Blackstone Mortgage Trust: Buy the 9.5% yielding BXMT stock

The Blackstone Mortgage Trust (NYSE: BXMT) stock price has bounced back in the past few weeks even as the challenges in the real estate market remain. BXMT shares jumped to a high of $20, ~20% above the lowest level this year. The stock is still about 32% below the all-time high.

Commercial Real Estate (CRE) concerns remain

Blackstone Mortgage Trust is a company owned by Blackstone, the biggest private equity company with almost $1 trillion in assets under management (AUM). The REIT, which has a dividend yield of about 9.8%, focuses on providing loans backed on mortgages. Most of its loans are in the United States while others are in Europe and Australia.

Blackstone Mortgage Trust shares crashed hard earlier this year as investors worried about the commercial real estate exposure. The company has provided substantial funds to CRE companies in high-risk places like New York and San Francisco. As I wrote in this article, there are concerns that CRE valuations are falling as debt maturities near.

There are three main reasons why the BXMT stock price has done well in the past few weeks. First, risks of defaults are a bit limited for Blackstone Mortgage Trust since it does not have any meaningful maturities until 2026. 

Second, the company’s collateral is fairly diversified. 25% is in US office while 9% is non-US office. In the US office, 26% of the properties are in the fast-growing sunbelt regions like Texas. The other part of the portfolio is made up of multifamily, hospitality, industrial, retail, life sciences, and others. This diversification is a good thing since CRE seems to be at a bigger risk. 

Most importantly, Blackstone Mortgage has continued to collect its payments. The most recent results showed that the company’s performing portfolio stands at 97%, which is a good number. It has a weighted average risk of 2.9%, which is a positive sign. BXMT stock has also jumped because its dividend is covered well.

Blackstone Mortgage Trust stock price forecast

BXMT chart by TradingView

The daily chart shows that the BXMT stock price has drifted upwards in the past few days. The stock has jumped above the important resistance point at $18.70, the highest point on April 28th. It has also jumped above the 23.6% Fibonacci Retracement level.

Blackstone Mortgage shares have also crossed the 50-day and 100-day exponential moving averages (EMA). It is also a few points below the important level at $20.24, the lowest point on October 12 last year.

Therefore, there is a likelihood that the BXMT share price will continue rising as buyers target the key resistance point at $22.90, the 50% retracement point. This price is about 16% above the current level.