Blackstone Mortgage Trust(US:BXMT)2020-10-29 10:53PART I. FINANCIAL INFORMATION This section provides detailed financial statements, management's discussion and analysis, and disclosures on market risks and internal controls ITEM 1. FINANCIAL STATEMENTS This section presents unaudited consolidated financial statements, including balance sheets, income statements, and cash flows, highlighting key financial positions and performance Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Assets | $16,876,804 | $16,551,871 | | Loans receivable, net | $16,291,677 | $16,164,801 | | Cash and cash equivalents | $427,028 | $150,090 | | Total Liabilities | $12,972,852 | $12,767,190 | | Secured debt agreements, net | $8,973,810 | $10,054,930 | | Total Equity | $3,903,952 | $3,784,681 | Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Income from loans and other investments, net | $114,961 | $101,916 | $322,727 | $314,465 | | Net income attributable to Blackstone Mortgage Trust | $89,860 | $74,897 | $54,054 | $226,635 | | Net income per share (diluted) | $0.61 | $0.56 | $0.39 | $1.76 | - The company adopted the new accounting standard ASU 2016-13 (CECL) on January 1, 2020, resulting in a $17.7 million cumulative-effect adjustment to retained earnings9155 Note 3. Loans Receivable, Net The loan portfolio, totaling $16.6 billion in principal, saw its weighted-average risk rating increase to 3.0 due to COVID-19, with a $177.0 million CECL reserve Loan Portfolio Statistics | Metric | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Number of loans | 123 | 128 | | Principal balance | $16.6 billion | $16.3 billion | | Net book value | $16.3 billion | $16.2 billion | | Unfunded loan commitments | $3.3 billion | $3.9 billion | | Weighted-average all-in yield | L + 3.53% | L + 3.55% | - The loan portfolio is primarily concentrated in Office (60%), Hospitality (13%), and Multifamily (11%) properties, with 70% located in the United States99101 - The weighted-average risk rating increased to 3.0 from 2.8 due to $3.2 billion in downgraded loans, reflecting higher risk from the COVID-19 pandemic107 - The total CECL reserve for loans receivable was $177.0 million, including specific reserves for two troubled debt restructurings placed on non-accrual status110111112 Note 5. Secured Debt Agreements, Net Secured debt decreased to $9.0 billion as of September 30, 2020, with amendments made to credit facilities in Q2 2020 to suspend credit mark provisions Secured Debt Balances (in thousands) | Debt Type | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Secured credit facilities | $8,651,313 | $9,753,059 | | Asset-specific financings | $348,964 | $330,879 | | Total secured debt | $9,000,277 | $10,083,938 | - In Q2 2020, agreements with seven lenders for $7.9 billion in secured credit facilities were amended to temporarily suspend credit mark provisions in exchange for repayments and additional collateral128 Note 10. Equity The company issued 10.8 million shares of class A common stock, raising $297.6 million in net proceeds, and declared consistent dividends of $0.62 per share for Q3 - In June 2020, the company completed a public offering of 10,000,000 shares of class A common stock, generating $278.3 million in net proceeds179 Dividends Declared Per Share | Period | 2020 | 2019 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | $0.62 | $0.62 | | Nine Months Ended Sep 30 | $1.86 | $1.86 | ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the COVID-19 pandemic's impact, highlighting 99% Q3 interest collection, $0.62 dividend, $0.63 Core Earnings per share, and a $191.2 million CECL reserve - The COVID-19 pandemic has significantly disrupted industries underlying loan collateral, prompting active engagement with borrowers and lenders253256 Key Financial Indicators (Q3 2020) | Indicator | Value | | :--- | :--- | | Earnings Per Share | $0.61 | | Dividends Declared | $0.62 | | Core Earnings Per Share | $0.63 | | Book Value Per Share | $26.51 | - The company collected 99% of Q3 2020 contractual interest payments and executed 11 loan modifications in Q3 ($1.7 billion principal) and 13 in Q2 ($2.4 billion principal) to address pandemic pressures272273 - The total Current Expected Credit Loss (CECL) reserve reached $191.2 million as of September 30, 2020, reflecting a $173.5 million increase due to the COVID-19 pandemic's macroeconomic impact283 Leverage Ratios | Ratio | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Debt-to-equity ratio | 2.6x | 3.0x | | Total leverage ratio | 3.6x | 3.7x | ITEM 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, with 98% floating-rate investments, followed by heightened credit risk due to COVID-19, and mitigated currency risk - The company's net income is positively correlated with rising interest rates, as 98% of investments are floating-rate, with a 50 basis point rate increase decreasing net interest income by $19.6 million annually346349 - Credit risk increased due to the COVID-19 pandemic, managed through active asset management and loan modifications, with a low weighted-average LTV of 63.6% providing an equity cushion355356 - Currency risk is actively managed by matching foreign asset and borrowing currencies and using forward contracts to hedge net exposure to major currencies364366 ITEM 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the report period end367 - No material changes in internal control over financial reporting occurred during the quarter369 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, and other standard disclosures, confirming no material changes or significant events ITEM 1. Legal Proceedings The company reported no material legal proceedings as of September 30, 2020 - The company reports no material legal proceedings as of September 30, 2020371 ITEM 1A. Risk Factors No material changes to previously disclosed risk factors from the 2019 Form 10-K and Q1 2020 Form 10-Q were reported - No material changes to previously disclosed risk factors from the 2019 Form 10-K and Q1 2020 Form 10-Q were reported372 Other Items (Items 2-6) This section covers standard disclosures, reporting no unregistered equity sales, no defaults on senior securities, and no other material information - The company reported no activity under Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), or Item 5 (Other Information)373374376