Blackstone Mortgage Trust grows portfolio to record $11B

Blackstone Mortgage Trust grew its loan portfolio by 16 percent to a record $11.1 billion amid strong lending in 2017.

The mortgage real estate investment trust issued $1.2 billion in new loans in the fourth quarter and $4.8 billion over the entire year — up 37 percent from 2016.

The growth comes amid an increase in competition among non-bank commercial real estate lenders, particularly in New York. A number of real estate investment firms have launched mortgage platforms in recent years, with Slate Property Group being the latest addition. Blackstone Mortgage Trust’s CEO Stephen Plavin estimated that loan spreads shrank by 50 basis points over the past year.

“I wish some of the competitors would fall out of the market,” Plavin joked during the company’s earnings call Wednesday. “We haven’t seen it.”

The company’s executives sounded upbeat on the overall state of the commercial real estate market, predicting that lower corporate tax rates could boost office leasing. Tax reform also has a more immediate impact on mortgage REITs by granting shareholders a 20 percent deduction on dividends. “We’re excited to see the impact of federal tax reform on our business,” the firm’s CFO Anthony Marone said during the call.

The public REIT is one of two major commercial mortgage businesses controlled by the Blackstone Group, along with private fund manager Blackstone Real Estate Debt Strategies.

Overall, 22 percent of Blackstone Mortgage Trust’s loans went to New York City properties, executives said on the call Wednesday.

On Tuesday, Blackstone announced that it had elevated real estate head Jonathan Gray to president and COO and appointed his top deputies, Kathleen McCarthy and Ken Caplan to replace him.

Blackstone’s real estate division is the private equity firm’s largest by assets and generated roughly half of its pretax profit last year.