BXMT - Earnings call transcript Q2 2024 | Blackstone Mortgage Trust, Inc.

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Operator

Good day, and welcome to the Blackstone Mortgage Trust Second Quarter 2024 Investor Call. Today's call is being recorded. [Operator Instructions]

At this time, I'd like to turn the conference over to Tim Hayes, Vice President, Shareholder Relations. Please go ahead.

Timothy Hayes

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

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

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

the GAAP of both second share, a respect quarter. share, A per per distributable and ago, net earnings weeks the paid a $X.XX $X.XX quarter, we of per second few share and were $X.XX prior distributable we earnings respectively. loss $X.XX dividend to to For charge-offs reported with

is Katie. I'll turn you September With now the dividend quarter today's any over authorized following The a and Additionally, XXXX. Please our October common on Board with to repurchase other call. of Directors declared program. a third to XX, let share me record respect XXXX, have $XXX dividend of $X.XX to per know stock if of XX, million stockholders on payable that, things questions

Katharine Keenan

greater of repayments, transparency to quarter. Portfolio impact rise reinvestment and shape the XXXX, cycle, and of resolutions, navigate office BXMT value, cases, interest the stockholder some power. through taking strategically a Entering of reserves, capital point This with in free demand. as transition recovery capital stabilization the we earnings in onset greater BXMT steep created accelerating rates and we course, flow focus driven period on we in up earnings, position reset cycle markets. buying and rebuilding maximize Greater Thanks, resolutions we pillars rates all saw but of necessary saw move which over to of have value are by a this and our shift the of to term. credit liquidity and transaction the the Since secular Tim. remains of primary long a volatile has positioned this the for

more specific had quarter, for for We over We billion L.A. a collected positioned $XXX quarter borrower repayments and through $X.X refinancing. our maturity significant repayments or are X incremental upgrades the of while hospitality, billion or increased a today This sector in the and liquidity carry financing we fundamentals. and performing we loans, at XX% multifamily in a end, truly reserves London $XXX refinancing. Through of nearly it at acquisition major lender we in July, reserves from of and half, which, in in loans half million of last our mostly takeout remain we repayments billion are second office modifications than X environment million in We've individual favorable impaired origination. the new several $XXX borrowers, to from XX% Credit XX% totaling collected portfolio remains across that to assets, $X.X even pre-COVID we repayments than asset see test accelerating. concentrated the valuation. extended book is And specific either a office, first so the commitments months, we value equity XX% of where on market. reset office, And issues equity implying the is from and subordinate value. the last quarter, ongoing have today's way XX down hotel loans in commitment considerable $X equity performing we in And broadly X activity or bringing of the made continued supporting this on the closed assets all profiles. they markets, West for basis. see did we million is away of office the we've of values that were the momentum with and were repayment significant continue have their the And To industrial loans. And year. our With in of more over tracking loans healing office we despite quarter, extension economics. Multifamily repaid, far than reached with variety are performing industrial their entire over Altogether, satisfied commitments U.S. across first over represent $X.X different have given challenges extension capital reemerging substantial year-to-date. office tests billion, challenged, year, progress. of representing portfolio of much to end well the

decision outcomes. exit resulting estate nonperformance of currently to portfolio lay and our Resolving assets reserves, dynamics levels well in markets, our utilize with when also most priority and refi. Across interest Our U.S., therefore, takeout this risk preclude of the our the to assets, X several it shareholders. This availability no capital and but for market is XX% options key allows expertise business. office Leasing the approach low positioned for value our they some deep resolution. resets free challenged transparency, for in do values, structure brings rated forward X stabilizing. it expedited exercise office reflect in in points, in maximize and These We to a cases, portfolio. periods us to the need within real and activity of more market New remains U.S. the are in remedies but provide are City, York liquidity quarter do largest major best U.S. not today's groundwork own up our assets for is the for

This XX% this office year, completed detenanting the Brooklyn last impaired OPB. on our a we sale of asset our would ] building guarantee, maximize a seller with execution quarter, collected of we determined financing, above value to ultimately plan facilitated no the a mark. pre-impairment [ XX% sold recover and exit We

are we for the Through the quarters. resolved track assets and on year, more first altogether, in several we the half coming nonperforming X of

same transaction highly be capital focused Values significant point. we At environment as us. lenders. before supporting the to on activity historically in assets on we While are, the competitive made landscape. Lending and progress, strong for we conservative more attractive is encumbered a we work spreads creating near-term remain in course, entry time, standards attractive base capture have are loans, reset by created all-in a new pullback demand wider. while lower, allocating bank capital of more affording earnings And maximize nonaccrual Emerging returns recovery. therefore, to shift the to for are continue structural a expect high, have has investment to rates

well $XXX which stock structure, performing in be book our our earnings loan We with compelling is largely value optimization a million effectively by served own discount, at buyback income continues authorized through current a for into through BXMT, capital capital significant a Board potential portfolio of our to current decisions. balancing plan. Delivering also has recently valuations buying priority but long-term and important an payout stockholder also allocation return see

a environment. With business, market we reflects power. longer-term declared per credit level mind, this we've the in considering a quarter on dividend sustainable power to focused long-term commented previously, our the dividend relative Board evaluates has of believe earnings a third of the As and outcomes including share, factors, Board our variety of the $X.XX interest earnings which rates, each quarter of range a

of emerging continued macro our to the generating level quarters While the strategy, front. to recent in while outlook allocation the a over on a strategically investment earnings and we're shoots delivering transaction increasing capital allows coupled which, see expect active asset vary our predictable half more gotten be already XXXX us with market, We've on of our earnings we This second XX% more this flow, also estate platform, with real yesterday. With the scenarios income capital green from we likely and at X impairments have the many origination closing capital, we months. to new recent resolutions, upside buyback started on distributable structure have depending yields, or over Blackstone broadly, adjustment within activity. $X time. acquired more the remains and our timing originated And last dividend, more in favorable current price deploy still incremental where billion

To expect to business BXMT's Our model access repayments, products to our on a market sheet constantly dynamics planting and to these position leverage and we our generation. forward, continued us affords seeds the clients. differentiated investors evaluating also continued position going loan that are end, enhance across actively and opportunities earnings to new innovate ways and With leader we strong balance presence to as overall geographies. more capitalize benefit market insight our our and

on adding BXMT's market a at at partnering platforms. bridge presence highly announced This knowledge access Optigo by through multi This alone. experienced and capitalize our important over essentially with billion fee portfolio, market multifamily the model, incremental to partnership loan M&T. X of Mac an lending refinanced We partnership a natural capital-light July Fannie vast same is ability income no to Capital have business Blackstone's in BXMT's borrowers the fundamentals. This $XX servicing loans multifamily of execution had in time, the complement multifamily deep multifamily team and been and for And lending Freddie is business. Many given years. evolution quarter, our a time provide with Mae DUS Mac it affords of we Freddie to Realty have income generate potential over BXMT cost. the we And while and bridge long-duration M&T with agency M&T's to Mae Fannie

impact, time BXMT it a portfolio earnings investment take While that the to accumulate of positioning drives we in meaningful excited are about long-term business. this the will

of travel. encouraged rates real to across the issuance, up new case. sectors Markets of the year, is to both strong year-over-year. continue lower the supply catalyst Inflation base long-term decelerating of estate is and back drop-off with we in out CMBS are corporate heal with the performance. by for Looking debt steep half fundamental And a direction meaningfully

advantages going competitive BXMT ever, that, platform in with of things forward. Thank tailwinds well the navigating the these over the and market as you. place continue and is capturing as strong positioned I'll cycle Tony. turn our to And to With opportunity

Tony Marone

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

of earnings resolution. loan We nonperforming prior reported to related losses share, $X.XX distributable realized to charge-offs excludes per also which

quarter with to financings by related recognized. Many of Our earnings loans, fact, from in current per interest encumbered this income continue no are, our loans be generating interest expense share these nonperforming $X.XX of income. the

we In our as per near against returns. quarter, headwind of was nonperforming face we This Katie time, of share repayments which and placed term, nearly target applied recovery. loans is generated loans basis. And earnings to the recovery, the interest mentioned earlier. our capital loan share as on well at collected of cash cost following over loans cost revenue however, $X.XX $X.XX our as this will resolved to related incremental portfolio expect incremental are contraction These elevated generate earnings per the redeployed on XQ instead in

an loan progress our resolutions, quarter collective our an resolved NPL office multifamily took more $XX stabilized over of accuracy process. time. title price small we our will validating ultimately we make to backing to continue We earnings end, to basis, mentioned, collateral date, And [indiscernible] realized values grow value. quarter loan million at have to at exit modest San assets Antonio premium above our Brooklyn resolutions Across to carrying the the Katie to two our loans. during crossed levels subsequent which the nonperforming we on a

We reserves our value these loans the booked expect management, at not above with have loan as can sold that CECL basis. asset or on be proper we and maximized

of million nonperforming half earmarked have we for over near-term out back the the resolution. loans $XXX Looking to year, of

of combination potential over upside taking a and through we sale see assets executed processes and be where situations will marketed these expect time. We REO

We make further continue provide as this will progress important periodic initiative on to for updates we BXMT.

earlier, mentioned Capital is partnership Another through access agency M&T loan agency with borrowers provide to execution multifamily our Realty their platform. BXMT, Katie initiative announced as recently our to for

will and protecting venture grow While this of virtually investment of be the with it it from BXMT for majority to requires BXMT expense take the these will capital earnings considerations. recognized in transactions. our generate And from no retain to time revenue or upfront downside share scale, upon the through loans book to agencies, able outlay M&T against sale value

X repayment was portfolio and as this June demonstrating execution, Our of refinanceability and institutional the business with our quarter plan collateral. XX% continued of activity strong upgrades XX, performing

loans, We relate that York values. to properties, our been impairments sector XX office impairments. and also downgraded of X incremental of assets Virtually office impacted rerating New all headwinds including have by two City a

are assets, more actively these working capitalizing of We on on for see markets positive backdrop resolutions both capital today. we the

asset small July multifamily our X.X% sector X full sale, including trends of The repayments currently liquidity we loan in market three Across third portfolio, with our during representing quarter impairment the to date. outcomes a just in this the for increasing quarter multifamily more and see healthy and fundamentals upgrades valuation is and portfolio. driving second positive broadly, the

by from million new offset CECL the quarter, stood quarter resolutions $XXX and nonperforming reflecting at prior of office impairment largely $XXX up at somewhat Our reserves XQ repayments. loans, the million end,

calls, reserves as real-time embedded across share through mentioned robust process, CECL These the have June per our data we was book from platform. XX. per in which our quarterly As estate determined real value, $X.XX on by aggregate and the $XX.XX experience Blackstone we share reserves are a of informed of prior

the balance to Turning sheet.

target structure X.Xx loan to liability X/XX, capital was end, the to X that term maintain marked financing equity of and but continue best-in-class from due timing with quarter Debt slightly up match a to markets largely was at We repayments. provisions.

quarter-over-quarter. balance, the apply following debt-to-equity have to quarter would first in you the XX June few been ratio flat received debt If days end the just repayments our

Katie supported equity, sources, our is book liquidity liquidity, investments throughout senior balance high also the our new acceleration $XXX but by historically the and sheet about portfolio, repurchases $X.X secured in we largely levels be and June or earlier. XX% in XX towards line substantial billion with notes. Year-to-date, loan of over commitments we towards mentioned capital, have the million repayments see existing of at deployed cycl.e, our selectively discounted of additional Importantly, maintained

and elevated maintained come loan and have net seen [indiscernible] debt have liquidity stands only financing. funding at now while time which over repaying We we billion commitments, $X of down

X.X fundings an term for scheduled these average over occur to BXMT. manageable a commitment are very years, Importantly, of

more the of record credit with attractive we through environment, at and our relationship have have expect further progress structure business unique more the we history As BXMT, to a investment level. Throughout liquidity would cycle settle move into a naturally we platform's as with terms. our and our we strengthened have capital consistently our maintained our market-leading counterparties, markets evolved. And track strong normalized and

questions. call. structure. our [indiscernible] execute repurchases the I will have platform capital to our this operator resolutions, selectively into reflect of under deploy to approved covenant facilities we joining we example ask provide our momentum appropriately business. Reflecting line open another balance accelerating dynamic, to rate strategically As across repayments the or our with now on sheet uniform and with flexibility near-term strong for current our more package and and visibility to investment further the capital you across incremental the the to credit for Thank environment loan

Operator

We'll Delaney JMP. question first Steven with our take Instructions] from [Operator

Steven Delaney

billion about XX% Katie the XXXX. now off about has recent from $XX high the in portfolio come late

the just more additional be on what might a new but much -- some balanced lending basis, size shoot see but Can opportunities. obvious portfolio? a -- lending nearing I some range, to realized Given seems bottom of green a we view the drinkage of, how slightly you towards give are sense net the we us runoff, rough of

Katharine Keenan

Thanks, Steve.

really relative in of to capital terms I comes think it value our down allocation.

where And see going returns. obviously, risk-adjusted structure allocating at into buying think you we're discount, impact, potential would best to about originations different that, be we has really have for our the one our impact. a new if capital So a capital

the that's driver. will So I result think settles primary be the The really where ultimately portfolio out.

repayments, we're on a of as the elevated refinanceability credit is sign very I [indiscernible] think getting, mentioned about call, I significantly portfolio. the obviously the very which positive and quality

decline the and in sort of a for get of repayments And portfolio could capital size those reinvestment. position as that see so think you local we I the

you possibility So focused But an of that. I part up certainly, loans capital in as that that continue we're be that is think are going to we mentioned, bit and on new on time. as that there a accretive a redeploying trend picked over really see way, we'll and

Steven Delaney

a think at of next your or you have it might M&T And to -- from familiar whatever? are a acquisition, I it you that. any us that entire the Dunlop. acquire business? optionality call larger It's do it X that follow-up of on & the quick business? Arbor for there make will the sort Can some BXMT on me. to recent business acquire to comment Or do Realty have as it On an much a some don't excellent is an with know if But whether, you out and you model. point, build JV to stay just do years option and Walker

Katharine Keenan

this optionality mean looked it of team, I fantastic a We've is from They evaluate business and Realty transitional agree a Capital. a [indiscernible], M&T very at and business, partnership No. we lot lending complementary our for that different a and business it's think for a or away platform Yes. have appropriate about a great ways. business really without with with really this interesting And this. participate to M&T initial an to best this in for economically execution way mentioned, the this think provide benefit agency expense. is overtime at time and loans as we our market. that gives BXMT the way we those creatively incremental via partnership us And any partnership the in

this pursue think this M&T is partnership, most is like think the and accretive we we We the business. model. platform to phenomenal So the way really

Operator

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

Stephen Laws

new first, about Katie, talk wanted dividend the to level. the,

nonaccrual then $X.XX of would some mentioned, given it the around the portfolio, loans new dividend point levels. I two especially the earnings and things in next dry runoff current about mean income like interest per share think, repayments. I in Tony from seems those QX as quarter to

So use Are level, to decide of stay we of the kind confidence guys what to that earnings you considerations new were the what there? gives dividend kind $X.XX place be? going below you the is right that

Katharine Keenan

Yes.

So might obviously ins level. focused period shareholders sort always level that the market what we sustainable based result, of about earnings earnings think really on quarters volatile to the vary allocate And from drive outs relatively mentioned, a importantly, And And as investments time. we're portfolio. within also the of focused is the dividend level near-term on our in business. very that talked with a as ability very we're the will we terms I we as over to long-term we time. of past, moving individual over in and through the better long-term and this think we enhance and current for income think But capital sustainable is to on balance continuing ultimately think new the

Stephen Laws

X of or year, XX%. XXX The is amounts the points about is X about in X%. of want up first then rated the in a gives We've is touch of seen big the row, half at into in a backing the And increases the kind repayments, I and look especially follow-up, last what Xs as absolute Okay. basis on you general for adjusting in kind current and pretty quarters, comfort few When level. total of to even Xs the X I loans, XX% reserve X:X level.

what the reserve moves additional forward? we loan big in X buckets. migration? half you talk back your for negative expectations the of Can of your out reserve rating expectations see the for when build about something are So year And increase the going a really

Katharine Keenan

Sure.

the to think office. we're loans we're of really of this So U.S. what transparently of to moving in markets, I a ahead is the list importantly, in we've the tried we seeing I think where credit obviously, in really market. part what be challenges. seeing lot watch our that to that see identify That's And concentrated

or look U.S. point, at we office our U.S. have XX% I impaired. this think at watchlisted office loans we of when our

risk is We have the rest that, are new $X.X against primarily portfolio billion. X assets and Of significant LTV. low about against Those And reserves rated that of loans, and X. our construction that loans. impaired very is XX% of

feel X is Sunbelt, other mentioned As see looking about about at Xs construction good about the the refi. and -- rated is is And and leased new risk That's the XX% good number XX% U.S. we office, on I them call, and XX% pretty also are $X like We well it which where very a Xs. flow. billion. of cash

think Away of really are proactively current to this. obviously, lot way amount the left we've repayments and sort more best about into U.S. in obviously, watch of rest impaired very for really our of We're which calls, the all list is performing on crystallization the into that. the trying things terms a seeing We we're and move think credit seeing we're watch asset impairment. much past in tried bucket that, loans liquidity office recovering ahead market I than really interest. where the mentioned get the are turn loans, that a exposure, paying is from diminishing it a So of the classes. And direct of of of Values the list are there's to to pressures. X really

well we quality with the markets we portfolio and coming and is office, improving returning. think in with so tailwinds of from down and that doing see the the U.S. liquidity And rates the capital given away credit valuations in

Operator

with go Doug to UBS. We'll next Harter

Douglas Harter

that you of to going that? If about migration future how the the that about we liquidity think does sort of play down? about you should ability see As the credit do you're slow pace of are to much think level redeploy, you how Just more how thinking deployment? hold migration, we credit into

Katharine Keenan

Sure.

well near-record last be to than in the maintained really as fortified volatility. positioned of we've or of have more year face we liquidity mentioned, really a levels year the over the Tony as think I business

on fundings down. we like feel going we visibility have more repayments. what's Future come Now the obviously, capital on more have in way markets,

last best a Transaction We level elevated against not use down And really at. didn't optionality XX%, lot And a opportunities. interesting see liquidity. of volumes sort kept weren't active we're pipeline We the that depending active. of the investment months, very months, what business. ton of our liquidity were also over you were obviously, on looked feels like opportunities. of Obviously, really of XX%, the so investment trading XX very XX We very maintaining there opportunities. the XX%, across significantly

Now those have shifted. both of dynamics

And so the investment maintaining liquidity the was structure seeing we and us to optionality really to better the of across a that able meant that capture of now a capital terms pipeline and be to in market. opportunity position we're the different across opportunities bunch the see of

mentioned. So wouldn't migration have excess with it's to have and lumpiness liquidity of we'll I as sort by think even around repayments, reinvesting at redeployment, comfortable think look others, liquidity that liquidity quarter-to-quarter. credit of better the of we with that all because of a stay think record you the obviously, that expect we how potential level very right cetera. that, that some sort served we it's, we liquidity. investing to the to today. necessarily is forward Again, there's be we et at tracks and scenarios we these obviously, But think see And And levels look time

Operator

to with Rahmani KBW. next We'll Jade go

Jade Rahmani

see access Securitization strategy? that market bifurcate there a wide been way distressed providing and, healthy risk Do pretty of a you open, opportunity a securitization to potential issuance. for any is markets typically amount are therefore, Coming such as accretively unlock there's cycles, out and capital. to of

Katharine Keenan

Yes.

what's we markets a I very an the issuer, a cetera. active player as great various mean at buyer are point. CMBS, CLO, it's et all a going looking securitization on as is, obviously, think across I geographies and around

impacts markets So a getting various business. refinanced a the the I capital market. the the lot including A in getting are one CMBS has for were direct coming is our resurgence think of of of in, most positive of lot the repayments. office. is Obviously, where That securitized that lot repaid is loans on

our Beyond We've directly in been over an improve obviously ways or and terms done to continue of that in it's CLO can options closely continue lot of in that, sheet have to I time. of innovator other of And sheet. a we I balance we issuance think the balance we'll position. very that all something best using monitor strategically terms the our financing to think put

the a I and maximize business of time really a impact of. our something about that we So spend in how for think a trend do thinking it's of relevant lot ways lot to

Jade Rahmani

doing which In pickup want For investment, you are you you loan on be for transactions the large example, see hone sales smaller this? take, use to its terms really out of of seeing targeted the differently company you of tranche with Also, BXMT anything coming very in do capital. allow could to and asset banks in a legacy would of new risk other holders? take portfolio from pieces and

Katharine Keenan

Sure.

investing in. is profile of the So on we're the very first that your Star North think question, I what always assets we're focused our on is credit

leverage But we access terms of think at to will not how change. tranche that a of looking here. I borrowers. business have very diversified return, That institutional quality So in risk

parts going accessing of that spectrum. strategic people think we're tranche I across the And have be about lending. the various great I'm capital We markets. really very to looking risk-return at

best the company. and we benefits the balance However, think sheet

where side We've So about. of business. I that, in the aspects that we're do think origination I innovating behind talked and on the obviously preferred the that about talked business you we that's multi and thinking past. on And side, for also time. just about deals, at ultimate to that's investment at equity get to try optimize a the the something that constantly the given is something look markets think equity We capital other in really in moment these how

underwrite to a whole we competitive points, touch market big that and that's think been capital have a of obviously very view them. to invest specific advantage portfolios, portfolios credit. a loan our bank has lot that on have of something is obviously. quickly, terms because a very it's of something sales as platform that a real we're We We've our able estate, In across in in these real business. scale Blackstone, episodic in Obviously, the participant have that

it's really think attractive a I so investment And opportunity.

to of that them, the think lot think obviously individual at terms deals episodic, drive extent see there's of market. it's come to and going I a investing we that in. things really sort whether of But I we'll those In that looking be that's volume, be to something

Operator

Don We're going Wells with Fargo. Fandetti to

Donald Fandetti

But you a to you -- to guess in? some can not whether respond do that not going think kind it liquidity, and going think markets Katie that's can more guess, you office. material cut. that's of you the maybe will talk the bit much talk for are so or Is Or equity how CRE Fed make bit markets refinancing, easier for on event? think finance potentially I to markets you a a drive I priced

Katharine Keenan

that XX-year very I the think so and think a liquidity -- XX the I at of those of looking rate markets expectation than and over. the is on impactful financing the and cuts of sort clearly markets So of will the material macro capital indicator terms inflation, already rates sort more in that refinancing, the really X-year, terms capital impact of have driving days of pretty are in is markets material a pace very that, timing and obviously,

to time, way, think going I I impact. as to the fruition by we're office. to would of that. And that But it's have already on it over an So starting comes say, really see including course,

coming we narrowing I clear rates materially And the in that. rates. of thing result the the more important but think that in dynamic. a base pretty market is continuation seeing in It capital of the CMBS sort the that I was really of direction down. market. peak observed over that's we a more a outcomes acceleration resurgence of and capital start on of is were to to down of just, sort and I next attractive impacted that Rates by we're also was activity of and think XXXX of about think, spreads cost range markets year, that the that most is flat really tailwind wider rates. level, And of was and relative the to with at And when a continue the turn transaction sort really be

if I while and I the in going have do down half were seeing don't faster think they rates in. very trajectory it's that, that year I base [indiscernible] positive but all in a we sort that's And the a than that's impact. back we're come priced so move or expecting think do perhaps think ago, of to the of already as

Operator

go Instructions] Catherwood BTIG. to [Operator next Tom with We'll

William Catherwood

office office Katie, currently of of Brooklyn you mentioned $X the billion makeup in the detailed, you're how sale of much was that repayments repayments of the is $XXX and included resolutions incremental had that the you million year-to-date. remaining what Outside tracking? loan

Katharine Keenan

had our of the some in leased We've to been up us sheet the So sales. and some kind construction We've market. loan office sponsor also activity definitely We obviously mix. had We've CMBS just a repayments office had balance had out. that date have repayments. an took

small parts those have liquidity. We're I some funds, talked back a real today similarly obviously, we across banks. there. mix. of market liquidity part smaller are some degree lot debt it's pulled we've also of and [indiscernible] we lending estate that's owners, coming they're Europe about pretty long-term the the from seeing generally, good But And pulled office have markets. coming from mean, back even we I A the capital CMBS, how the for So seeing high net is some and into from of of banks debt sort different even liquidity some in think where office. banks to of from are relationship back look market, worth, a funds certainly and when the

prevalent is Obviously, exactly there's the we're at in there and assets the we're X they coming that where the what in of And tracking we're number assets, obviously markets less the have people source. larger a think is market. quality $X and impaired just the situations either I in it's capital of mentioned, than highest liquidity as have that don't it seeing across the refi. Xs discount I for parts the certainly office, last Office case the are perceive it's but selling. been more liquidity of than over big Xs, in we as in So is But year. the or general couple other of -- volatile a billion ones

just the seeing we'll of to far obviously, very in But And we're in repayments thus see so repayments is how specific what watching indicator a is in $XXX be the in bear. portfolio. those to million our clear. July And seeing trend come very closely

William Catherwood

noted of details, performed as you Appreciate you within million had then first million to range. follow-up, those previously $XX maybe $XX Katy. a half that in the year, And for Tony, expectations realized losses and of the

through what near-term million-ish challenged the resolution, for the balance year? of realized losses of the earmarked your loans are $XXX are expectations for With that

Tony Marone

metric history we towards time. don't guide we I I resolutions assets. say, would resolutions you number would a importantly that this say I'd million, is specific variability, if to clear slightly our those look $XXX this of pretty our most when that provided specific you for above a of previously, little marks. being more sight there's had have at I Whereas line at a

would the that reserves. be line with CECL that assume we could You our losses take realized in

Operator

with take We'll Shane question our next JPMorgan. from Rick

Richard Shane

is should a it's should I to a this you repurchase think topic it? Stock at can percent see is book. how XX-plus reallocation should repurchase repurchase to discount to dividend of equates we million aggressively The trading more lot, authorization. Is given to you'll $XXX -- we from systemically How systematically, be or reduction a now is $XXX it expect stock delve shares bit we've in going and sort to given where year. discussed a but don't to this say? been the million think Or about a a do about dividend surprise you I a trading? little

Katharine Keenan

Yes.

X way. in it's any wouldn't say it's for think I I X --

related are two that it's separate that. things I think somewhat in really

see relative the value. allocation. the portfolio, being obviously, balancing terms investments. current to producing big the the and terms access going we the the see that is We toolkit able repayment all which to that we buying Our level, discount we're want of a have is tools into are in able the which we in buyback, best direct resurgence is about going going obviously, largely credit dividend And where decision really we new with incremental we performing to of income been are But in, to obviously, visibility, one adjusted even we to capital, debt income capital we're have invest, of seeing balance strong be continued at where performance to to and dividend and value current we're a at in loan where relative that in tools best toolkit the active of what investments. wherever against want have to we've

to be I very decision. So dynamic it's going a think

it's really making the down what as decisions. for I think balance investment to again, and we that the to optionality max company it's sure to of going composition. come best our make long-term we have And see really about best sheet power earnings the balance

Richard Shane

Got it.

trading million book? doesn't $XXX you I generates hurdle levered where compelling deploying that a it investment on necessarily context -- the understanding types versus is what return But guess, the lending to into Now business repurchasing make your capital see to would need does. in some of rates of and stock of shares in ways, them loans

Katharine Keenan

of as to because, points, it's And then loans I again, a hard the in mean I attractive in better. is generally what to significantly, looking we're we wide. lending specific values. come upswing. very relative -- the Yes. I and We're the at think the at lending to coming Spreads it opportunity, it better profile relative Values but remain the mentioned, down lending the the are and have new a attachment profile environment. I return do are that value on comes standards give down of think now really number

We have it historically. is a return very lot absolute than And positioning. obviously, been higher has strong competitive a

the levered with mid-teens through is So cycles where which business that return performed of a on our of basis. interest on of are sort net new level a we're that, looking basis, at loans in all margin sort has probably sort of

kind lot would of value from. a relative capital from into to at start around against buying we that's perspective. then return we So And how be considerations would balance a a different our structure and looking really benchmark of that

Operator

We'll from Bank America. take our with Dray final of Eric question

Eric Dray

loans? the in that to XXX year, next if even wanted guys of stabilize stick And you XX Fed Does kind office with cuts in of see that guys what Do Just it's improve? that really months? of we do sector real and quick. get things points XX basis think for if cuts you points half back to the change it take will think office basis

Katharine Keenan

related. office rates are are significantly but bps rates think not obviously secular change rate -- on don't reset market. what I obviously, a don't think And I rates impact, in that again, going lower on in helpful to generally margin. I that XXX seeing the obviously, really the that office Yes. lower But an have we're really going what's is

liquidity what reset I increasing of investing capital. rates of the going, demand more is of aren't impact general that sort office values. the viability having material is shift about I and about settle about going. very are that demand reset a level where to obviously, And going, think back in, conviction the that certainty a I think because the high-quality feeling the watch people of are, a is conviction creates is in as just that think I we've matter. in really of where in seen are market. rates right rates that at third to think about that the it's stronger there's out terms today and that, I of value to think, where where and demand in in their out really a impacting out, estate in invest that new markets And in in things locations. of But office, ago settling we've challenges in derivative the back office a where kind where come a and office a rents transparency, demand level on really to reconfiguration think real in of And assets sort settle year form and cap from And coming I of gone a are

that's office the a assets, of And not so assets, of the that's compression challenged sort if office fundamental that ones story. more second-tier a for sort older were locations, those rate in story,

the of the of office the segment on of driver. sort rates I think And is that market probably main impact that not so

Operator

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

Timothy Hayes

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

Blackstone Mortgage Trust (BXMT) 24 Jul 242024 Q2 Earnings call transcript