Blackstone Mortgage Trust Update
As you may have noticed, the share price of our portfolio holding, Blackstone Mortgage Trust (NYSE:BXMT) has jump by about 5% this morning on the back of some very exciting news.
BXMT’s sponsor, Blackstone (NYSE: BX) and Wells Fargo (NYSE: WFC) have agreed to buy most of the assets of GE Capital Real Estate for approximately $23 billion. As part of the deal, Blackstone Mortgage Trust will acquire 82 first commercial mortgage loans for $4.6 billion. The transaction nearly doubles the size of the BXMT commercial mortgage portfolio.
This deal is very good for BXMT and BXMT share owners. When completed, the extra loans will provide the cash flow to allow the BXMT dividend to grow by about 12%. I expect to see regular dividend hikes as the deal gets finalized and onto the Blackstone books.
For subscribers who already own BXMT, let’s pat ourselves on the back and enjoy the value gains. If you do not yet own shares of BXMT, even with the higher share price, the yield is at 7% and the future higher dividends will add to the value. The stock remains a buy up to $31, a price which gives a forward yield of 7.5%.
Click here for the original write-up on BXMT from the February 2015 issue.