Blackstone Mortgage Trust(BXMT) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for Blackstone Mortgage Trust, Inc. for Q1 2025, including balance sheets, statements of operations, cash flows, and accompanying notes Consolidated Balance Sheets Total assets increased to $19.96 billion as of March 31, 2025, driven by higher cash and real estate owned, while total liabilities also rose due to increased secured and securitized debt Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $19,957,475 | $19,801,955 | | Loans receivable, net | $18,308,171 | $18,313,582 | | Cash and cash equivalents | $668,563 | $323,483 | | Real estate owned, net | $619,796 | $588,185 | | Total Liabilities | $16,268,757 | $16,007,766 | | Secured debt, net | $10,000,027 | $9,696,334 | | Securitized debt obligations, net | $2,559,896 | $1,936,956 | | Total Equity | $3,688,718 | $3,794,189 | Consolidated Statements of Operations The company reported a net loss of $0.35 million for Q1 2025, a significant improvement from the $123.17 million loss in Q1 2024, primarily due to a smaller increase in the CECL reserve Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Income from loans and other investments, net | $89,824 | $142,392 | | Total net revenues | $126,947 | $145,355 | | Increase in current expected credit loss reserve | ($49,505) | ($234,868) | | Net loss | ($351) | ($123,170) | | Net loss attributable to Blackstone Mortgage Trust, Inc. | ($357) | ($123,838) | | Net loss per share, basic and diluted | ($0.00) | ($0.71) | Consolidated Statements of Cash Flows Cash and cash equivalents increased by $343.3 million in Q1 2025, driven by strong operating and investing activities, partially offset by financing outflows Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $100,516 | $94,610 | | Net cash provided by investing activities | $260,939 | $376,316 | | Net cash used in financing activities | ($18,142) | ($404,343) | | Net increase in cash and cash equivalents | $343,313 | $66,583 | Notes to Consolidated Financial Statements These notes detail the company's accounting policies, CECL methodology, loan portfolio characteristics, financing instruments, equity transactions, and related-party dealings - The company is a real estate finance company externally managed by a subsidiary of Blackstone Inc., operating as a REIT[22] - The CECL reserve is estimated primarily using a Weighted-Average Remaining Maturity (WARM) method, incorporating historical CMBS loss data from Trepp, macroeconomic forecasts, and internal risk ratings (1-5 scale)[38][39][49] Loan Portfolio Overview (as of March 31, 2025) | Metric | Value | | :--- | :--- | | Number of loans | 138 | | Principal balance | $19.2 billion | | Weighted-average all-in yield | +3.70% | | Weighted-average risk rating | 3.0 | - The loan portfolio is primarily composed of Office (29% of net loan exposure), Multifamily (30%), and Hospitality (15%). Geographically, 59% is in the United States and 41% is International[98] - In Q1 2025, the CECL reserve for loans receivable increased by a net $49.4 million to a total of $741.5 million. This was driven by a $32.9 million increase in general reserves and the impairment of one additional office loan, partially offset by a $41.8 million charge-off on a resolved loan[106] - As of March 31, 2025, 13 loans were rated '5' (Impaired) with an aggregate amortized cost of $1.5 billion and an asset-specific CECL reserve of $555.4 million[107] - The company acquired one Real Estate Owned (REO) asset in Q1 2025 via a deed-in-lieu of foreclosure, bringing the total to eight REO assets with a net carrying value of $619.8 million[118][119] - In Q1 2025, the company repurchased 1.8 million shares of its Class A common stock for $31.6 million. An additional $89.2 million remains available under the repurchase program[186] - A dividend of $0.47 per share was declared on March 14, 2025[194] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of Q1 2025 financial condition and operations, covering key indicators, investment portfolio performance, operating results, liquidity, and capital resources Key Financial Measures and Indicators Management highlights key metrics for Q1 2025, including a basic net loss per share of $0.00, a $0.47 dividend, $21.42 book value per share, and $0.17 Distributable Earnings per share Key Metrics Per Share (Q1 2025) | Metric | Value | | :--- | :--- | | Net Loss Per Share, Basic | $ (0.00) | | Dividends Declared Per Share | $ 0.47 | | Distributable Earnings Per Share, Basic | $ 0.17 | | Book Value Per Share | $ 21.42 | - Distributable Earnings, a non-GAAP measure, is presented to evaluate performance excluding certain non-cash GAAP adjustments and is a key metric considered for dividends[265][267] Investment Portfolio The loan portfolio totaled $19.2 billion across 138 loans as of March 31, 2025, with 95% performing and a weighted-average risk rating of 3.0, while the CECL reserve increased to $741.5 million Loan Activity (Q1 2025, in billions) | Activity | Amount | | :--- | :--- | | Loan Originations/Acquisitions | $1.6 | | Loan Fundings | $1.7 | | Loan Repayments and Sales | $1.8 | - 95% of the loan portfolio was performing (risk-rated 1-4) as of March 31, 2025, with a weighted-average risk rating of 3.0[291][294] - The total loans receivable CECL reserve was $741.5 million as of March 31, 2025. The increase in the quarter was mainly due to a change in portfolio mix and one new office loan impairment[296] - The company's portfolio financing totaled $13.1 billion, consisting of secured debt, securitizations (CLOs), and asset-specific debt[304] - Substantially all loans are floating rate, creating a net equity position that is positively correlated to rising interest rates[318] Results of Operations Q1 2025 results show a $11.7 million decrease in net interest income quarter-over-quarter, offset by increased REO revenue, and a significant reduction in net loss year-over-year due to a smaller CECL reserve increase Quarter-over-Quarter Operational Changes (Q1 2025 vs Q4 2024, in millions) | Item | Q1 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | Income from loans and other investments, net | $89.8 | $101.6 | ($11.7) | | Revenue from real estate owned | $37.0 | $11.8 | $25.2 | | Increase in CECL reserve | ($49.5) | ($19.1) | ($30.4) | | Net (loss) income attributable to BXMT | ($0.4) | $37.2 | ($37.5) | - The decrease in net interest income QoQ was driven by a $2.2 billion decrease in the weighted-average loan portfolio balance and lower average floating rates[326] - The increase in REO revenue and expenses QoQ was due to the full-quarter impact of four assets acquired in Q4 2024 and one new asset acquired in Q1 2025[327][329] - Compared to Q1 2024, the increase in the CECL reserve was $185.4 million lower, which was the primary driver for the significant reduction in net loss year-over-year[337] Liquidity and Capital Resources As of March 31, 2025, total liquidity was $1.6 billion, with a capitalization structure of $3.7 billion equity and $15.9 billion debt, resulting in a 3.4x debt-to-equity ratio Liquidity and Leverage (as of March 31, 2025) | Metric | Value | | :--- | :--- | | Total Liquidity | $1.6 billion | | Cash and cash equivalents | $668.6 million | | Debt-to-equity ratio | 3.4x | | Total Leverage Ratio | 4.1x | - Primary uses of liquidity include funding new loans, servicing debt, and paying dividends. The company has $1.0 billion in unfunded loan commitments[361][365] - During Q1 2025, the company repurchased 1.8 million shares of common stock for $31.6 million[363] Quantitative and Qualitative Disclosures About Market Risk This section details the company's market risk exposures, including interest rate, credit, capital market, counterparty, and currency risks, along with their respective mitigation strategies - The company's net income generally increases with rising interest rates. A hypothetical 100 basis point increase in rates is projected to increase net earnings by approximately $15.7 million over a 12-month period[411][412] - Credit risk is managed via underwriting and active asset management, leveraging Blackstone's real estate platform. As of March 31, 2025, there was a $555.4 million asset-specific CECL reserve on 13 loans[416][418][419] - Currency risk is mitigated by matching the currency of assets to their financing and using foreign currency forward contracts to hedge substantially all net asset exposure[424] - To mitigate borrower non-performance risk from rising rates, 86% of performing loans have interest rate caps or guarantees[415] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures are effective[427] - There were no material changes in internal control over financial reporting during the first quarter of 2025[428] PART II. OTHER INFORMATION Legal Proceedings As of March 31, 2025, the company reported no involvement in any material legal proceedings - The company was not involved in any material legal proceedings as of March 31, 2025[430] Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, were reported - There have been no material changes to the risk factors from the most recent Form 10-K[431] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company repurchased 1.8 million shares of Class A common stock for $31.6 million, with $89.2 million remaining available under the repurchase program Share Repurchase Activity (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 1,792,836 | $17.63 | | February 2025 | — | — | | March 2025 | — | — | | Total | 1,792,836 | $17.63 | - The share repurchase program was authorized in July 2024 for up to $150.0 million and has no specified expiration date[433] Other Information Three company officers, including the CEO and CFO, adopted Rule 10b5-1 trading arrangements in Q1 2025 for automatic share sales to cover tax withholding on restricted stock vesting - The CEO (Katharine A. Keenan), CFO (Anthony F. Marone, Jr.), and Deputy CFO (Marcin Urbaszek) each adopted a Rule 10b5-1 sales plan in March 2025[436] - The plans are designed to automatically sell shares to cover tax withholding obligations related to the vesting of restricted stock grants made in December 2024[436] Exhibits This section lists exhibits filed with the quarterly report, including amendments to credit agreements, officer certifications, and interactive data files - Key exhibits filed include amendments to a Master Repurchase Agreement and an Amended and Restated Master Repurchase and Securities Contract[437] - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are included as exhibits[437] Signatures - The report was duly signed on April 30, 2025, by Katharine A. Keenan (Chief Executive Officer), Anthony F. Marone, Jr. (Chief Financial Officer), and Marcin Urbaszek (Deputy Chief Financial Officer)[443]