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| 8-K - 8-K - BLACKSTONE MORTGAGE TRUST, INC. | d586912d8k.htm |
 Highly Confidential & Trade Secret
August 2013
Blackstone Mortgage Trust (BXMT) |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
1
Disclaimer
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 the current
views of Blackstone Mortgage Trust, Inc. (“Blackstone Mortgage
Trust”) with respect to, among other things, its operations and financial
performance. You can identify these forward-looking statements by the use of
words such as “outlook,” “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. 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. Blackstone
Mortgage Trust 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, 2012
and in its quarterly report on Form 10- Q for the quarterly period
ended June 30, 2013, as such factors may be updated from time to time in
its periodic filings with the Securities and Exchange Commission, which
are accessible on the SEC’s website at www.sec.gov. 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. Blackstone
Mortgage Trust undertakes no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise. |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
2
Blackstone Mortgage Trust Overview
Blackstone Mortgage Trust, Inc. (NYSE: BXMT) is a real estate investment trust
that primarily originates and purchases senior mortgage loans
collateralized by properties in the United States and Europe.
We are managed by Blackstone (“BX”), a world leader in real estate
investing with over $60 billion AUM and over $120 billion of owned real
estate (1)
•
Blackstone’s CRE lending platform, Blackstone Real Estate Debt Strategies
(“BREDS”), currently has approximately $10 billion AUM
(1)
•
Significant alignment of interest: $72
million BX investment
(2)
Dislocation
among
CRE
lenders
coupled
with
increased
transaction
volume
creates
a
compelling lending environment in the U.S. and Europe
•
BXMT
has
a
demonstrated
ability
to
originate
target
assets,
with
over
$1.8
billion
of
originations
since
May
equity
re-capitalization
(4)
BXMT is primarily a floating-rate lender and is designed to provide investors
with attractive current income and potential for value appreciation
________________________________________________
(1)
As of April 30, 2013.
(2)
Based upon closing price on the NYSE on August 20, 2013. Includes BX employees and
associates. (3)
As of August 20, 2013. |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
3
Superior Real Estate Platform
Blackstone Real Estate
Debt Strategies (“BREDS”)
________________________________________
Note: All figures are of March 31, 2013 unless otherwise noted.
(1)
As of April 30, 2013.
(2)
Includes contract employees.
BX investment committee process and investment philosophy
Superior sourcing capabilities through long-standing industry
relationships Underwriting process includes proprietary data from extensive
investment holdings $10
billion
AUM
(1)
51
professionals
(2)
+/-200 separate loans
Actively managed CMBS
hedge funds ($1 billion)
$50 billion AUM
174 professionals
Blackstone Real Estate
Partners (“BREP”)
Blackstone Real Estate |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
4
Seasoned and Fully Integrated Platform
21 Professionals
Origination
Thomas Ruffing
Randall
Rothschild
Douglas
Armer
Anthony
Marone
Robert Harper
Asset Management
Finance / Capital Markets
5 Professionals
5 Professionals
Stephen Plavin
CEO & President
SMD of BREDS
Legal /
Compliance
Geoffrey Jervis
CFO
MD of BREDS
Michael Nash
Executive Chairman
CIO of BREDS
Jonathan Gray
Global Head of Real Estate
Member of Blackstone Board of Directors
Member of BXMT Investment Committee
John Schreiber
Co-Founder of Blackstone Real Estate Advisors
Member of BXMT Board of Directors
Chair of BXMT Investment Committee
1 Professional
Peter Sotoloff |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
5
2013
2014
2015
2016
2017
$374
$350
$346
$321
$326
U.S. CMBS Issuance Volume
(Dollars in billions)
U.S. CRE Debt Maturities
(Dollars in billions)
European CRE Debt Maturities
(Euros in billions)
European CMBS Issuance Volume
(Euros in billions)
The supply/demand imbalance for debt capital creates an attractive
lending environment in the U.S. and Europe
________________________________________________
Source: Commercial Mortgage Alert (February 2013), Trepp LLC (December 2012), DTZ Research
(November 2012) and Barclays (November 2012). Real Estate Debt Market
Overview 2013
2014
2015
€240
€261
€285
2006
2007
2008
2009
2010
2011
2012
$198
$228
$12
$3
$12
$33
$48
2006
2007
2008
2009
2010
2011
2012
€69
€66
€8
€25
€5
€2
€4 |
 6
Highly Confidential & Trade Secret
Blackstone Mortgage Trust
Banking Environment
Overleveraged Banks
European banks have 2-3x the leverage of U.S. banks
________________________________________________
Source: IMF (October 2012).
Increased regulation and overleveraged balance sheets have reduced the lending capacity of
European banks in the U.S. and Europe
U.S.
U.K.
France
Germany
14x
24x
40x
45x |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
7
Limited new supply coupled with modest growth is a favorable investment
environment for senior commercial real estate debt
________________________________________________
Source: Citi (June 2013), BEA (December 2012).
U.S. Aggregate Construction Starts
(Annualized)
1984–2008
Average =2.0%
U.S. GDP
($ in billions)
2010
2011
2012
Current Investment Environment
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
$14,270
$15,864 |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
8
Today’s market conditions provide BXMT the opportunity to take relatively
less
risk
while
generating
higher
returns
(1)
Equity
Senior Debt
L + 1.50%
Equity
Senior Debt
L + 4.00%
2007
$100
(2)
Today
$80
(2)
Mezzanine Debt
L + 3.00%
BXMT
Target
Assets
Current Opportunity
(1)
Opinions expressed reflect the opinions of BXMT as of the date appearing in this material
only. These are representative capital stacks and it should not be assumed that any BXMT investments
bear resemblance to these. There is no assurance that BXMT will achieve its objectives
or avoid substantial losses.
(2)
Example of hypothetical asset values and decline based on Moody’s CPPI as of March 2013.
|
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
9
Target Investments
Loan Size
Property Type
Geographies
Loan to Value
Collateral
$50mm to $500mm
First mortgages on stabilized or transitional assets
All commercial property types
North America and Europe
Last dollar, 60-80%
Rate
Amortization
Fees
Prepayment
Term
LIBOR + 3.75% and higher, scaled to risk
3 to 5 years
Typically, interest only
Typically, 1.0% origination fee and 0.25% extension fees
12-24 months of yield maintenance |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
10
Financing
Prudent use of leverage to enhance returns and diversification
Develop
diversified
funding
sources
from
traditional
lenders
and
capital
markets
•
Leverage institutional relationships of BX and BREDS
Credit Facilities ($1.9 billion in total)
Revolving
credit
facilities
totaling
$1.5
billion
(1)
from
3
lenders
•
All-in Pricing
(2)
: L + 2.00% -
L + 2.50%
•
Advance Rate: 75% -
80%
•
Term: advances are term matched to the collateral loan maturities (term out
provisions) •
Asset Specific Mark to Market; no capital markets marks
•
Index Matched
Non-Recourse Asset Specific Financings totaling $363 million
Other Potential Funding Sources
•
A-Note sale (third party & CMBS)
•
CLO issuance
•
Corporate finance options
________________________________________________
(1)
Documentation of two $250 million credit facility increases currently in process bringing
total from $1.0 billion to $1.5 billion. (2)
Assuming 5 year senior mortgage transactions; includes applicable origination and extension
fees. |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
11
BXMT Investment Highlights
Superior Sponsorship
•
Affiliation with Blackstone Real Estate, the largest private equity real estate
business in the world
Significant Alignment of Interest
•
$72 million BX investment
BX Debt Investment Experience
•
BREDS has approximately $10 billion AUM
(1)
Strong Origination Platform
•
$1.8
billion loans have closed or are in-closing
(2)
•
Robust pipeline generated from BX network
Attractive Market Opportunity
•
Dislocation amongst CRE lenders coupled with increased transaction volume
________________________________________________
(1)
As of April 30, 2013.
(2)
As of August 20, 2013. |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
12
Appendix |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
13
Alignment of Interest and Governance
Blackstone
Common Share
Investment
$72
million investment by BX
(1)
180-day lockup for Issuer and its directors/officers, and BX
affiliates/certain employees Base
Management Fee
Structure
Incentive Fee
Corporate
Governance
1.5% of Equity per annum, payable in cash, quarterly in arrears
20% of Core Earnings with a 7% annual hurdle rate , payable in cash, quarterly
in arrears No incentive fee is payable unless Core Earnings for the 12
prior quarters (2)
is greater than
zero
A majority of the board of directors is independent as determined by the
requirements of the NYSE
No staggered board
No poison pill
________________________________________
(1)
(2)
Based upon closing price on the NYSE on May 29, 2013. Included BX employees and
associates. Or such lesser number of completed calendar quarters from May 29, 2013, the
closing date of the company’s recent common stock offering. |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
14
BXMT Ownership Structure
________________________________________
(1)
CT Legacy Assets
(1)
$268 million
Third Party Stockholders
Management
Agreement
90%
Blackstone
Employee/Associate
Investment
Blackstone Corporate
Investment
Loan Originations
$1.8 billion
10%
BXMT Advisors
L.L.C.
100%
CT Legacy Assets include consolidated assets of wholly owned and non-wholly owned subsidiaries and
securitization vehicles. GAAP value as of June 30, 2013. |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust
15
BXMT Investment Committee
Our Manager’s investment committee approves our loans and investments, and
advises our senior management team on investment strategy and portfolio
holdings Name
Years of Experience
Position Held with Blackstone or Blackstone Affiliate
Investment Committee
John
Schreiber (Chair)
41
Partner and Co-Founder of Blackstone Real Estate Advisors
Jonathan Gray
21
Global Head of Real Estate
Robert Harper
13
Managing Director of Blackstone Real Estate Debt Strategies (Europe)
Geoffrey Jervis
19
Managing Director of Blackstone Real Estate Debt Strategies
Michael Nash
24
Senior Managing Director of Blackstone Real Estate Debt Strategies
Stephen Plavin
28
Senior Managing Director of Blackstone Real Estate Debt Strategies
Randall Rothschild
16
Managing Director and Chief Operating Officer of Blackstone Real Estate Debt
Strategies
Peter Sotoloff
12
Managing Director of Blackstone Real Estate Debt Strategies (U.S.)
Other
Officers
Douglas Armer
15
Principal of Blackstone Real Estate Debt Strategies
Anthony Marone
9
Vice President of Blackstone Real Estate Debt Strategies |
 Blackstone Mortgage Trust
16
Blackstone Mortgage Trust, Inc.
Second Quarter 2013 Results
*EXCERPTS*
Confidential |
 Blackstone Mortgage Trust
17
Loan Originations
During the quarter, we closed eight new loans with total commitments of $765.2
million. Of this amount, we funded $756.6 million as of June 30,
2013. Weighted-average LTV of new loan originations of 65%.
All newly originated loans are floating rate senior mortgage loans.
Land
Office
Multifamily
Hotel
Midwest
West
Southeast
Northeast
________________________________________________
(1)
Includes only our newly originated loan portfolio. For information on loans in our CT Legacy
Portfolio, refer to our Form 10-Q, filed on July 30, 2013 (2)
Maximum maturity assumes all extension options are exercised.
Portfolio Diversification
(1)
(Dollars in Millions)
(Dollars in Thousands)
Portfolio Statistics
(1)
Number of loans
8
Principal
balance 756,638
$
Net book value
753,101
$
Wtd. Avg. cash coupon
L + 4.44%
Wtd. Avg. all-in yield
L + 5.26%
Wtd. Avg. maximum maturity
(2)
4.0 yrs.
$366
$64
$190
$133
$0
$424
$48
$81
$200
$0 |
 Blackstone Mortgage Trust
18
Loans Receivable Portfolio
The
following
table
provides
details
of
our
loan
portfolio
(1)
as
of
June
30,
2013:
________________________________________________
(1)
Includes only our newly originated loan portfolio. For information on loans in our CT Legacy
Portfolio, refer to our Form 10-Q, filed on July 30, 2013. (2)
All loans are floating rate loans indexed to LIBOR as of June 30, 2013. LIBOR was 0.19% as of
June 30, 2013. (3)
Maximum maturity date assumes all extension options are exercised.
(Dollars in Millions)
Loan Type
Principal
Balance
Book
Value
Cash
Coupon
(2)
All-In
Yield
(2)
Maximum
Maturity
(3)
Geographic
Location
Property
Type
Origination
LTV
Loan 1
Sr. mortgage
68.3
$
68.1
$
L + 3.95%
L + 4.05%
6/9/18
West
Office
71%
Loan 2
Sr. mortgage
300.0
298.5
L + 3.80%
L + 3.98%
6/15/18
West
Office
59%
Loan 3
Sr. mortgage
109.8
109.0
L + 5.25%
L + 8.41%
7/9/14
Northeast
Multifamily
80%
Loan 4
Sr. mortgage
58.0
57.4
L + 3.50%
L + 4.50%
7/9/18
West
Hotel
74%
Loan 5
Sr. mortgage
48.4
48.4
L + 5.00%
L + 5.68%
12/9/16
Midwest
Hotel
53%
Loan 6
Sr. mortgage
27.1
27.1
L + 3.87%
L + 3.87%
7/9/17
Northeast
Hotel
32%
Loan 7
Sr. mortgage
81.0
80.6
L + 3.85%
L + 4.03%
7/9/18
Southeast
Multifamily
75%
Loan 8
Sr. mortgage
64.0
64.0
L + 8.00%
L + 9.67%
2/9/15
Northeast
Land
69%
Total/Wtd. Avg.
756.6
$
753.1
$
L + 4.44%
L + 5.26%
4.0 years
65% |
 Blackstone Mortgage Trust
19
Stockholders’
Equity and Book Value per Share
Stockholders’
equity totaled $712.7 million, or $24.67 per share as of June 30, 2013.
•
On
May
29,
2013,
we
completed
an
offering
of
25.9
million
shares
of
class
A
common
stock
for
gross
proceeds of $656.8 million, and net proceeds of $633.6 million after underwriter
discounts and expenses.
•
On July 26, 2013, we filed an S-3 universal shelf registration with the SEC,
which permits us to periodically offer various debt and equity securities
to the public. Future equity offerings remain subject to the 180-day
lock-up agreement we executed in conjunction with our May 2013 offering of class A
common stock.
•
Our book value per share includes $22.45 attributable to our loan origination
business and $2.22 attributable to our CT Legacy Portfolio.
________________________________________________
(1)
Stock units are granted to certain members of our board of directors in lieu of cash
compensation for services and in lieu of dividends earned on previously granted stock units.
See Note 12 to our financial statements contained in the Form 10-Q, filed on July 30,
2013, for additional details. (Dollars in Thousands, Except per Share Data)
Loan Origination
CT Legacy
Portfolio
Total
Stockholders' equity
648,693
$
63,996
$
712,689
$
Shares
Class A common stock
28,801,651
28,801,651
28,801,651
Stock units
(1)
92,824
92,824
92,824
Total
28,894,475
28,894,475
28,894,475
Book value per share
22.45
$
2.22
$
24.67
$
|
 CT Legacy
Portfolio Our
CT
Legacy
Portfolio
consists
of:
our
investment
in
CT
Legacy
Partners, our residual interests in CT
CDO
I,
and
our
carried
interest
in
CT
Opportunity
Partners
I,
LP
(“CTOPI”).
As we focus on the growth of our loan origination business, we continue to
aggressively asset manage the remaining investments in our CT Legacy
Portfolio. •
$99.4 million of principal collections on legacy assets during the quarter.
•
$6.0 million of positive valuation and mark-to-market adjustments on the
CT Legacy Partners and CT CDO I loan portfolios during the quarter.
•
Net carried interest allocation from CTOPI increased $1.7 million during the
quarter to $12.1 million. Recognition
of
the
revenue
related
to
the
CTOPI
carried
interest
has
been deferred, resulting in a net
book value of zero as of June 30, 2013.
•
Repaid $102.9 million of legacy debt and interest rate swap liabilities during
the quarter. $2.22
CT Legacy Portfolio
Book Value per Share
$6.0 million
Positive Valuation Adjustments in 2Q
CT Legacy
Partners
CT CDO I
Other
Net Book Value
(Dollars in Millions)
$9.0
$4.9
$50.1
$0.0
Blackstone Mortgage Trust
20 |
 21
CT Legacy Portfolio: CT Legacy Partners
CT Legacy Partners is the March 2011 restructuring vehicle that owns our remaining
legacy asset portfolio
(1)
. Blackstone Mortgage Trust owns a controlling interest in CT Legacy Partners,
subject to liabilities under its secured notes and management incentive
awards plan. During the second quarter, CT Legacy Partners had $36.9
million of realizations. Proceeds were used to repay the remaining $20.2
million outstanding under its repurchase facility and terminate its remaining
interest rate swap agreements.
•
Refer
to
our
Form
10-Q,
filed
on
July
30,
2013,
for
additional
details
of
CT
Legacy
Partners’
loans
receivable portfolio.
________________________________________________
(1)
See Note 8 to our financial statements contained in the Form 10-Q, filed on July 30, 2013,
for additional details on the CT Legacy Partners structure. (2)
(3)
Assumes full payment of the management incentive awards plan based on a hypothetical GAAP
liquidation value of CT Legacy Partners as of June 30, 2013. As of June 30, 2013, our
balance sheet includes $6.8 million in accounts payable and accrued expenses for the management incentive awards plan.
(Dollars in Thousands)
June 30, 2013
Gross investment in CT Legacy Partners
Restricted cash
21,972
$
Loans receivable, at fair value
117,549
Equity investments (three-hotel portfolio)
4,108
Accrued interest receivable, other assets, and
accounts payable, net 17,355
Noncontrolling interests
(88,978)
Total gross investment in CT Legacy Partners
72,006
$
Secured notes, including prepayment premium
(1)(2)
(11,059)
Management incentive awards plan, fully vested
(1)(3)
(10,867)
Net investment in CT Legacy Partners
50,080
$
Blackstone Mortgage Trust
Includes the full potential prepayment premium on secured notes. This liability is carried at
its amortized basis of $8.8 million on our balance sheet as of June 30, 2013. |
 CT Legacy
Portfolio: CT CDO I CT CDO I is a collateralized debt obligation issued in
2004. Blackstone Mortgage Trust owns the residual debt and equity positions
of CT CDO I. During the second quarter, CT CDO I had $62.5 million of
investment repayments. Proceeds were used to repay its senior outstanding
securitized debt obligations. •
Refer to our Form 10-Q, filed on July 30, 2013, for additional details of CT
CDO I’s loans receivable portfolio.
(Dollars in Thousands)
June 30, 2013
Assets and liabilities of CT CDO I
Loans receivable, net
77,000
$
Loans held-for-sale, net
3,800
Accrued interest receivable, prepaid expenses, and
other assets 2,838
Total assets
83,638
Accounts payable, accrued expenses and other liabilities
155
Securitized debt
obligations 74,472
Total liabilities
74,627
Net investment in CT CDO I
9,011
$
Blackstone Mortgage Trust
22 |
 23
CT Legacy Portfolio: CTOPI
CTOPI
is
a
private
equity
real
estate
fund
that
we
sponsored
and
formed
in
2007.
The
fund
invested
$491.5 million in 39 transactions between 2007 and 2012, of which $291.8 million
has been realized and $199.7 million remains outstanding (carried at 137%
of cost) as of June 30, 2013. The carried interest in CTOPI entitles us to
earn incentive compensation in an amount equal to 17.7% of the fund’s
profits, after a 9% preferred return and 100% return of capital to the CTOPI limited partners.
•
We own a net 55% of the carried interest of CTOPI’s general partner; the
remaining 45% is payable under incentive awards to our former
employees. As of June 30, 2013, Blackstone Mortgage Trust was allocated
$13.5 million of carried interest from CTOPI based on a hypothetical
liquidation of the fund, reduced by tax-advance distributions received for a net
asset of $12.1 million. Other than tax-advance distributions, we have not
received any cash payments from CTOPI.
•
The net carried interest allocation of $12.1 million, increased $1.7 million from
1Q, and is based on the fair value of CTOPI’s net assets.
•
Recognition
of
the
revenue
related
to
the
CTOPI
carried
interest
has
been
deferred,
resulting
in
no
contribution
to
book
value
from
the
$12.7
million
of
net
carried
interest.
Blackstone Mortgage Trust |
 Highly Confidential & Trade Secret
Blackstone Mortgage Trust (BXMT)
Highly Confidential & Trade Secret |