Blackstone Mortgage REIT Slashes Dividend — Evening Brief – 07.24.24
Blackstone Mortgage Trust, a real estate finance company specializing in originating senior loans secured by commercial real estate, announced its second-quarter earnings on Tuesday, disclosing a 24% reduction in dividend payments.
The move was attributed to a rise in loan defaults and growing challenges with borrowers who are struggling to make payments or refinance their office tower loans amid the commercial real estate slump.
BXMT, the $3.4 billion real estate investment trust, reduced its dividend to $0.47 from $0.62 – a dividend distributed to shareholders for nearly the past nine years. BXMT shares fell slightly more than 2% to $17.53 on Wednesday, its largest intraday decline in seven months, following the news.
“We assess the dividend with the Board each quarter, prudently considering a variety of factors, and our Board has declared a third quarter dividend of $0.47 per share, which we believe reflects a sustainable level relative to long-term earnings power,” BXMT CEO Katie Keenan wrote in a statement
“With strong liquidity, accelerating repayments, and an emerging investment pipeline, BXMT is well positioned to deploy capital accretively in this environment and continue its forward trajectory through the cycle,” Keenan added.
Much of the distress comes from BXMT’s office portfolio, which constitutes approximately 25% of its outstanding loans. According to recent data from the Green Street Commercial Property Price Index, the value of U.S. office towers has experienced a decline of 37% since reaching its apex in early 2022.
Towers have experienced the most severe impact during the downturn in the commercial real estate sector. The remaining portion of the sector has experienced a decline of only 20%.
Moody’s has recently provided a forecast indicating that the decline in commercial real estate has not yet bottomed out. They have also cautioned that the increasing trend of hybrid working might lead to around 24% of all U.S. office towers being unoccupied within the next two years.