Blackstone Mortgage Trust NYSE: BXMT reported first-quarter 2026 results that management said reflected “the breadth of our platform” as it worked through repayments, resolutions, and new originations amid what it described as an improving real estate backdrop.
For the quarter, the company posted a GAAP net loss of $0.04 per share, while distributable earnings (DE) were $0.21 per share and distributable earnings prior to realized gains and losses were $0.49 per share, according to Vice President of Shareholder Relations Tim Hayes. The company paid a $0.47 per share dividend related to the first quarter.
Dividend coverage and market backdrop
Chief Executive Officer Tim Johnson said distributable earnings prior to realized gains and losses of $0.49 per share marked the company’s “third consecutive quarter of dividend coverage.” Johnson pointed to improving property values and a “sharp decline in new supply across all major property types,” adding that public REITs have “significantly outperform[ed] the S&P 500 year to date.”
Johnson also addressed market conditions amid geopolitical volatility, saying that “real estate equity and debt markets have remained resilient.” He cited U.S. CMBS issuance as “up nearly 15% from this time last year” with spreads “15 basis points tighter compared to the beginning of the year,” while noting Europe has seen “a slowdown in CMBS new issue activity and spreads modestly wider.”
In the U.K., Johnson said the company was “fully repaid on a GBP 177 million U.K. student housing loan that was refinanced by a bank syndicate,” and added, “we’ve observed no change in the fundamental performance across our U.K. and Europe portfolio.”
Originations and investment activity
The company ended the quarter with an investment portfolio “just under $20 billion,” consistent with year-end levels, as new investments largely offset repayments, management said. The loan portfolio represents approximately 87% of investments, with fixed-rate and longer-duration strategies such as net lease and bank loan portfolios at 6%, and owned real estate comprising the remainder.
President Austin Peña said BXMT closed $540 million of new investments during the quarter across geographies and strategies. That included:
- $275 million of loan originations with a weighted average LTV of 68%
- A GBP 50 million investment in a U.K. bank loan portfolio
- $197 million of net lease acquisitions at BXMT’s share, which Peña called the firm’s “most active quarter in net lease to date”
Peña said loan originations were “largely concentrated in residential and industrial sectors with strong underlying fundamentals.” He also noted that several originations were financed through the syndication market on a non-recourse, non-mark-to-market basis, and that gross loan originations exceeded $800 million when including sold positions that are not on BXMT’s balance sheet.
On the pipeline, Peña said the forward pipeline “remains strong with over $1 billion closed or in closing so far in the second quarter.” In response to an analyst question about relatively slower reported Q1 originations, Peña said activity appeared “pretty regular” when accounting for syndicated portions and added that quarter-to-quarter results can be affected by timing and seasonality.
Data center loan and U.K. bank loan portfolio
Among the quarter’s new investments, Peña highlighted BXMT’s “first data center loan,” financing a stabilized asset in Northern Virginia that is “100% leased to an investment-grade hyperscale tenant.” He said BXMT originated a fixed-rate whole loan and syndicated a senior mortgage, resulting in a mezzanine loan with a “14% all-in yield and four and a half years of call protection.”
Peña connected the investment to broader themes at Blackstone, noting that with “$150 billion of data center assets owned and under development, Blackstone is the largest financial investor in data centers globally.” He added that the “AI megatrend” is driving demand for compute infrastructure and that the company sees more opportunities ahead.
BXMT also invested GBP 50 million in a portfolio of U.K. bank loans backed by “over 3,000 properties,” primarily residential and industrial, with a weighted average LTV below 50% and an underwritten term of “over five years,” Peña said. CEO Tim Johnson told analysts bank loan portfolio transactions can be driven by a range of factors, including “capital relief” and “M&A activity,” which he described as “probably the main driver” behind portfolio loan sale activity in the U.S., particularly stemming from regional bank industry developments in 2023.
Portfolio performance, watch list activity, and owned real estate
Peña said the loan portfolio ended the quarter at $16.4 billion across 130 loans, with more than 50% in multifamily and industrial, and was “98% performing.” He said the company upgraded four loans during the quarter.
After quarter-end, Peña said BXMT modified its largest watch list loan, a Spanish residential NPL loan, “significantly enhancing our credit position.” The modification included a spread reduction and maturity extension “in exchange for meaningful additional commitment and credit support from the borrower.” He added the loan has repaid more than EUR 550 million since origination and remains current, with expectations it will continue to pay down over time.
At the same time, management disclosed additional risk items. Peña said BXMT added two office loans to its watch list and impaired two loans, booking “modest additional reserves.” He described one impaired loan as the company’s “only studio loan,” representing less than 1% of the portfolio and secured by a 25-acre campus in Los Angeles with “optionalities and redevelopment potential.” The second impaired loan is secured by 1980s-vintage multifamily properties in Dallas, where older assets in certain Sunbelt markets have faced “elevated new supply and weaker demand.”
In the quarter, Johnson said the company received over $600 million of repayments, with “more than half in U.S. office.” He also said BXMT resolved one impaired hospitality loan via foreclosure and sold a multifamily property from its owned real estate portfolio, calling it the first sale from that portfolio. Peña said the Texas multifamily asset sale was “in line with our carrying value.”
On other owned real estate updates, Peña said BXMT received local approvals to redevelop its Mountain View office asset into “for-sale residential.” He also said the company’s “fully renovated Hyatt Hotel in San Francisco” continued to improve, with first-quarter EBITDA more than doubling year over year.
When asked about timing for disposition of remaining REO, Peña said the company is “very focused on exiting those REO assets over time,” but reiterated that it is “not going to be a forced seller” and would take a “patient approach” aimed at maximizing investor value.
Financial results, reserves, and capital markets activity
Chief Financial Officer Marcin Urbaszek said first-quarter distributable earnings included $46 million of realized losses tied to the resolution of an impaired San Francisco hotel loan, which resulted in a foreclosure and the property being held as owned real estate. Urbaszek said BXMT’s basis represents “an approximate 70% discount relative to the prior owner’s cost basis.”
Urbaszek attributed the $0.02 quarter-over-quarter decline in distributable earnings prior to realized gains and losses to lower net operating income from owned real estate, citing an “outsized seasonal benefit from hospitality properties” recognized in the fourth quarter. He also said BXMT amended its presentation metric from “DE prior to charge off” to “DE prior to realized gains and losses,” describing it as a reflection of the evolving portfolio composition while maintaining the intent of showing ongoing earnings power.
Book value ended the quarter at $20.20 per share, down 2.7% from the prior period. Urbaszek said the change was driven primarily by a $0.33 per share increase in CECL reserves and $0.13 per share of depreciation and amortization related to owned real estate. He said book value includes $1.80 per share of total CECL reserves, including $1.30 per share in the general reserve.
In response to an analyst question on the quarter’s CECL provision, Urbaszek said that out of $55 million, “about 20%” related to the general reserve, with the remainder in specific reserves. He declined to attribute reserves to particular assets, but said the reserves “were pretty modest.” On the general reserve level, Urbaszek told analysts it is “somewhere around 100 to 120 basis points” and that the company does not expect it to change dramatically in the near term.
On capitalization, Urbaszek said BXMT ended the quarter with $1 billion of liquidity and a debt-to-equity ratio of 3.7x, down from 3.9x in the fourth quarter and within its target range. He highlighted several financing actions, including:
- Repricing about $700 million of corporate term loan debt in January, reducing the spread by 50 basis points
- Ending the quarter with four years of weighted average remaining term on corporate debt and “no maturities until 2027”
- Issuing a second reinvesting CLO, a $1 billion transaction largely collateralized by new-vintage investments
- Closing an inaugural asset-backed securitization in its net lease joint venture, which Urbaszek said was “several times oversubscribed”
Urbaszek said total non-mark-to-market borrowings now represent about 86% of total debt, and the company continues to have “no capital markets mark-to-market provisions throughout our capital structure.”
During the Q&A, management also discussed office market conditions. Peña said performance was “relatively consistent with what it’s been in prior quarters,” adding that leasing activity is “picking up” in many markets and that debt capital availability has generally been on “a positive trend,” though fundamentals remain “quite challenged relative to what they’ve been historically.”
Johnson summarized the quarter as one in which “resolutions and redeployment are driving earnings that cover our dividend,” pointing to what he described as an “attractive current yield” and an opportunity set supported by recovering values and “spreads still wide relative to other credit alternatives.”
About Blackstone Mortgage Trust NYSE: BXMT
Blackstone Mortgage Trust, Inc NYSE: BXMT is a publicly traded real estate finance company that originates, acquires and manages commercial mortgage loans and other CRE debt investments. As an externally managed real estate investment trust (REIT), it seeks to generate attractive risk-adjusted returns through the deployment of senior floating-rate and fixed-rate loans backed by income-producing properties.
The firm's core business activities span the origination of senior mortgage loans, the acquisition of loan portfolios and other real estate debt instruments, and the active management of those investments.
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