Blackstone Mortgage Trust : BXMT 1Q 2020 Earnings Transcript

Final Transcript

Blackstone Mortgage Trust, Inc.: 1Q 2020 Earnings Call April 29, 2020/10:00 a.m. ET

SPEAKERS

Stephen D. Plavin -Chief Executive Officer

Anthony F. Marone - Chief Financial Officer

Douglas N. Armer - Executive Vice President, Capital Markets Katie Keenan - President

Weston Tucker - Head of Investor Relations

Mike Nash - Executive Chairman

Jonathan Pollack - Global Head of Real Estate Debt Strategies

ANALYSTS

Douglas Harter - Credit Suisse

Don Fandetti - Wells Fargo

Rick Shane - JP Morgan

Jade Rahmani - KBW

Steven Laws - Raymond James

Arren Cyganovich - Citi

George Bahamondes - Deutsche Bank

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Derek Hewett - Bank of America

Coordinator Good day, and welcome everyone, to the Blackstone Mortgage Trust First Quarter 2020 Investor Call. My name is Tommy, and I'm your event manager. During the presentation, your lines will remain on listen only. [Operator instructions]. I would like to advise all parties the conference is being recorded for replay purposes.

Now, I'd like to hand over to your host, Weston Tucker, Head of Investor Relations. Please go ahead sir.

W. Tucker	Great. Thank you. Good morning everyone, and welcome to
	Blackstone Mortgage Trust's First Quarter Conference Call. I'm
	joined remotely today by Mike Nash, Executive Chairman; Steve
	Plavin, Chief Executive Officer; Jonathan Pollack, Global Head of
	Real Estate Debt Strategies; Katie Keenan, President; Tony
	Marone, Chief Financial Officer; and Doug Armer, Executive Vice
	President of Capital Markets.

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Last night, we filed our 10-Q and issued a press release with the presentation of our results, which are available on our website and have been filed with the SEC.

I'd like to remind everyone that today's call may include forward- looking statements which are uncertain and outside of the company's control. Actual results may differ materially. For a discussion of some of the risks that could affect results, please see the Risk Factor section of our most recent 10-K and 10-Q reports. We do not undertake any duty to update forward-looking statements.

We will also refer to certain non-GAAP measures on this call and for reconciliations, you should refer to the press release and our 10-Q.

This audiocast is copyrighted material of Blackstone Mortgage Trust and may not duplicated without our consent.

A quick recap of our results. We reported a GAAP net loss per share of $0.39 for the first quarter, while Core Earnings were a positive $0.64 per share. Two weeks ago, we paid a dividend of

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$0.62 per share with respect to the first quarter. If you have any questions following today's call, please let me know.

With that, I'll now turn things over to Steve.

S. Plavin	Thanks, Weston, and good morning everyone. We appreciate you
	joining the call under what are very challenging circumstances for
	many. We hope that you and your families are safe and healthy.

At Blackstone, we've been working remotely since March 16th, but with the demands of the current market, not to mention our heavy Zoom usage, we feel very connected as a team and with our important clients and counterparties as well. And, we have a lot to update you about.

Our Q1 was essentially a pre-COVID-19 quarter with continued strong performance, although we did revise our CECL reserve at quarter end to reflect current market conditions. Tony will take you through the details of the quarter and the reserve methodology, which as a reminder, is an accounting adjustment and not specific to any loans in our portfolio.

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I want to focus my remarks on where BXMT is today amid the pandemic and how our disciplined business model positions us for the staying power required in a time like this. Coming into this period of volatility, the overall real estate industry was well- situated with balanced fundamentals, responsible industry-wide leverage, diverse equity and debt participation, and liquid capital markets. BXMT has always been run conservatively with a focus on downside protection in our assets and the strength of our balance sheet. We are a pure-play, senior whole loan originator with a disciplined approach centered on top quality assets, markets, and borrowers. We have never purchased mezzanine loans or securities.

Our borrowers are among the best capitalized and most skilled operators in the business and have significant equity in the assets that we finance. The weighted average origination LTV of our portfolio is 63%, and our borrowers have never missed an interest payment.

Our balance sheet strength begins with our best-in-class bank relationships and financing vehicles. We set up these vehicles in light of lessons learned in the GFC, with no capital market mark to

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market. We've not had a margin call in the history of our company.

Our balance sheet is further fortified by our liquidity. We reported current cash and undrawn revolver capacity of $821 million versus the $667 million we had at year-end, in both cases, net of the quarterly dividend. On top of that, there are $1.6 billion of unencumbered assets.

These key features of our business model, disciplined investment process, clarity of mission, long-term relationships with our counterparties, and stability of our capital structure are the pillars upon which Blackstone Real Estate's 28-year record was built, and how we have successfully managed through the many market cycles over that period of time. These pillars, and that experience, are crucial today as COVID-19 has created significant challenges to real estate performance in all property sectors.

Let's talk about some of those challenges. On the asset side, our whole loan portfolio is now $18 billion in size, and every one of our loans has paid interest through April. But because of the impact of COVID-19, we are actively engaged in discussions with our hotel

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borrowers and others with high exposure properties about their plans to protect their assets and what we can do to be supportive. In general, our sponsors are planning to invest additional equity to help carry their assets through a period of disrupted operations and we are discussing ways that we can support them, including allowing flexibility in tapping reserves and in some cases temporary deferrals of interest.

The significant equity our borrowers have in these investments provide strong motivation for them to protect their assets and powerful support for our loans. Blackstone's scale and track record as a borrower and reputation for fair dealing help BXMT maintain great relationships with its lenders and best in market terms. Our $9 billion of bilateral bank credit facilities limit margin calls to credit events and are generally term-matched through the maturity of the underlying loans. The average look-through origination LTV is 51%, and the loans within each facility are cross- collateralized.

But the COVID-19 environment affects operating conditions across most property sectors, and it is incumbent upon us to position BXMT to thrive, even in a potentially more protracted recovery.

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So we engaged our largest bank lenders with plans to reduce the leverage in their facilities, particularly as it relates to hotels and other more exposed properties, in order to reduce the possibility of margin calls and create even greater stability within our capital structure. As of today, we have modifications closed or agreed in principle with our seven largest lenders.

In any financial crisis, maintaining liquidity is the top priority for all businesses. We are highly focused on building even more liquidity to achieve the staying power that may be required in the uncertain periods ahead. In this environment, we expect fewer loan prepayments and more selective capital markets activity. However, these traditional sources of liquidity are still likely to contribute meaningfully over time. We can also look to our unencumbered assets as a potential liquidity source and we could also retain more of our quarterly cash flow.

Our biggest use of liquidity is for the equity component of loan advances, our share of funding on previously originated loans for capex, carry, leasing and construction. Net of financing, we expect to fund $1.5 billion over the next four years on our existing portfolio, though the pace of capex and leasing has slowed in the

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current environment, which will delay the timing of these advances.

All in all, we are constructing a liquidity plan to address our working capital needs that are less reliant on our greatest source, repayments from an $18 billion loan portfolio that we expect to perform well, despite the challenges of the current market environment.

As for new business, loan demand in the current market has ground to a near halt. Buyers and sellers, lenders and borrowers, are generally on the sidelines waiting for the volatility to abate and bid ask spreads to narrow. But our fund-sponsored clients have considerable dry powder, not only to defend their existing assets but also to deploy the new, more opportunistic investments once transaction flows resume. When that does happen, we believe it'll produce an attractive lending environment, characterized by less competition, lower leverage, and wider lending margins. With our great sponsor relationships and differentiated access to high quality deal flow, we are very well-positioned for this inevitable pick up in transaction activity.

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I'd like to close by noting the strong commitment and track record Blackstone brings to BXMT. Blackstone and its employees own 12% of BXMT so there's great alignment with shareholders. In addition, Blackstone has agreed to take its first quarter management fees, which totaled $19 million in stock, rather than cash, further validation of its commitment to BXMT.

Blackstone Real Estate has a great track record of successfully managing investor capital through market cycles. Our philosophy at BXMT is deeply informed by this experience and we believe that we will emerge from the current market conditions better positioned than ever before.

With that, I'll turn the call over to Tony.

T. Marone	Thank you, Steve, and good morning everyone. I will start by
	echoing Steve's comments on the current environment. Our
	thoughts are with all of those who have been impacted by the
	COVID-19 pandemic, including those who may be facing health
	challenges, those whose lives and jobs have been upended by the
	social distancing initiatives, and all our medical professionals and

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other frontline workers who are fighting this disease and keeping the core of our country running.

Steve covered a lot of ground on our current position and outlook, so I will focus on our 1Q results, which underpin the theme Steve highlighted around the strength of our portfolio, the strength of our balance sheet, and our strong liquidity position in addition to our great quarterly results.

Starting with earnings, our results were significantly impacted by the current expected credit loss or CECL reserve we recorded in the first quarter. As a reminder, the CECL accounting standard was effective for BXMT and similar sized public companies on January 1stof 2020. This new accounting standard requires lenders to record an estimated life of loan loss reserve against all loans in their portfolio, and with a few exceptions, this reserve cannot be zero.

To determine our CECL reserve, we have augmented our track record of no realized losses across the $44 billion of loans we have originated since our senior lending business launched in 2013, with securitized loan data we licensed from Trepp LLC. Although

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securitized loans are not perfectly comparable to the high quality loans we make at BXMT, we have tailored our approach to focus on Trepp's loss data for loans that are most similar to our business model, which is focused on large senior loans to well-capitalized institutional owners of quality assets located in major markets. Our adoption of these new CECL accounting rules resulted in an initial reserve of $18 million or $0.13 per share on January 1st, which was recorded on our balance sheet as a reduction to stockholders' equity.

Much has changed since the beginning of the year, and while the data we referenced for determining our CECL reserve is largely consistent at 3/31, the environment in which we must consider that data certainly is not. Accordingly, during the quarter we increased our CECL reserve by $123 million or $0.90 per share to reflect the macroeconomic impact of the COVID-19 pandemic on commercial real estate markets and the general uncertainty around potential future outcomes as the world manages through and ultimately recovers from this crisis. To develop this estimate, we referenced the losses incurred by commercial real estate loans following the global financial crisis and used that data among other things to further inform our current reserve levels. Although

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our 3/31 reserve is large compared to where we started the quarter, we believe it is important to recognize the unprecedented and uncertain nature of this pandemic and we believe we fully reflected that dynamic in the reserve we recorded as of March 31st.

To be perfectly clear, we have not incurred any losses in our portfolio; we have not impaired any loans, and the CECL reserve is not what we believe is reflective of the typical risk of loss for our portfolio absent the economic stress resulting from COVID-19. To that end, assuming continued strong credit performance in our loan portfolio, we would expect our CECL reserve to decline over the medium to long-term as markets stabilize, although our reserve may increase or decrease in any one particular quarter. This CECL reserve drove the net loss we reported for the quarter of $53 million or $0.39 per share, as well as the decline in our book value to $26.92 per share from $27.82 per share at 12/31.

We reported Core Earnings for the quarter of $87 million or $0.64 per share, which excluded our $0.90 per share incremental CECL reserve, consistent with how other unrealized gains and losses are treated under our existing policies for calculating Core Earnings, and the terms of our management agreement with Blackstone.

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This quarter, although we saw global interest rates decline in response to the crisis, we continued to generate incremental earnings from LIBOR and other interest rate floors embedded in our loans, with $11.4 billion of loans, almost two-thirds of our portfolio benefitting from active floors as of quarter end.

Overall, our portfolio increased to $18 billion of senior loans with $1.3 billion of originations during the quarter and $1 billion of fundings under these and other loans. The new originations have low LTVs in line with our portfolio average of 63% and follow our longstanding business model of lending against quality assets owned by experienced, well-capitalized real estate sponsors. Importantly, we also continued to receive regular repayments of our loans with $567 million of loan repayments during the quarter and $178 million received in April.

In terms of credit, we downgraded the risk rating of $3.1 billion of loans in our portfolio to a four on our five-point scale, reflective of the greater risk for loans collateralized by hospitality and select other asset classes that were particularly impacted by COVID-19. Although we believe these loans have a greater risk profile and warrant a downgrade on our ratings scale, we have not impaired

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any of our loans, as we believe that even considering the impact of the current crisis, there remains meaningful real estate value subordinate to our senior loan positions.

Finally, we have no loans on non-accrual status at quarter end, as we collected 100% of the interest that was due in April. Our borrowers continue to support their investments in the assets securing our loans.

We also had an active quarter on the right-hand side of the balance sheet, highlighted by our issuance of a $1.5 billion CLO secured by participations in 34 of our loans, and priced at LIBOR + 1.13%. The $1.2 billion of proceeds generated by the CLO allowed us to repay existing credit facility advances and increase the amount of structurally non-recourse,non-mark to market debt to 35% of our total financing outstanding, including our securitizations, our term loan and convertible notes, and our senior loan syndications.

In addition to our CLO, we closed $1.1 billion of incremental financings for our loans, all of which priced at pre-COVID-19 levels. Consistent with the rest of our portfolio, these new loans benefit from the provisions of our credit facilities that limit margin

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calls to credit marks determined on a commercially reasonable basis only. We did not receive any margin calls during the quarter and as Steve noted, we have modifications completed or agreed in principle with our seven largest lenders regarding plans to reduce leverage in their facilities to further insulate us from future potential credit marks as well.

We closed the quarter with a debt to equity ratio of only 2.8 times, down from 3.0 times as of year-end, and reported current liquidity of $821 million. As Steve noted, we are currently focused on strengthening our balance sheet liquidity to bolster our positioning through the impact of the COVID-19 pandemic and maximize shareholder value over the medium to long-term.

With the credit quality of our portfolio, our healthy balance sheet and liquidity position, and the significant advantages we enjoy as part of the Blackstone Real Estate franchise, we believe we are well-positioned to accomplish these goals. Thank you for your support.

With that, I will ask the operator to open the call to questions.

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W. Tucker	If I could just remind everyone before the operator opens up to
	Q&A, if the analysts could please limit their questions to one
	question and one follow-up, just to make sure we get through the
	queue, that would be appreciated.

Coordinator Thank you so much. Everyone, your question-and-answer session will now begin. [Operator instructions]. The first question is coming from the line of Rick Shane. Please go ahead. You're live in the call now.

R. Shane	Hi, thanks for taking my questions this morning. I'd just like to
	talk a little bit about modifications generally on the loans. You
	guys cited one transaction this quarter. I'm curious what type -
	and again I realize we don't want to talk too specifically about an
	individual loan - but generally speaking, what type of additional
	capital might you expect borrowers to contribute and are there
	ways not only, I realize, you're giving up some spread in those
	transactions but are there places where you pick up additional
	economics?

K. Keenan	Thanks Rick, this is Katie. I think that when we talk about
	modifications, we're really starting from a position where we have

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low leverage loans and very well-capitalized sponsors. The vast majority of our loans are with sponsors with over $1 billion of AUM, and that's the perspective that they're bringing. They have long-term views on the value of their assets and they have reiterated to us, including all of our hotel sponsors, that they have the strong intention and ability to support their assets through this period.

So, our conversations with them about modifications are really focused on how the assets can best positioned to work through the period of disruption. We're not talking about any type of interest relief. On the small number of loans where we're talking about some interest deferral, which really is just a handful in our portfolio at this stage, it's really a timing difference. We expect to get paid all of our interest over time. And those conversations are paired with meaningful additional equity investment. The details, as you pointed out, vary from loan to loan. But, in general, we're looking at ensuring that the assets are well-positioned to carry through the period of disruption.

R. Shane	Got it. Great. That's very helpful. And then just one bookkeeping
	question for me. When you talk about the reserve with CECL, you

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	cited a number of $140.4 million and we see how that builds. But,
	when we look at the balance sheet allocation, it's $112.7 million.
	Where is the rest of that allocated, just so we can follow it over
	time?
T. Marone	Sure, this is Tony. I'll apologize for the way FASB wrote the CECL
	accounting rule. They make it a little bit harder to find. But, it's
	all in the 10-Q. So the portion you're seeing right on the balance
	sheet is the portion that's allocable to the funded amount of our
	loans. The CECL accounting rules also require reserve for the
	future funding component of the loans and that component sits in
	other liabilities. So if you look at our 10-Q, I believe it's Note 4,
	Other Assets and Other Liabilities, you'll see some further
	disclosure about the CECL reserve and that'll give you the other
	balance sheet component in that note.
R. Shane	Perfect. Thank you so much.
Coordinator	The next question is coming from Steve Delaney. Please go ahead.
	You're live in the call.

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S. Delaney	Good morning everyone. Steve, in your comments, you sounded
	like both sides of the market from a transactional standpoint were
	frozen in a wait-and-see. I'm just curious, I know you're working
	on asset management, but do you expect to review/consider any
	new loan requests over the next two or three quarters or is it just
	that the door is not open right now?

S. Plavin	Thanks for your question, Steve. No, I think the door is always
	open for good opportunities for us. We have great market access
	and great relationships. I do think that our borrower base is
	particularly well-positioned to be early movers and opportunistic
	investing that will inevitably occur through this crisis period.

Right now, the market is pretty frozen. Usually when you enter a period of high volatility, you typically see buyers and sellers and the lenders and the borrowers, everybody moves to the sidelines and waits for things to settle out. Buyer expectations tend to be high, and so it's very hard for deals to be made.

S. Delaney

Right.

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S. Plavin	I do think that we've seen a little bit more liquidity in the market
	and we've seen the CMBS deal this week. So, we've seen a little bit
	of a breath of life in terms of unlocking the capital markets a little
	bit more. The debt markets have been pulling even more
	significantly than that. Maybe that will indicate that we'll start
	seeing some transaction volume, but we wouldn't expect to see
	anything for a quarter or two based upon our present outlook.

S. Delaney	Got it. That's helpful. Then on the repayment side, the little over
	$500 million in the first quarter, at the same run rate, would you
	think if we were just to model out something in the $0.5
	billion/$600 million a quarter over the balance of the year, would
	be a reasonable expectation for repayments? It sounds like they're
	going to, you would expect them to, slow down versus the
	percentage repayment that we saw in 2019.

S. Plavin	Yes, I think that's correct as an observation. The repayments that
	we had in the first quarter were definitely concentrated in January
	and February, so before we began to feel the impact on markets of
	COVID-19. So, we do expect repayments to be at a slower pace
	than the historic levels and the levels that we would have expected,
	absent the current market conditions. It's very difficult to predict

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	the repayments and a lot of that will depend upon liquidity in the
	market and again those same factors that we talked about in terms
	of creating the new business will-a lot of those same factors is
	what generates the repayment volume in our portfolio as well.
	We do expect to see some repayments, and so there will be some
	liquidity coming through that channel. But, I think slower than
	the historic pace; it's very hard to peg a number. We'll just have to
	take it quarter by quarter.
S. Delaney	Got it. Thank you for the comments and everyone stay well.
Coordinator	The next question is coming from Doug Harter. Please go ahead.
	You're live in the call.
D. Harter	Thank you. As we're thinking about the liquidity positioning, any
	sense that you can give us as to the deleveraging that will take
	place and in your conversation with your seven largest lenders?
D. Armer	Sure, Doug. It's Doug here. The first thing I would tell you is that
	the agreements reflect a balance of priorities and optimizing
	liquidity and enhancing stability are twin goals for us. So the

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answer in terms of the impact on liquidity is not as much as you might think. There's an array of ways to de-lever. Cash payments is one, but pledging additional collateral and changing waterfall structures are others. We'll use all the tools in the toolkit over time to achieve the deleveraging that we need.

Each agreement is different and the specifics are obviously confidential but we believe we've addressed the potential for credit marks, especially on our hospitality assets as Steve mentioned, and developed the further flexibility that we need during the heavily COVID-19 impacted period.

I'll just go back to the beginning, the starting point for us, just in terms of context for these agreements, which is in the context of our pure-play senior loan portfolio, Blackstone's relationships with both our borrowers and the banks, and it's a very healthy context and we're happy to address the concerns of our banks in that context. We feel that the agreements reflect the alignment of interests that we have with them in terms of managing through this COVID-19 impacted period.

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D. Harter	Thanks Doug. Just following up on that, when you say changing
	waterfalls, does that change how the cash flow as loan repayments
	or interest payments receive, comes back to you and I guess just
	how does that factor into your quarterly cash flow? Just to make
	sure I understood your comments.
D. Armer	In terms of deleveraging, I would think about that more with
	regard to principal payments than interest payments. But, there is
	a whole array of options in terms of achieving that deleveraging.
	That is one of them, but we have a bunch of tools in the toolkit. I
	think our cash flow going forward is going to continue to reflect
	the fact that we have a very large scale portfolio of performing first
	mortgage loans that are generally speaking current pay loans.
D. Harter	Thank you Doug.
Coordinator	The next question is coming from Arren Cyganovich. Please
	proceed. You're live in the call.
A. Cyganovich	Thanks. I was hoping we could talk a little bit about the decision
	to move the hospitality assets to category four in your risk rating
	and I believe it's listed at high risk, potential for loss. I get that,

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completely understand it. The bulk of those have LTVs that are 70% and below, and more like 65%. It would take a pretty dramatic decline in those hotel asset values to really get into your loans. Maybe you could just talk a little bit about is there actual potential for loss there. Is it just because we have no idea what the values of these are going to be in 18 months? What are some of the sponsors doing to help alleviate the risk there?

K. Keenan	It's Katie. To your point, we continue to feel very good about the
	quality of our portfolio, the assets, and our sponsors. And, we are
	starting from a very low leverage point on these assets. But, we're
	mindful and cognizant that this is a very challenging environment
	and as a result we thought it was prudent to downgrade these
	loans based on the operational impact of COVID-19, particularly
	on our hospitality assets, which are right now experiencing
	disruption in cash flows. So, it's really a reflection of our prudence
	and uncertainty about exactly what the overall timing is going to
	be of the recovery of these assets.

But, the loans continue to perform. They have strong well- capitalized sponsors. They started at low leverage points, so to

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your point, there would have to be some very significant declines in value to actually impact the par balance of our loans.

But, with all that said, we just felt it was appropriate to move them to four rating in view of the current disruption and the possibility of an elongated recovery.

A. Cyganovich Thanks. In these conversations you're having with the sponsors, are they showing a willingness to put in additional equity-I don't even understand how that works from a structural perspective. Do they have special entities where they can add additional equity to the property? I'm just trying to understand how that would work.

K. Keenan	Yes, I would say, all of our sponsors, and as I'm sure you can
	imagine, we're in very frequent, close dialog with our sponsors on
	our hospitality assets, as well as our overall portfolio; they
	continue to reiterate their intention and their ability to support
	these assets. These are good assets with business plans that they
	believe will still be viable, just prolonged or pushed back through
	the period of disruption.

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Because we've always been very focused on lending to large, well- capitalized sponsors, generally large private equity funds, they have the liquidity to invest additional capital in these assets in order to carry them. So, what that would look like would be contributing additional equity to the properties, to the borrowers to provide for the ability for cash flows to carry through the period of disruption and get the assets to the other side so they can resume implementing their business plans.

A. Cyganovich

Thank you.

Coordinator The next question is coming from Jade Rahmani. Please proceed.

J. Rahmani Thank you very much. Glad to hear from everyone. In terms of the hotel loans, the slides note $1.2 billion of outstanding credit facility borrowings. Would you expect 10% to 20% pay downs to occur on those borrowings over the next one to two quarters in order to deleverage that financing?

D. Armer	Hi, Jade, it's Doug. I'd reiterate my previous comments in terms
	of that deleveraging. The specifics are different for each bank, and
	it's in the context of cross-collateralized portfolios that involve a

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significant portion, obviously, the vast majority that are not hospitality assets. And so, we wouldn't quantify the deleveraging in those terms. But we would say that we do feel like we've addressed, in the context of our relationships with these banks, the potential credit mark issues on the hospitality assets in particular with these agreements.

J. Rahmani Okay. The $1.6 billion of unencumbered assets, could you please describe what that pool consists of? I mean, when I look at the balance sheet and make an estimation myself, I come up with a much lower number, somewhere around about $200 million, so I found that somewhat surprising. I just wanted to ask about that.

D. Armer	Jade, it's Doug again. That's a good point. That $1.6 billion of
	unencumbered assets reflects a couple of different categories of
	loans. There are some currently unfinanced first mortgages and
	there are also different positions, retained security interests
	relative to our CLO transactions and SASB CMBS transactions and
	other structured interest in our first mortgage portfolio that make
	up the balance of that. There's also, by the way, a significant
	amount of cash on the balance sheet that's not included in that
	number but it's also part of our unencumbered asset package, so to

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	speak, if you think about it from the perspective of the subordinate
	and corporate debt in our capital structure.
J. Rahmani	Thanks.
Coordinator	The next question is coming Steven Laws. Please go ahead. You're
	live in the call.
S. Laws	Thank you. Good morning. To follow up on Steve Delaney's
	comments, I appreciate the comments around the repayments and
	then the slowdown there. Can you talk about the unfunded
	commitments a little bit, the expected drawdown on that and then
	how you expect that to be on a net basis relative to the
	repayments?
S. Plavin	Hi, Steven, this is Steve. Historically our repayments, the impact
	of our repayments has far exceeded the equity requirements
	associated with our future fundings. The future fundings are
	connected to loans that we've previously made that are very strong
	assets like all the others in our portfolio. And, we fund the future
	fundings related to the progress of construction, but a big
	component of it relates to good news. So, as properties realize

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additional leasing, we cover the costs of leasing commissions and tenant improvements. And so a lot of this future funding is value- add. It increases the value of the underlying real estate and it improves our loan to value ratio.

The magnitude of the future fundings is well handled by our liquidity, both our existing liquidity and the repayments that we reasonably expect to get over time and also any alternative sources of liquidity that we might feel compelled to tap in any kind of an environment where perhaps repayments are slowed relative to historic levels. But, we feel very good about our ability to meet those and also again the impact of those advances tends to be very positive on the real estate.

S. Laws	Great. Appreciate the color on that. As a follow-up, any additional
	disclosure or comments you can provide around the LIBOR floors?
	I think at quarter end, LIBOR was down around 60 basis points I
	believe. So, where we should we think about a weighted average
	LIBOR floor? How do we think about the impact or benefit of
	those floors that have been realized in the last month?

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D. Armer	It's Doug. I'll take that one. I think the important point to
	consider in thinking about those LIBOR floors-and they are
	significantly in the money and did contribute significantly to our
	earnings in the first quarter, they'll contribute more significantly in
	the second quarter given where LIBOR is today. But, the
	important point to keep in mind there is that it's not the weighted
	average strike price of the floors that matter so much but the
	difference between those strike prices and the corresponding
	floors or absence of floors in our financing.

So, we're able to lever the benefit of that income into our bottom line and we do expect it to be a continued significant contributor to our Core Earnings on a go-forward basis.

S. Laws

Great. Appreciate the update. Everyone take care.

Coordinator The next question is coming from George Bahamondes. Please proceed. You're live in the call.

G. Bahamondes Hi, good morning. Are you able to give us a sense of how many borrowers, or roughly the percentage of the portfolio that have

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asked for interest deferral, forbearance, or other loan modifications?

K. Keenan	Sure, George. To address that directly, of our overall portfolio we
	have 20 loans that we're currently talking about various types of
	modifications. But, less than half of that is around interest
	deferral. And, I think the important point to keep in mind, as we
	mentioned earlier, is we are talking about interest deferral, we're
	not talking about interest relief. And we're also pairing those
	conversations with additional equity coming in for the deals that
	are most impacted by COVID-19.

We view that overall as a positive because it increases the level of commitment of our sponsors, which is already quite substantial to these assets, but continues to increase it over time and reflects their desire to continue to support the assets.

G. Bahamondes Great. Thank you for that color, Katie. Just a follow up on prepared remarks, you had referenced a repayment amount for the month of April. Can you just repeat that number?

T. Marone

Sure, it was $178 million.

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G. Bahamondes Great. Thank you so much.

Coordinator Our final question comes from the line of Derek Hewett. Please proceed. You're live in the call.

D. Hewett	Good morning, everyone. In light of the challenging backdrop and
	wanting to increase liquidity, could you remind us of the dividend
	policy since dividend coverage relative to Core Earnings has
	tightened?

S. Plavin	Sure. I would just say generally that delivering income to
	shareholders is always a top priority for us. We just paid the Q1
	dividend. It's only been about two weeks ago. And after that
	payment, we still had over $800 million of liquidity.

The next dividend discussion that we'll have with the board will be in June regarding the Q2 dividend. And, we'll make a determination based upon the facts and circumstances at the time. But our dividend policy and our goals remain that it's a very significant priority and objective for us to continue to provide income to shareholders. That hasn't changed.

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D. Hewett	Okay. And then my follow-up is should we continue to expect
	management fees to be paid in stock?
S. Plavin	I think it will be a quarter by quarter decision on the part of
	Blackstone. A great gesture of support and alignment by
	Blackstone to agree to take its fees in stock rather than in cash, a
	nice contribution to our liquidity but more of a statement of
	alignment and commitment to the BXMT business. It's something
	that we'll discuss with Blackstone in future quarters and we'll take
	it quarter by quarter. Again, what I think you should take away
	from that is just the important and significant statement that
	Blackstone has made in terms of their belief and their commitment
	to BXMT.
G. Hewitt	Great. Thank you.
S. Plavin	Thanks for your questions.
Coordinator	Now I would like to hand the call back to Weston Tucker for
	closing remarks.

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W. Tucker	Great. Thanks, everyone, for joining us this morning. Please reach
	out to me after this call with any follow-ups.

Coordinator Thank you so much, everyone. That concludes your conference call for today. You may now disconnect. Thank you for joining and enjoy the rest of your day.

[END OF CALL]