ITEM 1A.RISK FACTORS
Risks Related to Our Investments
Our investments expose us to risks associated with debt or credit-oriented real estate investments generally.
We seek to originate, acquire, and manage senior loans and other debt or credit-oriented investments collateralized by or
relating to commercial real estate in North America, Europe, and Australia. As such, we are subject to, among other things,
risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and
investments. A deterioration of real estate fundamentals generally, and in North America, Europe, and Australia in
particular, could negatively impact our performance by making it more difficult for our borrowers to satisfy their debt
payment obligations, increasing the default risk applicable to our borrowers and/or making it more difficult for us to
generate attractive risk-adjusted returns. Changes in general economic conditions have and will continue to affect the
creditworthiness and/or performance of our borrowers and/or the value of underlying real estate collateralizing or relating
to our investments and may include economic and/or market fluctuations, changes in building, environmental, zoning and
other laws, casualty or condemnation losses, regulatory limitations on rents, decreases in property values, changes in the
appeal of properties to tenants, changes in supply of and demand for real estate products, fluctuations in real estate
fundamentals, the financial resources of our borrowers, energy supply shortages, various uninsured or uninsurable risks,
natural disasters, pandemics or outbreaks of contagious disease, political events, terrorism and acts of war, trade tensions
resulting from U.S. tariff implementation and retaliatory tariffs by other countries, changes in government regulations,
changes in monetary policy, changes in real property tax rates and/or tax credits, changes in operating expenses, changes in
capital expenditure costs, changes in interest rates, changes in inflation rates, changes in foreign exchange rates, changes in
the availability of debt financing and/or mortgage funds that may render the sale or refinancing of properties difficult or
impracticable, increased mortgage defaults, increases in borrowing rates, changes in consumer spending, negative
developments in the economy and/or adverse changes in real estate values generally and other factors that are beyond our
control. Concerns about the real estate market, high interest rates, inflation, energy costs, geopolitical issues, and other
global events outside of our control have contributed, and may in the future contribute, to increased volatility and
diminished expectations for the economy and markets going forward, which could materially and adversely affect our
business, financial condition, and results of operations.
We cannot predict the degree to which economic conditions generally, and the conditions for real estate investing in
particular, will improve or decline. Any declines in the performance of the U.S. and global economies or in the real estate
markets could have a material adverse effect on our business, financial condition, and results of operations.
Commercial real estate-related investments that are secured, directly or indirectly, by real property are subject to
delinquency, foreclosure and loss, which have resulted and in the future could result in losses to us.
We invest in commercial real estate debt instruments (e.g., mortgages, mezzanine loans and preferred equity) that are
secured, directly or indirectly, by commercial properties. The ability of a borrower to repay a loan secured by an income-
producing property typically is dependent primarily upon the successful operation of the property rather than upon the
existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the
borrower’s ability to repay the loan may be impaired. Net operating income of an income-producing property can be
affected by, among other things:
•tenant mix and tenant bankruptcies;
•success of tenant businesses;
•property management decisions, including with respect to capital improvements, particularly in older building
structures;
•renovations or repositionings during which operations may be limited or halted completely;
•property location and condition, including without limitation, any need to address climate-related risks or
environmental contamination at a property;
•competition from other properties offering the same or similar services;
•changes in laws that increase operating expenses or limit rents that may be charged;
•changes in interest rates, foreign exchange rates, and in the state of the credit and securitization markets and the
debt and equity capital markets, including diminished availability or lack of debt financing for commercial real
estate;
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•global trade disruption or conflict, trade tensions resulting from U.S. tariff implementation and retaliatory tariffs
by other countries, other changes to trade policy in the U.S. and other jurisdictions and supply chain issues;
•labor shortages and increasing wages;
•higher rates of inflation;
•changes in global, national, regional or local economic conditions and/or the conditions of specific industry
segments;
•declines in global, national, regional or local real estate values;
•declines in global, national, regional or local rental and/or occupancy rates;
•changes in real estate tax rates, tax credits and other operating expenses;
•changes in governmental rules, regulations and fiscal policies, including income tax regulations and
environmental legislation;
•any liabilities relating to environmental matters at the property;
•acts of God, natural disasters, pandemics or other severe public health events, climate-related risks, terrorism or
other hostilities, social unrest and civil disturbances, which may decrease the availability of or increase the cost of
insurance or result in uninsured losses; and
•adverse changes in zoning laws.
In addition, we are exposed to the risk of judicial proceedings with our borrowers and entities we invest in, including
bankruptcy or other litigation, as a strategy to avoid foreclosure or enforcement of other rights by us as a lender or investor.
In the event that any of the properties or entities underlying or collateralizing our loans or investments experiences or
continues to experience any of the other foregoing events or occurrences, the value of, and return on, such investments
could be reduced, which would adversely affect our results of operations and financial condition.
Fluctuations in interest rates and credit spreads have reduced and in the future could reduce our ability to generate
income on our loans and other investments, which could lead to a significant decrease in our results of operations, cash
flows and the market value of our investments and may limit our ability to pay dividends to our stockholders.
Our primary interest rate exposures relate to the yield on our loans and other investments and the financing cost of our
debt, as well as our interest rate swaps that we may utilize for hedging purposes. Changes in interest rates and credit
spreads have affected and may in the future affect our net income from loans and other investments, which is the difference
between the interest and related income we earn on our interest-earning investments and the interest and related expense we
incur in financing these investments. Interest rate and credit spread fluctuations resulting in our interest and related expense
exceeding interest and related income would result in operating losses for us. Changes in the level of interest rates and
credit spreads also may affect our ability to make loans or investments, the value of our loans and investments and our
ability to realize gains from the disposition of assets. Increases in interest rates and credit spreads have had and may in the
future also have negative effects on demand for loans and could result in higher borrower default rates. Despite recent
decreases in interest rates, inflation has remained above the U.S. Federal Reserve’s target level and interest rates remain
elevated. It presents a challenge to real estate valuations if interest rates remain elevated, or if higher inflation or other
factors lead to increases in interest rates. Higher interest rates have been particularly challenging for the traditional office
properties, as well as other property types with long-term leases that were entered into in a lower interest rate environment
and that may not allow near-term rent increases to offset increases in expenses. Interest rate increases also have had and
may in the future have adverse effects on commercial real estate property values, and, for certain of our borrowers have
contributed, and may continue to contribute, to loan non-performance, modifications, defaults, foreclosures, and/or
property sales, which has resulted and could continue to result in us realizing losses on our investments.
Our operating results depend, in part, on differences between the income earned on our investments, net of credit losses,
and our financing costs. The yields we earn on our floating-rate assets and our borrowing costs tend to move in the same
direction in response to changes in interest rates. However, one can rise or fall faster than the other, causing our net interest
margin to expand or contract. In addition, we could experience reductions in the yield on our investments and an increase
in the cost of our financing. Although we seek to match the terms of our liabilities to the expected lives of loans that we
acquire or originate, circumstances may arise in which our liabilities are shorter in duration than our assets, resulting in
their adjusting faster in response to changes in interest rates. For any period during which our investments are not match-
funded, the income earned on such investments may respond more slowly to interest rate fluctuations than the cost of our
borrowings. Consequently, changes in interest rates, particularly short-term interest rates, may immediately and
significantly decrease our results of operations and cash flows and the market value of our investments, and any such
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change may limit our ability to pay dividends to our stockholders. In addition, unless we enter into hedging or similar
transactions with respect to the portion of our assets that we fund using our balance sheet, returns we achieve on such
assets will generally increase as interest rates for those assets rise and decrease as interest rates for those assets decline.
The timing of loan repayment is difficult to predict and may adversely affect our financial performance, liquidity and
cash flows.
Our floating-rate mortgage loans are secured by commercial real estate assets. Generally, our mortgage loan borrowers may
repay their loans prior to their stated maturities. In periods of declining interest rates and/or credit spreads, prepayment
rates on loans will generally increase. If general interest rates or credit spreads decline at the same time, the proceeds of
such prepayments received during such periods may not be reinvested for some period of time or may be reinvested by us
in assets with lower yields than the assets that were prepaid. In periods of increasing interest rates and/or credit spreads,
prepayment rates on loans will generally decrease, which could impact our liquidity, or increase our potential exposure to
loan non-performance.
Prepayment rates on loans may be affected by a number of factors including, but not limited to, the then-current level of
interest rates and credit spreads, fluctuations in asset values, the availability of mortgage credit, the relative economic
vitality of the area in which the related properties are located, the servicing of the loans, possible changes in tax laws, other
opportunities for investment, and other economic, social, geographic, demographic and legal and other factors beyond our
control. Consequently, such prepayment rates can vary significantly from period to period and cannot be predicted with
certainty. No strategy can completely insulate us from prepayment or other such risks and faster or slower prepayments
may adversely affect our profitability and cash available for distribution to our stockholders.
Our loans often contain call protection or yield maintenance provisions that require a certain minimum amount of interest
due to us regardless of when the loan is repaid. These include prepayment fees expressed as a percentage of the unpaid
principal balance, or the amount of foregone net interest income due us from the date of repayment through a date that is
frequently 12 or 18 months after the origination date. Loans that are outstanding beyond the end of the call protection or
yield maintenance period can be repaid with no prepayment fees or penalties. The absence of call protection or yield
maintenance provisions may expose us to the risk of early repayment of loans, and the inability to redeploy capital
accretively.
Difficulty in redeploying the proceeds from repayments of our existing loans and investments may cause our financial
performance and returns to investors to suffer.
As our loans and investments are repaid, we seek to redeploy the proceeds we receive into new loans and investments
(which can include future fundings associated with our existing loans) or other alternative uses of capital, such as repaying
borrowings or repurchasing outstanding shares of our class A common stock. It is possible that we will fail to identify
reinvestment options that would provide returns or a risk profile that is comparable to the asset that was repaid. If we fail to
redeploy the proceeds we receive from repayment of a loan in equivalent or better alternatives, our financial performance
and returns to investors could suffer.
We operate in a competitive market for lending and investment opportunities, which may intensify, and competition may
limit our ability to originate or acquire desirable loans and investments or dispose of investments, and could also affect
the yields of these investments and have a material adverse effect on our business, financial condition and results of
operations.
We operate in a competitive market for lending and investment opportunities, which may intensify. Our profitability
depends, in large part, on our ability to originate or acquire our investments on attractive terms. In originating or acquiring
our investments, we compete for opportunities with a variety of institutional lenders and investors, including other REITs,
specialty finance companies, public and private funds, commercial and investment banks, commercial finance and
insurance companies and other financial institutions (including Blackstone-advised investment vehicles). Some of our
competitors have raised, and may in the future raise, significant amounts of capital, and may have investment objectives
that overlap with ours, which may create additional competition for lending and investment opportunities. Some
competitors may have a lower cost of funds and access to funding sources that are not available to us, such as the U.S.
government. Many of our competitors are not subject to the operating constraints associated with REIT tax compliance or
maintenance of an exclusion from regulation under the Investment Company Act. In addition, some of our competitors may
have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of loans and
investments, offer more attractive pricing or other terms and establish more relationships than us.
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Furthermore, competition for originations of investments may lead to decreasing yields, which may further limit our ability
to generate desired returns. Also, as a result of this competition, desirable loans and investments may be limited in the
future, and we may not be able to take advantage of attractive lending and investment opportunities from time to time,
thereby limiting our ability to identify and originate or acquire loans or make investments that are consistent with our
investment objectives. There can be no assurance that the competitive pressures we face will not have a material adverse
effect on our business, financial condition and results of operations.
If we are unable to successfully integrate new assets or businesses and manage our growth, our results of operations
and financial condition may suffer.
We have in the past and may in the future significantly increase the size and/or change the mix of our portfolio of assets or
acquire or otherwise enter into new lines of business, including through joint ventures. We may be unable to successfully
and efficiently integrate newly-acquired assets or businesses into our existing operations or otherwise effectively manage
our assets or our growth effectively. In addition, increases in our portfolio of assets and/or changes in the mix of our assets
or lines of business may place significant demands on our Manager’s administrative, operational, asset management,
financial and other resources. Any failure to manage increases in our size effectively could adversely affect our results of
operations and financial condition.
Our Manager manages our portfolio pursuant to very broad investment guidelines and is not required to seek the
approval of our board of directors for each investment, financing, asset allocation or hedging decision made by it, which
may result in our making riskier loans and investments and which could adversely affect our results of operations and
financial condition.
Our Manager is authorized to follow very broad investment guidelines that provide it with broad discretion over
investment, financing, asset allocation and hedging decisions. Our board of directors will periodically review our
investment guidelines and our loan and investment portfolio but will not, and will not be required to, review and approve in
advance all of our proposed loans and investments or our financing, asset allocation or hedging decisions. In addition, in
conducting periodic reviews, our directors rely primarily on information provided to them by our Manager or its affiliates.
Subject to maintaining our REIT qualification and our exclusion from regulation under the Investment Company Act, our
Manager has significant latitude within the broad investment guidelines in determining the types of loans and investments
it makes for us, and how such loans and investments are financed or hedged, which could result in investment returns that
are substantially below expectations or that result in losses, which could adversely affect our results of operations and
financial condition, or may otherwise not be in our best interests.
Acquiring or attempting to acquire multiple investments in a single transaction may adversely affect our operations.
We have in the past and may in the future acquire multiple investments in a single transaction. To the extent we share the
acquisition of large portfolios of investments with other Blackstone-advised investment vehicles through joint ventures or
otherwise, there may be conflicts of interest, including as to the allocation of investments within the portfolio and the prices
attributable to such investments. See “—Risks Related to Conflicts of Interest —We are subject to various risks arising out
of Blackstone’s allocation of investment opportunities among us and Other Blackstone Accounts, including that certain
Other Blackstone Accounts have similar or overlapping investment objectives and strategies, and as a result we will not be
allocated certain opportunities and may be allocated opportunities with lower relative returns.” Portfolio acquisitions, such
as loan pools or multiple properties, are typically more complex and expensive than single-investment acquisitions, and the
risk that a multiple-investment acquisition does not close may be greater than in a single-investment acquisition. Portfolio
acquisitions have also resulted and may also in the future result in us owning smaller investments related to different types
of assets in more geographically dispersed markets than the investments we have made historically, placing additional
operational and asset management demands on our Manager. See “—Risks Related to Our Relationship with Our Manager
and its Affiliates —We depend on our Manager and its affiliates to develop appropriate systems and procedures to control
operational risk.” In addition, to the extent the seller requires that a group of investments be purchased as a package and/or
also include certain additional investments we may purchase or investments we may not otherwise have purchased. In these
situations, if we are unable to identify another person or entity to acquire any unwanted investments, or if the seller
imposes a lock-out period or other restriction on a subsequent sale, we may be required to asset manage such investments
or attempt to dispose of such investments (if not subject to a lock-out period). It may also be difficult for our Manager to
fully analyze each investment in a large portfolio, increasing the risk that investments do not perform as anticipated. We
also may be required to accumulate a large amount of cash to fund such acquisitions. We would expect the returns that we
earn on such cash balances to be less than the returns on investments. Therefore, acquiring multiple investments in a single
transaction may reduce the overall return on our portfolio.
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The illiquidity of certain assets we invest in may adversely affect our business.
The illiquidity of certain assets we invest in may make it difficult for us to sell such investments, if needed. Certain assets
such as mortgages, B-Notes, mezzanine and other loans (including loan participations) and preferred equity, in particular,
are relatively illiquid investments due to their short tenor, are potentially unsuitable for securitization and have a greater
difficulty of recovery in the event of a borrower’s default. We are also required to hold certain risk retention interests in
certain of our securitization transactions. In addition, certain of our investments may become less liquid after our
investment as a result of periods of delinquencies or defaults or turbulent market conditions, including due to current
market conditions and exacerbated market volatility, which may make it more difficult for us to dispose of such assets at
advantageous times or in a timely manner. Moreover, many of the loans and securities we have invested and may invest in
are not registered under the relevant securities laws, resulting in limitations or prohibitions against their transfer, sale,
pledge or their disposition. As a result, many of our investments are illiquid, and if we are required to liquidate all or a
portion of our portfolio quickly, for example as a result of margin calls, we may realize significantly less than the value at
which we have previously recorded our investments. See “—We may foreclose on certain of the loans we originate or
acquire, which could result in losses that harm our results of operations and financial condition,” and “—As an owner of
real estate, we are subject to the risks inherent in the ownership and operation of real estate and the construction and
development of real estate.”
Further, we may face other restrictions on our ability to liquidate an investment to the extent that we or our Manager (and/
or its affiliates) has or could be attributed as having material, nonpublic information regarding the borrower. As a result,
our ability to vary our portfolio in response to changes in economic and other conditions may be limited, which could
adversely affect our results of operations and financial condition.
Any distressed loans or investments we make, or loans and investments that later become distressed, may subject us to
losses and other risks.
Our loans and investments focus primarily on “performing” real estate-related interests. Certain of our loans and
investments may also include making distressed investments from time to time (e.g., investments in defaulted, out-of-favor
or distressed loans and debt securities) and we have made and may in the future make investments that become “sub-
performing” or “non-performing” following our origination or acquisition thereof. Certain of our investments have
involved and may in the future involve properties that are highly leveraged, with significant burdens on cash flow and,
therefore, involve a high degree of risk. During an economic downturn or recession, loans or securities of financially or
operationally troubled borrowers or issuers are more likely to go into default than loans or securities of other borrowers or
issuers. Loans or securities of financially or operationally troubled issuers are less liquid and more volatile than loans or
securities of borrowers or issuers not experiencing such difficulties. The market prices of such securities are subject to
erratic and abrupt market movements and the spread between bid and ask prices may be greater than normally expected.
Investment in the loans or securities of financially or operationally troubled borrowers or issuers involves a high degree of
credit and market risk.
The success of our investment strategy depends, in part, on our ability to successfully effectuate loan modifications and/
or restructurings.
In certain cases (e.g., in connection with a workout, restructuring and/or foreclosure proceedings involving one or more of
our investments), the success of our investment strategy has depended and will continue to depend, in part, on our ability to
effectuate loan modifications and/or restructurings with our borrowers. The activity of identifying and implementing
successful modifications and restructurings entails a high degree of uncertainty, including macroeconomic and borrower-
specific factors beyond our control that impact our borrowers and their operations. There can be no assurance that any of
the loan modifications and restructurings we have effected will be successful or that (i) we will be able to identify and
implement successful modifications and/or restructurings with respect to any other distressed loans or investments we may
have from time to time, or (ii) we will have sufficient resources to implement such modifications and/or restructurings in
times of widespread market challenges. Further, such loan modifications and/or restructurings have entailed and may in the
future entail, among other things, a substantial reduction in the interest rate and/or a substantial write-off of the principal of
such loan, debt securities or other interests. Moreover, even if a restructuring were successfully accomplished, a risk exists
that, upon maturity of such real estate loan, debt securities or other interests, replacement “takeout” financing will not be
available. Additionally, such loan modifications have resulted and may in the future result in our consolidating the
underlying the real estate as an owned real estate asset if we assume legal title, physical possession, or control of the
collateral underlying a loan through a foreclosure, a deed-in-lieu of foreclosure transaction, or a loan modification in which
we receive an equity interest in and/or control over decision-making at the property. See “—We may foreclose on certain
of the loans we originate or acquire, which could result in losses that harm our results of operations and financial
condition,” and “—As an owner of real estate, we are subject to the risks inherent in the ownership and operation of real
estate and the construction and development of real estate.”
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Financial or operating difficulties of our borrowers may result in our being subject to bankruptcy proceedings.
Financial or operating difficulties faced by our borrowers, such as those described in this report, may never be overcome
and have caused and may in the future cause borrowers to become subject to federal bankruptcy or other similar insolvency
proceedings. A borrower may be involved in restructurings, insolvency proceedings or reorganizations under the U.S.
Bankruptcy Code and the laws and regulations of one or more jurisdictions that may or may not be similar to the U.S.
Bankruptcy Code, which may adversely affect the rights or priority of our loans. There is a possibility that we may incur
substantial or total losses on our investments and, in certain circumstances, become subject to certain additional potential
liabilities that may exceed the value of our original investment therein. For example, under certain circumstances, a lender
may have its claims subordinated or disallowed or, if it has inappropriately exercised control over the management and
policies of a debtor, may be found liable for damages suffered by parties as a result of such actions. In any insolvency
proceeding relating to any of our investments, we may lose our entire investment, may be required to accept cash, securities
or other property with a value less than our original investment and/or may be required to accept different terms, including
changes to interest rates and payment over an extended period of time. In addition, under certain circumstances, we may be
forced to repay payments previously made to us by a borrower if such payments are later determined to have been a
fraudulent conveyance, preferential payment, or similar avoidable transaction under applicable laws. Furthermore,
bankruptcy laws and similar laws applicable to insolvency proceedings may delay our ability to realize value from
collateral for our loan positions and prevent us from foreclosing upon loans and taking title to the property securing such
loans. If, through an insolvency proceeding, we do ultimately take title to the property securing a loan, we would take
ownership of such property subject to the potential rights of tenants to remain in possession for the duration of their
respective leases, which may substantially reduce the value of such property.
We have in the past and may in the future foreclose on certain of the loans we originate or acquire, which could result
in losses that negatively impact our results of operations and financial condition.
We have in the past and may in the future find it necessary or desirable to foreclose on certain of the loans we originate or
acquire, and the foreclosure process may be lengthy and expensive. When we foreclose on an asset, we take title to the
property securing that asset, and then own and operate such property as an owned real estate asset. Owning and operating
real property involves risks that are different (and in many ways more significant) than the risks faced in owning a loan
secured by that property. The costs associated with operating and redeveloping a property, including any operating
shortfalls and significant capital expenditures, could materially and adversely affect our results of operations, financial
conditions and liquidity. In addition, we may end up owning a property that we would not otherwise have decided to
acquire directly at the price of our original investment or at all, and the liquidation proceeds upon sale of the underlying
real estate may not be sufficient to recover our cost basis in the loan, resulting in a loss to us.
Whether or not we have participated in the negotiation of the terms of any such loans, there can be no assurance as to the
adequacy of the protection of the terms of the applicable loan, including the validity or enforceability of the loan and the
maintenance of the anticipated priority and perfection of the applicable security interests. Furthermore, claims may be
asserted by lenders or borrowers that might interfere with enforcement of our rights. Borrowers may resist foreclosure
actions by asserting numerous claims, counterclaims and defenses against us, including, without limitation, lender liability
claims and defenses, even when the assertions may have no basis in fact, in an effort to prolong the foreclosure action and
seek to force the lender into a modification of the loan or a favorable buy-out of the borrower’s position in the loan.
Foreclosure actions in some U.S. states can take several years or more to litigate and may also be time consuming and
expensive to complete in other U.S. states and foreign jurisdictions in which we do business. At any time prior to or during
the foreclosure proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure
actions and further delaying or even preventing the foreclosure process, and could potentially result in a reduction or
discharge of a borrower’s debt. Foreclosure may create a negative public perception of the related property, resulting in a
diminution of its value. Even if we are successful in foreclosing on a loan, the liquidation proceeds upon sale of the
underlying real estate may not be sufficient to recover our cost basis in the loan, resulting in a loss to us. Furthermore, any
costs or delays involved in the foreclosure of the loan or a liquidation of the underlying property will further reduce the net
sale proceeds and, therefore, increase any such losses to us.
We are subject to the risks inherent in the ownership and operation of real estate.
As of December 31, 2025, we had 12 owned real estate assets with an aggregate carrying value of $1.3 billion. We may in
the future acquire or otherwise consolidate additional owned real estate assets. We also indirectly own real estate through
our Net Lease Joint Venture and may become the owner and/or operator of additional real estate through future
investments.
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We are therefore subject to the risks inherent in the ownership and operation of real estate and real estate-related businesses
and assets. Such investments are subject to the potential for deterioration of real estate fundamentals and the risk of adverse
changes in local market and economic conditions, which may include changes in supply of and demand for competing
properties in an area, changes in interest rates and related increases in borrowing costs, changes in the financial resources
of tenants, defaults by borrowers or tenants and the lack of availability of financing, which may render the sale or
refinancing of properties difficult or impracticable. Such investments are also subject to additional risks specific to the type
of property. For example, with respect to our hospitality owned real estate assets, the hospitality or leisure business is
seasonal, highly competitive and influenced by additional factors such as general and local economic conditions,
fluctuations in average occupancy and room rates, quality, service levels, reputation and reservation systems, among many
other factors. As a result of such seasonality, there has been and will likely continue to be quarterly fluctuations in results
of operations of our owned real estate assets. In addition, investments in real estate and real estate-related businesses and
assets may be subject to the risk of environmental liabilities, contingent liabilities upon disposition of assets, casualty or
condemnations losses, energy supply shortages, natural disasters, climate-related risks (including transition risks and acute
and chronic physical risks), acts of God, terrorist attacks, war, pandemics or other public health events (such as
COVID-19), and other events that are beyond our control, and various uninsured or uninsurable risks. Because landlord
claims for future rent are capped under the U.S. Bankruptcy Code, tenants in our properties may be incentivized to enter
bankruptcy proceedings for the purpose of rejecting leases at our properties and reducing liability thereunder.
Further, investments in real estate and real estate-related businesses and assets are subject to changes in law and regulation,
including in respect of building, environmental and zoning laws, rent control and other regulations impacting residential
real estate investments and changes to tax laws and regulations, including real property and income tax rates and the
taxation of business entities and the deductibility of corporate interest expense. In addition, if we acquire direct or indirect
interests in undeveloped land or underdeveloped real property, which may often be non-income producing, we will be
subject to the risks normally associated with such assets and development activities, including risks relating to the
availability and timely receipt of zoning and other regulatory or environmental approvals, the cost and timely completion of
construction (including risks beyond our control, such as weather or labor conditions or material shortages) and the
availability of both construction and permanent financing on favorable terms.
Further, ownership of real estate may increase our risk of direct and/or indirect liability under environmental laws that
impose, regardless of fault, joint and several liability for the cost of remediating contamination and compensation for
damages. In addition, changes in environmental laws or regulations or the environmental condition of real estate may
create liabilities that did not exist at the time we became the owner of such real estate. Even in cases where we are
indemnified against certain liabilities arising out of violations of laws and regulations, including environmental laws and
regulations, there can be no assurance as to the financial viability of a third party to satisfy such indemnities or our ability
to achieve enforcement of such indemnities.
Further, we rely on other parties (including portfolio companies owned by Blackstone-advised investment vehicles and
other affiliates of our Manager) to operate, manage and provide services to our owned real estate assets and other assets.
Such parties have significant decision-making authority with respect to the applicable assets, and our ability to direct and
control how those assets are managed and operated on a day-to-day basis may be limited. Thus, the success of our business
may depend on the ability and performance of these other parties. Any adversity experienced by, or problems in our
relationship with these other parties could adversely impact the operation and profitability of our assets. Moreover, there
may be conflicts of interest with respect to services provided by portfolio companies owned by Blackstone-advised
investment vehicles and other affiliates of our Manager. See “—Risks Related to Conflicts of Interest —Blackstone, Other
Blackstone Accounts, Portfolio Entities, and personnel and related parties of the foregoing will benefit from the fees and
compensation, including performance-based and other incentive fees, which could be substantial, for products and services
provided to us.”
Further, certain of our owned real estate assets are also assets of one or more of the non-recourse securitizations we use to
finance our loans and investments, which may further limit our ability to take certain actions with respect the management,
operations and potential sales of such assets. See “—Risks Related to Financing and Hedging —We have utilized and may
continue to utilize in the future non-recourse securitizations to finance our loans and investments, which may expose us to
risks that could result in losses” for further information regarding such securitizations.
Increases in our CECL reserves have had and could continue to have an adverse effect on our business, financial
condition and results of operations.
Our CECL reserves required under the Financial Accounting Standards Board, or FASB, Accounting Standards
Codification, or ASC, Topic 326 “Financial Instruments - Credit Losses,” or ASC 326, reflect our current estimate of
potential credit losses related to our loans’ included in our consolidated balance sheets. Changes to our CECL reserves are
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recognized through net income on our consolidated statements of operations. See Notes 2 and 3 to our consolidated
financial statements for further discussion of our CECL reserves.
While ASC 326 does not require any particular method for determining CECL reserves, it does specify the reserves should
be based on relevant information about past events, including historical loss experience, current portfolio and market
conditions, and reasonable and supportable forecasts for the duration of each respective loan. Because our methodology for
determining the CECL reserves may differ from the methodologies employed by other companies, our CECL reserves may
not be comparable with the CECL reserves reported by other companies. In addition, other than a few narrow exceptions,
ASC 326 requires that all financial instruments subject to the CECL model have some amount of loss reserve to reflect the
GAAP principal underlying the CECL model that all loans, debt securities, and similar assets have some inherent risk of
loss, regardless of credit quality, subordinate capital, or other mitigating factors. 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 December 31, 2025. In addition, there can be no
assurance that any loan modification or restructuring will not result in a substantial write-off of the principal of such loan,
debt securities or other interests. If we are required to materially increase our CECL reserves for any reason, such increase
could adversely affect our business, financial condition, and results of operations.
CECL reserves are difficult to estimate.
Our CECL reserves are evaluated on a quarterly basis. The determination of our CECL reserves requires us to make certain
estimates and judgments, which may be difficult to determine. Our estimates and judgments are based on a number of
factors, including projected cash flow from the collateral securing our loans, debt structure, including the availability of
reserves and recourse guarantees, likelihood of repayment in full at the maturity of a loan, potential for refinancing, the
creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of
loans and expected market discount rates for varying property types, all of which remain uncertain and are subjective. In
determining the adequacy of our CECL reserves, we rely on our experience and our evaluation of economic conditions and
market factors. If our assumptions prove to be incorrect, our CECL reserves may not be sufficient to cover losses inherent
in our loan portfolio and adjustment may be necessary to allow for different economic conditions or adverse developments
in our loan portfolio. Consequently, a problem with one or more loans could require us to significantly increase the level of
our CECL reserves. Our estimates and judgments may not be correct and, therefore, our results of operations and financial
condition could be severely impacted.
Certain of our investments are recorded at fair value and, as a result, there will be uncertainty as to the value of these
investments.
Our investments in unconsolidated entities and investments we may make in the form of positions or securities that are not
publicly traded are or will be recorded at estimated fair value. The fair value of these investments may not be readily
determinable. We will value these investments quarterly at fair value, which may include unobservable inputs. Because
such valuations are subjective, the fair value of certain of our assets may fluctuate over short periods of time and our
determinations of fair value may differ materially from the values that we ultimately realize upon their disposal. Our results
of operations and financial condition could be adversely affected if our determinations regarding the fair value of these
investments were materially higher than the values that we ultimately realize upon their disposal.
Control may be limited over certain of our loans and investments.
Our ability to manage our portfolio of loans and investments may be limited by the form in which they are made. In certain
situations, we:
•acquire investments subject to rights of senior classes, special servicers or collateral managers under intercreditor,
servicing agreements or securitization documents;
•pledge our investments as collateral for financing arrangements;
•acquire only a minority and/or a non-controlling participation in an underlying investment;
•co-invest with others through partnerships, joint ventures or other entities, thereby acquiring non-controlling
interests; or
•rely on independent third-party management or servicing with respect to the management of an asset.
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In addition, in circumstances where we originate or acquire loans relating to borrowers that are owned in whole or part by
Blackstone-advised investment vehicles, we generally forgo all non-economic rights under the loan, including voting
rights, so long as Blackstone-advised investment vehicles own such borrowers above a certain threshold.
Therefore, we may not be able to exercise control over all aspects of our loans or investments. Such financial assets may
involve risks not present in investments where senior creditors, junior creditors, servicers, third-party controlling investors
or Blackstone-advised investment vehicles are not involved. Our rights to control the process following a borrower default
may be subject to the rights of senior or junior creditors, holders of senior securities issued in our non-recourse
securitizations or servicers whose interests may not be aligned with ours. A partner or co-venturer may have financial
difficulties resulting in a negative impact on such asset, may have economic or business interests or goals that are
inconsistent with ours, or may be in a position to take action contrary to our investment objectives. In addition, we will
generally pay all or a portion of the expenses relating to our joint ventures and we may, in certain circumstances, be liable
for the actions of our partners or co-venturers.
B-Notes, mezzanine loans, and other investments (such as preferred equity) that are subordinated or otherwise junior in
the capital structure and that involve privately negotiated structures will expose us to greater risk of loss.
We may originate or acquire B-Notes, mezzanine loans and other investments (such as preferred equity) that are
subordinated or otherwise junior in the capital structure and that involve privately negotiated structures. To the extent we
invest in subordinated debt or mezzanine tranches of an entity’s capital structure, such investments and our remedies with
respect thereto, including the ability to foreclose on any collateral securing such investments, will be subject to the rights of
holders of more senior tranches in the issuer’s capital structure and, to the extent applicable, contractual intercreditor, co-
lender and/or participation agreement provisions. Significant losses related to such loans or investments could adversely
affect our results of operations and financial condition.
As the terms of such loans and investments are subject to contractual relationships among lenders, co-lending agents and
others, they can vary significantly in their structural characteristics and other risks. For example, the rights of holders of B-
Notes to control the process following a borrower default may vary from transaction to transaction.
Like B-Notes, mezzanine loans are by their nature structurally subordinated to more senior property-level financings. If a
borrower defaults on our mezzanine loan or on debt senior to our loan, or if the borrower is in bankruptcy, our mezzanine
loan will be satisfied only after the property-level debt and other senior debt is paid in full. As a result, a partial loss in the
value of the underlying collateral can result in a total loss of the value of the mezzanine loan. In addition, even if we are
able to foreclose on the underlying collateral following a default on a mezzanine loan, we would be substituted for the
defaulting borrower and, to the extent income generated on the underlying property is insufficient to meet outstanding debt
obligations on the property, we may need to commit substantial additional capital and/or deliver a replacement guarantee
by a creditworthy entity, which may include us, to stabilize the property and prevent additional defaults to lenders with
existing liens on the property. In addition, mezzanine loans may have higher loan-to-value ratios than conventional
mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal. Significant losses related
to our B-Notes and mezzanine loans would result in operating losses for us and may limit our ability to pay dividends to
our stockholders.
We have originated and expect to continue to originate loans with the intention of syndicating all or a portion of the loan at
or following origination, but there can be no assurance that any intended syndication will be completed on favorable terms
or at all.
Loans on properties in transition may involve a greater risk of loss than conventional mortgage loans.
The typical borrower in a transitional loan has usually identified an asset that it views as undervalued, having been under-
managed and/or located in a recovering market, and is seeking relatively short-term capital to be used in an acquisition or
rehabilitation of a property. If the borrower’s assessment of the asset as undervalued is inaccurate, or if the market in which
the asset is located fails to improve according to the borrower’s projections, or if the borrower fails to sufficiently improve
the quality of the asset’s management and/or the value of the asset, the borrower may not receive a sufficient return on the
asset to satisfy the transitional loan, and we bear the risk that we may not recover all or a portion of our investment. During
periods in which there are decreases in demand for certain properties as a result of macroeconomic factors, reductions in
the financial resources of tenants, and defaults by borrowers or tenants, borrowers face additional challenges in
transitioning properties. Market downturns or other adverse macroeconomic factors may affect transitional loans in our
portfolio more adversely than loans secured by more stabilized assets.
In addition, borrowers usually use the proceeds of a sale or a refinancing to repay a loan, and both sales and refinancings
are subject to the broader risk that the underlying collateral may not be liquid and that financing may not be available on
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acceptable terms or at all. In the event of any default under one of our loans, we bear the risk of loss of principal and non-
payment of interest and fees to the extent of any deficiency between the value of the underlying collateral and the principal
amount and unpaid interest of the loan. To the extent we suffer such losses with respect to our loans, it could adversely
affect our results of operations and financial condition.
Risks of cost overruns and noncompletion of renovations of properties in transition may result in significant losses.
The renovation, refurbishment or expansion of a property in transition by a borrower involves risks of cost overruns and
noncompletion. Estimates of the costs of improvements to bring an acquired property in transition up to standards
established for the market position intended for that property may prove inaccurate. Inflation in the cost of labor and
materials, as well as global supply chain shortages or slowdowns can also create challenges for borrowers in transitioning
properties. Other risks may include rehabilitation costs exceeding original estimates, possibly making a project
uneconomical, environmental risks, delays in legal and other approvals (e.g., for condominiums) and rehabilitation and
subsequent leasing of the property not being completed on schedule. If such renovation is not completed in a timely
manner, or if it costs more than expected, the borrower may experience a prolonged reduction of net operating income and
may not be able to make payments on our investment on a timely basis or at all, which could result in significant losses.
There are increased risks involved with our construction lending activities.
Our construction lending activities, which include our investment in loans that fund the construction or development of real
estate-related assets, may expose us to increased lending risks. Construction lending may involve a higher degree of risk of
non-payment and loss than other types of lending due to a variety of factors, including the difficulties in estimating
construction costs and anticipating construction delays (or governmental shut-downs of construction activity) and,
generally, the dependency on timely, successful completion and the lease-up and commencement of operations post-
completion. In addition, since such loans generally entail greater risk than mortgage loans collateralized by income-
producing property, we may be required to increase our CECL reserves in the future to account for the likely increase in
probable incurred credit losses associated with such loans. Further, as the lender under a construction loan, we may be
obligated to fund all or a significant portion of the loan at one or more future dates. We may not have the funds available at
such future date(s) to meet our funding obligations under the loan. In that event, we would likely be in breach of the loan
unless we are able to raise the funds from alternative sources, which we may not be able to achieve on favorable terms or at
all.
If a borrower fails to complete the construction of a project or experiences cost overruns, there could be adverse
consequences associated with the loan, including a decline in the value of the property securing the loan, a borrower claim
against us for failure to perform under the loan documents if we choose to stop funding, increased costs to the borrower
that the borrower is unable to pay, a bankruptcy filing by the borrower, and abandonment by the borrower of the collateral
for the loan.
Loans or investments involving international real estate-related assets are subject to special risks that we may not
manage effectively, which could have a material adverse effect on our results of operations and financial condition and
our ability to pay dividends to our stockholders.
We invest a material portion of our capital in assets outside the United States and may increase the percentage of our
investments outside the United States over time. Our investments in non-domestic real estate-related assets subject us to
certain risks associated with international investments generally, including, among others:
•currency exchange matters, including fluctuations in currency exchange rates and costs associated with conversion
of investment principal and income from one currency into another, which may have an adverse impact on the
valuation of our assets or income, including for purposes of our REIT requirements, regardless of any hedging
activities we undertake, which may not be adequate;
•less developed or efficient financial markets than in the United States, which may lead to potential price volatility
and relative illiquidity;
•the burdens of complying with international regulatory requirements, including the requirements imposed by
exchanges on which our international affiliates list debt securities issued in connection with the financing of our
loans or investments involving international real-estate related assets, and prohibitions that differ between
jurisdictions;
•changes in laws or clarifications to existing laws that could impact our tax treaty positions, which could adversely
impact the returns on our investments;
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•a less developed legal or regulatory environment, differences in the legal and regulatory environment or enhanced
legal and regulatory compliance;
•political hostility to investments by foreign investors;
•higher rates of inflation;
•higher transaction costs;
•greater difficulty enforcing contractual obligations;
•fewer investor protections;
•war or other hostilities;
•certain economic and political risks, including potential exchange control regulations and restrictions on our non-
U.S. investments and repatriation of profits from investments or of capital invested, the risks of political,
economic or social instability, the possibility of expropriation or confiscatory taxation and adverse economic and
political developments; and
•potentially adverse tax consequences.
If any of the foregoing risks were to materialize, they could adversely affect our results of operations and financial
condition and our ability to pay dividends to our stockholders.
A prolonged economic slowdown, a lengthy or severe recession, severe public health events or declining real estate
values could impair our investments and harm our operations.
We believe the risks associated with our business will be more severe during periods of economic slowdown or recession,
particularly if these periods are accompanied by declining real estate values. Declining real estate values, whether
occurring during a period of economic slowdown or recession or otherwise, will likely reduce the level of new mortgage
and other real estate-related loan originations since borrowers often use appreciation in the value of their existing properties
to support the purchase of or investment in additional properties. Borrowers may also be less able to pay principal and
interest on our loans if the value of real estate weakens. Further, declining real estate values significantly increase the
likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be
insufficient to cover its cost on the loan. Any sustained period of increased payment delinquencies, foreclosures or losses
could adversely affect our ability to invest in, sell, and securitize loans, which would materially and adversely affect our
results of operations, financial condition, liquidity and business and our ability to pay dividends to stockholders.
Market disruptions in a single country could cause a worsening of conditions on a regional and even global level, and
economic problems in a single country are increasingly affecting other markets and economies. A continuation of this trend
could result in problems in one country adversely affecting regional and even global economic conditions and markets. For
example, concerns about the fiscal stability and growth prospects of certain European countries in the last economic
downturn had a negative impact on most economies of the Eurozone and global markets. In addition, Ongoing wars in the
Middle East and Ukraine have disrupted, and may continue to disrupt, energy prices and the movement of goods in Europe
and the Middle East, which has resulted, and may continue to result, in rising energy costs and inflation more generally.
The occurrence of similar crises in the future could cause increased volatility in the economies and financial markets of
countries throughout a region, or even globally.
Additionally, global trade disruption or conflict, trade tensions resulting from U.S. tariff implementation and retaliatory
tariffs by other countries, other changes to trade policy in the U.S. and other jurisdictions, as well as war or other
hostilities, together with any future downturns in the global economy resulting therefrom, could adversely affect our
performance.
Furthermore, severe public health events, such as those caused by the COVID-19 pandemic, may occur from time to time,
and could directly and indirectly impact us in material respects that we are unable to predict or control. In addition, we may
be materially and adversely affected as a result of many related factors outside our control, including the effectiveness of
governmental responses to a severe public health event, pandemic or epidemic, the extension, amendment or withdrawal of
any programs or initiatives established by governments and the timing and speed of economic recovery. Actions taken in
response may contribute to significant volatility in the financial markets, resulting in increased volatility in equity prices,
material interest rate changes, supply chain disruptions, such as simultaneous supply and demand shock to global, regional
and national economies, and an increase in inflationary pressures.
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Long-term macroeconomic effects from a severe public health event, pandemic or epidemic, including from supply and
labor shortages, workforce reductions in response to challenging economic conditions, or shifts in demand for real estate
have had and could in the future have an adverse impact on our investments, including investments in office, hotel, and
other asset classes that are particularly negatively impacted by such supply and labor issues. The impact of such long-term
effects may disproportionally affect certain asset classes and geographic areas. For example, many businesses permit
employees to work from home and make use of flexible work schedules, open workplaces, videoconferences and
teleconferences, which have had and could continue to have a longer-term impact on the demand for both office space and
hotel rooms for business travel, which could adversely affect our investments in assets secured by office or hotel
properties. While we believe the principal amount of our loans are generally adequately protected by underlying property
value, there can be no assurance that we will realize the entire principal amount of certain investments. For more
information on the concentration of credit risk in our loan portfolio property type and geographic region, see Note 3 to our
consolidated financial statements.
Transactions denominated in foreign currencies subject us to heightened risks, including foreign currency risks and
regulatory risks.
We hold assets denominated in various foreign currencies, including, without limitation, British Pounds Sterling, Euros,
and other currencies, which exposes us to foreign currency risk. As a result, a change in foreign currency exchange rates
may have an adverse impact on the valuation of our assets, as well as our income and cash flows. While we have not
experienced any material adverse impacts during the year ended December 31, 2025 due to our use of derivative
instruments, there can be no assurance that we will continue to utilize such measures or that such measures will be
successful. Any changes in foreign currency exchange rates may impact the measurement of such assets or income for the
purposes of our REIT tests and may affect the amounts available for payment of dividends on our class A common stock.
Our success depends on the availability of attractive investments and our ability to identify, structure, consummate,
leverage, manage and realize returns on our investments.
Our operating results are dependent upon the availability of, as well as our ability to identify, structure, consummate,
leverage, manage and realize returns on our investments. In general, the availability of favorable investment opportunities