Blackstone Inc. and KKR & Co. mortgage real estate investment trusts are grappling with deteriorating office loans as higher interest rates and weak demand drive down property values.

Blackstone Mortgage Trust Inc. downgraded 13 loans during the first quarter, seven of which were backed by US offices, and took on the legal title to an office building in Mountain View, California, according to an earnings report and a conference call Wednesday. KKR Real Estate Finance Trust Inc. said three of its eight loans on its watchlist are office debts.