Blackstone Mortgage Trust, Inc. (Exact Name of Registrant As Specified in Its Charter) Maryland 94-6181186 (State Or Other Jurisdiction of (I.R.S
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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number: 001-14788 Blackstone Mortgage Trust, Inc. (Exact name of Registrant as specified in its charter) Maryland 94-6181186 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 345 Park Avenue, 42nd Floor New York, New York 10154 (Address of principal executive offices)(Zip Code) (212) 655-0220 (Registrant’s telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The number of the Registrant’s outstanding shares of class A common stock, par value $0.01 per share, outstanding as of April 17, 2018 was 108,194,511. Table of Contents TABLE OF CONTENTS PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS 2 Consolidated Financial Statements (Unaudited): Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 2 Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2017 3 Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2018 and 2017 4 Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2018 and 2017 5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 6 Notes to Consolidated Financial Statements 8 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 37 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 54 ITEM 4. CONTROLS AND PROCEDURES 56 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 57 ITEM 1A. RISK FACTORS 57 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 57 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 57 ITEM 4. MINE SAFETY DISCLOSURES 57 ITEM 5. OTHER INFORMATION 57 ITEM 6. EXHIBITS 58 SIGNATURES 60 Table of Contents PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Blackstone Mortgage Trust, Inc. Consolidated Balance Sheets (Unaudited) (in thousands, except share data) March 31, December 31, 2018 2017 Assets Cash and cash equivalents $ 57,396 $ 69,654 Restricted cash 17,082 32,864 Loans receivable, net 11,081,716 10,056,732 Other assets 55,096 99,575 Total Assets $ 11,211,290 $ 10,258,825 Liabilities and Equity Secured debt agreements, net $ 5,996,880 $ 5,273,855 Loan participations sold, net 117,926 80,415 Securitized debt obligations, net 1,282,279 1,282,412 Convertible notes, net 778,070 563,911 Other liabilities 109,624 140,826 Total Liabilities 8,284,779 7,341,419 Commitments and contingencies — — Equity Class A common stock, $0.01 par value, 200,000,000 shares authorized, 108,194,090 and 107,883,860 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively 1,082 1,079 Additional paid-in capital 3,515,418 3,506,861 Accumulated other comprehensive loss (21,903) (29,706) Accumulated deficit (573,384) (567,168) Total Blackstone Mortgage Trust, Inc. stockholders’ equity 2,921,213 2,911,066 Non-controlling interests 5,298 6,340 Total Equity 2,926,511 2,917,406 Total Liabilities and Equity $ 11,211,290 $ 10,258,825 Note: The consolidated balance sheets as of March 31, 2018 and December 31, 2017 include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations of each respective VIE, and liabilities of consolidated VIEs for which creditors do not have recourse to Blackstone Mortgage Trust, Inc. As of both March 31, 2018 and December 31, 2017, assets of the VIEs totaled $1.5 billion and liabilities of the VIEs totaled $1.3 billion. Refer to Note 15 for additional discussion of the VIEs. See accompanying notes to consolidated financial statements. 2 Table of Contents Blackstone Mortgage Trust, Inc. Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share data) Three Months Ended March 31, 2018 2017 Income from loans and other investments Interest and related income $ 155,425 $ 118,517 Less: Interest and related expenses 69,989 46,674 Income from loans and other investments, net 85,436 71,843 Other expenses Management and incentive fees 15,492 12,921 General and administrative expenses 8,708 7,428 Total other expenses 24,200 20,349 Income before income taxes 61,236 51,494 Income tax provision 120 89 Net income 61,116 51,405 Net income attributable to non-controlling interests (158) — Net income attributable to Blackstone Mortgage Trust, Inc. $ 60,958 $ 51,405 Net income per share of common stock basic and diluted $ 0.56 $ 0.54 Weighted-average shares of common stock outstanding, basic and diluted 108,397,598 94,993,386 Dividends declared per share of common stock $ 0.62 $ 0.62 See accompanying notes to consolidated financial statements. 3 Table of Contents Blackstone Mortgage Trust, Inc. Consolidated Statements of Comprehensive Income (Unaudited) (in thousands) Three Months Ended March 31, 2018 2017 Net income $ 61,116 $ 51,405 Other comprehensive income Unrealized gain on foreign currency remeasurement 10,738 7,770 Realized and unrealized loss on derivative financial instruments (2,935) (3,925) Other comprehensive income 7,803 3,845 Comprehensive income 68,919 55,250 Comprehensive income attributable to non-controlling interests (158) — Comprehensive income attributable to Blackstone Mortgage Trust, Inc. $ 68,761 $ 55,250 See accompanying notes to consolidated financial statements. 4 Table of Contents Blackstone Mortgage Trust, Inc. Consolidated Statements of Changes in Equity (Unaudited) (in thousands) Blackstone Mortgage Trust, Inc. Class A Additional Accumulated Other Common Paid-In Comprehensive Accumulated Stockholders’ Non-controlling Total Stock Capital (Loss) Income Deficit Equity Interests Equity Balance at December 31, 2016 $ 945 $ 3,089,997 $ (56,202) $ (541,137) $ 2,493,603 $ — $ 2,493,603 Shares of class A common stock issued, net 3 — — — 3 — 3 Restricted class A common stock earned — 5,810 — — 5,810 — 5,810 Dividends reinvested — 105 — (96) 9 — 9 Deferred directors’ compensation — 94 — — 94 — 94 Other comprehensive loss — — 3,845 — 3,845 — 3,845 Net income — — — 51,405 51,405 — 51,405 Dividends declared on common stock — — — (58,787) (58,787) — (58,787) Balance at March 31, 2017 $ 948 $ 3,096,006 $ (52,357) $ (548,615) $ 2,495,982 $ — $ 2,495,982 Balance at December 31, 2017 $ 1,079 $ 3,506,861 $ (29,706) $ (567,168) $ 2,911,066 $ 6,340 $ 2,917,406 Shares of class A common stock issued, net 3 — — — 3 — 3 Restricted class A common stock earned — 6,848 — — 6,848 — 6,848 Issuance of convertible notes — 1,462 — — 1,462 — 1,462 Dividends reinvested — 122 — (108) 14 — 14 Deferred directors’ compensation — 125 — — 125 — 125 Other comprehensive income — — 7,803 — 7,803 — 7,803 Net income — — — 60,958 60,958 158 61,116 Dividends declared on common stock — — — (67,066) (67,066) — (67,066) Contributions from non-controlling interests — — — — — 375 375 Distributions to non-controlling interests — — — — — (1,575) (1,575) Balance at March 31, 2018 $ 1,082 $ 3,515,418 $ (21,903) $ (573,384) $ 2,921,213 $ 5,298 $ 2,926,511 See accompanying notes to consolidated financial statements. 5 Table of Contents Blackstone Mortgage Trust, Inc. Consolidated Statements of Cash Flows (Unaudited) (in thousands) Three Months Ended March 31, 2018 2017 Cash flows from operating activities Net income $ 61,116 $ 51,405 Adjustments to reconcile net income to net cash provided by operating activities Non-cash compensation expense 6,976 5,907 Amortization of deferred fees on loans (11,229) (8,808) Amortization of deferred financing costs and premiums/discount on debt obligations 6,331 4,535 Changes