Real Estate: Blackstone Mortgage Trust Announces Public Offering
Blackstone Mortgage Trust (NASDAQ: BXMT) announced the pricing of an underwritten public offering of 10,000,000 shares of its class A common stock.
The underwriters have been granted a 30-day option by the Company to purchase up to an additional 1,500,000 shares. The offering is expected to close on June 11, 2020, and is subject to customary closing conditions. The total estimated gross proceeds of the offering are approximately $282.0 million or roughly $324.3 million if the underwriters exercise their option to purchase additional shares in full.
Blackstone Mortgage Trust
Blackstone will use the capital to maintain a high level of liquidity during the difficult economic conditions in the commercial real estate markets due to the COVID-19 pandemic. Blackstone has focused on low-leveled properties in Class A markets, which has resulted in a 100% performance level in its loan portfolio.
Although 100% of the loan portfolio is current with payments, Blackstone has a lot of hotel-related borrowers and is aware that this could become problematic. Raising additional capital ensures the Blackstone has sufficient capital to deal with any problems that arise and take advantage of any opportunities that develop in the turbulent commercial real estate markets.
Blackstone Mortgage Trust is one of the more conservative commercial real estate lending REITs. The portfolio’s loan-to-value ratio is 63%, so there is a substantial margin of safety. The debt to equity ratio of 2.8 is one of the lowest of its peers. Before the offering, the REIT has over $ 800 million in available liquidity. The proceeds from the sale of stock increase that level to over $1 billion.
With 24% of the portfolio in the New York market, it is prudent for management to have raised capital. New York has been ground zero of the pandemic, and the commercial property market will take some time to recover.
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