Blackstone Mortgage Trust Inc (BXMT) Q1 2024 Earnings Call Transcript Highlights: Navigating ...

• GAAP Net Loss: $0.71 per share

• Distributable Earnings: $0.33 per share

• Distributable Earnings Prior to Charge-offs: $0.65 per share

• Dividend: $0.62 per share

• Repayments Collected: Over $1 billion this quarter

• Liquidity: Ended the quarter at $1.7 billion

• Portfolio Performance: 92% performing

• Realized Losses: $61 million in the first quarter

• CECL Reserves: Increased by $174 million to $766 million

• Book Value: $23.83 per share as of March 31st

• Debt to Equity Ratio: Increased slightly to 3.8 times

• Warning! GuruFocus has detected 5 Warning Signs with BXMT.

Release Date: April 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: On the loan extensions completed this quarter, can you discuss the typical duration of these extensions? A: (Katharine Keenan, President and CEO) - Extensions typically range from one to two years, depending on the amount of equity provided by borrowers and the specific business plan for the asset. The decision is based on optimizing outcomes between return and recovery.

Q: What factors led to the downgrade of loans in the first quarter? A: (Katharine Keenan, President and CEO) - The downgrades were primarily in U.S. office loans, reflecting challenges in the market, changes in occupancy, and tenant dynamics. Additionally, some multifamily assets were affected by temporary supply issues and higher rates.

Q: Can you discuss the net impact of loan resolutions and downgrades on future earnings? A: (Anthony Marone, CFO) - The impact of moving loans to cost recovery is expected to be in the $0.08 to $0.10 per share range. Resolutions will have a more muted impact, depending on the leverage against the loans.

Q: How is the higher interest rate outlook affecting borrowers, particularly in the multifamily sector? A: (Katharine Keenan, President and CEO) - Higher rates impact carry costs and liquidity for less well-capitalized sponsors, creating challenges particularly in the multifamily sector. However, the overall direction of rates is expected to trend downward, maintaining market liquidity and normalizing spreads.

Q: Regarding the dividend policy, how does the company view its sustainability given the current earnings and market conditions? A: (Anthony Marone, CFO) - The dividend is set with a long-term view of the company's earnings power. The current level has been maintained for nearly nine years, reflecting the company's ability to manage through varying market conditions.

Q: What is the expected impact of nonaccrual loans on the dividend and the company's financial health? A: (Anthony Marone, CFO) - Nonaccrual loans do impact earnings, but the company focuses on distributable earnings before charge-offs to assess dividend coverage. This approach helps in managing through temporary disruptions while maintaining a stable dividend.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.