In the April issue of my newsletter and in the Durable Income REIT Portfolio, I have 23 REITs, consisting of 22 equity REITs and 1 mortgage REIT. The sole mortgage REIT in the portfolio is United Development Funding (NASDAQ:UDF), a small-cap company that specializes in providing debt and equity capital solutions to leading developers and home-builders (see my article on UDF HERE).
As the name of my portfolio suggests, I'm focused on durable income, and that means no stocks with dividend volatility. I seek to avoid most mortgage REITs (except a few preferred issues); yet, I see value in the simpler commercial mortgage REITs.
The sole mREIT, United Development Funding (a monthly dividend payer), has been a good choice; but with a market cap of around $551 million, I'm limiting my stake (in UDF) to around 2%. In the quest for yield (and safety), I'm seeking yet another candidate that will enable me to deliver strong income over time.
Just over a year ago, I wrote an article on Blackstone Mortgage Trust (NYSE:BXMT), and I concluded the editorial as follows:
I have BXMT on my research list. That means, I will conduct more due diligence and hopefully meet with management after earnings. BXMT appears to be well-positioned, and I like the fact that the company has a more conservative positioning within the mortgage REIT sector.
Blackstone Mortgage: A Differentiated Approach
Blackstone Mortgage Trust originates and purchases senior mortgage loans collateralized by properties in the U.S. and Europe. The New York-based REIT is managed by Blackstone Real Estate (NYSE:BX), a world leader in real estate investing with nearly $81 billion of assets under management (or AUM) and over $141 billion of owned real estate.
Blackstone Real Estate consists of two operating entities: (1) Blackstone Real Estate Partners is the equity investment platform that has around $72 billion in AUM, including several recent REIT spin-offs - Hilton Worldwide (NYSE:HLT), Brixmor (NYSE:BRX), and Extended Stay America (NYSE:STAY), to name a few. (2) Blackstone Real Estate Debt Strategies has over $9 billion in AUM.
BXMT's affiliation with Blackstone Real Estate is a great competitive advantage, because the company's access to proprietary deal flow and property and market information is a valuable differentiator, given the scale of Blackstone's real estate business.
Continue reading this article here.
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