BLACKSTONE MORTGAGE TRUST INC
For the period ended Sep 30, 2024. Filed Oct 23, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 23, 2024
BXMT$11.16-2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-24.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-23.
0001061630-24-000148
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 241 previous paragraphs and 236 current paragraphs.
163 unchanged; 58 reworded; 14 added; 17 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 29 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
(1)Total loan exposure reflects our aggregate exposure to each loan investment. As of September 30, 2024, total loan exposure, includes (i) loans with an outstanding principal balance of $21.8 billion that are included in our consolidated financial statements, (ii) $770.2 million of non-consolidated senior interests in loans we have sold, which are not included in our consolidated financial statements, and excludes (iii) $103.5 million of junior loan interests that we have sold, but that remain included in our consolidated financial statements. See Note 2 to our consolidated financial statements for further discussion of loan participations sold.
Current report
(1)Total loan exposure reflects our aggregate exposure to each loan investment. As of September 30, 2024, total loan exposure, includes (i) loans with an outstanding principal balance of $21.8 billion that are included in our consolidated financial statements, (ii) $770.2 million of non-consolidated senior interests in loans we have sold, which are not included in our consolidated financial statements, and excludes (iii) $103.5 million of junior loan interests that we have sold, but that remain included in our consolidated financial statements. See Note 2 to our consolidated financial statements for further discussion of loan participations sold.
Current report
(1)Total loan exposure reflects our aggregate exposure to each loan investment. As of September 30, 2024, total loan exposure, includes (i) loans with an outstanding principal balance of $21.8 billion that are included in our consolidated financial statements, (ii) $770.2 million of non-consolidated senior interests in loans we have sold, which are not included in our consolidated financial statements, and excludes (iii) $103.5 million of junior loan interests that we have sold, but that remain included in our consolidated financial statements. See Note 2 to our consolidated financial statements for further discussion of loan participations sold.
Current report
Revenue from real estate owned
Current report
Revenue from real estate owned increased by $1.2 million during the three months ended September 30, 2024 due to additional REO assets acquired during the quarter. There was no revenue from real estate owned during the three months ended June 30, 2024.
Current report
Other expenses include management and incentive fees payable to our Manager, general and administrative expenses, and expenses from real estate owned. Other expenses increased by $1.4 million during the three months ended September 30, 2024 compared to the three months ended June 30, 2024 primarily due to an increase in expenses of real estate owned due to additional REO assets acquired during the quarter.
Current report
During the three months ended September 30, 2024, we recorded a $132.5 million increase in our CECL reserves, as compared to a $152.4 million increase during the three months ended June 30, 2024. These incremental CECL reserves primarily reflect a $124.2 million increase in the specific reserves, primarily related to two loans impaired during the three months ended September 30, 2024, both of which were secured by office buildings. The office sector is generally facing reduced tenant and capital markets demand in recent years. These impairments are each determined individually as a result of changes in the specific credit quality factors for such loans. These factors included, among others, (i) the underlying collateral performance, (ii) discussions with the borrower, (iii) borrower events of default, and (iv) other facts that impact the borrower’s ability to pay the contractual amounts due under the terms of the loan. In addition, our general CECL reserves decreased primarily as a result of loan repayments reducing the size of our portfolio during the three months ended September 30, 2024.
Current report
We may be required to record further increases to our CECL reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may be volatility in the level of our CECL reserves. In particular, our loans secured by office buildings have experienced higher levels of CECL reserves and may continue to do so if market conditions relevant to office buildings do not improve. Any such reserve increases are difficult to predict, but are expected to be primarily the result of incremental loan impairments resulting from changes in the specific credit quality factors of such loans and to be concentrated in our loans receivable with a risk rating of “4” as of September 30, 2024.
Current report
Revenue from real estate owned
Current report
Revenue from real estate owned increased by $1.2 million during the nine months ended September 30, 2024 due to REO assets being acquired. There was no revenue from real estate owned during the nine months ended June 30, 2024.
Current report
Gain on extinguishment of debt increased by $811,000 during the nine months ended September 30, 2024. During the nine months ended September 30, 2024, we recognized an aggregate gain on extinguishment of debt of $5.4 million related to the repurchase of an aggregate principal amount of $33.8 million, $30.8 million, and $2.3 million, of our Convertible Notes, Senior Secured Notes, and B-1 Term Loan, respectively. During the nine months ended September 30, 2023, we recognized a gain on extinguishment of debt of $4.5 million related to the repurchase of an aggregate principal amount of $33.4 million of our Senior Secured Notes.
Current report
We may be required to record further increases to our CECL reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may be volatility in the level of our CECL reserves. In particular, our loans secured by office buildings have experienced higher levels of CECL reserves and may continue to do so if market conditions relevant to office buildings do not improve. Any such reserve increases are difficult to predict, but are expected to be primarily the result of incremental loan impairments resulting from changes in the specific credit quality factors of such loans and to be concentrated in our loans receivable with a risk rating of “4” as of September 30, 2024.
Current report
During the three and nine months ended September 30, 2024, we repurchased 628,884 shares of class A common stock at a weighted-average price per share of $17.49, for a total cost of $11.0 million. As of September 30, 2024, the amount remaining available for repurchases under the program was $139.0 million.
Current report
(4)Total loan exposure reflects our aggregate exposure to each loan investment. As of September 30, 2024, total loan exposure, includes (i) loans with an outstanding principal balance of $21.8 billion that are included in our consolidated financial statements, (ii) $770.2 million of non-consolidated senior interests in loans we have sold, which are not included in our consolidated financial statements, and excludes (iii) $103.5 million of junior loan interests that we have sold, but that remain included in our consolidated financial statements.
Removed paragraphs (17)
Previous report
Recent Developments
Previous report
Share Repurchase Program
Previous report
Third Quarter Dividend
Previous report
In July 2024, we declared a dividend of $0.47 per share of common stock for the third quarter of 2024, which is payable on October 15, 2024 to stockholders of record as of September 30, 2024.
Previous report
(4)Reflects the $6.3 million of incentive fee expenses that would have been incurred if such charge-offs had not occurred during the three months ended March 31, 2024.
Previous report
(1)Total loan exposure reflects our aggregate exposure to each loan investment. As of June 30, 2024, total loan exposure, includes (i) loans with an outstanding principal balance of $23.0 billion that are included in our consolidated financial statements, (ii) $725.4 million of non-consolidated senior interests in loans we have sold, which are not included in our consolidated financial statements, and excludes (iii) $100.6 million of junior loan interests that we have sold, but that remain included in our consolidated financial statements. See Note 2 to our consolidated financial statements for further discussion of loan participations sold.
Previous report
(1)Total loan exposure reflects our aggregate exposure to each loan investment. As of June 30, 2024, total loan exposure, includes (i) loans with an outstanding principal balance of $23.0 billion that are included in our consolidated financial statements, (ii) $725.4 million of non-consolidated senior interests in loans we have sold, which are not included in our consolidated financial statements, and excludes (iii) $100.6 million of junior loan interests that we have sold, but that remain included in our consolidated financial statements. See Note 2 to our consolidated financial statements for further discussion of loan participations sold.
Previous report
(1)Total loan exposure reflects our aggregate exposure to each loan investment. As of June 30, 2024, total loan exposure, includes (i) loans with an outstanding principal balance of $23.0 billion that are included in our consolidated financial statements, (ii) $725.4 million of non-consolidated senior interests in loans we have sold, which are not included in our consolidated financial statements, and excludes (iii) $100.6 million of junior loan interests that we have sold, but that remain included in our consolidated financial statements. See Note 2 to our consolidated financial statements for further discussion of loan participations sold.
Previous report
Acquisition Facility
Previous report
We previously had a $100.0 million full recourse secured credit facility that was designed to finance eligible first mortgage originations for up to nine months as a bridge to term financing without obtaining discretionary lender approval. The cost of borrowing under the facility was variable, dependent on the type of loan collateral. This facility matured on April 3, 2024.
Previous report
Net expense from real estate owned
Previous report
During the three months ended June 30, 2024, we recognized net expense from REO of $963,000, which primarily relates to operating expenses and depreciation expense. We did not earn any income or incur any expense from REO during the three months ended March 31, 2024.
Previous report
During the six months ended June 30, 2024, we recorded a $387.3 million increase in our CECL reserves, as compared to a $37.6 million increase during the six months ended June 30, 2023. These increases in CECL reserves primarily reflect certain impaired loans in our portfolio.
Previous report
During the six months ended June 30, 2024, we recognized a gain on extinguishment of debt of $3.0 million related to the repurchase of an aggregate principal amount of $26.2 million of our Senior Secured Notes. There was no repurchase activity or gain on extinguishment of debt in the six months ended June 30, 2023.
Previous report
Net expense from real estate owned
Previous report
During the six months ended June 30, 2024, we recognized net expense from REO of $963,000, which primarily relates to operating expenses and depreciation expense. We did not earn any income or incur any expense from REO during the six months ended June 30, 2023.
Previous report
(4)Total loan exposure reflects our aggregate exposure to each loan investment. As of June 30, 2024, total loan exposure, includes (i) loans with an outstanding principal balance of $23.0 billion that are included in our consolidated financial statements, (ii) $725.4 million of non-consolidated senior interests in loans we have sold, which are not included in our consolidated financial statements, and excludes (iii) $100.6 million of junior loan interests that we have sold, but that remain included in our consolidated financial statements.
Reworded paragraphs (58)
Previous wording
As a real estate finance company, we believe the key financial measures and indicators for our business are earnings per share, dividends declared, Distributable Earnings, and book value per share. For the three months ended June 30, 2024, we recorded a basic net loss per share of $0.35, declared a dividend of $0.62 per share, and reported $0.49 per share of Distributable Earnings. In addition, our book value as of June 30, 2024 was $22.90 per share, which is net of cumulative CECL reserves of $5.21 per share.
Current wording
As a real estate finance company, we believe the key financial measures and indicators for our business are earnings per share, dividends declared, Distributable Earnings, and book value per share. For the three months ended September 30, 2024, we recorded a basic net loss per share of $0.32, declared a dividend of $0.47 per share, and reported $0.39 per share of Distributable Earnings. In addition, our book value as of September 30, 2024 was $22.17 per share, which is net of cumulative CECL reserves of $5.89 per share.
Previous wording
The following table sets forth the calculation of basic net loss per share and dividends declared per share ($ in thousands, except per share data):
Current wording
The following table sets forth the calculation of basic net income (loss) per share and dividends declared per share ($ in thousands, except per share data):
Previous wording
(1)Represents net loss attributable to Blackstone Mortgage Trust. Refer to Note 14 to our consolidated financial statements for the calculation of diluted net loss per share.
Current wording
(1)Represents net loss attributable to Blackstone Mortgage Trust. Refer to Note 14 to our consolidated financial statements for the calculation of diluted net income (loss) per share.
Previous wording
The following table provides a reconciliation of Distributable Earnings and Distributable Earnings prior to charge-offs of CECL reserves to GAAP net loss ($ in thousands, except per share data):
Current wording
The following table provides a reconciliation of Distributable Earnings and Distributable Earnings prior to charge-offs of CECL reserves to GAAP net income (loss) ($ in thousands, except per share data):
Previous wording
(3)Represents realized gains (losses) on the repatriation of unhedged foreign currency. These amounts were not included in GAAP net loss, but rather as a component of other comprehensive income in our consolidated financial statements.
Current wording
(3)Represents realized gains (losses) on the repatriation of unhedged foreign currency. These amounts were not included in GAAP net income (loss), but rather as a component of other comprehensive income in our consolidated financial statements.
Previous wording
(5)The weighted-average shares outstanding, basic, exclude shares issuable from a potential conversion of our Convertible Notes then outstanding. Consistent with the treatment of other unrealized adjustments to Distributable Earnings, these potentially issuable shares are excluded until a conversion occurs. Refer to Note 14 to our consolidated financial statements for the calculation of diluted net income per share.
Current wording
(4)The weighted-average shares outstanding, basic, exclude shares issuable from a potential conversion of our Convertible Notes then outstanding. Consistent with the treatment of other unrealized adjustments to Distributable Earnings, these potentially issuable shares are excluded until a conversion occurs. Refer to Note 14 to our consolidated financial statements for the calculation of diluted net income per share.
Previous wording
During the three months June 30, 2024, we originated $103.2 million of loans. Loan fundings during the quarter totaled $375.8 million and loan repayments and sales totaled $700.6 million. We generated interest income of $466.2 million and incurred interest expense of $339.4 million during the quarter, which resulted in $126.8 million of net interest income during the three months ended June 30, 2024.
Current wording
During the three months September 30, 2024, we originated or acquired $131.5 million of loans. Loan fundings during the quarter totaled $403.7 million and loan repayments and sales totaled $1.8 billion. We generated interest income of $430.1 million and incurred interest expense of $321.7 million during the quarter, which resulted in $108.3 million of net interest income during the three months ended September 30, 2024.
Previous wording
(2)Loan fundings during the three and six months ended June 30, 2024, include $44.6 million and $89.3 million, respectively, of additional fundings under related non-consolidated senior interests.
Current wording
(2)Loan fundings during the three and nine months ended September 30, 2024, include $44.8 million and $134.1 million, respectively, of additional fundings under related non-consolidated senior interests.
Previous wording
(3)Loan repayments and sales during the three and six months ended June 30, 2024, include $57.3 million and $512.1 million, respectively, of additional repayments or reduction of loan exposure under related non-consolidated senior interests.
Current wording
(3)Loan repayments and sales during the nine months ended September 30, 2024, include $512.1 million of additional repayments or reduction of loan exposure under related non-consolidated senior interests. There were no such related loan repayments during the three months ended September 30, 2024.
Previous wording
(1)Total loan exposure reflects our aggregate exposure to each loan investment. As of June 30, 2024, total loan exposure, includes (i) loans with an outstanding principal balance of $23.0 billion that are included in our consolidated financial statements, (ii) $725.4 million of non-consolidated senior interests in loans we have sold, which are not included in our consolidated financial statements, and excludes (iii) $100.6 million of junior loan interests that we have sold, but that remain included in our consolidated financial statements. We have retained an aggregate $187.1 million of subordinate mezzanine loans, as of June 30, 2024, related to non-consolidated senior interests that are included in our balance sheet portfolio.
Current wording
(1)Total loan exposure reflects our aggregate exposure to each loan investment. As of September 30, 2024, total loan exposure, includes (i) loans with an outstanding principal balance of $21.8 billion that are included in our consolidated financial statements, (ii) $770.2 million of non-consolidated senior interests in loans we have sold, which are not included in our consolidated financial statements, and excludes (iii) $103.5 million of junior loan interests that we have sold, but that remain included in our consolidated financial statements. We have retained an aggregate $199.5 million of subordinate mezzanine loans, as of September 30, 2024, related to non-consolidated senior interests that are included in our balance sheet portfolio.
Previous wording
(2)Unfunded commitments will primarily be funded to finance our borrowers’ construction or development of real estate-related assets, capital improvements of existing assets, or lease-related expenditures. These commitments will generally be funded over the term of each loan, subject in certain cases to an expiration date. Excludes $291.9 million of unfunded loan commitments related to our non-consolidated senior interests, as these commitments will not require cash outlays from us.
Current wording
(2)Unfunded commitments will primarily be funded to finance our borrowers’ construction or development of real estate-related assets, capital improvements of existing assets, or lease-related expenditures. These commitments will generally be funded over the term of each loan, subject in certain cases to an expiration date. Excludes $247.1 million of unfunded loan commitments related to our non-consolidated senior interests, as these commitments will not require cash outlays from us.
Previous wording
(4)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 June 30, 2024, 12% of our loans by total loan exposure were subject to yield maintenance or other prepayment restrictions and 88% were open to repayment by the borrower without penalty.
Current wording
(4)Maximum maturity assumes all extension options are exercised by the borrower, however our loans and other investments may be repaid prior to such date. Excludes loans accounted for under the cost-recovery and nonaccrual methods, if any. As of September 30, 2024, 14% of our loans by total loan exposure were subject to yield maintenance or other prepayment restrictions and 86% were open to repayment by the borrower without penalty.
Previous wording
(2)Includes Euro, British Pound Sterling, Swedish Krona, Australian Dollar, Swiss Franc, and Danish Krone currencies.
Current wording
(2)Includes Euro, British Pound Sterling, Swedish Krona, Australian Dollar, and Swiss Franc currencies.
Previous wording
(5)As of June 30, 2024, the weighted-average index rate floor of our total loan exposure was 0.80%. Excluding 0.0% index rate floors and loans with no floor, the weighted-average index rate floor was 1.35%. As of December 31, 2023, the weighted-average index rate floor of our total loan exposure was 0.56%. Excluding 0.0% index rate floors and loans with no floor, the weighted-average index rate floor was 1.02%.
Current wording
(5)As of September 30, 2024, the weighted-average index rate floor of our total loan exposure was 0.97%. Excluding 0.0% index rate floors and loans with no floor, the weighted-average index rate floor was 1.56%. As of December 31, 2023, the weighted-average index rate floor of our total loan exposure was 0.56%. Excluding 0.0% index rate floors and loans with no floor, the weighted-average index rate floor was 1.02%.
Previous wording
(5)Includes floating rate loans indexed to STIBOR, BBSY, SARON, and CIBOR indices.
Current wording
(5)Includes floating rate loans indexed to STIBOR, BBSY, and SARON indices.
Previous wording
(1)Net loan exposure reflects the amount of each loan that is subject to risk of credit loss to us as of June 30, 2024, which is our total loan exposure net of (i) $725.4 million of non-consolidated senior interests, (ii) $1.1 billion of asset-specific debt, (iii) $76.3 million of cost-recovery proceeds, and (iv) our total loans receivable CECL reserve of $893.9 million. Our non-consolidated senior interests, asset-specific debt, and loan participations sold are structurally non-recourse and term-matched to the corresponding collateral loans. Geographic locations that represent less than 1% of net loan exposure are excluded from the chart above.
Current wording
(1)Net loan exposure reflects the amount of each loan that is subject to risk of credit loss to us as of September 30, 2024, which is our total loan exposure net of (i) $770.2 million of non-consolidated senior interests, (ii) $1.2 billion of asset-specific debt, (iii) $99.0 million of cost-recovery proceeds, and (iv) our total loans receivable CECL reserve of $1.0 billion. Our non-consolidated senior interests, asset-specific debt, and loan participations sold are structurally non-recourse and term-matched to the corresponding collateral loans. Geographic locations that represent less than 1% of net loan exposure are excluded from the chart above.
Previous wording
As of June 30, 2024, 90% of our loans were performing with risk ratings of “1” through “4,” and the remaining 10% were impaired with a risk rating of “5.” Of the performing loans, 99.8%, based on net loan exposure, were in compliance with the contractual terms of each respective loan. We believe this demonstrates the overall strength of our loan portfolio and the commitment and financial wherewithal of our borrowers generally, which are primarily affiliated with large real estate private equity funds and other strong, well-capitalized, and experienced sponsors.
Current wording
As of September 30, 2024, 88% of our loans were performing with risk ratings of “1” through “4,” and the remaining 12% were impaired with a risk rating of “5.” All of the performing loans were in compliance with the applicable contractual terms. We believe this demonstrates the overall strength of our loan portfolio and the commitment and financial wherewithal of our borrowers generally, which are primarily affiliated with large real estate private equity funds and other strong, well-capitalized, and experienced sponsors.
Previous wording
We maintain a robust asset management relationship with our borrowers and utilize these relationships to maximize the performance of our portfolio, including during periods of volatility. We believe that we benefit from these relationships and from our long-standing core business model of originating senior loans collateralized by large assets in major markets with experienced, well-capitalized institutional sponsors. Our loan portfolio’s low weighted-average origination LTV is 62.9%, excluding any loans that are impaired and any junior participations sold, as of June 30, 2024. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments. As of June 30, 2024, we had an aggregate $759.4 million asset- specific CECL reserve related to 19 of our loans receivable, with an aggregate amortized cost basis of $2.9 billion, net of cost-recovery proceeds. This CECL reserve was recorded based on our estimation of the fair value of each of the loan's underlying collateral as of June 30, 2024.
Current wording
We maintain a robust asset management relationship with our borrowers and utilize these relationships to maximize the performance of our portfolio, including during periods of volatility. We believe that we benefit from these relationships and from our long-standing core business model of originating senior loans collateralized by large assets in major markets with experienced, well-capitalized institutional sponsors. Our loan portfolio’s low weighted-average origination LTV is 62.8%, excluding any loans that are impaired and any junior participations sold, as of September 30, 2024. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments. As of September 30, 2024, we had an aggregate $883.6 million asset-specific CECL reserve related to 20 of our loans receivable, with an aggregate amortized cost basis of $3.2 billion, net of cost-recovery proceeds. This CECL reserve was recorded based on our estimation of the fair value of each of the loan's underlying collateral as of September 30, 2024.
Previous wording
As discussed in Note 2 to our consolidated financial statements, we perform a quarterly review of our loan portfolio, assesses the performance of each loan, and assigns it a risk rating between “1” and “5”, from less risk to greater risk. Our loan portfolio had a weighted-average risk rating of 3.0 as of both June 30, 2024 and December 31, 2023.
Current wording
As discussed in Note 2 to our consolidated financial statements, we perform a quarterly review of our loan portfolio, assesses the performance of each loan, and assigns it a risk rating between “1” and “5”, from less risk to greater risk. Our loan portfolio had a weighted-average risk rating of 3.1 and 3.0 as of September 30, 2024 and December 31, 2023, respectively.
Previous wording
(2)Net loan exposure reflects the amount of each loan that is subject to risk of credit loss to us as of June 30, 2024, which is our total loan exposure net of (i) $725.4 million of non-consolidated senior interests, (ii) $1.1 billion of asset-specific debt, (iii) $76.3 million of cost-recovery proceeds, and (iv) our total loans receivable CECL reserve of $893.9 million. Our non-consolidated senior interests, asset-specific debt, and loan participations sold are structurally non-recourse and term-matched to the corresponding collateral loans.
Current wording
(2)Net loan exposure reflects the amount of each loan that is subject to risk of credit loss to us as of September 30, 2024, which is our total loan exposure net of (i) $770.2 million of non-consolidated senior interests, (ii) $1.2 billion of asset-specific debt, (iii) $99.0 million of cost-recovery proceeds, and (iv) our total loans receivable CECL reserve of $1.0 billion. Our non-consolidated senior interests, asset-specific debt, and loan participations sold are structurally non-recourse and term-matched to the corresponding collateral loans.
Previous wording
During the three months ended June 30, 2024, we recorded an increase of $142.6 million in the CECL reserves against our loans receivable portfolio, primarily related to three new impaired loans, offset by charge-offs of our CECL reserves of $12.5 million, bringing our total loans receivable CECL reserve to $893.9 million as of June 30, 2024. These charge-offs primarily related to one previously impaired loan that was resolved during the three months ended June 30, 2024. The resolution was the result of the repayment of a loan collateralized by an office asset in New York, NY. As of June 30, 2024, the income accrual was suspended on the three additional loans that were impaired as the recovery of income and principal was doubtful. During the three months ended June 30, 2024, we recorded $11.1 million of interest income on these three loans.
Current wording
During the three months ended September 30, 2024, we recorded a net increase of $117.1 million in the CECL reserves against our loans receivable portfolio, due to a $134.1 million increase in CECL reserves, offset by charge-offs of our CECL reserves of $17.0 million, bringing our total loans receivable CECL reserve to $1.0 billion as of September 30, 2024. This increase primarily relates to two loans impaired during the three months ended September 30, 2024, both of which were secured by office buildings. The office sector is generally facing reduced tenant and capital markets demand in recent years. These impairments are each determined individually as a result of changes in the specific credit quality factors for such loans. These factors included, among others, (i) the underlying collateral performance, (ii) discussions with the borrower, (iii) borrower events of default, and (iv) other facts that impact the borrower’s ability to pay the contractual amounts due under the terms of the loan. As of September 30, 2024, the income accrual was suspended on the two additional loans that were impaired as the recovery of income and principal was doubtful. During the three months ended September 30, 2024, we recorded $4.9 million of interest income on these two loans. In addition, our general CECL reserves decreased primarily as a result of loan repayments reducing the size of our portfolio during the three months ended September 30, 2024.
Previous wording
As of June 30, 2024, we had an aggregate $759.4 million asset-specific CECL reserve related to 19 of our loans receivable, with an aggregate amortized cost basis of $2.9 billion, net of cost-recovery proceeds. This CECL reserve was recorded based on our estimation of the fair value of each of the loan's underlying collateral as of June 30, 2024. No income was recorded on our impaired loans subsequent to determining that they were impaired. During the three and six months ended June 30, 2024, we received an aggregate $18.5 million and $35.3 million, respectively, of cash proceeds from such loans that were applied as a reduction to the amortized cost basis of each respective loan.
Current wording
As of September 30, 2024, we had an aggregate $883.6 million asset-specific CECL reserve related to 20 of our loans receivable, with an aggregate amortized cost basis of $3.2 billion, net of cost-recovery proceeds. This CECL reserve was recorded based on our estimation of the fair value of each of the loan's underlying collateral as of September 30, 2024. No income was recorded on our impaired loans subsequent to determining that they were impaired. During the three and nine months ended September 30, 2024, we received an aggregate $24.5 million and $59.8 million, respectively, of cash proceeds from such loans that were applied as a reduction to the amortized cost basis of each respective loan.
Previous wording
As of June 30, 2024, one of our performing loans with an amortized cost basis of $33.0 million was past its current maturity date, was less than 30 days past due on its interest payment, and had a risk rating of “4.” Subsequent to June 30, 2024, we foreclosed on the assets securing this loan and recognized them as REO. This loan was not impaired as of June 30, 2024 as the fair value of the underlying collateral exceeded our basis in the loan. As of June 30, 2024, all other borrowers under performing loans were in compliance with the contractual terms of each respective loan, including any required payment of interest. Refer to Note 2 for further discussion of our policies on revenue recognition and our CECL reserves.
Current wording
As of September 30, 2024, all borrowers under performing loans were in compliance with the applicable contractual terms, including any required payment of interest. Refer to Note 2 to our consolidated financial statements for further discussion of our policies on revenue recognition and our CECL reserves.
Previous wording
As of June 30, 2024, our multifamily joint venture held $473.2 million of loans, which are included in the loan disclosures above. Refer to Note 2 to our consolidated financial statements for additional discussion of our multifamily joint venture.
Current wording
As of September 30, 2024, our multifamily joint venture held $294.7 million of loans, which are included in the loan disclosures above, respectively. As of September 30, 2024, our Multifamily Joint Venture also held a $32.2 million REO asset. Refer to Note 2 to our consolidated financial statements for additional discussion of our multifamily joint venture.
Previous wording
(2)Represents the amount of new borrowings we obtained approval for during the six months ended June 30, 2024.
Current wording
(2)Represents the amount of new borrowings we obtained approval for during the nine months ended September 30, 2024.
Previous wording
(3)In addition to spread, the cost includes the associated deferred fees and expenses related to the respective borrowings. 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. All-in yield excludes loans accounted for under the cost-recovery and nonaccrual methods, if any.
Current wording
(3)In addition to spread, the cost includes the associated deferred fees and expenses related to the respective borrowings. 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. All-in yield excludes loans accounted for under the cost-recovery and nonaccrual methods, if any, and REO assets.
Previous wording
(5)Represents the principal balance of the collateral assets and the book value of the REO asset.
Current wording
(5)Represents the principal balance of the collateral loan assets and the book value of the collateral REO assets.
Previous wording
(5)During the three and six months ended June 30, 2024, we recorded $40.2 million and $81.7 million, respectively, of interest expense related to our securitized debt obligations.
Current wording
(5)During the three and nine months ended September 30, 2024, we recorded $40.6 million and $123.9 million, respectively, of interest expense related to our securitized debt obligations.
Previous wording
During the six months ended June 30, 2024, we repurchased an aggregate principal amount of $26.2 million of the Senior Secured Notes at a weighted-average price of 88%. This resulted in a gain on extinguishment of debt of $3.0 million during the six months ended June 30, 2024.
Current wording
During the nine months ended September 30, 2024, we repurchased an aggregate principal amount of $2.3 million of the B-1 Term Loan at a weighted-average price of 99%, an aggregate principal amount of $30.8 million of the Senior Secured Notes at a weighted-average price of 88%, and an aggregate principal amount of $33.8 million of the Convertible Notes at a weighted-average price of 93%. This resulted in a gain on extinguishment of debt of $25,000, $3.3 million, and $2.0 million, respectively, during the nine months ended September 30, 2024.
Previous wording
(1)Includes Australian Dollar, Danish Krone, Swedish Krona, and Swiss Franc currencies.
Current wording
(1)Includes Australian Dollar, Swedish Krona, and Swiss Franc currencies.
Previous wording
(4)Excludes $3.0 billion of floating rate impaired loans.
Current wording
(4)Excludes $3.3 billion of floating rate impaired loans.
Previous wording
(5)Excludes $725.4 million of non-consolidated senior interests and $100.6 million of loan participations sold, as of June 30, 2024. Our non-consolidated senior interests and loan participations sold are structurally non-recourse and term-matched to the corresponding loans, and have no impact on our net floating rate exposure.
Current wording
(5)Excludes $770.2 million of non-consolidated senior interests and $103.5 million of loan participations sold, as of September 30, 2024. Our non-consolidated senior interests and loan participations sold are structurally non-recourse and term-matched to the corresponding loans, and have no impact on our net floating rate exposure.
Previous wording
In addition to the risks related to fluctuations in cash flows and asset values associated with movements in interest rates, there is also the risk of non-performance on floating rate assets. In the case of a significant increase in interest rates, the cash flows of the collateral real estate assets may not be sufficient to pay debt service due under our loans, which may contribute to non-performance or, in severe cases, default. This risk is partially mitigated by our consideration of rising rate stress-testing during our underwriting process, which generally includes a requirement for our borrower to purchase an interest rate cap contract with an unaffiliated third party, provide an interest reserve deposit, and/or provide interest guarantees or other structural protections. As of June 30, 2024, 95% of our performing loans have interest rate caps, with a weighted-average strike price of 3.3%, or interest guarantees. During the six months ended June 30, 2024, interest rate caps on $8.1 billion of performing loans, with a 3.4% weighted-average strike price, expired and 94% were replaced with new interest rate caps, with a weighted-average strike price of 3.5%, or interest guarantees.
Current wording
In addition to the risks related to fluctuations in cash flows and asset values associated with movements in interest rates, there is also the risk of non-performance on floating rate assets. In the case of a significant increase in interest rates, the cash flows of the collateral real estate assets may not be sufficient to pay debt service due under our loans, which may contribute to non-performance or, in severe cases, default. This risk is partially mitigated by our consideration of rising rate stress-testing during our underwriting process, which generally includes a requirement for our borrower to purchase an interest rate cap contract with an unaffiliated third party, provide an interest reserve deposit, and/or provide interest guarantees or other structural protections. As of September 30, 2024, 96% of our performing loans have interest rate caps, with a weighted-average strike price of 3.5%, or interest guarantees. During the nine months ended September 30, 2024, interest rate caps on $10.8 billion of performing loans, with a 3.4% weighted-average strike price, expired and 95% were replaced with new interest rate caps, with a weighted-average strike price of 3.4%, or interest guarantees.
Previous wording
Income from loans and other investments, net decreased $15.6 million during the three months ended June 30, 2024 compared to the three months ended March 31, 2024. The decrease was primarily due to a decline in interest income related to additional loans accounted for under the cost-recovery method during the three months ended June 30, 2024. This was offset by a decrease in the weighted-average principal balance of our outstanding financing arrangements by $264.7 million for the three months ended June 30, 2024 compared to the three months ended March 31, 2024.
Current wording
Income from loans and other investments, net decreased $18.4 million during the three months ended September 30, 2024 compared to the three months ended June 30, 2024. The decrease was primarily due to a decrease in the weighted-average principal balance of our loan portfolio by $1.2 billion during the three months ended September 30, 2024, as well as a decline in interest income related to additional loans accounted for under the cost-recovery method during the three months ended September 30, 2024. This was offset by a decrease in the weighted-average principal balance of our outstanding financing arrangements by $1.1 billion for the three months ended September 30, 2024 compared to the three months ended June 30, 2024.
Previous wording
During the three months ended March 31, 2024 we recognized a gain on extinguishment of debt of $3.0 million related to the repurchase of an aggregate principal amount of $26.2 million of our Senior Secured Notes. During the three months ended June 30, 2024, there was no repurchase activity or gain on extinguishment of debt.
Current wording
Gain on extinguishment of debt increased by $2.4 million during the three months ended September 30, 2024. During the three months ended September 30, 2024, we recognized an aggregate gain on extinguishment of debt of $2.4 million related to the repurchase of an aggregate principal amount of $33.8 million, $4.6 million, and $2.3 million of our Convertible Notes, Senior Secured Notes, and B-1 Term Loan, respectively. There was no repurchase activity during the three months ended June 30, 2024.
Previous wording
The income tax provision increased by $215,000 during the three months ended June 30, 2024 compared to the three months ended March 31, 2024 primarily due to an increase in the income tax provisions related to our taxable REIT subsidiaries.
Current wording
The income tax provision decreased by $604,000 during the three months ended September 30, 2024 compared to the three months ended June 30, 2024 primarily due to a decrease in the income tax provisions related to our taxable REIT subsidiaries.
Previous wording
During the three months ended June 30, 2024, we declared dividends of $0.62 per share, or $107.6 million in aggregate. During the three months ended March 31, 2024, we declared dividends of $0.62 per share, or $107.7 million in aggregate.
Current wording
During the three months ended September 30, 2024, we declared dividends of $0.47 per share, or $81.3 million in aggregate. During the three months ended June 30, 2024, we declared dividends of $0.62 per share, or $107.6 million in aggregate.
Previous wording
The following table sets forth information regarding our consolidated results of operations for the six months ended June 30, 2024 and 2023 ($ in thousands, except per share data):
Current wording
The following table sets forth information regarding our consolidated results of operations for the nine months ended September 30, 2024 and 2023 ($ in thousands, except per share data):
Previous wording
Income from loans and other investments, net decreased $82.4 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily due to a decline in interest income related to additional loans accounted for under the cost-recovery method for the six months ended June 30, 2024. This was offset by an increase in floating rate indices during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.
Current wording
Income from loans and other investments, net decreased $139.4 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decrease was primarily due to a decrease in the weighted-average principal balance of our loan portfolio by $1.8 billion during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, as well as a decline in interest income related to additional loans accounted for under the cost-recovery method during the nine months ended September 30, 2024. This was offset by a decrease in the weighted-average principal balance of our outstanding financing arrangements by $1.8 billion for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Previous wording
Other expenses include management and incentive fees payable to our Manager and general and administrative expenses. Other expenses decreased by $24.7 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 due to a decrease of $26.7 million of incentive fees payable to our Manager, driven primarily by charge-offs of CECL reserves. This was offset by (i) a $746,000 increase of operating expenses, (ii) an increase in non-cash restricted stock amortization of $687,000 related to shares awarded under our long-term incentive plans, and (iii) an increase of $444,000 of management fees payable to our Manager, primarily as a result of an increase in our Equity, as defined in our Management Agreement.
Current wording
Other expenses include management and incentive fees payable to our Manager, general and administrative expenses, and expenses from real estate owned. Other expenses decreased by $29.9 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to a decrease of $36.8 million of incentive fees payable to our Manager, driven primarily by charge-offs of CECL reserves. Expenses of real estate owned, which relates to real estate owned operations, increased by $3.6 million. We did not incur any expenses from REO during the nine months ended September 30, 2023. Additionally, general and administrative expenses increased by $2.9 million primarily due to (i) an increase in non-cash restricted stock amortization of $982,000 related to shares awarded under our long-term incentive plans, (ii) a $774,000 increase in legal expenses, and (iii) an increase of $279,000 of management fees payable to our Manager, primarily as a result of an increase in our Equity, as defined in our Management Agreement.
Showing the first 40 of 58 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The charge-offs primarily related to one previously impaired loan that was resolved during the three months ended September 30, 2024. The resolution was the result of the consolidation of an office property located in Burlington, MA as a result of a loan modification that provided us an equity interest in the property. Refer to Note 19 to our consolidated financial statements for additional information.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Other expenses include management and incentive fees payable to our Manager and general and administrative expenses. Other expenses decreased by $269,000 during the three months ended June 30, 2024 compared to the three months ended March 31, 2024 primarily due to a decrease in management fees payable to our Manager. Additionally, there was a decrease of $150,000 of non-cash restricted stock amortization related to shares awarded under our long-term incentive plans as a result of forfeitures.
Previous report — wording carried elsewhere
In July 2024, our board of directors authorized the repurchase of up to $150.0 million of our class A common stock. Under the repurchase program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual amounts repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date.
Previous report — wording carried elsewhere
During the six months ended June 30, 2024, our CECL reserves increased by $317.0 million, bringing our total reserves to $906.0 million as of June 30, 2024. See Notes 2 and 3 to our consolidated financial statements for further discussion of our CECL reserves.