Blackstone Mortgage Trust, Inc. Q4 FY2025 earnings call

• Fourth quarter reported $0.51 per share of distributable earnings prior to charge-offs, covering the dividend for the second consecutive quarter. - Loan portfolio resolved $575 million of impaired loans in the quarter, with impaired loan balance under $90 million. - Closed $1.5 billion of investments in Q4, including $1.4 billion new loan originations and $100 million net lease acquisitions. - Global real estate debt platform with over 170 professionals provides access to diverse investments. - Closed over $20 billion private loan originations/acquisitions and traded over $15 billion real estate securities in 2025. - Executed over $5 billion corporate and securitized debt transactions in past year, reducing borrowing spread. - Owned real estate carried at 50% discount to origination values, with one multifamily property in Texas under contract to sell. - Net lease portfolio scaled to over $300 million at share, with strategy focused on essential-use retail. - Acquired $600 million principal balance bank loan portfolios at discounts, with $80 million repayments since acquisition.

For the fourth quarter, GAAP net income was $0.24 per share, while distributable earnings were negative $2.07 per share and distributable earnings prior to charge-offs were $0.51 per share. The loan portfolio is 99% performing. The investment portfolio stands at $20 billion, including an $18 billion loan portfolio, $1.3 billion of owned real estate, and over $900 million of investments at share held in bank loan portfolio and net lease joint ventures. The loan portfolio is 50% multifamily and industrial, with office exposure declining. Nearly half of loans are in international markets, ~40% in Europe where over $2 billion of industrial loans were originated with a weighted average LTV of 68%.

• Expect to selectively exit owned real estate properties to redeploy capital into core investments. - $60 million share repurchased in Q1, ~$140 million since July 2024. - Dividend yield 9.5% implies 540 basis point spread to ten-year treasury, stock trades below book value.

Forward-looking statements subject to risks, uncertainties, and factors outside control. Refer to risk factors section of most recent 10-K for discussion of risks affecting results.

Q: Obviously, you have been kind of showing your support for the stock through share repurchase. I am sure you saw what the actions of one of your competitors earlier this month. Just thoughts on other ways you might look to kind of validate or support the value of the loans in the portfolio?

A: Thanks, Doug. This is Tim. You know, I think that, you know, we certainly take a look at all opportunities to maximize shareholder value in the market. I think we feel really good about the direction of the stock to date given the performance in 2025 and where we stand. You know, we still have a discount to book value to make up, but a relatively modest one. So we will continue to look at all options during the quarter, as you mentioned. A really good tool in the toolkit was definitely stock buybacks, and we analyzed everything that we have in terms of optionality in markets, but we feel really good about where we stand today.

Q: Could you provide your views on the REO portfolio? Do you see upside in key assets? And can you also discuss the New York office REO that took place in December 2025 based on the disclosure? Looks like an attractive basis. So I wanted to get your thoughts there.

A: Yeah. Jade, hey. It is Austin. You know, I would say with respect to REO, I think the way we look at that, as we have discussed before, it is really a go-forward analysis in terms of our decision-making there. These are really investment decisions that we think are really well informed due to the really unique data and information that we have access to. Specifically, we are seeing some improved fundamentals and investor demand in places like New York. With respect to that asset, as you mentioned, it is an asset in New York that we hold at a very low basis, significant discount to the value when the loan was originated. We are seeing improvement in markets like that. As we think about the potential to exit these assets over time, as I mentioned in my earlier remarks, we do think several assets are well-positioned to look to exit over the course of the year. We will be very thoughtful and strategic about that. We are selling one asset in Texas. We are also seeing positive trends in San Francisco. As we go through the rest of the year, I think we will start to look at those sale opportunities as the market opportunities sort of present themselves.

Q: Hey, guys. Thanks for taking the questions and congrats on really solid progress on loan workouts in the quarter. I see in the 10-Ks that you guys made a $75 million investment in the Blackstone fund. Can you just talk about the type of investments that will go into that fund? And if there is any overlap on what you guys are already doing?

A: Yeah. This is Austin. I can take that. As you mentioned, we did make an investment in a new Blackstone-managed real estate credit fund. That fund will be focused on high-quality core plus real estate in the US and Canada. We really think it is a great example of BXMT's ability to deliver unique and compelling investments for our investors due to the scale of our platform and our affiliation with the Blackstone real estate credit business. I should note that BXMT pays no fees for this fund commitment. The investments will be sourced, underwritten, and managed by our team. Ultimately, we do think that adding some exposure to this profile investment to BXMT is a good risk-adjusted return. Adding investments in a diversified way with this type of profile we think is quite attractive for BXMT.

Q: You guys provided some detail on the new origination front as it pertains to industrial. Can you put any color around what you guys are doing in multifamily? And then a second question, I will just give it to you now, is how are you thinking about total leverage? You are almost 3.9 times right now. How do you think about that going forward?

A: Thanks. Yeah. Hey, it is Austin. Thanks, Gabe. I will take the first part of that question, then I will pass it over to Marcin for the second point. In terms of multifamily, we really like the opportunity we see in multifamily today. With respect to the performance that we have seen in our portfolio, our multifamily is 100% performing. When we think about the opportunity set in that space, we really just like the setup for multifamily and rental housing in general. It is a structurally undersupplied market. New construction starts are down 60% from peak. It is a really highly liquid and granular asset class. That is why you see us lending in that space. When you look at the performance in our portfolio, I think that has been demonstrated. That is the profile, I would say, and the reason we are in that area. Maybe, Marcin, if you want to handle the second part of it. Sure. Happy to. Look, I think our leverage, we think of it in terms of where it is within our target, as Tony mentioned, it is within our target where we are. It is a function also of what type of leverage we have. As Tony mentioned, a lot of our financing is non-mark-to-market. We have been active in addressing different maturities within our corporate debt profile as well as reducing costs on both the asset financing and corporate financing. It is a function of investment opportunities, where the balance sheet is, what is available to us from a financing perspective in the market. We are very thoughtful about it. But, again, within our targets, and we will maintain where it is.

Q: Thank you guys for taking my questions. And Tony, thank you for all your help over the years. And Marcin, congratulations on the new gig. Most of my questions have been asked and answered at this point, but, you know, as we sort of look forward to 2026, it feels like the expectation is given where you are in leverage and unless there is additional equity capital available at some point, the portfolio will be roughly flat in size, maybe modest growth. I am curious about the timeline as you resolve loans and redeploy capital potentially from REO resolutions, what you think the path back to normalized ROE might look like?

A: Yeah, Rick. Hey. It is Austin. I can take that. As Marcin mentioned, the portfolio is, we think we are pretty well invested. I do think that we have capacity. We have liquidity of $1 billion today. But we think that is actually a good position to be in. We have a very broad pipeline. There are a lot of opportunities. But given the position we are in, we can be pretty selective across that pipeline. In terms of the REO timeline and exiting those assets, as I mentioned earlier, I think some of those assets are pretty well-positioned for us to look at exiting over the course of this year. Some others may take longer. But we do think that those loans or those assets are earning, generating a below-target ROE. As we exit those positions and redeploy that capital at our target returns, that should be supportive of earnings over time.

Q: Thank you, and good morning. Obviously, we were encouraged to see the significant headway made on your impaired loan during the quarter. Was that more a matter of strategy and timing on your team's end or for the specific assets? Or was there a notable shift in the broader market as a whole that made these resolutions more achievable? Thanks.

A: Thanks, John. This is Tim. I would say it is reflective of a couple of things. One, just the strength of our asset management team and their ability to work through challenges pretty swiftly. We have a large-scale team. It is one of the benefits of our platform. That is certainly a part of it. I think market liquidity does help as well. There is more transparency in the market in terms of valuations today that makes decision-making a little quicker for both owners and lenders to figure out which direction to go in. I think that is reflective of a stabilized real estate market where we sit today with valuations steadily stable and increasing. That is just a better backdrop for quicker resolutions in general.

Q: Thank you. So you mentioned the transaction market in the US is becoming more transparent, more liquid. Does that sort of start to pivot some of the deal volume that has been more levered towards Europe over the last years? Does that start to shift a little bit more to the US? And then maybe how do you weigh the pros and cons between a more liquid transaction market, more visibility into values, but also somewhat lower spreads that are available today versus a year ago?

A: Yeah. It is a great question. I think you are right. You are seeing more liquidity in the US. You certainly have seen that in 2025 in our CMBS market and early in 2026. With much more liquidity. I think that is overall a positive for the business. It just means there is more velocity to the portfolio, and you see that in the loan repayment activity. You see that in loan repayments of loans that have been pre-rate hike cycle and pre-COVID repaying. I think that generally is helpful. We are in, I would say, a liquid but more normalized market today, which is a good operating environment for us. As we said at the beginning, having the scale of our platform, the different styles of investment capabilities we have, the global reach, we can really look across the full set of opportunities and pick and choose what we want to do. Austin referenced it before. We are pretty well invested today, so we have the luxury of looking for the best relative value out there in the market. Even though spreads have tightened, back leverage has tightened as well. So that is offset a bunch of that spread tightening. But the opportunity set today still feels compelling and deal activity is increasing. So that is a pretty good setup for us overall.