Blackstone Mortgage Trust continues to claw its way back from 2024 when it shrank its dividends and built reserves to handle troubled loans, primarily those backing office properties.
The mortgage real estate investment trust has resolved about $2.3 billion of impaired loans since its peak levels in the third quarter of 2024. And, as it has done so, it deployed $6.8 billion last year into portfolios of bank loans and multifamily, industrial and net lease properties, according to the REIT’s fourth quarter and year-end earnings released Wednesday.
The publicly traded REIT reported that its loan portfolio reached 99% performing status as of Dec. 31, up from 96% in the third quarter.
The trust, also known as BXMT, resolved $575 million of impaired loans during the fourth quarter alone, driving a 96% reduction from the September 2024 peak and reducing the total impaired loan balance to about $100 million from $700 million in the prior quarter.
The company wrote off $434 million in reserves tied to five major loan resolutions and three subordinated loans.
"BXMT's strong fourth quarter results demonstrate continued positive momentum, with robust capital deployment across diversified investments, improved credit performance and balance sheet optimization driving earnings power and dividend coverage," CEO Timothy Johnson said in a statement.
Lending rotates to multifamily, industrial sectors
BXMT's capital deployments last year were more than 80% concentrated in multifamily and industrial properties, bank loan portfolios and net lease acquisitions. The company said it closed $5.7 billion in loan originations, acquired a $719 million share in bank loan portfolios purchased at discounts and invested $316 million in net lease property acquisitions.
Fourth-quarter loan originations totaled $1.4 billion, entirely allocated to multifamily and industrial properties.
A joint venture to invest in bank loans, launched in June 2025 with a Blackstone-advised vehicle, acquired more than $700 million in performing commercial mortgage loans from regional banks.
Its net lease joint venture, established in 2024, purchased 178 triple net lease properties for $421.8 million in aggregate, with BXMT holding a 75% stake.
These new diversification channels now represent 5% of BXMT's $20 billion investment portfolio, up from zero at the beginning of 2025.
BXMT has reduced its office exposure by 50% since year-end 2021. U.S. office loans now comprise 20% of net loan exposure, while non-U.S. office properties account for 7%. Multifamily and industrial assets together represent 50% of the loan portfolio.
Expected real estate owned exits
Real estate owned assets, those properties the trust had to take back from borrowers, increased to $1.3 billion in the fourth quarter from $933 million in the third quarter. The company added two office properties during the fourth quarter. One of the properties was the 1800 Larimer, a 544,195-square-foot office property in Denver on which BXMT had loaned $190.6 million in 2022, according to CoStar data. The other foreclosure was in New York and brought BXMT’s total REO holdings to 12 properties.
BXMT said the company has one multifamily property in Texas under contract for sale with several other assets well positioned for potential sale this year.
"We expect to see opportunities to selectively exit our owned real estate properties, further supporting earnings as we more efficiently redeploy capital into our core investments," Johnson said on the company’s earnings conference call.
Portfolio composition
BXMT's portfolio comprises 131 loans secured by institutional-quality assets. Multifamily property loans represent 26% of net loan exposure, followed by industrial real estate at 24% and hospitality at 11%.
Geographically, the U.S. Sun Belt accounts for 23% of exposure, followed by the United Kingdom at 21% and other European markets at 18%.