Blackstone Mortgage Trust Posts Q3 Loss, Cuts Dividend to $0.30

Blackstone Mortgage Trust Inc. (NYSE: BXMT) reported a third-quarter 2026 GAAP net loss of $327.0 million, or $1.95 per share, as higher credit-loss reserves and valuation charges outweighed progress in reducing watchlist and office exposure. The commercial mortgage REIT also declared a fourth-quarter dividend of $0.30 per share, below the $0.47 paid for the third quarter.

The loss compared with GAAP net income of $63.4 million, or $0.37 per share, a year earlier. A $264.8 million increase in current expected credit loss, or CECL, reserves was the largest charge during the quarter. Results also included a $63.9 million valuation adjustment on loans moved to held-for-sale and a $36.4 million impairment of owned real estate.

On a non-GAAP basis, distributable earnings were $64.1 million, or $0.38 per share, compared with $0.31 per share in the second quarter. Distributable earnings before realized gains and losses were $71.2 million, or $0.42 per share, down from $0.48 in the preceding quarter and $0.49 in the first quarter.

Total net revenue rose to $141.9 million from $132.6 million a year earlier. Net income from loans and other investments declined to $64.4 million from $98.9 million, while revenue from owned real estate increased to $77.5 million from $33.7 million. Owned-real-estate expenses also rose to $81.2 million from $43.1 million.

Book value ended the quarter at $17.06 per share, down from $19.31 at June 30. The September figure included $3.64 per share of CECL reserves and $0.93 per share of accumulated depreciation and amortization. Total CECL reserves were $606 million, comprising $444 million of asset-specific reserves and $162 million of general reserves.

Portfolio turnover reduces watchlist exposure

BXMT said repayments, asset sales and portfolio turnover reduced watchlist loans by 56% from the second quarter to $0.9 billion, their lowest level since the fourth quarter of 2019. The loan portfolio was 93% performing based on net loan exposure, excluding $0.6 billion of loans held for sale.

The quarter nevertheless included six newly impaired loans. One Bay Area mixed-use office loan was resolved through a transfer to owned real estate. At quarter-end, BXMT held $0.9 billion of impaired loans and $1.5 billion of owned real estate; combined with watchlist loans, those categories declined 17% sequentially.

The company collected $2.3 billion from loan repayments and sales during the quarter, including $251 million of sales. About 88% of the activity involved loans originated before 2023. BXMT said it sold nearly $1.0 billion of loans during the third quarter and early fourth quarter at 93% of carrying value, including $0.5 billion of office loans and $0.2 billion of multifamily loans that had been on its watchlist.

BXMT made $0.5 billion of investments during the quarter, substantially less than repayments and sales. Activity included $0.3 billion of loan originations, $0.1 billion of net lease properties at the company’s share, $0.1 billion of debt securities and $50 million of single-family homebuilder finance loans at its share.

The resulting investment portfolio totaled $17.0 billion at September 30, down from $19.7 billion at the end of the second quarter and $20.0 billion at the end of 2025. The portfolio included $14.0 billion of loans held for investment on a net book value basis, $1.5 billion of owned real estate and interests in net lease, bank loan and homebuilder joint ventures.

Multifamily represented 22% of the overall investment portfolio and industrial assets accounted for 20%. U.S. office exposure was 15%, while non-U.S. office represented 5%. BXMT said office exposure had declined 59% to $4.0 billion from $9.9 billion at the end of 2019, while targeted investments in residential, industrial, net lease and joint-venture strategies increased to $8.7 billion from $2.4 billion.

Liquidity and capital position

BXMT ended the quarter with $1.3 billion of liquidity and a debt-to-equity ratio of 3.9 times. Non-mark-to-market debt represented 89% of total debt, with no capital-markets mark-to-market provisions. The company said its financing structure is designed to match debt maturities, interest-rate indices and currencies with the underlying assets.

The company repurchased $36 million of Class A common stock during the quarter at a weighted-average price of $14.09 per share. Its board declared the $0.30 fourth-quarter dividend payable January 15, 2027, to shareholders of record on December 31, 2026.

BXMT said its outlook and estimates remain subject to uncertainty, including changes in interest rates, the macroeconomic environment and property-level credit performance. Its non-GAAP distributable earnings measures also exclude CECL reserves until losses are realized and deemed non-recoverable, meaning the timing of credit losses under those measures can differ materially from GAAP results.