BXMT - Earnings call transcript Q1 2024 | Blackstone Mortgage Trust, Inc.

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Operator

Good day, and welcome to the Blackstone Mortgage Trust First Quarter 2024 Investor Call. Today's conference is being recorded. At this time, all participants journalists in only mode. [Operator instructions]. At this time, I'd like to turn the conference over to Tim Hayes, Vice President, Shareholder Relations. ahead. go Please

Timothy Hayes

Chief filed welcome, of website with our of SEC. a risks, XXXX press are and Tim outside and which Blackstone Trust's company's our Actual factors available Pena, issued remind have Katie on a subject Mortgage Chair of other been Financial and call Marone, Good forward-looking control. to release and like XX-Q results This results, Officer; our today's Conference everyone, morning, may Call. Quarter Austin the are I'd Keenan, Directors; presentation of to Earnings the that Vice by differ Officer; statements, may I'm First Tony and the and everyone of uncertainties include which Chief President morning, Executive Board to Executive Investments. joined Johnson, filed today we materially.

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

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

$X.XX GAAP share, to quarter, following respect call. Katie. first we over per with if Please $X.XX to and of and we now charge-offs respectively. loss have the ago, earnings me For dividend share I'll turn With you per A today's weeks reported first net per while a questions the know paid let to $X.XX that, $X.XX any things quarter. were distributable a few share, of distributable prior earnings

Katharine Keenan

issuance travel Liquidity we quarter direction multiples into above see levels. real ago CMBS the the has estate. Tim. for to market positive continue with to A year Thanks, year, a returned of

below across New is down XX% asset which to XX% classes. dramatically, peak supply starts

compressing new continue entry of this expectations with portfolio, attractive capital more values majority strong an the cuts commercial we for are of With private lending investments. performance markets. point backdrop, for cost creating We overall believe loans. ballast been see of have bottoming, spreads subset is across rate While public providing for challenged of lower, in on hampered, the our estate the vast and to real pace

portfolio liquidity our over charge-offs, CMBS the $X.XX Our $X We our remains performing. produced transaction refinancing levels, distributable this quarter ending of we the largest investor $X.X prior XX% And through repayments loans quarter, of We office dividend. near-record a demand. one at earnings with maintained including of collected billion of to $X.XX covering deep billion.

transition to real continue reset normalized definitively path at for This necessary point selling more to recovery earnings a for prompting longer borrowers We of with our ongoing position. year. cases, and the structure revved both sheet values put our which experts floating estate well to we've on liquidity this and the last on a this where period. to seen we fortified take lender, of moving office as balance management, address our plenty And don't. where capital prepared the collecting will platform, of market. Blackstone and marshaled our liquidity more more And and prompting In enhances rates, for pick over $X.X the billion creates along more We way the they and navigate build. both additional income But with or of our cycle is of our process see the financings course, time reserve commercial and healthier $X.X pressure asset rate across borrowers. to impact We additional good value, refinancing resets bringing experience in But a The insights over reserves as last up borrowers higher levels. equity globally. to appropriate credit months, billion with the while from reduction they our and real estate is quarter. bear largest a from incremental get their credit losses owner in transparency, equity BXMT more the assets, XX

actively portfolio seeking to We business. are the turnover to core to and through move cycle lending our return accelerate credit

a strong resolved for approach show stability outcome strongly and if generate top started with our We past credit-enhancing Some their income. continued workouts the of This borrowers enhancing across in incremental highly quarter our as granted expect its the of this this for significant importantly, and maintain the in XX foreclosures, sponsor X company, with on for million modification, sponsor free capitalize investors. well-capitalized contributed New bankruptcy. ultimate office XX% liquidity employees disruption progress newly value-add our York control to faced WeWork credit time new sophisticated, these long-term enhanced firmly with largest a sales, on Blackstone aligned. conversations the to recent we economics. or average. approach, our new with from with positive X performing the Others equity $XXX CapEx. unwilling negotiated our down our are We the And quarter, one modifications. following quickly portfolio closed X just or of loan demonstrate extended increased equity next we in disciplined result loans, impairments business X no Of total, respective proactive Most our loan pay loans, commitment. the to asset the $X.X in will we the to was of a core the commitment We of collateral. XX% in final real-time we City of and believe plan exchange we equity, and quarter, these repaid quarter. sponsors asset accretive pursue billion both opportunity tests to XX which over balance modifications through representing extension restructurings best and And renovated the shareholder and agreed materialize multifamily the where apartments, of loans replace they taking are options Included portfolio We our of interim maturities a surrendered office continues loan performing this values. were that or or presented value minority paydowns as component, of confidence indications and

WeWork In ended multifamily collateral, the multifamily, constructive are of the in with this shortage we given virtually quarter portfolio. result addition on this Blackstone, at XXX% no us long-term to for modification highly portfolio BXMT, positive exposure the Across our our leaves structural Within housing. ongoing performing.

renewed up XX% or then. since and of of rate weighted the NOIs first a $X.X portfolio demonstration replaced loans caps quarter of commitment. cap XX% Our a with across guarantees, at benefit origination our from of LTV Across billion them XXX% clear with average expirations, borrowers multi-loans

markets well. Our coming stabilization largest have We in loans upgraded are in are Dallas, quarters. multifamily and reached performing concentrations and X QX likely in City which New the York are that repay to

of from markets' believe long-term from compounded and supply watch X that Given users headwinds capital fundamentally and the and higher bring and alike, are the credit will cycle temporary are the markets, timing portfolio, we additional believe our these placing loans, of that impact demand And contained. In follows a also historically we certain but the inevitably in listed rates, by insulated portfolio. for these period with the on and any pressures will highly distress. Sunbelt market investment to to and remain multifamily attractive together is will best stable closing, XXXX dynamic, liquidity clarity our focused largely be just ourselves marginal position portfolio while of in we we opportunity owners these the capture X%

and We will a resort to committing senior given selectively double-digit is up on on strong are opportunities XX% a a intellectual Real and loan our are estate one take relationships principles investors XX% lending Debt driven that $XX at core position, the the business, analytical debt have opportunity return. Estate These quarter real deep we across market. expertise, our to entrust the creativity of lending which I to for Exceptional not always sign. the advantage. over Blackstone strengths million following unlevered to Strategies will all this capital, have Tony. that, knowledge, And with loan We call the waiting hotel they today performance underpinned liquidity turn $XX with such drive sets now the through to cycle. continue post and result available billion our and will end, our and platform clear capitalized yield, a their of This LTV

Tony Marone

GAAP the In $X.XX quarter, and first a share reported per loss BXMT earnings Katie, of and good of net distributable per $X.XX morning, share. you, Thank everyone.

therefore, prior to investment. to distributable dividend supporting distributable of this coverage. the as of realized it $X.XX REO this and material believe We positioned time added our the significant impacted to asset, and demand recognized reserves, acquired is newly we quarter, $X.XX and for helpful earnings asset earnings ongoing to submarket the investors as Silicon Excluding to vacant, well management assessing renovated asset share. is when leasing the earnings value. of We title which more located consider first a per of first loss existing several capture but progress made flows realized or earnings dividend losses, reflective we crystallizing share, as labeled legal book our of metric power the per on our disclosures cash without desirable business resolving losses our million in office in quarter adjusted charge-offs is a loans $XX were This We for campus initiatives, our currently impaired DE, CECL Valley. CapEx over non-GAAP but need

impaired resources complete amount. the balance of than with manage collateral fair loan current the The the resolutions is at value of accuracy sector still resolutions, our beyond the we another the asset in office expect are XX% believe quarter, million XX/XX recovery with losses sale of our liquidity of We market broader property lower achievable Blackstone realized validating asset to the goal we recorded its in the last is limited. the maximizing second quarter, prior our an CECL value of on sheet, loan with process. in to discussed line leveraging reserves, for from what office collective $XX Further underlying the platform our loan line with on the

resolutions noted future As BXMT. focused also They generation. loan are for catalyst an important for are earnings earlier, Katie

loan as be any $X.XX expect to impaired expense interest we income not this time, per $X.XX we it per loans, interim, drag from advance cash investments. In reminder, new is the new with loan this of loan longer-term burden the eliminate in resolutions. cost earnings, we to portfolio net will share generated by the to value. capital contribute we from of near In in into BXMT's benefit impaired earnings do many these the these and can XQ will recognize that earnings loans, capital repay loans, share. term, the a earnings principal but to its net from contraction resolutions outweigh eventually currently modifications book redeploying debt reduces in continues results, associated and impacting support the but earnings and instead, these recognized expect recoup more quarter. generate flows our and our It immediately of tailwinds recovery not loan As loans variability applied earnings balance Over currently by impact

credit, environment outcomes and the of performing. reflecting and power we for factors, a plan on rates, considering Directors the including As long-term upgraded X each quarter, within multifamily the now new interest impaired Board once assets progression a dividend business, X again past, of broadly hospitality in on loans resolution are credit of and that with determine earnings our business More the we've discussed loans our originations. our variety continued we range this quarter of of focused

borrowers For were equity strong current basis and income and injected these our X generation. to loans, new structures capital cash improve sustain reset

were this that quarter, which U.S. on office impaired. loans We also were placed and XX loans cost downgraded of recovery X

reflecting Our CS million, reserves new to these quarter-over-quarter increased million impaired $XXX $XXX by largely loans.

in $XX.XX are March Our as aggregate of of embedded per share book of $X.XX XX. value our reserves for fees

our face to we and balance no sheet built driven is in on environment, our match stability which are pressure financing BXMT's key mark-to-market withstand our business sheet today. capital launched which on solid market Importantly, and constructed the tenets the term to diversified current underpin in markets funding provisions. sources, These we and XXXX continue balance remains the

our billion. This levels the while reducing to and specifically. and face in financing in continue versus and million QX of yielded range, funded $X target X.Xx at has Debt-to-equity Over QX. past fundings, billion near-record this proceeds also as significant higher our repurchases, of compliance within value, of discount lumpy, generating to has we quarters. have quality exceed reserves, balance consecutive which asset for increased to of of we while collected clear over dynamic liquidity with slightly year, see corporate million trend $X.X a continuing Repayments we including $X this our a gains can CECL BXMT financial quarter $X.X remains X the covenants. And $XX loan with to office. $X an remain overall highest executed million position quarters past but X note This that and liquidity sheet secured result be net level billion, million cash by for repayments all in demand increased $XXX included senior fortified indications collateral,

the portfolio pursue management the best of outcomes reflect we a Looking rate results for and taking proactive investors. also our environment long-term are interest higher ahead, expect to the measures we realities near-term will

Our substantial joining income generated to portfolio. Thank strong operator balance our business with liquidity, positioned now and call call. ask I current the well the for you a stable is to by the questions. open will sheet the

Operator

as [Operator We'll you. question one Harter go one Doug limit first ask many allow with questions instructions]. possible. Thank We follow-up UBS. and yourself to to as to you

Douglas Harter

were this loan completed long how can extensions extensions talk about the you quarter, typically you that granted? the On you

Katharine Keenan

are Doug, borrowers we're doing, getting we're multifamily to on to? sort extensions, of referred that credit the giving I positive referring and where more paydowns specifically the or time the modes you

Douglas Harter

how and much the that getting is kind just you being Just to sense on XQ chart time a in as general had of additional of kind pie maturities granted. with

Katharine Keenan

Sure.

So it categories. of a into couple falls

typical the So chart, when that's that of the loans. tests, are the loans you structure X-year passing their just a look that extending that's extension pie at for and generally provided under

credit down our we're For putting on just asset. getting equity investment really situations over position the our see is, and as based we're do time. really it's in a optimize where appropriately comes and much equity are basis getting. Is to for where is, and return we that we're and that where more our making between it business new continuum how more we're recovery plan equity about them decision period time, at outcomes we And of borrowers point it an capitalized the in what the how granting

within making So that on. when investment that, we're decision we're continuum, to generally, years, it's at X talking not it's really than about point them X about longer an but the doing

Douglas Harter

Great. positioned quarter, led versus kind the a loans this they kind changed of during just XQ? quarter what downgraded And that on then the of were were to that in XQ downgrade in how

Katharine Keenan

Sure.

the then where of temporary And we marginal. X% expect So by occupancy on be over of markets, but supply the the seen office, at it assets. just are portfolio as and overall the largely I watch also that tenant multifamily each compounded obviously you're the list loans to really in reflecting certain changes of has specific pretty challenges in side, mentioned, higher one But looking situations in there U.S. market, these those impacts in rates. assets, individual we've but of and time, it's dynamics can well-known sort change some

Operator

with We'll go James. Raymond next to Laws Stephen

Stephen Laws

with wanted I Tony, start question a the on to numbers.

side, of on net off of mentioned in Can nonaccrual X will X around that should impact in I term? remove think the And and think loans. mentioned those out those the we then the I talk things nonaccrual I some you see some near about you the believe, balance help the in downgrades, resolutions, are how financing drag expected positive you new assets. one of the QX QX and

Tony Marone

Sure.

expect quarter, the getting to guidance to impact loans resolving next I on moving we're particular, a you these, in see as from we're some seen similar think specific cost as in we've without into of recovery would So past.

on $X.XX the portfolio, we be given resolutions, could something leverage how that them. dependent And will the on So to you that magnitude as of is might -- you $X.XX of will much those think that expect. be something have range in against then the

muted cents per be couple will a more maybe a it impact, of So share.

of I many I across the when going remarks, loans continue the particular, mentioned impaired some earnings loans to of more in you're importantly, thinking about impact recently loans, the think which these pay. in of recovery, our

it's that DE through and cash getting our flow basis, still we're coming our metrics. it's even not benefiting So though

Stephen Laws

much current I for And expectation the or QX. of outlook look Appreciate those of of one you how know think the Great. second half? think calendar over consider think about I And for resolved you've clarification resolution this in year there. do was it X loans that much kind then the here of you in you was how how $X.X specific do as year? balance resolutions you But mentioned the one reserves, can and office. the rated billion, that that, But we get maybe

Katharine Keenan

great a question. it's Yes,

of on there through perspective, more the I market. this took from including loans, quarter, be perspective to resolved we one market is our us core transparency back this moving, overall the market, going one get recovery focused quarter X office side, of stuff create we going it's REO. to absolutely or office. in is other on I sell an capital think we noise, of when we fact this see is wholesale investors, on or are X best a taking our we liquidity, going think the Obviously, back, the perspective, to sale very we the at do the general restructuring and from our to business. focused but that There's more And a is level And return that at advantage move get it's fact but our from cycle a lots for turnover, coming liquidity of that where are there analysis the more lows overall opportunity ultimately in more to look where that. sense for the to move more both in some also resolved from the order a maximizing asset it's makes approach we that thing and

We're terms others So a term. soon things as sure as we systems possible. of couple these resolve near all go have in process, to in that relatively are of obviously make trying we

project I moving but through second focused to we're the assets So resolution getting and these half the it. of to tough very on it's for think year,

Operator

to Sarah We'll go next with BTIG. Barcomb

Sarah Barcomb

me was walk resolutions the resolution Could need assets And My CLOs? watch the level losses cash much related X-rated some additional an in? there on leverage the Meaning list to question is avoid those approximately in leverage five assets? to of the you assets. rated new through when is on CLO of how proceeds at came

Katharine Keenan

Sure.

approach So thinking general there. about our

of assets, have way. delevered most X generally the For we along rated the them

lower vibrated So the typical on materially advance than rate portfolio. asset is overall a our

So usually, a of position. already ourselves more sort put we've into stable

CLO investors our the optimizing we On we're looking capital recovery when for at throughout our and structure. all and return look specifically, the assets, these for at really of investors

for the buying will loan Sometimes thing going the of decision to with looking or, continue it outcome best and a all out the to say, that of all really involve of really is CLOs, maximize the in the down other of an and loans at and it's the the to some look we'll cases, overall asset factors portions out company. in come cases, to at CLO, the in CLO of

list with while, something obviously, because lenders, way, we assets on overnight. the for have terms know our not talking the going is is a most So impact the for we're part, you these what's along this on, that really to happening impaired of capital, loans seen watch in they're

see a of don't about to in capitalized and sort these each just recovery change is through move optimally as our one sure assets liquidity value we making it's material business of really the plan. and return So we maximize

Sarah Barcomb

quick Okay. just modeling question. And a then

are you up the expecting year? still you first more expecting this for in for million expectations $XX quarter. about full the of mentioned losses resolution $XX second half those to total shaping So And are realized one Are you how million year? the

Tony Marone

on our mentioned great we I as validation in the I coming between year-end the our top think is valuation right SEC so of which of process, would second to stick with stick I and a that reserves, in quarter first would expectation, remarks, that are our losses expectation.

relates I of half covered going earlier there transactions liquidity of what in it that on Katie see that back be kind the year, that to is. to think dependent of the what we the very kind As it's market,

a I would So number I know at focus point. specific this if don't there's on that

Operator

go next Jade with to We'll Rahmani KBW.

Jade Rahmani

everyone is higher the the changed. attended borrowers? about impacting prospect in I address lower that's and And for rate How is particular. if multifamily outlook [Craft] could ecstatic you Clearly, January rates. in

Katharine Keenan

question. Sure. Yes, it's great a

that view obviously, expectation a of lending for I lot think of mind, the normalizing about rates seen look in as the have but we markets, cuts of But on has across slower both liquidity capital a here rate rate liquidity overall down, travel and changed. we are is not cuts, when think spreads the importantly, you private. real market at of forth that and of cost the and in market, path keep thing I expectations we've back a internally. pace month of downward. impact been We're rates, that, it come And estate still the that we here going public to overall important the from all has spreads, sort cost see continued direction to continue has across of inflation the the seeing despite of pace, we've do see to happening volatility tempered. with think It's and of data or that on capital of I think

And direction. so travel that the the in kept has of direction all same of sort

impact terms carry an conversations particular, of I more cuts liquidity of could on and in of higher situations, for in sponsors. terms pace think cost, on marginal obviously, rates, rate in the have

indicative a overall multifamily see but market. more well with to were sponsors less that's really to going think in of that the to I of corner the create the lot going not and -- going who it's capitalized of market you're headlines, particularly it's

really but rates, direction the the liquidity rate rates helpful, long-term and impact, market. think critically in it's obviously, that for of think travel not I the about I So

Jade Rahmani

this below the and cash Just thinking about was operations dividend the from dividend million. flow quarter $XX.X

that mentioned that's was the now accrued million interest $XX.X nonaccrual. on of You

You we it's liquidity would that premise portfolio dividend. a there similar in the already that give managing dividend a because the think it some the steady smaller state And on including reduced be some about one dividend, through long-term seems returns? it around detriment about a cash, company other in about earnings is your based received turbulence. the with repayments. Or to given also additional which dividend company peers, current make reduction yield it lower are and in the flexibility being in a trades stock, XX% think of to type yield, but will and fact, factors, a the Should on of does sense pricing XX% as at

Tony Marone

Thanks for Jade. the question,

the different GAAP hit first things to impact the operations. charge-offs than point that There's dividend. for we the flow flow the quickly. charge-offs is metric folks cash So when from the metric as We at to point so look more to maybe you cash think contextualizing would prior the best you're before the to DE and

the So the $X.XX $X.XX. this quarter relative to

As almost X years. the of longer we've $X.XX the had term, dividend level to same it relates for dividend

Sometimes been sometimes below we've far that slightly earned that out level, we've level.

view in dividend that with I set continued our a shows to think long-term mind. that we've

and one really earnings time to think going this over we're of decision or is I in As Directors company the discussed what this overreact quarter at long-term along we is drives what power where dividend quarterly, And way. of with another we the the the to to our not we're that. mentioned looking makes relative sense and Board remarks,

Operator

-- go question we'll take last JPMorgan. Shane with our Rick We'll from next

Richard Shane

a almost perfect segue. It's actually

dividend ex-realized the policy which earnings essentially look it of So really if out best the to takes setting losses, distributable is equation, business. the not way of we credit kind at about a think on I'm convinced

outcomes looks is the the that a down like that given value third in particularly 'XX, row. start the book of One for it of will year be to

given return, and where is earn value a sustainable which would of to about guys. You XX.X% book or economics, capital dividend you watermark dividend high today return is talked a the require sort economic pretty for about that on the

the wonder do I do I target? we So return ask a XX-plus base rates percent you really near-term nonaccruals 'XX would potentially headwind lower the as or and I question, and guess, think achievable move given -- that of ask into long-term

Katharine Keenan

think is very at it's question. The we it way that much way. a I in great look

aside it So think really putting which about and equity relates nonaccruals, ROE. the term the the value our of long-term the of of to short of sort I book the encumbrance is and power business. earnings value

you return is the consistently over very we have look over basis business, history of the XXX If back a that rates. generated about points base

curve And important been today. look when equation at rates the part are have business, rate for the so history even the of rates the a base of [sofa] what well really terminal as below base of the most we see sort we of

And that takes losses up. equity impactful that that the but levels of think ends take or be over how impact of earnings ultimately ROE we this quarter in obviously, to equity into thinking about need account. equity. the where It's you it credit when long-term sort It's about and about And value of is time, puts coming and normalized just I that about other less value off. the or of power we DE. long-term obviously, sort there's business ROE book through you're that's when quarter, So think the think where could overall ultimately, realized the where

Richard Shane

to the nature as should opposed dividend how true 'XX given assume where given of about we've of for a year, should the a we that, think And it. dividend? we return capital that, started the Got that be will

Tony Marone

dividend. our to tax for attributes it's the give asking. think I early in year what That's you're

Operator

I our Hayes additional like to will session. back over That conclude or remarks. this closing turn for would to the call time, any question-and-answer Mr. At

Timothy Hayes

joining call. everyone Thank reach Katie, Please today's questions. any with and you, to out

Blackstone Mortgage Trust (BXMT) 24 Apr 242024 Q1 Earnings call transcript