6 unchanged sentences
Generally, our business model is such that rising interest rates will increase our net income, while declining interest rates will decrease net income.
−Removed: As of June 30, 2023, substantially all of our investments by total loan exposure earned a floating rate of interest and were financed with liabilities that pay interest at floating rates, which resulted in an amount of net equity that is positively correlated to rising interest rates, subject to the impact of interest rate floors on certain of our floating rate loans.
−Removed: In certain cases, we have financed fixed rate assets with floating rate liabilities, and have purchased interest rate swaps to effectively convert our net exposure to floating rate.
−Removed: The following table projects the earnings impact on our interest income and expense, net of incentive fees, for the twelve-month period following June 30, 2023 , of an increase in the various floating-rate indices referenced by our portfolio, assuming no change in credit spreads, portfolio composition, or asset performance, relative to the average indices during the three months ended June 30, 2023 ($ in thousands):
+Added: As of September 30, 2023, 99% of our loans by total loan exposure earned a floating rate of interest and were financed with liabilities that pay interest at floating rates, which resulted in an amount of net equity that is positively correlated to rising interest rates, subject to the impact of interest rate floors on certain of our floating rate loans.
+Added: The following table projects the earnings impact on our interest income and expense, net of incentive fees, for the twelve-month period following September 30, 2023 , of an increase in the various floating-rate indices referenced by our portfolio, assuming no change in credit spreads, portfolio composition, or asset performance, relative to the average indices during the three months ended September 30, 2023 ($ in thousands):
Assets (Liabilities) Sensitive to Changes in Interest Rates (1)
−Removed: Interest Rate Sensitivity as of June 30, 2023 (2)
+Added: Interest Rate Sensitivity as of September 30, 2023 (2)(3)
Increase in Rates Decrease in Rates
10 unchanged sentences
Refer to Note 14 to our consolidated financial statements for additional details of our incentive fee calculation.
+Added: (3) Excludes income from loans accounted for under the cost-recovery method.
(4) Includes an interest rate swap with a notional amount of $229.9 million that effectively converts our fixed rate loan exposure to floating rate exposure.
−Removed: (4) Net of $1.2 billion of non-consolidated senior interests and $236.3 million of loan participations sold, as of June 30, 2023.
−Removed: Our non-consolidated senior interests and loan participations sold are structurally non-recourse and term-matched to the corresponding collateral loans, and have no impact on our net floating rate exposure.
+Added: (5) Excludes $1.1 billion of non-consolidated senior interests and $275.7 million of loan participations sold, as of September 30, 2023.
+Added: Our non-consolidated senior interests and loan participations sold are structurally non-recourse and term-matched to the corresponding loans, and have no impact on our net floating rate exposure.
(6) Includes amounts outstanding under secured debt, securitizations, asset-specific debt, and term loans.
Investment Portfolio Value
−Removed: As of June 30, 2023, substantially all of our portfolio earned a floating rate of interest, and so the value of our investments is generally not impacted by changes in market interest rates.
+Added: As of September 30, 2023, 99% of our portfolio earned a floating rate of interest, so the value of such investments is generally not impacted by changes in market interest rates.
+Added: As of September 30, 2023, the remaining 1% of our portfolio earned a fixed rate of interest and as such, the values of such loans are sensitive to changes in interest rates.
Additionally, we generally hold all of our loans to maturity and so do not expect to realize gains or losses resulting from any mark to market valuation adjustments on our loan portfolio.
10 unchanged sentences
We believe that we benefit from these relationships and from our long-standing core business model of originating senior loans collateralized by large assets in major markets with experienced, well-capitalized institutional sponsors.
−Removed: Our loan portfolio’s low origination weighted-average LTV of 63.9% as of June 30, 2023 reflects significant equity value that we expect our sponsors will be motivated to protect through periods of cyclical disruption.
+Added: Our loan portfolio’s low weighted-average origination LTV of 64.0%, excluding any junior participations sold, as of September 30, 2023 reflects significant equity value that we expect our sponsors will be motivated to protect through periods of cyclical disruption.
While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain loans.
−Removed: As of June 30, 2023, we had an aggregate $214.4 million asset-specific CECL reserve related to seven of our loans receivable, with an aggregate amortized cost basis of $1.1 billion.
−Removed: This CECL reserve was recorded based on our estimation of the fair value of each of the loan’s underlying collateral as of June 30, 2023.
+Added: As of September 30, 2023, we had an aggregate $322.6 million asset-specific CECL reserve related to ten of our loans receivable, with an aggregate amortized cost basis of $1.4 billion, net of cost-recovery proceeds.
+Added: This CECL reserve was recorded based on our estimation of the fair value of each of the loan’s underlying collateral as of September 30, 2023.
Our portfolio monitoring and asset management operations benefit from the deep knowledge, experience, and information advantages derived from our position as part of Blackstone’s real estate platform.
1 unchanged sentence
The market-leading real estate expertise derived from the strength of the Blackstone platform deeply informs our credit and underwriting process, and we believe gives us the tools to expertly asset manage our portfolio and work with our borrowers throughout periods of economic stress and uncertainty.
−Removed: The six months ended June 30, 2023 have been characterized by continued volatility in global markets, driven by investor concerns over inflation, rising interest rates, slowing economic growth, political and regulatory uncertainty and geopolitical conditions.
+Added: The nine months ended September 30, 2023 have been characterized by continued volatility in global markets, driven by investor concerns over inflation, rising interest rates, slowing economic growth, political and regulatory uncertainty and geopolitical conditions.
Recent events affecting financial institutions have also contributed to volatility in global markets and diminished liquidity and credit availability in the market broadly.
20 unchanged sentences
As a result, we substantially reduce our exposure to changes in portfolio value related to changes in foreign currency rates.
−Removed: In addition, substantially all of our net asset exposure to foreign currencies has been hedged with foreign currency forward contracts as of June 30, 2023.
+Added: In addition, substantially all of our net asset exposure to foreign currencies has been hedged with foreign currency forward contracts as of September 30, 2023.
The following table outlines our assets and liabilities that are denominated in a foreign currency (amounts in thousands):
−Removed: June 30, 2023
−Removed: EUR GBP All Other (2)
+Added: September 30, 2023
+Added: GBP EUR All Other (2)
Foreign currency assets £ 2,933,335 € 2,568,586 $ 2,003,299
5 unchanged sentences
(1) Represents the U.S.
−Removed: Dollar equivalent as of June 30, 2023.
+Added: Dollar equivalent as of September 30, 2023.
(2) Includes Swedish Krona, Australian Dollar, Swiss Franc, and Danish Krone currencies.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.