regulatory Capital Ratios Up

The reduction in loan balances – and, consequently, the reduction in risk-weighted assets – more than offsets the impact of the reduction in shareholders’ equity, leading to increases in the company’s and the bank’s regulatory capital ratios.

Upon closing the transaction, Blackstone expects to move approximately $550 million of deposit balances off-balance sheet, aiming to provide a modest increase to its tangible common equity ratio. The remaining proceeds are expected to be used to fund near-term loan growth opportunities with the option to move additional deposits off-balance sheet.

The proposed transaction is expected to close on or around 18 September 2025, subject to market conditions and customary closing requirements. Blackstone has filed supplemental materials regarding this transaction with the US Securities and Exchange Commission.

For Blackstone Real Estate, this transaction follows the acquisition of $22 billion of commercial real estate loan portfolios in the last 24 months, including the acquisition of an approximately 20% stake in the $17 billion Signature Bank commercial real estate debt portfolio with JV partners, the $1 billion performing senior mortgage loan portfolio acquisition from PBB and the recent acquisition of approximately $2 billion of commercial real estate loans from Atlantic Union Bank. The BREDS platform has deployed $38 billion from January 2024 through June 2025.