Blackstone Mortgage Trust shakes off debt market turbulence

Lending REIT has issued $1.5B in new loans this year

TRD New York /
Apr.April 27, 2016 02:55 PM

Turmoil in global capital markets during the first months of 2016 left many commercial real estate lenders licking their wounds, but not Blackstone Mortgage Trust. The commercial mortgage REIT originated $861 million worth of new loans in the first quarter, while increasing its net income by 61 percent year-over-year to $57.2 million.

Since the end of the first quarter, the REIT has closed or agreed on another $625 million worth of loans, CEO Stephen Plavin said in an earnings call Thursday morning. He did not specify whether any of those loans are on New York properties.

Plavin attributed some of the lending volume to decreased competition from other lenders. As The Real Deal recently reported, CMBS lending all but dried up in the first two months of 2016 as a global bond market slide made it harder to price new loans. Blackstone Mortgage Trust, in contrast, doesn’t securitize its loans. “Our business model insulates us form CMBS market volatility,” Plavin said, adding that less competition meant Blackstone Mortgage Trust could increase the rates it charges on loans in the first quarter.

But Blackstone’ mortgage REIT wasn’t entirely immune to the CMBS market. Plavin acknowledged that the number of repaid loans fell, primarily because borrowers were unable to refinance in the face of tightened CMBS lending. “In order for our loans to be repaid a new loan needs to be closed,” he said. “We had a couple of loans that we thought were going to repay that didn’t.”

Echoing other market observers, Plavin said that debt markets improved in March, and that he expects repayment to get back on track.

Blackstone Mortgage Trust, a public company managed by the Blackstone Group, issues senior loans on commercial real estate properties. It borrows around 75 percent of the money it lends to real estate companies from banks, and makes a profit off the spread between the interest rates.

In the first quarter, the new loans it issued carried an average floating interest rate of 4.4 percentage points over the benchmark London Interbank Overnight Rate (Libor), while its revolving credit facilities with major U.S. banks like Wells Fargo carried an average rate of 2 percentage points over Libor.


Related Articles

arrow_forward_ios
Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

WeWork’s side businesses are fizzling

Daily Digest Thursday

City Council sets sights on housing and land use, details emerge of WeWork’s ties to the Kabbalah Centre: Daily digest

From left: 254 Water Street, 45-01 Northern Boulevard and 34-08 46th Street (Credit: Google Maps)

Here’s what the $10M-$30M investment sales market looked like last week

(Illustration by Andrew Colin Beck)

How much are NYC hotels hurting?

Home foreclosures dropped nearly 20% in Q3, report shows

Normandy Founder Finn Wentworth, Columbia CEO E. Nelson Mills, 799 Broadway and 250 Church Street (Credit: Google Maps)

Columbia acquiring Normandy for $100M in New York real estate’s latest megamerger

arrow_forward_ios