• GAAP Net Loss: Effectively zero for the first quarter.
• Distributable Earnings (DE): $0.17 per share.
• Distributable Earnings Prior to Charge-offs: $0.42 per share.
• Dividend Paid: $0.47 per share for the first quarter.
• Repayments: $1.8 billion, including 86% in office.
• New Investments: $1.6 billion, highest level of quarterly originations in over two years.
• Portfolio Composition: 95% performing, with US office exposure reduced to 21%.
• Impaired Loan Resolutions: $400 million resolved this quarter, reducing impaired loan balance by 58% from the peak.
• Liquidity: $1.6 billion at the end of the quarter.
• Leverage: 3.4 times DE, lowest level in three years.
• Book Value: $21.42 per share.
• Common Stock Repurchase: $32 million repurchased at a discount to book value.
• REO Portfolio: $691 million across eight assets, generating $7 million of DE in Q1.
• CECL Reserve: $754 million, stable versus 12/31, representing 3.9% of the portfolio.
• New CLO Issuance: $1 billion with a 30-month reinvestment feature.

• Warning! GuruFocus has detected 7 Warning Signs with BXMT.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Blackstone Mortgage Trust Inc (NYSE:BXMT) reported $1.8 billion in repayments and $1.6 billion in new investments, marking the highest level of quarterly originations in over two years.
• The company's portfolio is now 95% performing, up from 88% at its lowest point, with a significant reduction in U.S. office exposure from nearly 40% to just 21%.
• BXMT has a strong international presence, with over 40% of investments abroad, providing geographic diversification.
• The company successfully issued a $1 billion CLO with a 30-month reinvestment feature, enhancing its capital structure and providing flexibility for future investments.
• BXMT's balance sheet is robust, with $1.6 billion in liquidity and a debt-to-equity ratio of 3.4 times, the lowest in three years, positioning it well for future growth opportunities.

Negative Points

• BXMT reported a GAAP net loss of effectively zero and distributable earnings of $0.17 per share, indicating financial challenges.
• The timing mismatch between repayments and capital redeployment negatively impacted distributable earnings for the quarter.
• The company faces a drag from remaining capital invested in non-earning assets, which burdened earnings with $0.07 of interest expense in Q1.
• BXMT's impaired loan balance, although reduced, still represents $970 million or 5% of the portfolio, posing ongoing risk.
• The macroeconomic environment, including tariff policies and potential economic slowdown, presents uncertainties that could impact future performance.

Q & A Highlights

Q: How many loans are currently in the four-rated category, and what is the historical transition from four to five versus four to three? A: Katharine Keenan, CEO, explained that the focus is on non-modified four-rated office loans, which are around $500 million, down from $1 billion a year ago. Many four-rated loans have persisted in that category without material performance changes. The company is working on modifications for some of these loans to improve their status.

Q: Given the 30-month reinvestment period on the new CLO, how does this impact your origination strategy? A: Katharine Keenan, CEO, stated that the reinvesting CLO provides optionality and diversification in financing new originations. The company has strong lender relationships and sees good liquidity and capital markets access for financing new originations.

Q: How much do you think you can grow your loan book over the next three quarters of 2025? A: Katharine Keenan, CEO, mentioned that while the pace of repayments is continuing, the company is underinvested and has $2 billion in closing. They aim to grow the portfolio towards the $20 billion mark, focusing on credit quality.

Q: Have you seen a shift in the types of borrowers or business plans post-tariff announcements? A: Austin Pena, EVP of Investments, noted that the company has been focusing on light value-add business plans and less transitional assets due to cost pressures. This trend is expected to continue, with less new supply making existing assets more valuable.

Q: How has the recent market volatility impacted new CLO issuance, and could we see another CLO from you this year? A: Katharine Keenan, CEO, indicated that while some CLOs were put on hold due to market volatility, the market is settling down. If conditions are favorable, BXMT may consider another CLO issuance later in the year.

Q: What trends are you seeing with respect to BXMT's credit facility providers and the broader repo market? A: Katharine Keenan, CEO, highlighted strong relationships with lenders who are eager to grow their credit facility exposure. The company is receiving competitive quotes and new facilities are in closing, driven by BXMT's performance and the high-quality nature of the product for banks.

Q: Could you comment on the performance of hospitality, multifamily, and industrial sectors? A: Katharine Keenan, CEO, noted that hospitality is the most economically sensitive sector, but BXMT's exposure is limited. Multifamily performance is resilient, with supply rolling over, and industrial remains strong with long-term tailwinds like e-commerce.

Q: How are you thinking about the pace of resolving impaired loans and moving on from REOs? A: Katharine Keenan, CEO, stated that resolving impaired assets is a priority, with $200 million in resolutions underway. REOs are a small part of the portfolio, and the focus is on maximizing value over time, with some assets potentially exiting soon.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.