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Mortgage REIT Investors: What To Know From Blackstone's Latest Data

Mortgage REIT Investors: What To Know From Blackstone's Latest Data
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Blackstone Mortgage Trust Inc (NYSE: BXMT) on Tuesday released its earnings presentation for the quarter ended June 30, 2015 after the market closed.

Blackstone Mortgage is a commercial mREIT externally managed by Blackstone Group LP (NYSE: BX), and therefore stands to benefit from the deal flow from its affiliation with Blackstone, the largest publicly traded alternative asset manager with over $330 billion of assets under management (AUM).


Notably, Blackstone engineered a huge asset acquisition from GE Capital during the quarter, which led to a doubling of the Blackstone Mortgage assets on its balance sheet.

Related Link: A Small-Cap Mortgage REIT Might Be The GE Capital Deal's Biggest Winner

Q2 Earnings Highlights


Stephen D. Plavin, Chief Executive Officer, said, "This was a landmark quarter for BXMT. We closed $6.5 billion of loans, including the entire $4.9 billion GE portfolio, and added $1.73 to our book value primarily from the equity we issued to fund new investments. We enter the second half of the year with all of the drivers for significant growth in Core Earnings and dividends already in place."


Blackstone Mortgage presents its results both in GAAP and in the form of Core Earnings, as defined by the company.

BXMT Q1 Core Earnings - Comparison

The Q2 earnings presentation included slide 13 below, a recap of Q1 Core Earnings calculation and balance sheet highlights.

Although the Blackstone Mortgage balance sheet has expanded tremendously quarter-over-quarter sequentially, as shown by the slide below, both net income and Core Earnings fell vs. Q1 2015 results.

Focus On 2H 2015 Earnings


The $517 million of "dry powder" or liquidity available for investment will certainly be put to work during 2H15. Blackstone Mortgage calculates that including additional leverage, this would equate to a potential increase of loan originations of ~$1.9 billion.

No Longer 100% Floating Rate Loans


Notably, the GE fixed rate portion of the portfolio generated a higher gross ROI of 19.8 percent.


Previously, the Blackstone Mortgage loan portfolio was comprised of 100 percent floating rate loans. After the GE Capital transaction, there are ~25 percent fixed rate and 75 percent floating rate, indexed to Libor.

BXMT Diversified Loan Portfolio


The Blackstone Mortgage portfolio continues to be comprised almost completely of senior loans, diversified both geographically and by property type. Notably, New York at 19 percent and office buildings at 40 percent make up the highest concentration of loans.

Q2 BVPS Increase Vs. Q1 2015


Investor Takeaway

The Blackstone Mortgage Q2 conference call is scheduled for Wednesday at 10 a.m. ET to discuss these results.

Investors will be eager to listen to management discussion centering on 2H 2015 and future guidance for net income and Core Earnings per share, as well as BXMT fixed rate vs floating rate strategies moving forward.

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