Forward Looking Statements and Other Matters

Transcription

1 November 2015

2 Forward Looking Statements and Other Matters This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect Blackstone Mortgage Trust, Inc. s ( BXMT ) current views with respect to, among other things, BXMT s operations and financial performance, including performance of its recently acquired loan portfolio from GE Capital. You can identify these forward-looking statements by the use of words such as outlook, indicator, believes, expects, potential, continues, may, will, should, seeks, approximately, predicts, intends, plans, estimates, anticipates or the negative version of these words or other comparable words. Additionally, other statements in this presentation reflecttheopinionofbxmt smanagementasofthedatesindicated.such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. BXMT believes these factors include but are not limited to those described under the section entitled Risk Factors in its Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and under the section entitled Risks Related to the Loan Portfolio Acquisition in its Current Report on Form 10-Q for the fiscal quarter ended March 31, 2015, as such factors may be updated from time to time in its periodic filings with the SEC which are accessible on the SEC s website at These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this presentation and in the filings. BXMT assumes no obligation to update or supplement forward looking statements that become untrue because of subsequent events or circumstances. We refer to Core Earnings, which is a non-gaap financial measure, in this presentation. A reconciliation of core earnings to net income, the most directly comparable GAAP measure, is included in this presentation and in our most recent Annual Report on Form 10-K, and is available on our website at Slide 17 of this presentation includes a reference to imputed core return on equity ( Imputed Core ROE ) and other economic terms relating to an illustrative BXMT loan transaction that are presented solely for purposes of illustrating the impact of using floating rate financing to finance the origination of a floating rate loan and should not be viewed as indicative of the results that will be achieved for any particular loan in BXMT s portfolio or of BXMT s results as a whole. The loan economics presented are hypothetical and based upon a number of assumptions, including no defaults on the loan, and are subject to various risks and uncertainties. Accordingly, there are or will be important factors, including those referred to above, that could cause the actual economics that are achieved on any loan in BXMT s loan portfolio to differ materially from those indicated in this illustration. In particular, it should be noted that as a result of such factors the net spread between whole loan yields and the cost of related leverage, the leverage multiple applicable to any particular loan and allocable overhead may vary materially from period to period and across BXMT s loan portfolio. Imputed Core ROE also excludes potential incentive management fees and is presented before any tax effects. Information included in this presentation is as of or for the period ended September 30, 2015, unless otherwise indicated. 1

3 Blackstone Mortgage Trust Overview Blackstone Mortgage Trust, Inc. (NYSE: BXMT) is a real estate investment trust that originates and acquires senior loans collateralized by commercial properties in North America and Europe Portfolio weighted average LTV of 64% Large scale loan portfolio: $10.6 billion total loans; average direct origination loan size $115 million Acquisition of $4.9 billion (a) GE portfolio doubled balance sheet in a single transaction We are managed by Blackstone ( BX ), a world leader in real estate investing with approximately $93 billion of real estate debt and equity AUM and over $136 billion of owned real estate Superior sourcing, informational, execution and asset management capabilities Significant alignment of interest: BX investment of $176 million in BXMT (b) Advantage over traditional lenders in terms of speed, reliability and flexibility Commercial real estate environment marked by healthy property transaction volume gives rise to strong borrower demand for transitional capital Property transaction volume increasing Market leading liability structure including multi-currency credit facilities, asset specific financings and senior participation sales $10.4 billion of financing capacity: 7 revolving credit facilities, 11 asset specific transactions plus customized GE portfolio financing Structured to optimize economics with an emphasis on stability Our senior lending strategy is designed both to provide attractive current income and protect investors capital (a) (b) Funded balance of portfolio is $4.7 billion. Based on BXMT s October 28, 2015 closing price of $ Includes investments by BX employees and associates. 2

4 Superior Real Estate Platform Blackstone Real Estate is a premier debt and equity investment and asset management platform Blackstone Real Estate Equity $84 billion AUM 281 professionals Debt $10 billion AUM 106 professionals Rated / Approved Special Servicer Global Funds Europe Funds Asia Fund Core+ Strategy Drawdown Funds Liquid Funds Blackstone BREP VIII BREP Europe IV BREP Asia BPP BREDS II BSSF/ BREIF Mortgage Trust Opportunistic Opportunistic Opportunistic Core+ Mezzanine debt CMBS strategy Senior loans $15.8B fund 6.6B fund $5.0B fund $8.5B in investor capital $3.9B strategy Over $1B equity under management $10.6B of assets $2.6B equity market capitalization (a) (a) Based on BXMT s October 28, 2015 closing price of $

5 Superior Real Estate Platform Blackstone Real Estate has proprietary insight, long standing expertise and superior access to deal flow Office 122M Square Feet Largest owner in U.S. Hotel 304k Keys (a) Major investor globally Multifamily 110k Units Major investor globally Retail 166M Square Feet Most active investor since 2011 Note: As of June 30, 2015 (a) Includes one pending transaction, and there can be no assurance this transaction will close as expected or at all, or otherwise be available to investors. 4

6 Seasoned Management Team and Fully Integrated Platform Jonathan Gray Global Head of Real Estate Member of Blackstone Board of Directors Member of BREDS Investment Committee John Schreiber Co Founder of Blackstone Real Estate Advisors Member of BXMT Board of Directors Chair of BREDS Investment Committee Michael Nash Executive Chairman CIO Blackstone Real Estate Debt Strategies Stephen Plavin CEO & President SMD Blackstone Real Estate Debt Strategies Origination Europe United States 34 Professionals Asset Management 15 Professionals Legal / Compliance 4 Professionals Capital Markets / Investor Relations / Finance 15 Professionals Jonathan Pollack Robert Harper Tim Johnson Thomas Ruffing Randall Rothschild Douglas Armer Weston Tucker Paul Quinlan Anthony Marone 5

7 Real Estate Market Overview Economic conditions are sustaining a favorable commercial real estate market Liquidity and fundamentals in the commercial real estate market are generally in balance Economy Recovering Capital Returning Positive Feedback Loop Technicals Improving Confidence Growing 6

8 Real Estate Market Overview Limited new supply coupled with modest growth is a favorable investment environment for senior commercial real estate debt 3.5% U.S. Aggregate Construction Completions (Office, Industrial, and RetailSectors) U.S. GDP ($ in billions) (Office, Industrial, and RetailSectors) 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Sources: REIS & Federal Reserve Economic Data as of 3Q

9 Real Estate Market Overview Debt markets are normalizing; CMBS issuance is still below peak levels Other Life Companies U.S. CRE Debt Holders ($ in billions) (Office, Industrial, and RetailSectors) $351 GSEs $236 $420 $360 $300 Global CMBS Issuance ($ in billions) (Office, Industrial, and RetailSectors) $557 $1,594 $240 $585 $180 $120 CMBS Issuers U.S. Depository Institutions $60 $0 1Q 2Q 3Q 4Q Projected Source: PREA Compendium of Statistics as of 4Q 2014; Commercial Mortgage Alert as of 3Q

10 Target Investments Loan Size Collateral Property Type Geographies $50 million to $500 million First mortgages on stabilized or transitional assets All commercial property types North America and Europe Loan to Value Last dollar 60 to 80% Rate Term Amortization Fees Prepayment LIBOR % and higher, scaled to risk 3 to 5 years Typically interest only Typically 1.0% origination fee and 0.25% to 0.50% extension fees 12 to 24 months of spread maintenance 9

11 Sample Transaction: SFO Airport Hotels $130 million floating rate, first mortgage loan secured by the Westin and aloft SFO Airport hotels 72% LTV; $200k per key Diverse demand drivers including airport traffic and SF/Silicon Valley business overflow Loan upsized by $30 million 15 months after origination and refi call protection extended by 6 months BX office and hotel investments in California enabled definitive, efficient execution 10

12 Sample Transaction: 401 North Michigan Avenue $190 million floating rate, first mortgage loan secured by 401 North Michigan Avenue in Chicago Well located class A office building undergoing value-enhancing repositioning; 70% LTV Initial funding of $145 million with $45 million future funding commitment for building improvements and leasing Transaction sourced through existing Blackstone relationship with experienced regional owner Located in a core U.S. market where Blackstone has been an active investor Tribune 401 N. Michigan 401 N. Michigan NBC Sheraton Wrigley Bldg. 11

13 Sample Transaction: Westminster UES $181 million floating rate, first mortgage loan secured by The Westminster apartment building located on Manhattan s Upper East Side 150 unit multifamily rental building undergoing condominium conversion 68% LTV Sponsored by repeat BXMT borrower that specializes in development and management of multifamily properties Westminster UES 12

14 Sample Transaction: Aldwych House 78 million floating rate, first mortgage loan secured by Aldwych House in central London Well located 162k sf prime office building undergoing 28.0 million, value-enhancing, refurbishment 50% LTV Transaction sourced through existing Blackstone relationship with local operating partner paired with a well capitalized institutional sponsor Aldwych House 13

15 Portfolio Diversification BXMT s portfolio is diversified by collateral property type and geographic location, and is comprised of primarily senior mortgages and similar credit quality loans. Geographic Diversification (Net Book Value,% of Total) OR 1% WA 3% CAN 6% MA 1% Senior Loans (a) (Net Book Value, % of Total) 97% CA 11% HI 1% AZ 2% CO 2% NM 0.4% TX 9% OK 1% IA 1% IL 4% TN, 1% GA 4% PA 1% VA 3% NC 2% SC 1% MD 1% DC 2% NY 20% Collateral Diversification (Net Book Value, % of Total) Condo 2% Other 6% 7% Office Multifamily 41% Retail 8% UK 10% ES 1% NL 1% DEU 3% FL 8% States that comprise less than 1% of total loan portfolio 15% Manufactured Housing (MHC) 21% Hotel (a) Senior loans include senior mortgages and similar credit quality loans, including related contiguous subordinate loans and pari passu participations in senior mortgage loans. 14

16 Interest Rates Earnings are positively correlated to changes in USD and GBP LIBOR, the benchmark indices for 74% of BXMT s loan portfolio and related secured financings. Concentration of fixed rate assets in EUR and CAD results in an inverse correlation to EURIBOR and CDOR; an increase in either benchmark rate by 50bps would decrease annual Core Earnings by less than $0.02 per share. Portfolio Fixed vs. Floating (% of Principal Balance) Portfolio Income Sensitivity to USD LIBOR (Annual Dollars of Net Interest Income per share) $0.25 Fixed 22% 78% Floating (a) Net Interest Income Per Share $0.20 $0.15 $0.10 $0.05 $ % 0.69% 1.19% 1.69% 2.19% 2.69% USD LIBOR (a) As of September 30, 2015, $1.1 billion of floating rate loans earned interest based on floors that were above the applicable index, with an average floor of 0.64%. 15

17 Financing BXMT has developed $10.4 billion of market leading financing capacity with an emphasis on efficiency and stability ($ in billions) Revolving Credit Facilities Seven cross collateralized, bilateral credit agreements Revolving credit facilities provide for efficient liquidity management and allin pricing of L+1.70% to L+2.00% Term, currency and index matched No capital markets mark-to-market $4.6 Asset-Specific Financings Non-revolving; non-cross collateralized; generally non-recourse with limited margin call provisions Pricing directly related to underlying collateral assets 11 transactions with nine counterparties Non-debt structures: participations sold and non-consolidated senior interests $2.2 GE Portfolio Financing Term and currency matched facility to finance GE portfolio acquisition Pro rata repayment for first 80% of repayments and sequential thereafter Floating rate index %; 5bps rate increase in years 4 and 5 $3.6 Total Financing Capacity $

18 Illustrative Loan Economics BXMT s senior loans are supported by significant owner s equity Prudent use of balance sheet leverage drives attractive risk adjusted returns for BXMT stockholders LTV Capital Structure $ Cum. Illustrative Loan Economics (a) Whole Loan Yield (b) L % Leverage: Advance Rate 80.0% Credit Facility Advance All-in Cost (b) L % $80 million Net Spread 2.00% Leverage Multiple 4.0 x 53.3% $80 million Levered Spread 8.00% Base Return L % BXMT Equity Gross ROI L % $20 million 66.7% $100 million Less Overhead Allocations: (c) Management Fee 1.50% General & Administrative 0.40% Owner Equity Working Capital/ $50 million Equity Deployment 1.60% % 100.0% $150 million Imputed Core ROE (d) L % % (a) (b) (c) (d) This illustration is presented solely for demonstrating our business model and should not be viewed as indicative of the results that will be achieved for any particular loan in BXMT s portfolio or of BXMT s aggregate results. The loan economics presented are hypothetical and are subject to various risks and uncertainties. See Forward Looking Statements and Other Matters at the beginning of the presentation for further discussion of such risks and uncertainties. Whole loan yield and all in cost of leverage include amortization of fees and expenses pursuant to GAAP in addition to current pay rates, and assume no defaults. Overhead allocations are illustrative, actual allocations vary materially and depend on expenses incurred, working capital and defensive liquidity needs, overall capital deployment and performance among other factors. Imputed Core ROE excludes potential incentive management fees, is a hypothetical illustrative measure and does not represent BXMT Core Earnings. 17

19 Investment Highlights Superior Sponsorship Affiliation with BX Real Estate, the largest private equity real estate business in the world Significant alignment of interest: $176 million BX investment (a) BREDS has approximately $10 billion of AUM Strong Origination Platform $14.3 billion of loans closed since May 2013 equity recapitalization Acquisition of $4.9 billion (b) GE portfolio Robust pipeline generated from BX network Attractive Market Opportunity Commercial real estate environment marked by healthy property transaction volume gives rise to strong borrower demand for transitional capital that traditional lenders cannot supply Focused Strategy Senior lending strategy provides attractive current income and protects capital Large Scale Balance Sheet Average direct origination loan size $115 million Stable and efficient financing structure (a) (b) Based on BXMT s October 28, 2015 closing price of $ Includes investments by BX employees and associates. Funded balance of portfolio is $4.7 billion. 18

20 Appendix: 3Q 2015 Earnings Release Excerpts

21 Third Quarter 2015 Balance Sheet, Net Income, and Core Earnings (Dollars in Millions) Balance Sheet Net Income Core Earnings Loan portfolio $9,378 Interest income $ ($2.0) $134.8 $7,093 Secured financings Interest expense ($51.3) + $0.4 ($50.9) $0.4 Convertible notes, $164 net CT Legacy net income Equity and other (a) $2,121 Non-cash comp. ($3.2) Mgmt./Incentive fees ($13.8) G&A/other ($2.0) + ($0.4) $3.2 $- ($0.5) $- $- ($13.8) ($2.5) $66.9 $67.5 (a) Includes stockholders equity of $2.5 billion, less the net of (i) cash and cash equivalents of $139 million, (ii) certain accrued interest receivable, prepaid expenses, and other assets of $306 million, (iii) certain accounts payable, accrued expenses, and other liabilities of $87 million, and (iv) CT Legacy portfolio net equity value of $8 million. Blackstone Mortgage Trust 20

22 3Q Dividend Analysis The $0.62 dividend reflects the stabilized earnings power of the senior floating rate investment strategy at its increased scale and Core Earnings of $0.72 includes the accretive effects of the GE portfolio acquisition. Core Earnings Stabilization (a) Additional yield from add-on financing of GE loans 3Q Core Earnings $0.72 per share GE fixed rate loans with 1.7 year weighted average life (b) 3Q Dividend $0.62 per share Senior floating rate loans, reinvested on an ongoing basis 1Q Dividend $0.52 per share Transaction costs & deployment lag concentrated in 2Q 2015 (a) (b) Not presented to scale. Weighted average life ( WAL ) calculation considers the amount and timing of contractual repayments through the expiration date of call protection for each loan. Blackstone Mortgage Trust 21

23 Loan Portfolio Details The following table provides details of BXMT s loan portfolio: (Dollars in Millions) Loan Type Origination Date (a) Total Loan Principal Balance Book Value Cash Coupon All In Yield Maximum Maturity (b) Geographic Location Loan 1 Senior loan 6/11/2015 $ 340 $ 340 $ % (c) 4.92% (c) 4/30/2019 Diversified US MHC 78% Loan 2 Senior loan 6/23/ % (c) 5.33% (c) 1/31/2017 Diversified US MHC 60% Loan 3 Senior loan 5/22/ L+4.00% L+4.34% 5/22/2019 U.K. Hotel 57% Loan 4 Senior loan 5/1/ L+3.45% L+3.83% 5/1/2020 NY Office 68% Loan 5 Senior loan 1/7/ L+3.50% L+3.95% 1/9/2020 NY Office 53% Loan 6 Senior loan 6/4/ % (c) 5.56% (c) 2/9/2019 Canada Hotel 54% Loan 7 Senior loan 6/23/ % 5.53% 1/18/2017 Germany Retail 53% Loan 8 Senior loan 6/11/ % (c) 4.83% (c) 1/31/2017 Diversified US MHC 65% Loan 9 Senior loan 3/4/ L+4.25% L+4.25% 3/9/2017 WA Office 64% Loan 10 Senior loan 2/25/ L+4.40% L+4.82% 3/9/2019 Diversified US Hotel 49% Loan 11 Senior loan 12/9/ L+3.80% L+4.31% 12/9/2019 Diversified US Office 65% Loan 12 Senior loan 7/31/ L+3.50% L+4.09% 8/9/2019 IL Office 70% Loan 13 Senior loan 1/7/ L+4.75% L+5.14% 1/7/2019 Diversified US Other 58% Loan 14 Senior loan 6/23/ L+5.00% L+5.01% 12/20/2017 D.C. Office 72% Loan 15 Senior loan 11/20/ L+3.40% L+3.62% 11/20/2019 U.K. Hotel 62% Loan Various (d) Various 6,670 6,114 6, % 4.68% Various Various Various 64% Total/Wtd. avg. (e) $ 10,151 $ 9,413 $ 9, % 4.87% 3.3 years 64% Property Type Origination LTV (a) (a) (b) (c) (d) (e) Date loan was originated or acquired by BXMT, and the LTV as of such date. Maximum maturity assumes all extension options are exercised, however floating rate loans generally may be repaid prior to their final maturity without penalty. Loan consists of one or more floating and fixed rate tranches. Coupon and all in yield assume applicable floating benchmark rates for weighted average calculation. Includes (i) 112 senior loans with an aggregate principal balance of $5.9 billion and (ii) five mezzanine loans with an aggregate principal balance of $261 million resulting from BXMT s sale of the related non consolidated senior interests. Weighted average coupon and all in yield exclude subordinate loans, which are not comparable to other loans as they are reported net of syndicated amounts. Blackstone Mortgage Trust 22

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