Short Sellers Bet Against Blackstone and Starwood REITs (1)

Short sellers have ramped up bets against commercial mortgage REITs, wagering that more borrowers will default on office debt as interest costs increase and property values fall.

Short interest in the largest mortgage real estate investment trusts focused on business properties, including Blackstone Mortgage Trust Inc. and Starwood Property Trust Inc., hit post-pandemic highs in the past month, according to data compiled by S&P Global Market Intelligence.

Hedge funds have been using credit derivatives and equities to bet that the rise of working from home will cripple demand for poorer-quality properties and hurt landlords. US office vacancy rates have ...