On Monday, Keefe, Bruyette & Woods maintained a "Market Perform" rating on Blackstone Mortgage Trust (NYSE:BXMT) with a steady stock price target of $18.00.
The firm's analyst noted that the company's second-quarter dividend of $0.62 per share matched expectations but projected that earnings per share (EPS), both including and excluding credit, would fall short of the dividend amount until conditions improve. The analyst anticipates an increase in capital deployment later in the year and into 2025, which may lead to better financial outcomes.
Blackstone (NYSE:BX) Mortgage Trust confirmed the dividend for the second quarter of 2024, which aligned with the forecasts. Still, the firm expects a potential dividend reduction to $0.52 in the third quarter. This anticipation stems from the projection that EPS, with and without credit considerations, may not meet the current dividend levels until Blackstone Mortgage Trust enhances its capital deployment.
In a separate development on the previous Friday, Blackstone Mortgage Trust announced a new partnership with M&T Bank, aimed at providing permanent agency financing for Blackstone Mortgage Trust borrowers in the multifamily lending space. This strategic move is seen as a potential downstream positive that could benefit the trust in the future.
Despite the current shares trading at an attractive 0.73 times book value and offering a 14.2% yield, the forward-looking valuation is considered less appealing at 0.77 times with a projected 11.9% yield, assuming the anticipated dividend cut. The analyst concluded that, with the risks appearing balanced at this time, the firm's stance on Blackstone Mortgage Trust remains at "Market Perform."
In other recent news, Blackstone Mortgage Trust reported a GAAP net loss of $0.71 per share for the first quarter of 2024. Despite this, the company's distributable earnings stood at $0.33 per share, and distributable earnings prior to charge-offs were at $0.55 per share. The company also paid a dividend of $0.62 per share during the quarter.
In terms of portfolio performance, 92% of Blackstone Mortgage Trust's portfolio is performing with over $1 billion in repayments. The company also maintained near-record liquidity levels at $1.7 billion. The company upgraded nine loans but downgraded 13 loans, including seven U.S. office loans due to market challenges.
Recent developments show Blackstone Mortgage Trust actively pursuing attractive investment opportunities, as evidenced by a recent $69 million senior loan commitment to a resort hotel. The company's management believes the real estate market is stabilizing and they are positioning themselves to navigate the ongoing credit cycle with a fortified balance sheet.
Despite the higher interest rate environment that is expected to affect near-term results, the company remains optimistic about its long-term earnings potential.
InvestingPro Insights
As Blackstone Mortgage Trust (NYSE:BXMT) navigates the uncertainty surrounding its dividends and earnings, recent data from InvestingPro provides a deeper look into the company's financial health. With a market capitalization of $3.14 billion, BXMT's hefty P/E ratio of 7820.0 as of the last twelve months ending Q1 2024 stands out, suggesting a high earnings multiple that investors should be aware of.
Despite the substantial P/E ratio, the company has a track record of maintaining dividend payments for 13 consecutive years, which may offer some reassurance to income-focused investors. Moreover, the current dividend yield is substantial at 14.24%, although the potential reduction in future dividends is a point of consideration.
InvestingPro Tips highlight that Blackstone Mortgage Trust's stock price movements have been quite volatile, with a 1-month price total return of -5.12% and a 3-month price total return of -10.69%. Nevertheless, the trust's liquid assets exceed its short-term obligations, which could be a critical factor in sustaining its dividend payments.
For those looking for more detailed analysis and additional tips, InvestingPro offers further insights on BXMT. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a broader range of expert financial advice. There are 5 more InvestingPro Tips available, which can guide investors to make more informed decisions about BXMT.
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