Blackstone Mortgage REIT Shares Dive Most Since Early Pandemic
(Bloomberg) -- Shares of a Blackstone Inc.’s commercial mortgage trust posted their biggest two-day plunge since 2020 after executives highlighted “increased pressure” on $1 billion
(Bloomberg) -- Shares of a Blackstone Inc.’s commercial mortgage trust posted their biggest two-day plunge since 2020 after executives highlighted “increased pressure” on $1 billion of loans. The loans are mostly secured by office assets and have already been placed on a so-called watch list because such loans have lagged behind the broader real estate market, Blackstone Mortgage Trust Inc. executives told analysts Thursday. BXMT, as the real estate investment trust is known, placed three new loans on the watch list this quarter, including a Denver office loan.
The $20 billion REIT expects distributable earnings to be impacted by loan impairments in the third quarter, executives said after it reported its second-quarter financial results. Shares of BXMT fell as much as 14% in the past two days to $14.11, the most since the early days of the pandemic. “These borrowers have been playing through a challenging environment with the expectation that a recovery in fundamentals and lower rates were on the horizon,” BXMT Chief Executive Officer Tim Johnson told analysts.
“But given headwinds in these specific sectors and markets, performance has taken longer to recover and rates, of course, have remained elevated.” Watch list loans make up about 5% of total investments for BXMT, Johnson said. Blackstone has emphasized that offices were a small part of its overall US real estate portfolio. The trust has reduced office exposure to 21% today, Johnson said on the call. It’s also writing smaller checks in a bid to diversify its portfolio, with the average investment shrinking to about $20 million from about $130 million a few years ago, Johnson said.
“Between increased repayment activity and our proactive asset management approach,” Johnson said, “we see a path to reducing our exposure to both office loans and to legacy pre-2023 loans by 40% or more by year-end.” More stories like this are available on bloomberg.com
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