Blackstone Mortgage reduces office loans to 21% of its portfolio while expanding into single-family home builder finance for higher yields.
Blackstone Mortgage Trust is reallocating capital from legacy office assets to residential, industrial, and net lease sectors. The firm has reduced office exposure from 36% to 21% of its portfolio, aiming for a 40% reduction in pre-2023 and office assets by year-end. It has entered the $200 billion single-family home builder finance market, targeting mid-to-high teens levered yields amid regional bank pullbacks.
The company’s strategy includes shrinking average investment sizes from over $130 million to about $20 million. A $1 billion subset of watchlist office loans faces pressure due to high interest rates and weak fundamentals, while CMBS issuance hits a 20-year high. Distributable earnings in Q3 may be impacted by new loan impairments and delayed repayments.
Management plans to sell a 686-key Hyatt Hotel in San Francisco and over $1 billion in loans to accelerate capital recycling. Dividend policy is under review amid shifting earnings dynamics.