Citizens Financial Group’s analyst team maintained a Market Perform rating on Blackstone Mortgage Trust (NYSE: BXMT) following the commercial mortgage REIT’s portfolio rotation strategy, while flagging short-term credit pressures. The reiteration comes as BXMT shifts capital toward residential, industrial, and net-lease properties, accelerating exits from legacy assets.
The company originated $1.4 billion in new investments during the second quarter, while repayments totaled $1.2 billion, largely from loans originated before 2023. Management is also evaluating the sale of approximately $1 billion in loans, primarily backed by office properties, as part of its ongoing portfolio optimization. The REIT’s watchlist exposure declined to $2.0 billion from $2.5 billion in the prior quarter, reflecting progress in resolving troubled assets.
BXMT reported second-quarter distributable earnings of $0.31 per share, below the $0.42 per share expected by analysts, though revenue reached $158.06 million, exceeding the $127.34 million forecast. The REIT’s book value per share fell 4% to $19.31, driven by increased CECL reserves and asset depreciation. Shares were trading near $14.17, down 0.69% on the session.
Citizens noted that elevated credit costs and the resolution of remaining troubled loans will continue to weigh on near-term performance, despite an improving investment environment. The stock trades at 0.73x book value, above the commercial mortgage REIT peer group median of 0.58x, while offering a dividend yield of 13.3%—a metric InvestingPro flags as potentially unsustainable given its Fair Value assessment. Raymond James recently downgraded BXMT to Market Perform from Outperform, citing concerns over portfolio quality and an expected 7% decline in book value.
