BXMT - Earnings call transcript Q3 2018 | Blackstone Mortgage Trust, Inc.

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Operator

Good day, and welcome everyone to the Blackstone Mortgage Trust Third Quarter 2018 Investor Call. My name is Derina, and I'm your event manager. [Operator Instructions] And with that, I would like to hand over to Weston Tucker, Head of Investor Relations. Please proceed.

Weston Tucker

Great. morning quarter and conference good Mortgage to and third Trust's call. Derina, to welcome everyone, Blackstone Thanks, I'm joined Head today Tony Marone, by Steve Plavin, Financial and President Officer; Doug Armer, of Markets. Chief Capital and CEO; we SEC. a of our with website night, press available been have which presentation filed issued our and Last a XX-Q filed release and are results, on our with the are company's that to call may which remind control. statements, the of everyone today's uncertain like outside I'd forward-looking and include Actual results materially. may differ

that risks most the affect of do some of discussion Factors update our a see please of not to Risk recent could the statements. duty For results, We forward-looking undertake section any XX-K.

We reconciliations, XX-Q. of material Mortgage audiocast non-GAAP certain you is Trust This and Blackstone not be and should consent. will refer press our refer for our duplicated call, to to and without measures copyrighted on also may the the release

core of of share, comparable and per week, closing quick respect the third a yield attractive net GAAP paid period. So, income reflects dividend while were third of the on of to X.X%. price, reported with based recap $X.XX dividend yesterday’s prior a year for We we from an the results. earnings $X.XX share $X.XX Last our quarter quarter, the up per

you that, me following I'll If have to today's with questions let know. now over And any call, please Steve. turn things

Steve Plavin

$X.XX share. first reported third strong per with the earnings BXMT momentum half, Weston. from of the Thanks, Continuing quarter results core

closing pipeline. to quarter billion now high since $X its process continuing have maintained team $X.X the our end. of close originations in originations closing We in or of quarter and Our billion loans to build productivity, the another

year-to-date of repayments. originations our on loans, and new a billion exceeding grown with $XX.X portfolio to We far more fundings existing than XX% have combination

Australia. Our quarterly and Hawaii originations office, loans and hotel multifamily California, in include

soon largest boosted totaled single productivity. JV contributions another a and came our quality formed penalties quarter again million of to from one completion, Prepayment We nice two addition still from our since repaid almost prepayment the outperformance. our also with to million. protection The quarter, underlying this and of & closings, Dunlop real contributing call the originations penalties had our Walker construction from baseline $XXX earnings that These effect. best we recapitalization $X.X in high the after build were estate, while was loans sale of

and While prepayment where real the a over originations from time, unpredictable consistent of estate asset is Australia, magnitude, franchise. this BXMT driving timing ground. business of up earnings. BXMT tend fees Blackstone with equity the the on in strong Blackstone supplemental to ramped be they of management UK and provide source continues the teams global Spain, year to in and the benefit professionals power investment

export to also been that to have spread magnitude capital have compression of loan as the that BX and Sydney able We low offices debt seen the have not regions cost US. London originators in in our same in the

adds to same In period BXMT So, ability inefficiencies over dynamism in origination quality our the internationally advantage flow the still these our year-to-date outside markets the scale, and US XX% where and is up of global of take lend higher. Deal US, to originations overall. last are episodic were the source ROIs year. market and

so have real as strong $XXX than been fund the continued of see demand more expect estate equity is sponsored billion equity new in that invested will fund private clients we require universe equity has that Our powder, still active CREE financing. to acquisitions and dry

portfolio, high. portfolio at LTV we markets The XX%. most, well. target of our fund loan the billion leverage To XXX competitive help on in XX% The equity market in with as $XXX trending larger premium outside issued best achieve target. loans credit major and the QX The stands average especially $XX.X added still Fundamentals loans, demand are special remains certainty we've secured million priced director seeing overall with our refinance capacity and more quality of North tighter. credit can and year-to-date, of growth the in spreads economic efficiently our the especially matter that generally quarter in LTV when America. scale are origination speed real billion situations our process. We with loans of expertise, in senior opportunities remains we originations stable, we markets was in and results also and estate $X.X and construction We

records of our The borrower our We from highly US. capital of of from market business to capability expand estate to group almost real built structure. platform a global lending senior banking matches $XX.X track match and our liability markets billion its it a leading potential efficient quality client. a portfolio, our initiatives Blackstone billion with equity the and We've and great benefits and capital funded $X mortgage -- and outside the scale origination continue multi-currency capability origination global cover the also

Our stability opportunity focus dividend, on call continuing Blackstone the dividend company to Tony. over highly I'll invest this to with and X.X% compelling And investors the turn remains yield. BXMT and to that, sponsored and introduce in quality to with

Tony Marone

Thank you, good Steve and morning, everyone.

core with quarter, share. net share delivered again earnings results we income of $X.XX of This $X.XX compelling GAAP and per per

$X.XX early which the from quarter, we significant income, loan compared run at a $X.XX items, remained upon typical up per stable mentioned range structures, income, which related earnings $X.XX we fees a capture as reversal comparable in rate second earlier. the our economics such XQ, and to dilution In recognized per XQ XQ, prepayment as quarter. acceleration incremental while consecutive of as our during for share in the results Steve from slightly reserve the benefit GE issued second these for shares discussed in notwithstanding prepayment the we $X.XX quarter, income Adjusting the outsized of to we XQ, well the For prepayment. an share significant recorded $X.XX our of $X.XX included fee quarter, a

of are is performance, book additional earnings earnings dividend on and covered potential on. $X.XX able upside prepayment and We the our and as I earnings the events. material with we $X.XX respectively, the XQ our other income are additional strong proud repayments loan with of in which earnings periods well business, At generation value to consistent note demonstrates $X.XX further retain and before XQ One generated from move to value. book in or

as balance previously of recognized prepayment loan a participation quarter asset we this One larger fees with whole the record loan the gross a but we senior recorded the on sheet, relates loan included still and to as an syndicated, liability. sole our

impact our share, fees. look net makes interest for on our accounting, net income relatively loan accounting expect this as I this expense interest is we to As of $X.XX gross low additional our a than provide $X.XX expense cost but just a and this of highlight gross capital, per incentive of up net of of of interest recorded result of this clarity, $X.XX we a quarter, position. one given really would the earned higher fees

through $X.XX our million stock book program value. we shares and our of to through well increase value X.XX a business July X.X in capital to offerings common $XXX issued offering raised accretive share. growing value, at stock times million X.X book underwritten per an of XQ book as in fresh an our Turning quarter, shares of at-the-market contributed for These average this as price million

more our year. billion $X.X this quarter, time same double slightly total closed year-to-date earlier, we new mentioned Steve loans originations to billion, of bringing the than $X.X As last

origination This future in diversifying our America opportunities. and outside North of XX% increasing business pipeline total quarter portfolio loans two further our first of includes loans our of Australia, our to and

other excludes contracts. embedded GAAP XQ, of of $XX.X with contracts, quarter net Australian These As investment index we the a currency effectively to an our income currency and currency. for points currency forward local are loan existing so comprehensive CorePoint remaining natural financing, LIBOR in a through dollar included last USD closed forward quarter. which provides forward currency a the Australian total is same foreign mitigate lending We in hedge points our to borrowing however, portfolio earnings. are additional which to address by with roughly the through as swap which currency investments, exposure with foreign the recorded combination line and hedge expect billion, and And component originated accounting exposure in core of the in the

$XX.X our our ratio stock for as asset billion reflect on the return. the loan. in During times business. investment the assets retention $XXX well XX% net issued CorePoint investment last loan to net in GAAP single only $XX million million to component another L a quarter the statements participation billion total consolidate securitization, our XX/XX, portfolio Morgan position, grew loan retained which we our generates of We during to investment to sheet. XX underlying our security our common This JP alongside financial who the our pari-passu subordinate of do we securitization that securitization equity Including September only contributed third balance $XX an drove securitization We instead the quarter. and risk quarter, in a other as down times of XX% other as as from million X.X transaction X.X record the the this owns $X attractive plus not is as debt

into liquidity sheet million, loan move with the Thank Steve to As the always, our of we mentioned into sources investments. for the the remain and year-end. closed and which that, call. to your we on accretive We robust pursuing available expect open our with you balance ask senior deploy I low focused stability $XXX as we to support earlier, the leverage, capital operator finance quarter of will pipeline

Operator

line [Operator Instructions] from the question first Delaney. And of Steven the is

Steven Delaney

by two and rating and number we XX-Q, was but congratulations reviewing your morning to on noticed were loans appears quarter. of of I most the increase XX, risk XX there X it the an rated in the new were specifically rated. three Good another loans from strong section, about when

upgrades. on some you was comment there's and Could appears it the that So if case? confirm that

Tony Marone

Yes. Sure, Steve.

seven in this past originated as those a portfolio they're an portfolio that progress from X often know includes Xs think, upgrades, quarter, you business are were loans seven a The X the upgrades in to And, they a loan at part downgrades. plans, typically every the no X review upgraded the loans quarter, we Xs our repaid and we level. of rating. as risk through process. and at had that in revisit typically in-depth updated Every to I

be script at this have quarter of looking in reflective quality the terms upgrade is that is I you that mentioned we that during – of that. very saw it of in to the the the case, it's what but and careful the information and portfolio So means, credit strong in trend my

Steven Delaney

asset, the suggest absorption of sort or better terms I project, that projected you the estate real fair with in and value mark I of would least on just are you fundamentals, at think revenue that am some the specific Steve So not hearing right? fundamentals

Steve Plavin

Well, so that is I think, along seeing it's you're business that progressed we really assets finance. that the what transitional plan, the

when or be So, upgraded we might it its and XX% building or could leased finance and credit we gets XX% X X. XX% XX% a then review to it or again, rating it gets XX% to it – that’s from -- leased begins leased

really assets, the as they and in it’s portfolio our a quality times, it's credit or the credit anticipated progress of along our plans. view of So lot business migration of and improvement

Steven Delaney

just And XXX just were in Australia. some believe. on indicated type, provide -- Could other. about property I loans million color They the two on follow-up quick they in terms that? you They a of as were both were new combined

Tony Marone

everywhere we’re loans mean, in sponsors. you markets concept. would the moderate I loans, general, making the LTV better and transitional world are in in I are better and in there Australia similar say

and hotel The local X.X% and office portfolio first good Australia, a yield, two LTV sponsor. was performing loans assets, strong debt one XX% of in

and outstanding a construction sponsored the mitigated credit. to again pre-leased facilities, and was loan. project one risk by Goldman two AAA PPG It’s really a data an expansion other by center, that and The the to pre-releasing. the existing credit hyper-scaled was completely It XXX% is equity really

Operator

next is from The Stephen question Laws.

Stephen Laws

pipeline keeping and raising Could protected from about capital as maybe a investments that. you your far Can here your period maybe particularly maturities talk, talk prepayment look capital you are about at opportunistically you as how job a deploying good of time. you've for done deployed, against

you You of expect provide what extended four quarters. to to but payoff can kind the maturity, you two be like to maximum do or the the next over security, talk

Tony Marone

in the tough to prepayments the notice usually of in out. but our compared days in The we've lot are amend and continuing period this reflect market prepayments of call loans to in beyond quarter our call required sure to active through lot a Steve, it's the originations. XX performance or really relatively necessary management a success were A changes improvements very outside us are to protection, borrowers to of protection light, underlying advance. making certainly loans that maintaining in estate well loans the Yes. predict the conditions asset as we're real had

Going excess forward, able to but of significant originate grow and do we those have expect we been prepayments, portfolio. our in

going it’s expect in obviously, repay. these to get just just we what probably ’XX. And of it when. a matter It’s matter repay sometime loans are all So, that – now, will a repaid doesn’t

committing a we part on again, process our a As repay, and review we and to do prepayment of a it’s might but very replacement. it interest they’re or estimation really don’t go that it, be until best think we think we credit close actually of of where sale about but just when quality, try visibility sponsor’s dates, lot to to get

Doug Armer

would by lot I seasoned thing when level took by we've that sheet on and of XXXX one GE, to balance XXXX, Stephen, that up is to loans newly it’s very beyond originated now comparison built Doug, with, the a that loans. add we from The definition,

bit is a random a by portfolio so lifecycle but earlier walk And point than mentioned, as loans on of were of little we're with we sheet. comparison lifecycle earlier average a average we're a larger in the of of on a which bit view, in balance XXXX the from in loan, little course Steve the a

it sheet the in bit in did youth a life in growth of than the contributes a the sort that certainly average So the XXXX-XX to little which balance will longer seem period. portfolio, make weighted effect

Stephen Laws

for building it industry less continue opportunities. seeing prepayment as new is what you're the a maybe little you're of investment you maybe, bit pipeline there, you seeing about less as out talk protection, And look you're can are they the others competition, in on investments, to what from covenant, price, new competing

Doug Armer

look in to for that new markets continue like. the obviously opportunities we Well, investment we

lenders will do We less are competitive, larger much to less have deals at that on say, big very me because let big, that, focus a the very bigger able are vehicles.

I about active we're -- us deals get the fray. talked that that in out of speed the that not or of where maybe everybody's certainty have also Some or competitive helped jurisdictions require

$XXX private situation, the commodity and mortgage depends million there's more a see the On deals, relationships funds. loan maybe from the It million other $XXX the REITs that size, and with. US from or competition. more We in who from debt it sponsors deal are upon banks, the

especially no, to able sort because basis generally our want creep. the of it we our the compete timeframe. of so of of but sponsors, And is seeing in haven't history XXXX Most lending, investments, but We’re lot the cost terms of get rate. in of competition, equity the the XXXX, the favorably, leverage we their what on sponsors like seen margin, competition, borrowers our meaningful you're and on impact given fund competitive capital US, we're nothing responsible to saw the now with a the primarily in and

base as rates of and decreases competition reflects in base of absolute with really a anticipated result spread in the And the rates. does increase spreads rates some the increasing

finding overall amount a is it to winning accretive but opportunities for So fair good competitive investments. us, we're make and

Stephen Laws

market, condos And as one can maybe in like luxury less attractive that point you don't your question, asset here property this in to if well last talk you softening on cycle? to the seem view curious you but level I maybe any like a to hotels higher at attractive, as types find be get may, types or or Manhattan maybe

Steve Plavin

have don't don't avoided any We have luxury We've malls. We in any regional BXMT. condos. suburban

the hotels near that to so term our real buildings, real retail in percentage view the coastal be Internet the physical general a suburban or and suburban cities and retail real those innovation almost that of winners constructive office tend more have estate, just tend We in is especially We We tendency physical to everywhere like down have service more estate assets, those tenant much cities, of with terms the the challenged. again, reflective demand gateway Our demand. of is tech the like X%, some growth to general, on avoid, multifamily and and full And in have markets. dynamic cities. world. housing, with typically in

hotels markets. where we you huge larger of cities assets. to owner that On lot and it’s there's some that's hotels, barriers these see most worldwide. so major hotel. generally think We're where there's And activity increased us active, for opportunities has in competition, performance good a of improved with The in a economic

great we have into don't. we So, insight want we and be where to where

to between And percentage, of still continues our so largest typically we're of you've doing. the are percentage to hotels what and portfolio about which be compared a XX% and minority seeing office, seen, XX% XX,

Operator

the BTIG. question Ben of line is from next And coming Zucker the from

Ben Zucker

morning, they you're you of to I that go market to States. back about thank in that Australia, pretty Good and you guys markets heard and questions. but making taking type my underlying the much wanted are loan to environment fundamentals the I international can for Europe you landscape. the and same the you differ make loans comparing the United between and would how US, the talk like them then abroad

Steve Plavin

there demand. outside see interested we the the in markets the real the estate. estate, for dynamics that just fundamentals US in We There's regular do that The US. -- in We the a do investing. very and what quality favorable underlying our biggest opportunities and in we’re standpoint, the the US, the a better Australia, good. good quality as certainly differences consistent banks more all international more a fund good generally that that are or are high seeing Again, real little solid certainly palette, a major flow episodic. The broad major are see demand But, ROI bit We markets the much don’t ones look less a it. wish spread have In an from of was mandate across specifically, and better from gotten markets see we're standpoint. generally standpoint meet than pretty conservative. more or

So, available loans, like are we’re to us thing. Australia. gone bank UK, as in look some of – now. loans And The were have that market we cycle. the at not they to in looking other were our the be are deals they same have but banks last as might two aggressive These might the first

follow of had to same great we they fall than where Blackstone lot seeing we so, Europe. these ground opportunity A client more base in private clients. It's more Australia been, get we’re and for active are the the to equity And regions, in now us the a tend real into own do and like franchise, there our with clients people have on of full benefit US. estate we the the

Ben Zucker

That's and reach. capability a this unique broader more obviously very platform’s of your is helpful

of to just December Turning doing structure, just are that the you in Would coming liability you're this I think a a Do notes think be willing you what year, redeem you at of the are XXXX your that? or going looking month. for beginning are noticed speak to plans I your to due those in over with to those? refinancing

Doug Armer

Ben. Doug. Hey, It’s

those think year. convertible important the good issuance done beginning those which of at market. will a cash, note the off is and be and an of this I We for distinction we’ll redeem year paying deal the that clear last in been summer we've in We've

will sheet to our got small the continue refinanced, since sense, notes our issued sheet. those. can already leverage access markets It's and consider how evaluate we given on we has XXXX that in great but when balance terms relatively balance options grown of those number, in the to a So we've capital managing you

notes, with general in were end going with road. mover it's terms arrows of very We capital It's those So well. it's five certainly the performed and the needle in happy forward. in of quiver structure. they’ve transaction, one product happy not very the our With a we're a year the real our type of

Ben Zucker

like the while of paper. that picked you security debt piece side, you'd -- be that that I risk about nice retention quasi bank more that you yielding that, and that don't convertible And Can equity speaking accretive. help on up, use correct? on Is make able and debt the put to but a that's to you we're think note can finance that as it

Steve Plavin

our you fungible. And obligation say make, any true. the investments lever notes about that That's corporate that and can we balance sheet convertible is a the that as of capital

specific separately that we're levered our SaaS and we it yield all in in a is although of That's the you to way, it’s fair accounted topic, and in financing level, think non-recourse very asset So, investment for It's can basis, retained good perfectly very net securitization about of think the by as of a a and That episodically. the our it. priced, so relative investment, our financing trade, which portfolio, large way but invest on it’s while represents sort at on loan. a position. that that of sound and it a deal, on attractive structurally efficiently a non-mark-to-market CMBS resulting to

Ben Zucker

-- the real for seems been I obviously through most on little get process at of though curious I'm normally into remainder and like or the to And started quarter, year in going a -- borrower quarter the there the Since to of bit loan first it end it to there's or active. September through. going your lastly, pretty is started. my then do been soft XQ, -- has time go really forward because even the takes understanding think making a rates fourth is little pipeline to incremental kind any out of seasonally you the for next XQ impact the fourth move quarter just of be maybe is healthy

we when you a spoke? are feeling bit rates higher and Just now seeing what the on are that last little street than guys

Tony Marone

Hey, Ben.

we margin, borrowers and looking impact and And a rate I re-traded far. on just thus rates our rates deals an from that fixed you not of cost and some again, from rate haven't the will closed deals close think if do continue fixed at to of impact I most some what are that that, of be on may aren’t get would maybe might borrowers any seen the acquisition think have floating move, maybe borrowing their see then standpoint. though that deal. impacts rates

So a up there's fall some be that little opportunities movement might and out. anytime have maybe to more ability have that beneficiary in bit of financing you the rates, Hopefully, certainly pick we’ll sharp a deal we’ll the gone that fixed wouldn't going that, rate forward. more a be contracts or yet, I of get of see it will we bit things there have some to surprised that opportunistic haven't be to little seen but some but

Operator

The next question is from JPMorgan. Rick Shane from

Rick Shane

counterparty to really base behavior has the that just protection obviously borrower protection question, require to my the in Ben rates get there in on terms in or related of asked if sort but follow like. the on up to that an you to well sort of rise. swaps Is take this as or movement rates, risk your any any borrowers of impact continue

Steve Plavin

We we above almost by pre-determined completely That’s provided us rates on a caps. interest require banks really in almost worthy those for are rising and insurance rate all borrower’s those a and an and collateral the additional in cases credit instances. have level interest that loans all to policy rate caps posted purchase

So, typically the or that move to for at LIBOR it rapid insurance moves those bit potentially LIBOR. does with event which in the somewhere pace us little -- us higher. are in continues LIBOR of caps, X% Xs over a and with provide a

Rick Shane

it. Got

your from fallout on the that actually duration rate and other only there. implication in originations, could it the the some the delay And that, not will the fixed potential impact just transitions. Okay. loans talked market for refinancing could then it to but Is you the opportunity about expand, continue

Steve Plavin

market those in delayed to loans. of first transactions away I occur we loans. the going a [indiscernible] commitments likely parties walking period lot or think some hold where a we sort that transaction on borrowers little that bit deals and possible. of a forward some our it's typically duration deals from bit less on sidelines getting repriced and being We cancelled. CMBS -- so some of our could more from and funding of that a saw in benefit Any lot XXXX of market time quarter great to little with saw definitely with or dislocation of lot yeah, or sale move We a volatility the during put of could and

from that we benefit So, do how it see these think and of we'll of kinds plays we periods volatility out.

Operator

is coming from The of Jade KBW. question line the from next Rahmani

Jade Rahmani

quarter’s loan banks the loan repayment? growth, what in are moderation the odds actually Seems with seeing their at declining are terms the in drove What of portfolios modestly.

Steve Plavin

This is difficult to any again one our quarter. really Jade, in repayments explain

the duration over to loans anticipated. time, think I what that beneficial see us. of was the than it we’re for maybe extended bit our all nice and the there repay of little to definitely going had extend see a longer period -- average It’s of loans out we

pushed into likely its but initiatives see I a decision other year, lot occurred we'll those that now get made We've get the longer adjustment this get some on XXXX, that by going to anything for strategic borrower. when reason so repaid loans less loans half of maybe an And I don't is terms our is seen asset of asset the that management trying other some evolution. the timetable. talked are where of think a see reflective repaid prepayment about other will and we've anything so in anything we in their no no of hold do to terms or for maybe than could have aren’t that making amend in than the of loans There's second to are

and we it winded that long make made the part lighter of little basis that that on very becomes very the quarter. we why leased saw was in to proactive repayments significantly the a bit If third our on loan that do to an prepayment need a it least. we adjustment we if as So activity that's to not defers of hold asset, portfolio a and reason you asset, definitely want the to in some

they’ll hopefully, but goes like going see so, that, And stay light. how mean, forward. I we'll it we

Jade Rahmani

looks extended it of XX-Q, referring noticed that that otherwise spread. upsized loans thing and And prepaid. you’re one term like in hotel that the on just Hawaii that in quarter note, this in we some adjustment the the Maui, in have Is the one could with was just loan loan to

Steve Plavin

and had years in we performance or from date, off months dramatic when a they improvement able probably to by That loan five-year Yes. at hedge borrower NOI a provide. of essentially the loan looking the a and for and hotel the on so that sort later. pass plus in improvement to the it two to went new hotel XX maintained to XX% loan were contract were

equivalent of new on but call protection, sort able between where of to, would we’re a amendment not, on was where the So, was rate new that a our as loan, midpoint loan that that a existing because to a loan loan was that get five maybe rate an the of and structured be and the asset. year loan of

So rate, we a existing solution. on the the of loan -- because the ability nice win on because of with still were a able of provide incumbency our to and sponsor

Jade Rahmani

any in the unusual associated And quarter? that modification were with or fees there fees

Steve Plavin

repeat sort would would between overall where loan and we exact we a or somewhere we would the would previously fee where economic that package be in sort remember of pleased the just don't of say reflected. new were were but very dynamics, and I with again, general got. get I I in

Jade Rahmani

unusual Is the outsized the inclusive of inclusive any all about -- initial amortization. was to accelerated because above fees origination of of acceleration of the $X.XX. on the any fees, items, example, impact normal business, sort early prepayment $X.XX quarter $X.XX switching not there that but amortization it's fees, was for at Just that part of of commentary of about

Doug Armer

it’s hey, Yes. Jade, was. It Doug.

non-recurring them $X.XX number. or as recurring, characterize It's extraordinary hard or total not. the So the to is

I deferred bit little origination a the from think tend fees, lumpy fees as definition. be penalties to amortization distinct prepayment of more by

So, those some you general are term. normalize some loans level, to need always to for don't at of degree because income, but there as full a prepayment we go experience matter

you it's recurring to out area great So, of consider broken the total how a much or as We've that amount. non-recurring.

pennies few quarters, back that every had regular If two from numbers. see some quarter you'll on you last you’ll historically, we've you look obviously the see But that real historically, coming in basis. back a if lumpy a fairly look

Jade Rahmani

management for if just Ozarks loans large discuss you the I because asset and think impairments wondering surprised approach Bank books so of took have I'm been was sure long. could it in your the quarter the the broadly. saw on two to you investors, more I

were think ’XX. in I originated ’XX, these

level NPL So, what can an about the can going there. give you performance also the just Spanish you borrowers. with say is to deal, for example, how respect wondering update And with of on, if proactiveness discussions

Steve Plavin

an in we’re I asset Sure. extremely I proactive offensive both It's management. defensive would critical, way. in mean on and just say general, our

for that Given our loans we're identification of has to of terms issues success that keep extremely credit of most absolutely credit might in them anything loans our our we around, achieving have of no on issues asset our but or early trying and longer and few management. going mindful issues portfolio, rightsizing way been is management wrong duration, be in the in asset energy critical

we're process. not portfolio, our going are rating if wait, and there in to our risk And we so so And have see issues identify we're will think, them, going again, them. quarterly you to I

that historically loans. rated had both have both They've we for. been GE they two loans were We repaid,

So continue be and you’ve seen to will us forward. the that in past them resolve our and identify going practice loans

it's As to really the relates Spanish well so it gone deal, far.

in a underwriting. We're mostly for been underlies related. activity in And large good it’s underwriting. $XXX There our aren’t about underlying progress our of that expecting the the and seen the has in which are portfolio the portfolio, a REO with – housing sales very performance loans, of NPLs of values, the a of has of the in in We performance of the our lot closing. sales those a We’ve it's third is million lot Spain. the familiar, who our secured total by A portfolio, MPL right underlying already portfolio line book, seeing been in is NPLs results spot of those XX% in on collateral.

to continue pleased as future. progress very it we’ll get more far the and about report in we updates with we're So the so

Jade Rahmani

clearly of running Just that. dividend in in date, terms core lastly, of to the earnings excess

there the maintain need would taxable based for you a dividend, a on Assuming dividend be income? special

Doug Armer

distribution in as for It’s a special of be need a wouldn't There terms a requirement Doug. REIT. dividend our

to on relative the on requirement very put benefit But distribution and value. what us, core of of there earnings we're book is the in those earnings any dividend. terms REIT to retained accretion pressure these doesn't different a I think our -- focused the string as

Operator

from of is question line next Wells the the coming And Fargo. Don Fandetti from

Don Fandetti

secondly curious Steve. a I leverage. do, three over has more you if obviously and convinced in was been companies internally has that then moves, slowdown, six seems recession look cautious more insight good months market would around guys just the economic you markets, risk of steady? into are Question, real it very became window estate. any in you an and Hi, if in it Is a a like last moving the to that the at natural valuations for or the what direction, terms another suggesting little that, message commercial portfolio more and we Blackstone And equity

Steve Plavin

during underwrite always I lending year making typically term We're making business, during The presume recession bit term more rates will five at, there extended of years. think, it rates possibility being five trend have loans fully -- possibility least, if been of cap that the a at -- that long was might. in possible. looking our sort especially, of little quite always we we a seems higher the have we're We've cautious. that to and or that term a

while have we we've world sort way of this now. so and at been a -- looking for And -- been the

kind slowdown recession. with we conservatively any loan built portfolio sure to that company, individual the seeing our the and term term term loans So ground to across recession, near economy whether, match fundamentals to and the us it feel endure definitely to near don't of us anything a are we're a any whether on get think issue, or and a that will through result lead as I we -- capitalized we're strong debt on occur, but of be not our in see the that make credit may events

time, has just or we're seeing term it So based to ownership the be but in near not any indicators our your calculus footprint. real lending upon all

Don Fandetti

And or is you've around sort -- anyway, good the thing? market, got view there it of is is a incrementally there and your you that the talk of been sense about point the so caution hasn’t to maybe as of committees operate is sort sit growing internal

Steve Plavin

if I growing think that know again, I there's sense a – don't of caution.

I it make the prior and has think at that in being the a we we're that of really we're to it I years term North more bit again, have but been so has again, feel mindful, believe investments a anything little recession. America certainly that – than event, acquisitions I in the market it been we near and with term equity side we’re time, bit any looking but we over value and maybe it’s where is there's think is because it’s value valued don't to certainly really economic fully the think definitely in near a us -- – really lead fear not know that than will more we're little harder on than will seeing past, where go

Operator

Bank. the And question from line is Bahamondes our of from Deutsche final coming George

George Bahamondes

good morning. Hi,

at around peak ask up market potentially the really US being Just levels. follow question wanted point, and a near last on or to your

you typically primary spreads focus the what loans Do in on you can you see seeing and exposure you abroad abroad be call your XX%. versus earlier sense as if for large States? get, can how referenced like international provide any United exposure markets international what opportunities the have color may your that a is might now you for in You look the around

Steve Plavin

so to capital these function exporting little a come I being a job creating gives I markets. in It here international the strong transact internationally flow not sponsors wider and when transact. is and think months because our our have deals a team markets, as are much We're again and to from the when us is has that really, we're advantage our It’s last borrowings again this of harder to XX that these been a an think, in more of cost seen there US. it nice compression because is big such get episodic. to competition. there of international than markets in have less call spreads the interesting in we deals of to that the the and multi-currency capability beyond an standpoint, a in US, the spread seeing as we've markets in definitely the capital markets these in predict that fortunate presence ability we go early a done or have many Doug in

Hopefully, opportunities So more exposure in portfolio opportunities perhaps seeing our that opportunity, points a of XX cover. we're we but grow don't of we US. whether the US we lot are that don't that spreads we so to we or the know to more XX the international have If today. the be markets see lighter will, in probably outside on see on the beyond the international sort that XX% we're I will best basis of them. it for just then looking allocate, we capitalize will

Operator

back Thank hand you Tucker. to let over And Weston me much. very

Weston Tucker

for morning. this everyone Thanks Great. joining us

up questions, any me after follow with have you call. please If the

Operator

gentleman. ladies concludes much and for today. joining. That call for very your you you conference Thank Thank

now may disconnect. You

Blackstone Mortgage Trust (BXMT) 24 Oct 182018 Q3 Earnings call transcript