Blackstone Mortgage initiated with neutral view at UBS, here’s why

UBS analyst Doug Harter initiated coverage of Blackstone Mortgage with a Neutral rating and $23.50 price target. The analyst initiated or assumed coverage of seven commercial mortgage real estate investment trusts. While the sector is trading at a discount to book value, this is explained by the market concerns around commercial real estate and the potential for additional losses to move book values lower, the analyst tells investors in a research cenote. In addition, the need to hold excess liquidity to help cover the potential for additional problem assets will continue to weigh on returns on equity. UBS does not expect the concerns over commercial real estate to ease in the near-term, which it says should continue to weigh on the valuation for the commercial mREIT sector.