Blackstone's battered mortgage fund slumps as empty offices intensify pressure
24/07/2024 17:38
By Michelle Conlin and Matt Tracy
NEW YORK, July 24 (Reuters) - Commercial real estate
finance company Blackstone Mortgage Trust BXMT.N saw shares
drop 10% on Wednesday as the firm cut its dividend 24% in the
face of continued strain from vacancy-ravaged office spaces.
It is the latest sign of mounting woe for commercial real
estate, which analysts say is set for a multi-decade reckoning
as American workers stay rooted in their pandemic-era remote
work habits, leaving wide swaths of office space empty at a time
when interest rates remain elevated in the Federal Reserve's
higher-for-longer world.
"For Blackstone to have to come out and cut dividends, I
have to imagine that's going to weigh on some people's minds,"
said Stephen Buschbom, research director at Trepp, an industry
data provider. "It wouldn't surprise me to see ripple effects
throughout the industry when the biggest player is having to cut
dividends," he said.
Blackstone recorded a $140 million net increase in reserves
for current expected credit losses. The firm said 55% of its
U.S. office space is "watchlisted or impaired, though
higher-quality office continues to show liquidity."
Investors remain deeply worried about the specter of a
coming commercial office space collapse, as nearly $1 trillion
of the $4.7 trillion of outstanding commercial mortgages come
due in 2024, according to the Mortgage Bankers Association.
This looming maturity comes against a backdrop of declining
property values and lower rent rolls. Blackstone cut its
dividend to $0.47 per share in the third quarter, down from
$0.62 paid in the second quarter. The company also authorized a
$150 million stock buyback.
The company reported a quarterly loss of $61.06 million.
Loan resolutions will unlock earnings potential over time,
the company says.
The office sector gloom extends to the entire industry. In
February, KKR Real Estate Finance Trust KREF.N slashed its
dividend amid souring loans.
(Reporting By Michelle Conlin and Matt Tracy; Editing by Megan
Davies and Chris Reese)
((Michelle.Conlin@thomsonreuters.com; 646-223-5660;))