Blackstone Mortgage (BXMT) to Raise $400M Via Notes Offering
Blackstone Mortgage Trust, Inc. BXMT recently announced a private offering of senior secured notes worth $400 million in aggregate principal amount. The debt obligations are set to mature in 2027.
Blackstone Mortgage’s efforts to strengthen its near-term liquidity in these testing times, and raise capital through the debt market amid the current low rate environment are strategic fits.
However, the note offering increases the company’s long-term debt obligation. As of Jun 30, it had $8.7 billion of secured debt. The notes offering will likely lead to a further rise in interest expenses, thus, limiting bottom-line growth.
Nonetheless, with an improving times interest earned ratio of 2.2 as well as $289.5 million of cash and cash equivalents (as of Jun 30, 2021), Blackstone Mortgage is likely to have enough cash after meeting interest obligations on debts to continue to invest in the business.
Earlier this month, the company also sold ten million shares of class A common stock in an underwritten public offering. It anticipates to channelize the funds raised to working capital and other general corporate necessities, including aiding the origination of additional commercial mortgage loans as well as other target assets and investments. Given the robust rebound in the commercial real property and commercial mortgage transaction volumes, the focus to fund such origination will enable the company to benefit from this recovery. During the June-end quarter, the company originated or acquired $2.2 billion of loans across 21 transactions. The momentum continued with Blackstone Mortgage originating $2.6 billion of loans as of Sep 9. It also had more than $4 billion of additional loans in closing as of the same date.
Through these efforts, the company has expanded its investment portfolio. As of Aug 31, 2021, the principal balance of its total investment portfolio was $20.1 billion, up from $18.2 billion as of the prior-year end.
Blackstone Mortgage currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Shares of the company lost 2%, as against the industry’s growth of 3.1%, over the past six months.
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In August 2021, Gladstone Investment Corporation GAIN priced a public offering of notes worth $117 million in aggregate principal amount. The notes, which are set to mature on Nov 1, 2028, will carry an interest of 4.875%.
Franklin Resources, Inc. BEN has priced a public offering of two series of notes, aggregating $450 million in principal amount. This includes all or part of its $300-million, 2.800% notes due 2022, along with $250 million of Legg Mason’s 3.950% senior notes maturing in 2024. (Read more: Franklin to Procure Capital With $450M of Notes Offering)
In the same month, Huntington Bancshares Incorporated HBAN also resorted to a private offering of unsecured subordinated notes. The company priced $500 million in principal amount of fixed-to-fixed rate notes at 100% of the aggregate principal amount. The notes carry a coupon rate of 2.487% and are set to mature in 2036.
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