On July 24, 2024, Blackstone Mortgage Trust (BXMT) announced a significant 24% reduction in its dividend, lowering the payout to shareholders from 62 cents to 47 cents per share. This decision comes in response to mounting difficulties in the commercial real estate market, with increasing defaults and challenges faced by borrowers in repaying or refinancing loans. The dividend cut aims to preserve approximately $100 million annually, which the company plans to use for capital allocation and growth initiatives.
BXMT's CEO, Katie Keenan, stated that the dividend adjustment reflects a sustainable level aligned with the REIT's long-term earnings potential, allowing for strategic deployment of capital. The company also announced a $150 million stock buyback program, signaling confidence in its long-term strategy despite current market stresses.
The trust's exposure to U.S. office properties, which constitute a significant portion of its troubled debt, is a notable factor in this decision. As of June, 7.4% of nationwide office commercial mortgage-backed securities (CMBS) debt was delinquent, a figure that has risen recently. BXMT has been actively reducing its exposure to office properties, cutting it by $1.4 billion over the past two years.
BXMT's dividend cut follows similar actions by other commercial real estate mortgage REITs, including KKR Real Estate Finance Trust and Ares Commercial Real Estate Corp., both of which also reduced their dividends earlier this year. These measures reflect broader challenges within the sector as it navigates a complex and evolving market environment.
Comments