In 2006, Katie Keenan moved to New York City and took her first investment banking job, at Lehman Brothers. An industry baptism by fire, the Bethesda, Md., native was soon juggling a move to the big city with the dizzying heights of a booming market expansion — one that would be swiftly followed by a downturn of epic proportions.
Winston Churchill once said, “Never let a good crisis go to waste,” and Keenan’s early industry experience only helped inform a balanced investment approach that’s stuck with her throughout her career. “I’m able to understand the upside but also able to think about the downside as a lender, in making sure our capital is always well protected,” she said.
This COVID-aggravated market crisis was like no other, of course, but Keenan got to experience it from a very different seat this time around, at Blackstone Mortgage Trust (BXMT).
BXMT’s $18.7 billion portfolio proved to be pretty much pandemic-proof, and its investment strategy of providing senior, low-leverage loans to good borrowers in the right markets was only further validated as COVID bore down on the U.S.
And, in May, after almost 10 years at Blackstone, Keenan was appointed CEO of BXMT.
A week into the new role, Keenan described her path to the top, and what she has planned for BXMT as the market rebounds.
Commercial Observer: Congratulations on being named CEO of BXMT! Now that you’re in this role, what’s next for the platform?
Katie Keenan: Thank you. It’s an organic transition, in that I’ve been involved in the management of the company for years with Steve [Plavin, senior managing Director of Blackstone Real Estate Debt Strategies and former CEO of BXMT] and Doug [Armer, treasurer at BXMT]. And so, the vision and strategy of the company today really reflects my view of the best possible position that we can have in the market.
What I’m excited about is continuing the momentum, continuing to build on all the progress that we’ve made since the re-IPO in 2013, and returning the company to growth mode as we come out of the COVID pandemic. We’ve got an incredible investment environment in front of us and tremendous activity in the pipeline, so my focus is really on making sure that we’re well-positioned to take advantage of all the great opportunities out there.
Can you talk me through the evolution of your role at Blackstone?
I joined Blackstone almost 10 years ago, and I’ve been involved in BXMT since the beginning. I helped on the re-IPO in 2013; I actually remember reviewing the filings when I was at a friend’s getaway weekend. During the first phase of my career, I was focused on originating new loans for our vehicles, a lot in BXMT. And then, over time, I progressed from leading deals to becoming more involved in the management, the portfolio strategy and the investment strategy of BXMT — that really began in 2018.
Over time, I got more and more involved with our investors, our corporate finance strategy and our board of directors, and — by the time I became president of BXMT a year ago — I was working side by side with Steve on all aspects of the business, including its positioning.
How was the COVID experience for you, given that you were likely trying to envision what your new role might look like, while not knowing how this crisis would play out.
It’s interesting — my role was certainly a long-term discussion, but COVID was difficult in so many ways. I actually had a baby in May of last year, so there was a whole added layer of complexity and joy — but also stress.
So, I wasn’t thinking a lot about the timing of the transition. I was more focused on making sure that we were putting the company in the best possible position and ensuring that all of the building blocks that we had put in place in the years leading up to COVID continued to allow us to perform in a stable way. I was busy working with our borrowers and management team to ensure the company was well-positioned to get through the volatility. And, ultimately, it worked really well.
How was BXMT’s portfolio positioned going into the pandemic?
The strategy with BXMT has always been very disciplined and very simple. We make low-leverage, first mortgage loans to good borrowers in the right markets, and we take advantage of all the information flow that we have within Blackstone to make the right asset selections.
Coming into COVID, our sponsors had a lot of equity value to protect and they had the wherewithal to protect it, because they’re well-capitalized, large sponsors and they — like us — knew that good assets hold their value over time. COVID was a very difficult period, but it became clear that this was going to be a temporary market disruption. And our sponsors knew that it was the time to protect their assets and make sure they were well-positioned to come out the other side.
I think the fact that we have been so disciplined really positioned us well. We’ve always managed risk prudently, we’ve always carried a lot of liquidity, and we have been really focused and adherent to a philosophy of running a match-funded balance sheet. Having long-term debt matched to our underlying assets was also a difference maker in the earlier days of COVID.
Are you viewing asset types differently as the market rebounds?
The performance of the portfolio through COVID largely validated our investment strategy. Seeing the stability within it — we had near-perfect credit performance — made us feel like we were making the right calls in terms of our investments. We’ve always tried to take all the information we have, look ahead and think, “OK, where are we seeing growth?” We’re seeing it in West L.A. with the content creation dynamic. We’re seeing it in Boston with life sciences. And we’ve always been a huge player in the multifamily market, because we see the resilience and the stability and rent growth.
But, we’re also seeing some really good growth-market office lending opportunities, and even some interesting hotel opportunities. We’re always very selective as an investor, but we’re believers in the post-COVID travel recovery, and I think there’s going to be some interesting relative value as a low-leverage lender in the hotel space.
BXMT’s portfolio has grown to $18.7 billion, and by more than 50 percent over the past couple of years alone. How do you see this growth trajectory continuing?
Every year, we’ve seen portfolio growth, and I certainly expect that to continue. We have a tremendous origination platform here, led by Tim Johnson [global head of originations] and Michael Eglit [managing director], and we have the largest pipeline of deals that we can have because of the scale of Blackstone in the market. We see every deal, we have great relationships, and then we can use all the information we have to make very efficient decisions. We give our sponsors confidence that we can make a decision about an investment, make a good loan that works really well for them, and also works well for our company.
That business model is really effective today — as it always has been, but especially when there’s a level of uncertainty in the market. There’s a need to work with lenders who you trust.
Is there such a thing as a typical transaction for BXMT today?
Our typical transaction is 65 percent loan-to-value and we’re seeing a lot of new acquisitions, because borrowers are feeling like the market environment is supportive of acquiring new assets — generally deals where capital is being invested to improve the quality of the asset. We like large transactions, because they tend to be with very institutional sponsors, and high-quality assets. And we’re seeing a lot of activity in our core markets, as well as a lot of activity in growth markets — so, South Florida, Austin, Texas, Nashville and Atlanta.
Rewinding a little, how did you first get interested in the real estate world?
I grew up in Bethesda, Md. Real estate is in the water there, although it wasn’t in my family. But, when I was in middle school, there was a big [real estate investment trust] that was basically redeveloping the downtown area and putting in a lot of new retail and restaurants, and I was just fascinated by it all. I was in the journalism class, and I convinced them to let me on the site. They gave me a hard hat and a site tour, and I was hooked from there.
And you also wrote for Harvard University’s newspaper, right?
I would characterize that as my major in college [laughs]. I was very involved in the newspaper. It was just a great environment, such intellectual curiosity — the ability to be resourceful, call people up, figure out information, and then communicate it to a broader audience. As you know! It was really fun. And, honestly, I think it was really good training for me as an investor today.
Did you ever consider a career in journalism?
I did think about it, but I loved real estate. It was my first love. I found the finance and investment industry very interesting, and so, that was my first path — and, obviously, I never left.
Your first job was as an analyst at Lehman Brothers, and you were there through its eventual shuttering. How was that experience for you?
I think it was really great for me to have the experience of working at the end of the last expansion cycle, so the run-up and then, obviously, seeing the other side. It was really challenging in a lot of ways, but it also gave me a balanced investment approach as I moved forward through the rest of my career.
I’ve always been a critical thinker and balanced in the way I look at deals. I’m able to understand the upside, but also able to think about the downside as a lender in making sure our capital is well protected. And I think having the experience of working through a cycle early in my career was really valuable in informing my approach for the rest of my career.
Did you move to New York for the Lehman Brothers job?
Yes. I was a summer analyst, so I came here and lived in an apartment with no windows and three roommates [laughs]. I had that whole experience that many other people have.
Tell me about your path to Blackstone and why the opportunity appealed.
I’ve worked in various different positions in the real estate industry: corporate finance and investment banking when I was at Lehman, and the equity side at a private equity firm called Lubert-Adler. I went to work at a small firm called G2, and saw the dynamics and the flow of being in a very small place, before eventually coming to Blackstone in 2012.
What really appealed to me about Blackstone — and continues to appeal — is the level of intellectual curiosity, integrity and care that people bring here every day. And, working here is like a family. Most of the people I work with, I’ve worked with for five to 10 years. They were at my wedding. That level of culture and trust is so important in an investment environment, because it means that we can focus on asking the right questions, figuring out the answers, and making the best investments for the business.
It’s also a great place to build a career, in terms of the apprenticeship culture. From the day I started here, I had a seat at the table and I was part of the decision-making. I had insight into how we were thinking about investment decisions, how we were working through challenges, how deals got put together. The learning curve really never plateaus here, it steepens, which is an amazing environment to be in. I feel like I learn from every person that I work with here, every day.
What have been some of the most memorable deals during your 10 years at Blackstone?
One of the most formative experiences for me here was in the first year or two. We signed up two of the earliest, new ground-up construction deals coming out of the last cycle. Tim Johnson — who’s been a very meaningful mentor for me — was the deal lead, but he came to me and said, “You know what? You can lead the negotiations and the analysis on this.” It was a big stretch opportunity, but he had the trust and confidence in me.
We had a really wonderful client on the deal, and this business is all about relationships, and developing key relationships and authentic relationships with people. At the end, I looked back and said, “Wow. I can do this.” And I took that experience forward to other large construction deals that I’ve worked on. And, ultimately, the next one I led was the [$1.8 billion BXMT financing for Tishman Speyer’s] the Spiral, which was the largest construction deal we’ve done.
It was a very complicated deal, but all the learning experience that I had developed through taking the lead on negotiations and structuring deals, all led up to me having the capabilities to think creatively and figure out how to put together a deal like that.
How did you tackle being thrown in the deep end so early on?
I’ve always been a person who gets nervous, over-prepares, and then does a good job. And so, I think I went through that cycle on those early deals. My way of dealing with an uncertain situation, or a situation that’s new, is to just make sure I’m as prepared as humanly possible by talking to other people in the organization, doing my research, and thinking through different issues that might come up. And, so, by the time I’m actually in the situation, I feel like I’ve already done it.
You’re in a very different seat during this crisis compared with the last one. Any big takeaways this time around?
I think the thing that has been so inspiring about the last year is how much the team pulled together.
Job one was making sure everyone was safe and healthy. And then, making sure BXMT was managed and had the direction that was necessary. We were on the phone every day, all day, just thinking about how we could make sure that our company was working the way we expected, that the assets were doing well and we were in touch with our borrowers. Seeing the team at Blackstone bring the same level of focus that we always do, but also bring a level of personal support that we needed at that time, was the most meaningful part.
Then, we’d put together a business plan that worked really well in the years leading up to the pandemic in an economic expansion. But seeing that the company was stable, and that the assets we’d chosen were the right ones during a period of economic volatility was a really great thing to see.
You said Tim Johnson is one of your mentors. Who else has been a mentor to you?
Well, definitely Steve [Plavin]. I cannot say how much of a privilege it’s been to work side-by-side with Steve for years, even before my involvement in BXMT. He’s such a thoughtful investor, and so generous with his experience and time. Jonathan Pollack, who runs our business, is also so thoughtful and entrepreneurial. And Kathleen McCarthy — who is a global co-head here — just working with her and seeing how she looks at the world, and having another senior woman in real estate to look up to and bounce ideas off of has been invaluable.
Do you do any mentoring?
I do. Helping develop the next generation of talent is a huge focus for me, because I’ve been a tremendous beneficiary of that help. So, I spent a lot of time with our junior team. I think one of the great things about Blackstone is we expect that this is a career for people; people stay here a long time. And so, there’s this tremendous focus on helping people learn and have experience, so that they can grow and develop in their career, and take on more and more responsibility over time. And I really view that as a critical part of my job, because it’s what’s necessary to make this business work as well as it can.
You’re one of the few women CEOs in real estate. What is your take on diversity within our industry?
I have been really heartened to see the progress that we’ve made, but there’s a lot more to do. I’ve been lucky to be part of a tremendously supportive group of women in the real estate industry. I think we started getting together in 2014, and, over time, I’ve really seen all of those women progress in their careers and mentor younger women coming up. And that’s been a really rewarding thing to see, but there’s still a lot more to do.
Do you have any advice for women coming into the industry today?
I think it’s a great place to be. It’s such an exciting industry, and a place where creativity and relationship-building is valued. What I tell people is, “Sure, there are a lot of good things to work on, but what’s really important is working with people who are good people, and finding a place where you have high-integrity, caring people that are part of the team.” It’s just so important. And, you also want it to be fun — that’s critical.
The other thing is, speak up and ask for what you want. What I’ve found in my career is that people are so supportive and want to put me in the position to succeed, but people don’t always know what you need. And so, asking for new job responsibilities, asking for the opportunity to work on a certain project or asking for a break is key. I think for women, in some cases, that comes less naturally. And I think that it’s important to speak up and be an active partner in career development, because I think what you’ll find is that everyone wants to help support you and elevate you — you just have to help them understand how to do that.
Now that you’re in the CEO seat, are there any near-terms goals in mind?
My number one goal right now is to just make sure we’re well-positioned to take advantage of what is a really fruitful investment environment right now. There are so many interesting transactions. We’re seeing really good credit profiles [and] low-leverage, strong sponsors in markets that are growing. And our biggest task is just making sure that we take advantage of the platform that we have and all the great originators we have to bring those transactions together and get them into the company.
BXMT’s track record of performance and the ability of our company to generate stable, strong current income over multiple market cycles is just a tremendously valuable proposition for investors, and that’s part of what I’m really excited to continue growing.