(Bloomberg) -- Blackstone Mortgage Trust is preparing to sell its first collateralized loan obligation since 2021, a $1 billion deal that shows the real estate investment trust pivoting away from its focus on office properties.
The CLO will be backed by roughly 90 properties, and over 85% of the total dollar value will be comprised of apartment complexes and hospitality and industrial properties, according to people familiar with the matter who requested anonymity to discuss sensitive information.
By comparison, four prior deals issued by the lender were mostly backed by office buildings, according to data compiled by Bloomberg News.
The deal details are preliminary and could still change, the people added. Blackstone declined to comment.
Blackstone Mortgage Trust or BXMT, a publicly-traded REIT, has largely focused on making loans to office properties and has funded them through CLOs, a type of securitization. But on recent analyst calls, executives have signaled a shift in focus toward other sectors, such as multifamily and logistics.
BXMT's Chief Executive Officer, Katharine Keenan, said in a February earnings call that the lender expects office exposure to come down over time and that it would be "very selective" when it comes to new investments in office going forward.
Since issuing its last CLO in 2021, the rise of new work-from-home norms has sharply reduced demand for office space. The market for commercial real estate CLOs has also been beset by surging delinquencies after properties of all types lost value when the Federal Reserve raised interest rates to tame inflation.
Although much of the CRE CLO market is still dealing with that hangover, especially in sectors such as apartment complexes, lenders have recently seized on better sentiment and thinning risk premiums to issue several new deals.
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