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| 8-K - FORM 8-K - BLACKSTONE MORTGAGE TRUST, INC. | d605228d8k.htm |
 October 2013
Blackstone Mortgage Trust (BXMT)
Exhibit 99.1 |
 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 subsequent quarterly reports on Form 10- Q 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. |
 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: $70
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
$2.0
billion
of
originations
since
May 2013
equity
re-capitalization
(3)
BXMT is primarily a floating-rate lender and is designed to provide investors
with attractive current income and potential for value appreciation
________________________________________________
(1)
Includes July 2013 closings for the most recent debt strategies drawdown fund.
(2)
Based upon closing price on the NYSE on September 27, 2013. Includes BX employees
and associates. (3)
As of September 30, 2013. |
 Superior Real Estate Platform
Blackstone Real Estate
Blackstone Real Estate
Debt Strategies (“BREDS”)
Blackstone Real Estate
Partners (“BREP”)
________________________________________
(1)
Includes July 2013 closings for the most recent debt strategies drawdown fund.
BX investment committee process and investment philosophy
Superior sourcing capabilities through long-standing industry
relationships Underwriting process includes proprietary data from extensive
investment holdings $54 billion AUM
174 professionals
$10
billion
AUM
(1)
51
professionals
+/-200 separate loans
Actively managed CMBS
hedge funds ($1 billion)
Blackstone Mortgage Trust
3 |
 Blackstone Mortgage Trust
4
Seasoned and Fully Integrated Platform
21 Professionals
Origination
Peter Sotoloff
Thomas Ruffing
Randall
Rothschild
Douglas
Armer
Anthony
Marone
Robert Harper
Asset Management
Capital Markets / Finance
6 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 |
 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
2016
2017
$374
$350
$346
$321
$326
2013
2014
2015
€240
€261
€285
2006
2007
2008
2009
2010
2011
2012
€69
€66
€8
€25
€5
€2
€4
2006
2007
2008
2009
2010
2011
2012
$198
$228
$12
$3
$12
$33
$48
Blackstone Mortgage Trust
5 |
 Blackstone Mortgage Trust
6
Increased regulation and overleveraged balance sheets have reduced the
lending capacity of European banks in the U.S. and Europe
Banking Environment
Overleveraged Banks
European banks have 2-3x the leverage of U.S. banks
________________________________________________
Source: IMF (October 2012). |
 Blackstone Mortgage Trust
7
Limited new supply coupled with modest growth is a favorable investment
environment for senior commercial real estate debt
________________________________________________
Source: Citi (June 2013), BEA (December 2012).
U.S. Aggregate Construction Starts
(Annualized)
U.S. GDP
($ in billions)
Current Investment Environment |
 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)
(2)
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.
Example of hypothetical asset values and decline based on Moody’s CPPI as of March 2013.
|
 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 to 24 months of yield maintenance |
 Blackstone Mortgage Trust
10
Capital Deployment
BXMT has executed on its first mortgage direct origination strategy with rapid
success •
Since May, BXMT has closed $1.5 billion of loans; and another $529 million of
loans are currently in closing
•
18 transactions closed; 5 in closing; Median loan size is $68 million
$ -
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
22-May-13
22-Jun-13
22-Jul-13
22-Aug-13
22-Sep-13
Cumulative BXMT Loan Origintions |
 Blackstone Mortgage Trust
11
Portfolio Snapshot
The BXMT loan portfolio is comprised of select transitional, senior lending
opportunities •
100% of BXMT’s new loans are floating rate
•
The portfolio has a weighted average LTV of 67% and all-in yield of
L+5.44% ________________________________________________
Note: Statistics and charts represent data for closed loans and loans in closing.
$ -
$100
$200
$300
$400
$500
$600
Property Type
Geography
Loan to Value
0% -
50%
50% -
55%
55% -
60%
60% -
65%
65% -
70%
70% -
75%
75% -
80%
80% -
85%
85% -
100% |
 Blackstone Mortgage Trust
12
Financing
________________________________________________
(1)
Availability of borrowings up to $1.5 billion depending on amount of collateral pledged.
Closing of a $250 million credit facility increase currently in negotiation is included in the $1.5 billion total.
(2)
Assuming 5 year senior mortgage transactions; includes applicable origination and extension
fees. Prudent use of leverage to enhance returns and diversification
Develop
diversified
funding
sources
from
traditional
lenders
and
capital
markets
•
Obtained leverage that is advantageous in terms of structuring and pricing
Debt Facilities ($1.8 billion in total)
Revolving
debt
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 $342 million
Other Potential Funding Sources
•
A-Note sale (third party & CMBS)
•
CLO issuance
•
Corporate finance options |
 Blackstone Mortgage Trust
BXMT Investment Highlights
________________________________________________
(1)
As of September 27, 2013.
(2)
As of April 30, 2013.
(3)
As of September 30, 2013.
Superior Sponsorship
•
Affiliation with Blackstone Real Estate, the largest private equity real estate
business in the world
•
Significant
Alignment
of
Interest:
$70
million
BX
Investment
(1)
BX Debt Investment Experience
•
BREDS
has
approximately
$10
billion
AUM
(2)
Strong Origination Platform
•
$2.0
billion
loans
have
closed
or
are
in-closing
(3)
•
Robust pipeline generated from BX network
Attractive Market Opportunity
•
Dislocation amongst CRE lenders coupled with increased transaction volume
Floating Rate Business Model
•
Returns increase with rising short-term interest rates
13 |
 Blackstone Mortgage Trust
14
Appendix |
 Blackstone Mortgage Trust
15
Alignment of Interest and Governance
Blackstone
Common Share
Investment
$70
million investment by BX
(1)
180-day lockup for Issuer and its directors/officers, and BX
affiliates/certain employees, entered into May 2013
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 September 27, 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. |
 BXMT
Ownership Structure Management
Agreement
90%
10%
100%
CT
Legacy
Assets
(1)
$268 million
Loan Originations
$2.0 billion
BXMT Advisors
L.L.C.
Blackstone
Employee/Associate
Investment
Blackstone Corporate
Investment
Third Party Stockholders
Blackstone Mortgage Trust
16
(1)
CT Legacy Assets include consolidated assets of wholly owned and non-wholly owned
subsidiaries and securitization vehicles. GAAP value as of June 30, 2013.
________________________________________ |
 Blackstone Mortgage Trust
17
BXMT Investment Committee
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
Our Manager’s investment committee approves our loans and investments, and
advises our senior management team on investment strategy and portfolio
holdings |
 Blackstone Mortgage Trust
18
Blackstone Mortgage Trust, Inc.
Second Quarter 2013 Results
*EXCERPTS* |
 Blackstone Mortgage Trust
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)
As of June 30, 2013, 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.
19 |
 Blackstone Mortgage Trust
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%
20 |
 Blackstone Mortgage Trust
$756.6 million of floating-rate loans, indexed
to one-month LIBOR.
$165.2 million of floating-rate liabilities, also
indexed to one-month LIBOR.
Return on $591.4 million of equity capital is
highly correlated to LIBOR.
All else equal, as of June 30, 2013, a
100bps increase in LIBOR would increase
our
net
income
by
$5.9
million
(2)
per
annum.
Our equity value is insulated from changes in
interest rates because both our loans and
borrowings are LIBOR-based.
Floating-Rate Business Model
Because of our LIBOR-based lending and funding business model, our returns
increase with rising short- term interest rates, and therefore our
asset and equity values are insulated from such increases. 21
Loan Capitalization
(1)
(Dollars in Millions)
Floating-Rate
Loans
Floating-Rate
Borrowings
$756.6
$165.2
$591.4
________________________________________________
(1)
Includes only our newly originated loan portfolio of $756.6 million, capitalized with $165.2
million of debt and $591.4 million of equity. Excludes the assets, liabilities, and equity
of our CT Legacy Portfolio.
(2)
Excludes the impact of LIBOR floors on certain of our loans receivable investments.
Equity Capital |
 Blackstone Mortgage Trust
22
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
$
|
 Blackstone Mortgage Trust
23
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)
$0.0
$9.0
$4.9
$50.1
$0.0 |
 Blackstone Mortgage Trust
24
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)
(2)
(3)
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.
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.
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
25
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
26
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 (BXMT) |