• GAAP Net Income: $0.21 per share for Q4 2024.
• Distributable Earnings: Negative $1.25 per share for Q4 2024, including $294 million of charge-offs.
• Distributable Earnings (Excluding Charge-offs): $0.44 per share for Q4 2024.
• Dividend: $0.47 per share paid for Q4 2024.
• Book Value: $21.87 per share at the end of Q4 2024.
• Impaired Loan Resolutions: $1.1 billion resolved, representing 49% of impaired loans.
• Repayments: $1.6 billion in Q4 2024, totaling $5.2 billion for the year.
• Liquidity: Record $1.9 billion as of the call date.
• Debt to Equity Ratio: Reduced to 3.5 times, the lowest level in 11 quarters.
• Loan Originations: $186 million in Q4 2024, with over $2 billion closed or in closing in Q1 2025.
• Corporate Debt Transaction: $1.1 billion deal completed, 4 times oversubscribed.
• CECL Reserve: $746 million, down 27% quarter over quarter.
• Economic Return: Positive 1% for stockholders in Q4 2024.

• Warning! GuruFocus has detected 9 Warning Signs with BXMT.

Release Date: February 12, 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) resolved $1.1 billion, or 49% of its impaired loans, improving its performing loan percentage to 93%.
• The company completed the largest corporate debt transaction in its history, a $1.1 billion deal, which was 4 times oversubscribed.
• BXMT reported robust repayments of $1.6 billion in the fourth quarter, bringing total repayments to $5.2 billion for the year.
• The company has a strong liquidity position with $1.9 billion available, providing a solid foundation for future growth.
• BXMT's new investment pipeline is strong, with $2 billion of deals closed or in closing, concentrated in sectors like multifamily and industrial.

Negative Points

• BXMT reported a GAAP net income of $0.21 per share but a distributable earnings loss of $1.25 per share due to charge-offs.
• The company faced $294 million in charge-offs related to impaired loan resolutions, impacting distributable earnings.
• Despite improvements, BXMT's book value decreased by 1% from the third quarter.
• The company continues to face challenges with its remaining impaired loans, which are burdened by significant interest expenses.
• BXMT's portfolio contraction due to capital deployment lagging repayments is expected to weigh on distributable earnings in the near term.

Q & A Highlights

Q: Can you provide an earnings bridge into the beginning of the year and how you see earnings ramping as we move forward? A: Katharine Keenan, CEO: We had $0.44 in the fourth quarter, $0.46 if you exclude certain costs. The most impactful driver of earnings is resolutions, with $1 billion executed and another $400 million in closing. Reinvestments from repayments will take a quarter to see the full impact. We are in the trough now and expect improvement by the second quarter.

Q: How should we think about the resolution of the remaining $1.5 billion of 5-rated loans? A: Katharine Keenan, CEO: The $400 million in resolutions are deals we have clear visibility on and hope to close in the first quarter. We are focused on reducing our impaired loan balance quickly and are working on every single one of them.

Q: What is the expected loss on UPB for resolving remaining 5-rated loans? A: Anthony Marone, CFO: Our CECL reserves tend to be in the mid-20s, and we resolve around that mark or slightly better. The 13% figure mentioned might be off; our reserves have been accurate or conservative.

Q: Will stock buybacks continue if the stock remains under 85% of book value? A: Katharine Keenan, CEO: We have $90 million left on our stock buyback authorization and almost $2 billion of liquidity. We are actively deploying into various real estate credit investment opportunities, and the stock is on that list.

Q: How do you differentiate BXMT's approach in the net lease sector from other major institutional players? A: Katharine Keenan, CEO: The market is large and granular. We aim to build a thoughtful, diversified, and well-protected portfolio that complements our earnings profile. We are not in a rush to grow rapidly but will focus on quality and diversification.

Q: What types of spreads or IRRs do you expect on new loans in 1Q and '25? A: Austin Pena, EVP-Investments: Asset spreads and liability spreads have both come in, maintaining leverage spreads around 900 to 1,000 over. The risk-adjusted returns are compelling given the credit profile of the deals.

Q: How are you thinking about leverage levels as the market begins to heal? A: Katharine Keenan, CEO: Our strategy of maintaining leverage between 3 and 4 times has proven effective. We were at 3.5 times at year-end, and with repayments, we are at the lower end of our target range. We are optimistic about portfolio growth within this range.

Q: Has rate volatility created any new potential credit challenges? A: Katharine Keenan, CEO: We haven't seen a material impact from rate upticks on repayments. The slight rate increase has driven more capital into credit markets, enhancing liquidity for repayments, which benefits our portfolio's credit profile.

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