- Blackstone Mortgage Trust cut its dividend from 62 to 47 cents per share and is projected to save $100M annually.
- The trust also authorized a $150M share buyback plan to dampen the impact of the dividend cut.
- BXMT shares fell 6.1% in pre-market trading, bringing the firm’s YTD returns to -7.7% and attracting short sellers.
According to Bloomberg, Blackstone Mortgage Trust Inc. (BXMT) will cut dividends by 24% as rising defaults and refinancing difficulties continue to plague CRE borrowers. The trust’s board also approved a $150M share buyback plan to appease investors.
By The Numbers
BXMT’s dividend will drop from 62 cents to 47 cents per share, a baseline the trust has maintained since 2015. The cut is expected to save $100M annually, capital that can be redirected to new loans or investments.
CEO Katie Keenan emphasized the importance of balancing current returns with long-term earnings via strategic capital allocation. Following the announcement, BXMT shares dropped 6.1% to $18.43 in pre-market trading. Notably, the stock had already fallen 7.7% YTD.
Earlier this year, similar stress led KKR Real Estate Finance Trust Inc. (KREF) and Ares Commercial Real Estate Corp. (ACRE) to cut dividends by 42% and 24%, respectively.
Office Matters
The bulk of BXMT’s troubled loans are tied to U.S. office buildings, which make up about a quarter of the trust’s portfolio. Office property values have plummeted 37% since early 2022, compared to a 20% drop for all CRE sectors, according to the Green Street Commercial Property Price Index.
BXMT has reduced its net exposure to offices by $1.4B over the past two years, with 13% of its office portfolio now given a risk rating of 3, mainly linked to European properties. About 7% of the portfolio is considered impaired and holds the worst risk rating.
Watching Carefully
Carson Block of Muddy Waters (great name, by the way) has been shorting BXMT since December, forecasting a liquidity crisis and potential loan defaults. He reaffirmed his short position earlier this month, anticipating more challenges for BXMT in 2H24.
According to analysts at Keefe Bruyette & Woods, BXMT modified three loans in California and Texas last month by providing extensions to borrowers. Three more California loans were added to its watch list, likely due to near-term maturities.
