Blackstone Mortgage Trust, Inc.

Thank you for standing by. You're on hold for the Blackstone Mortgage Trust third quarter 2026 investor call. At this time, we're gathering additional participants and should be underway shortly. We appreciate your patience and ask that you continue to hold. Good day and welcome to the Blackstone Mortgage Trust third quarter 2026 investor call. Today's conference is being recorded. At this time, all participants are in a listen-only mode. If you require operator assistance at any time, please press star zero. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. At this time, I'd like to turn the conference over to Tim Hayes, Vice President, Shareholder Relations. Please go ahead.

Good morning, and welcome everyone to Blackstone Mortgage Trust's third quarter 2026 earnings conference call. I'm joined today by Tim Johnson, Chief Executive Officer, Austin Pena, President, and Marcin Urbaszek, Chief Financial Officer. This morning, we filed our 10-Q and issued a press release with a 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 subject to risks, uncertainties, and other factors outside of the company's control. Actual results may differ materially. For discussion of some of the risks that could affect results, please see the risk factors section of our most recent 10-K. 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 10-Q. This audio cast is copyrighted material of Blackstone Mortgage Trust and may not be duplicated without our consent. For the third quarter, we reported a GAAP net loss of $1.95 per share. Well, distributable earnings were 38 cents per share and distributable earnings prior to realized gains and losses were 42 cents per share. A few weeks ago, we paid a dividend of 47 cents per share with respect to the third quarter. Additionally, our board of directors declared a dividend of 30 cents per share with respect to the fourth quarter. The dividend is payable on January 15th, 2027 to stockholders of record as of December 31st, 2026. With that, I'll now turn the call over to Tim. Thanks, Tim.

Interest rates continue to be the headline in our world. The 10-year Treasury is up 80 basis points since the beginning of the year, briefly reaching a 25-year high earlier this month. The market is clearly focused on the potential impacts to our sector, but importantly, we believe the setup is quite different today versus the last time rates rose significantly. Capital markets are functioning well, with CMBS issuance on track for a post-GFC record this year. Spreads are effectively unchanged from where we started the year and approximately 40% lower than their peak in 2023. As it relates to real estate values, elevated rates are a headwind, but strong fundamentals supported by continued demand and the collapse in new supply are a tailwind. This is evidenced by REIT same-store NOI growth reaching a three-year high and reflected in performance, with the REIT sector achieving a total return of approximately 12% year-to-date and 50% from the 2023 lows when the 10-year last touched 5%. These are all encouraging signs for continued liquidity in both real estate debt and equity markets. Where we see rates having more of an impact is on certain investments made prior to 2023. Last quarter, we outlined a path to accelerate portfolio turnover and reduce our exposure to these legacy pre-2023 investments. Since then, we've made significant progress, proactively selling select loans more exposed to higher rates, harvesting repayments, and reducing our watch lists. and while this has had a significant impact on our third quarter CECL reserves, we believe the impact of the recent rise in rates on our legacy loan portfolio is largely reflected in our third quarter book value. To provide more detail on our progress this quarter, I'll start with loan sales. Since last quarter, we've sold nearly $1 billion of loans at a weighted average price of 93 cents on the dollar, capitalizing on strong market liquidity even as interest rates moved higher. This included six legacy office loans totaling nearly $500 million and two legacy multifamily loans totaling approximately $200 million. Importantly, most of these loans were on our watch list, driving a near 60% reduction in our watch list quarter over quarter to its lowest level since 2019. We're very pleased with this outcome, proactively reducing higher risk-rated and office loans in our portfolio. Including $250 million of these sales that closed in the quarter, we received a total of $2.3 billion of repayments, our highest level since the fourth quarter 2021. Nearly 90% of these repayments consisted of legacy loans. This momentum has continued with the repayment of a $300 million legacy office loan that priced in the CMBS market earlier this week. Real-time evidence of liquidity for high-quality assets in the current rate environment. Reflecting the loan sales and repayment activities so far through October, we are well on our way to meet or potentially exceed the 40% year-end reduction in both office and legacy loans that we referenced on our last earnings call. Turning to book value, the largest driver of the decline was the impairment of approximately $800 million of loans in the quarter, mostly legacy office and one hotel loan. We identified these loans on our last earnings call as part of $1 billion in our watch list where we observed slower business plan progress and increasing pressure from higher rates. All of these loans were pre-2023 originations, and in many cases, sponsors had injected meaningful equity. But as we anticipated could be the case, those borrowers are now unwilling to commit additional capital to further support their assets. As a result, we took significant reserves against these loans. It's important to point out that we now have only one $57 million watchlist loan in the office sector that has not been previously impaired and reserved for. We believe that the secular change challenges in office that have caused the majority of BXMT's impairments are substantially reflected in our book value. Turning to earnings, while we reported 42 cents of distributable earnings prior to realized gains and losses in the third quarter, We expect to see pressure on go-forward earnings as we reduce the size of our portfolio to account for the book value impact of these new impairments and as we work through resolving legacy investments. As has always been a priority for BXMT, we are committed to generating an attractive, sustainable dividend, and the capital allocation decisions we make today directly influence book value and long-term earnings power, both key components of total stockholder return. With all of this in mind, our board has declared a 30 cent per share dividend for the fourth quarter. Based on what we see today, we expect to be able to cover this dividend next quarter and in full year 2027, even considering the near-term earnings pressure from impaired loans and our lower yielding owned real estate assets. Importantly, we believe this dividend can be sustained through a range of credit and rate environments. A key component of this decision is the ability to preserve capital that can be allocated towards attractive new investments and accretive debt or share repurchases. And with a stable, well-structured balance sheet and a reset dividend, we believe BXMT has ample flexibility to dynamically allocate capital and deliver strong risk-adjusted returns for our shareholders. To that end, we bought back $36 million of stock in the third quarter and have $110 million of remaining capacity under our current authorization. We continue to view buybacks as an attractive allocation of capital, especially given the progress we've made in repositioning our portfolio. First, we carry our owned real estate and impaired loans at nearly 30% below our prior loan basis, reflecting an approximate 55% decline in asset value. Second, our watch list now stands at its lowest level since before COVID. And third, the remainder of the portfolio is well performing. As Austin will walk through in more detail, this includes Legacy Office, which is shrinking rapidly through repayments. Despite all of this, the market is pricing in significant downside from here, with BXMT shares trading at an additional $1 billion discount to our book value. We believe this offers an attractive entry point while delivering an 11% current yield to investors. I'll now pass it to Austin to unpack our portfolio and investment strategy in greater detail.