Blackstone Mortgage Trust Reports $1.8B in Loan Payoffs, $600M in Resolutions

Blackstone (BX) Mortgage Trust (BXMT) reported Wednesday it completed $1.8 billion in loan payoffs in the third quarter and more than $600 million in resolutions of impaired assets that have closed or are in-closing. 

BXMT anticipates it will resolve over half of the $2.3 billion in impaired loans it currently carries on its balance sheet in the coming quarters. Overall, the firm reported a net loss of $56 million in the third quarter.  

BXMT CEO Katie Keenan told investors and shareholders Wednesday, during the firm’s third-quarter earnings call, that commercial real estate values have “bottomed” and that the market recovery is “driving strong forward momentum” in BXMT’s business model by accelerating portfolio turnover. 

BXMT has closed, or is in the process of  closing,  $700 million in new originations year-to-date, mostly in multifamily, industrial and self-storage, Keenan said. The firm’s biggest deal, currently in closing, is a $450 million senior loan backed by a portfolio of stabilized self-storage assets, she said.   

Moreover, Keenan noted that the $1.8 billion in repayments in the third quarter is the fourth-highest repayment quarter ever for the firm, and that it doubled the average received in the first half of the year. 

“We expect more activity from here,” she said. “U.S. transaction volume is up 20 percent, the largest sequential increase since the fourth quarter 2021. More deal activity has spurred greater demand for new loans, and our pipeline continues to expand.”

The $700 million in new loans made by BXMT carry a weighted average loan-to-value of 60 percent, a weighted average debt yield of 9 percent, and a return-on-investment estimated to be in the “mid-teens,” according to Keenan. 

“The environment today supports lending at a lower basis, with stronger cash flow coverage and higher returns,” she said. 

BXMT’s short-duration portfolio of loans typically carries a five-year term and achieves repayment by year two or three, according to the firm. More than $2.7 billion of BXMT loans are scheduled for final maturity over the next 12 months, Keenan said. 

The firm is focused on both repayments and resolutions. 

BXMT completed one resolution in the third quarter, but both Keenan and Chief Financial Officer Anthony Marone emphasized that the firm’s is on track to resolve “over half” of the $2.3 billion in impaired loans it carries on its balance sheet, with $600 million of resolutions closed or in closing in the fourth quarter and visibility into another $500 million by the end of the year. 

“These resolutions will come through a combination of all-cash sales, A-B note restructuring, and, in some cases, REO [foreclosure],” Keenan  said. 

Overall, the firm secured $650 million in payments across its large portfolios of hotels in both Australia and Europe, and collected $675 million in repayments in the second half of the year for office loans, with loan repayments reaching  $1.5 billion year-to-date. This includes full repayment on a $286 million loan the firm extended for Colony Square, a mixed-use office and retail venture in Atlanta.

“Fourth quarter will be a rebuilding period, but looking forward to 2025, the combination of resolutions and redeployment should provide a tailwind to earnings power and coverage of our reset dividend,” said Keenan. 

Brian Pascus can be reached at bpascus@commercialobserver.com