What changed in this filing

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Item 1. Business

2021-02-10 compared with 2020-02-11 · 56 added, 30 removed, 164 unchanged (34% of the section changed)

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Our investment objective is to preserve and protect shareholder capital while producing attractive risk-adjusted returns primarily through dividends generated from current income from our loan portfolio.

We are externally managed by BXMT Advisors L.L.C., or our Manager, a subsidiary of The Blackstone Group Inc., or Blackstone, and are a real estate investment trust, or REIT, traded on the New York Stock Exchange, or NYSE, under the symbol “BXMT.” Our principal executive offices are located at 345 Park Avenue, 42 nd

Floor, New York, New York 10154.

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of Blackstone’s real estate group, are members of our Manager’s investment committee.

Blackstone Real Estate Debt Strategies, or BREDS, was launched in 2008 within Blackstone’s global real estate group to pursue opportunities relating to debt and preferred equity investments globally, with a focus primarily on North America and Europe.

Blackstone Real Estate Debt Strategies, or BREDS, was launched in 2008 within Blackstone’s global real estate group to pursue opportunities relating to real estate debt investments globally, with a focus primarily on North America and Europe.

Michael Nash, the global chairman of BREDS, serves as the executive chairman of our board of directors and is a member of our Manager’s investment committee.

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As of December 31, 2020, 113 dedicated BREDS professionals, including 15 investment professionals based in London and Australia, managed $28.3 billion of investor capital.

Our chief executive officer, chief financial officer, and other executive officers are senior Blackstone real estate professionals.

Our chief executive officer, president, chief financial officer, and other executive officers are senior Blackstone real estate professionals.

None of our Manager, our executive officers, or other personnel supplied to us by our Manager is obligated to dedicate any specific amount of time to our business.

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Our Portfolio

Our business is currently focused on originating or acquiring senior, floating rate mortgage loans that are secured by a first priority mortgage on commercial real estate assets primarily in the office, hotel, and multifamily sectors in North America, Europe, and Australia.

Our business is currently focused on originating or acquiring senior, floating rate mortgage loans that are secured by a first priority mortgage on commercial real estate assets primarily in the office, hotel, multifamily, and industrial sectors in North America, Europe, and Australia.

These investments may be in the form of whole loans, pari passu

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During the year ended December 31, 2020, we originated or acquired $1.6 billion of loans.

Loan fundings during the year totaled $7.0 billion, with repayments of $4.8 billion, for net fundings of $2.1 billion.

The following table details overall statistics for our investment portfolio as of December 31, 2019 ($

Loan fundings during the year totaled $2.1 billion, with repayments of $2.0 billion, for net fundings of $139.5 million.

The following table details overall statistics for our investment portfolio as of December 31, 2020 ($ in thousands):

Total Investment Exposure

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Weighted-average maximum maturity (years) (6)

Loan to value (LTV) (7)

Excludes investment exposure to the $89.0 million subordinate risk retention interest we own in the $930.0 million single asset securitization vehicle, or the 2018 Single Asset Securitization.

Origination loan to value (LTV) (7)

Excludes investment exposure to the $79.2 million subordinate position we own in the $735.5 million 2018 Single Asset Securitization.

Refer to Notes 4 and 16 to our consolidated financial statements for further discussion of the 2018 Single Asset Securitization.

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Includes investment exposure to the $735.5 million 2018 Single Asset Securitization.

We do not consolidate the 2018 Single Asset Securitization on our consolidated financial statements, and instead reflect our $89.0 million subordinate risk retention investment as a component of other assets on our consolidated balance sheet.

We do not consolidate the 2018 Single Asset Securitization on our consolidated financial statements, and instead reflect our $79.2 million subordinate position as a component of other assets on our consolidated balance sheet.

Refer to Notes 4 and 16 to our consolidated financial statements for further discussion of the 2018 Single Asset Securitization.

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The weighted-average cash coupon and all-in

yield are expressed as a spread over the relevant floating benchmark rates, which include USD LIBOR, GBP LIBOR, EURIBOR, BBSY, and CDOR, as applicable to each loan.

As of December 31, 2019, 97% of our loans by total loan exposure earned a floating rate of interest, primarily indexed to USD LIBOR, and $6.1 billion of such loans earned interest based on floors that are above the applicable index.

The other 3% of our loans earned a fixed rate of interest, which we reflect as a spread over the relevant floating benchmark rates, as of December 31, 2019, for purposes of the weighted-averages.

yield are expressed as a spread over the relevant floating benchmark rates, which include USD LIBOR, GBP LIBOR, EURIBOR, BBSY, and CDOR, as applicable to each investment.

As of December 31, 2020, 98% of our investments by total investment exposure earned a floating rate of interest, primarily indexed to USD LIBOR, and $14.2 billion of such investments earned interest based on floors that are above the applicable index.

The other 2% of our investments earned a fixed rate of interest, which we reflect as a spread over the relevant floating benchmark rates, as of December 31, 2020, for purposes of the weighted-averages.

In addition to cash coupon, all-in

yield includes the amortization of deferred origination and extension fees, loan origination costs, and purchase discounts, as well as the accrual of exit fees.

Excludes loans accounted for under the cost-recovery method.

Maximum maturity assumes all extension options are exercised by the borrower, however our loans and other investments may be repaid prior to such date.

As of December 31, 2019, 59% of our loans and other investments were subject to yield maintenance or other prepayment restrictions and 41% were open to repayment by the borrower without penalty.

As of December 31, 2020, 32% of our loans and other investments by total investment exposure were subject to yield maintenance or other prepayment restrictions and 68% were open to repayment by the borrower without penalty.

Based on LTV as of the dates loans and other investments were originated or acquired by us.

The charts below detail the geographic distribution and types of properties securing our investment portfolio, as of December 31, 2020:

States comprising less than 1% of total loan portfolio are excluded.

For additional information regarding our loan portfolio as of December 31, 2020, see Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – II.

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To maintain an adequate amount of available liquidity and execute our business plan, we look to a variety of sources.

In addition to raising capital through public offerings of our equity and debt securities, our financing strategy includes credit facilities, asset-specific financings, a revolving credit agreement, non-consolidated

senior interests, securitized debt obligations, and senior secured term loan facilities.

In addition to raising capital through public offerings of our equity and debt securities, our financing strategy includes secured debt agreements, securitizations, and asset-specific financings, as well as convertible notes and senior secured term loan facilities.

In addition to our current mix of financing sources, we also expect to access additional forms of financings including resecuritizations and public and private, secured and unsecured debt issuances by us or our subsidiaries.

During the year ended December 31, 2019, we issued an aggregate 10.5 million shares of our class A common stock through a combination of an underwritten public offering and our at-the-market

program, providing aggregate net proceeds of $372.3 million.

Additionally, we entered into a $750.0 million senior secured term loan facility which bears interest at a rate of L + 2.25% per annum.

During the year ended December 31, 2019, we increased the size of six of our existing credit facilities, providing an aggregate additional $2.9 billion of credit capacity, and added two new credit facilities, providing an aggregate additional $577.0 million of credit capacity.

The following table details our outstanding portfolio financing arrangements as of December 31, 2019 ($

During the year ended December 31, 2020, we (i) refinanced $2.1 billion of our secured credit facilities with the proceeds from two non-recourse,

non-mark-to-market

securitization transactions that closed during the year, reducing our debt-to-equity

ratio to 2.5x as of December 31, 2020, (ii) issued an aggregate 10.0 million shares of our class A common stock through an underwritten public offering, providing aggregate net proceeds of $278.3 million, and (iii) entered into a $325.0 million senior secured term loan facility.

Additionally, during the year ended December 31, 2020, we increased the size of one of our credit facilities and added a multi-currency facility with one of our existing lenders, providing an aggregate additional $650.0 million of credit capacity.

The following table details our outstanding portfolio financing arrangements as of December 31, 2020 ($ in thousands):

Portfolio Financing

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December 31, 2020

Credit facilities

Secured debt agreements

Securitizations (1)

Asset-specific financings (2)

Non-consolidated

senior interests (1)

Securitized debt obligations

Total portfolio financing

These non-consolidated

Includes our consolidated securitized debt obligations of $2.9 billion and our non-consolidated

securitized debt obligations of $656.3 million.

The non-consolidated

securitized debt obligation represents the senior non-consolidated

investment exposure to the 2018 Single Asset Securitization.

We own the related subordinate position, which is classified as a held-to-maturity

debt security on our balance sheet.

Refer to Notes 4 and 16 to our consolidated financial statements for details of the 2018 Single Asset Securitization.

Includes our consolidated asset-specific debt agreements of $399.7 million and our non-consolidated

senior interests of $801.8 million.

The non-consolidated

senior interests provide structural leverage for our net investments which are reflected in the form of mezzanine loans or other subordinate interests on our balance sheet and in our results of operations.

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Generally, our business model is such that rising interest rates will increase our net income, while declining interest rates will decrease net income.

As of December 31, 2019, 97% 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.

As of December 31, 2019, the remaining 3% of our loans by total loan exposure earned a fixed rate of interest, but are financed with liabilities that pay interest at floating rates, which resulted in a negative correlation to rising interest rates to the extent of our financing.

In certain instances where we have financed fixed rate assets with floating rate liabilities, we have purchased interest rate swaps or caps to limit our exposure to increases in interest rates on such liabilities.

As of December 31, 2020, 98% of our investments by total investment 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.

As of December 31, 2020, the remaining 2% of our investments by total investment exposure earned a fixed rate of interest, but are financed with liabilities that pay interest at floating rates, which resulted in a negative correlation to rising interest rates to the extent of our financing.

In certain instances where we have financed fixed rate assets with floating rate liabilities, we have purchased interest rate caps to limit our exposure to increases in interest rates on such liabilities.

LIBOR and certain other floating rate benchmark indices to which our floating rate loans and other loan agreements are tied, including, without limitation, the Euro Interbank Offered Rate, the Canadian Dollar Offered Rate and the Australian Bank Bill Swap Reference Rate, or collectively, IBORs, are the subject of recent national, international and regulatory guidance and proposals for reform.

On November 30, 2020, the Financial Conduct Authority of the U.K., or FCA, which has statutory powers to require panel banks to contribute to LIBOR where necessary, announced that subject to confirmation following its consultation with the administrator of LIBOR, it would cease publication of the one-week and two-month USD LIBOR immediately after December 31, 2021 and cease publication of the remaining tenors immediately after June 30, 2023.

Additionally, the Federal Reserve Board has advised banks to stop entering into new USD LIBOR based contracts.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, has identified the Secured Overnight Financing Rate, or SOFR, a new index calculated by short-term repurchase agreements, backed by Treasury securities, as its preferred alternative rate for LIBOR.

At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates as the transition away from the IBOR benchmarks is anticipated in coming years.

Refer to “Part I.

Risk Factors—Risks Related to Our Lending and Investment Activities—The expected discontinuation of currently used financial reference rates and use of alternative replacement reference rates may adversely affect net interest income related to our loans and investments or otherwise adversely affect our results of operations, cash flows and the market value of our investments.” of this Annual Report on Form 10-K.

Investment Guidelines

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equity, loans and/or other interests (including “mezzanine” interests and/or options or derivatives related thereto) relating to real estate assets (including pools thereof), real estate companies, and/or real estate-related holdings;

prior to the deployment of capital into investments, our Manager may cause our capital to be invested in any short-term investments in money market funds, bank accounts, overnight repurchase agreements

with primary federal reserve bank dealers collateralized by direct U.S.

government obligations and other instruments or investments reasonably determined by our Manager to be of high quality;

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For additional information concerning these competitive risks, see Item 1A—“Risk Factors—Risks Related to Our Lending and Investment Activities.”

Human Capital

We do not have any employees.

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Our executive officers serve as officers of our Manager, and are employed by an affiliate of our Manager.

See “—Our Manager.”

Government Regulation

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The SEC maintains a website that contains these reports at www.sec.gov

Website Disclosure

We use our website (www.blackstonemortgagetrust.com) as a channel of distribution of company information.

The information we post through this channel may be deemed material.

Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings and public conference calls, and webcasts.

In addition, you may automatically receive email alerts and other information about Blackstone Mortgage Trust when you enroll your email address by visiting the “Contact Us & E-mail

Alerts” section of our website at http://ir.blackstonemortgagetrust.com.

The contents of our website and any alerts are not, however, a part of this report.

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.

What changed 10-K

Item 1. Business