Blackstone Mortgage Trust(BXMT) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Presents unaudited consolidated financial statements for Blackstone Mortgage Trust, Inc. as of March 31, 2021, including balance sheets, operations, cash flows, and explanatory notes Consolidated Financial Statements (Unaudited) Q1 2021 total assets reached $17.35 billion, with net income of $79.9 million ($0.54 per share), a significant recovery from the prior year Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Total Assets | $17,354,710 | $16,958,955 | | Loans receivable, net | $16,888,002 | $16,399,166 | | Total Liabilities | $13,450,617 | $13,054,724 | | Secured debt agreements, net | $8,124,787 | $7,880,536 | | Securitized debt obligations, net | $2,875,241 | $2,922,499 | | Total Equity | $3,904,093 | $3,904,231 | Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 (in thousands, except per share data) | Three Months Ended March 31, 2020 (in thousands, except per share data) | | :--- | :--- | :--- | | Income from loans and other investments, net | $109,152 | $100,636 | | Decrease (increase) in CECL reserve | $1,293 | $(122,702) | | Net income (loss) attributable to Company | $79,902 | $(53,350) | | Net income (loss) per share | $0.54 | $(0.39) | Consolidated Cash Flow Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $83,048 | $68,617 | | Net cash used in investing activities | $(523,591) | $(249,266) | | Net cash provided by financing activities | $431,693 | $389,077 | | Net (decrease) increase in cash | $(8,850) | $208,428 | Notes to Consolidated Financial Statements Details company operations as a REIT, key accounting policies including CECL, and breakdowns of the loan portfolio, financing, derivatives, and equity - The company is a real estate finance company originating senior loans collateralized by commercial real estate, operating as a REIT and externally managed by a Blackstone subsidiary[28] - The company estimates its Current Expected Credit Loss (CECL) reserve using the Weighted Average Remaining Maturity (WARM) method, incorporating historical CMBS data and economic forecasts[42][43] - An internal 5-point loan risk rating system, from 'Very Low Risk' (1) to 'Impaired/Loss Likely' (5), is the primary indicator for CECL reserve assessment[49] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2021 performance, highlighting $0.59 Distributable Earnings per share, $1.7 billion loan originations, 100% interest collection, and $1.1 billion liquidity - The company's investment objective is to preserve shareholder capital and generate attractive risk-adjusted returns, primarily via senior loan portfolio dividends[213] - Economic recovery from COVID-19 is gradual and uneven, with ongoing uncertainty despite fiscal stimulus and vaccine distribution[216][217] Key Financial Indicators - Q1 2021 | Indicator | Value (per share) | | :--- | :--- | | Earnings Per Share | $0.54 | | Dividends Declared Per Share | $0.62 | | Distributable Earnings Per Share | $0.59 | | Book Value Per Share | $26.35 | Loan Portfolio Q1 2021 saw $1.7 billion in loan originations, $692.8 million net fundings, an $18.7 billion portfolio with 64.5% LTV, and 100% interest collection Loan Activity (in thousands) | Activity | Q1 2021 (in thousands) | Q4 2020 (in thousands) | | :--- | :--- | :--- | | Loan originations | $1,735,129 | $228,900 | | Loan fundings | $1,491,682 | $478,464 | | Loan repayments and sales | $(798,839) | $(561,740) | | Total net fundings (repayments) | $692,843 | $(83,276) | - The total investment portfolio was $18.7 billion as of March 31, 2021, with a weighted-average origination LTV of 64.5% and a maximum maturity of 3.1 years[233][239] - The company collected 100% of contractual interest payments in Q1 2021, with virtually no deferrals, including on hospitality assets[236] - The total Current Expected Credit Loss (CECL) reserve was $184.0 million as of March 31, 2021, reflecting COVID-19 macroeconomic impact and $69.7 million in specific impairments on two loans[243][244][247] Portfolio Financing The portfolio is supported by $13.0 billion in asset-level financing and $1.9 billion in corporate financing, predominantly floating-rate to match its asset base Portfolio Financing Breakdown (in thousands) | Financing Type | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Secured debt agreements | $8,142,728 | $7,896,863 | | Securitizations | $3,508,303 | $3,596,980 | | Asset-specific financings | $1,328,352 | $1,201,495 | | Total portfolio financing | $12,979,383 | $12,695,338 | Corporate Financing Breakdown (in thousands) | Financing Type | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Secured term loans | $1,259,575 | $1,062,766 | | Convertible notes | $622,500 | $622,500 | | Total corporate financing | $1,882,075 | $1,685,266 | - As of March 31, 2021, 98% of investments were floating-rate, financed with floating-rate liabilities, creating a net equity position positively correlated to rising interest rates[268] Results of Operations Q1 2021 net income was $79.9 million, a decrease from Q4 2020 but a significant turnaround from Q1 2020, driven by CECL reserve changes and LIBOR impact Quarterly Results of Operations (in thousands) | Metric | Q1 2021 (in thousands) | Q4 2020 (in thousands) | | :--- | :--- | :--- | | Net interest income | $109,152 | $109,450 | | Total other expenses | $29,804 | $30,709 | | Decrease in CECL reserve | $1,293 | $5,813 | | Net income attributable to Company | $79,902 | $83,616 | Year-over-Year Quarterly Results (in thousands) | Metric | Q1 2021 (in thousands) | Q1 2020 (in thousands) | | :--- | :--- | :--- | | Net interest income | $109,152 | $100,636 | | Total other expenses | $29,804 | $31,068 | | Change in CECL reserve | $1,293 | $(122,702) | | Net income (loss) attributable to Company | $79,902 | $(53,350) | Liquidity and Capital Resources As of March 31, 2021, total liquidity was $1.1 billion with a 3.8x leverage ratio, facing $3.5 billion in unfunded loan commitments, supported by capital market access Leverage Ratios | Ratio | March 31, 2021 (ratio) | December 31, 2020 (ratio) | | :--- | :--- | :--- | | Debt-to-equity ratio | 2.6x | 2.5x | | Total leverage ratio | 3.8x | 3.6x | Sources of Liquidity (in thousands) | Source | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $280,126 | $289,970 | | Available borrowings under secured debt | $836,916 | $829,165 | | Loan principal payments held by servicer, net | $2,578 | $19,460 | | Total | $1,119,620 | $1,138,595 | - Unfunded loan commitments totaled $3.5 billion as of March 31, 2021, with $2.4 billion already financed through existing credit facilities[295] Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate risk, with 98% floating-rate investments benefiting from rising rates, alongside managed credit and hedged currency risks, and LIBOR transition uncertainty - The business model is positively correlated with rising interest rates, with 98% of investments earning floating rates and financed by floating-rate liabilities[321] - Credit risk from borrower non-performance is mitigated by a low 64.5% origination LTV, strong sponsor relationships, and robust asset management by Blackstone's real estate platform[327][330][331] - Currency risk on foreign-denominated loans is substantially mitigated by matching asset and financing currencies and using foreign currency forward contracts for hedging[336][337] - The upcoming discontinuation of LIBOR and transition to alternative rates like SOFR presents uncertainty and risk to net interest income and investment values[322] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2021[338] - No material changes to internal control over financial reporting occurred during Q1 2021[339] PART II. OTHER INFORMATION Legal Proceedings The company was not involved in any material legal proceedings as of March 31, 2021 - No material legal proceedings were reported as of March 31, 2021[343] Risk Factors No material changes to risk factors were reported from the Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes to risk factors were reported for the quarter[344] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None[345] Exhibits Lists exhibits filed with Form 10-Q, including credit agreement amendments, CEO/CFO certifications, and Inline XBRL data files - Exhibits filed include amendments to Term Loan Credit Agreement and Master Repurchase Agreements, plus required CEO/CFO certifications[349]