ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto
appearing elsewhere in this Annual Report on Form 10-K. In addition to historical data, this discussion and analysis
contains forward-looking statements about our business, operations and financial performance based on current
expectations that involve risks, uncertainties and assumptions. Our actual results or outcomes may differ materially from
those in this discussion and analysis as a result of various factors, including but not limited to those discussed in Part, 1.
Item 1A, “Risk Factors” in this Annual Report on Form 10-K.
Introduction
Blackstone Mortgage Trust is a real estate finance company that originates, acquires, and manages senior loans and other
debt or credit-oriented investments collateralized by or relating to commercial real estate in North America, Europe, and
Australia. Our portfolio is composed primarily of senior loans secured by high-quality, institutional assets located in major
markets, and sponsored by experienced, well-capitalized real estate investment owners and operators. We finance our
investments in a variety of ways, including borrowing under secured credit facilities, issuing collateralized loan obligations,
or CLOs, other securitization transactions, syndicating senior loans and/or participations, and other forms of asset-level
financing, depending on our view of the most prudent financing option available for each of our investments. We are
externally managed by BXMT Advisors L.L.C., or our Manager, a subsidiary of Blackstone Inc., or Blackstone, and are a
real estate investment trust, or REIT, traded on the New York Stock Exchange, or NYSE, under the symbol “BXMT.”
We benefit from the deep knowledge, experience and information advantages of our Manager, which is a part of
Blackstone Real Estate. Blackstone Real Estate was founded in 1991 and is the world’s largest owner of commercial real
estate, with$319.3 billion of investor capital under management as of December 31, 2025. Blackstone Real Estate operates
as one globally integrated business with 787 real estate professionals globally as of December 31, 2025 and investments in
North America, Europe, Asia and Latin America. In the United States, Blackstone Real Estate is one of the largest owners
of rental housing, industrial, office, hospitality and retail assets.The market-leading real estate expertise derived from the
strength of the Blackstone platform deeply informs our credit and underwriting process, and we believe it gives us the tools
to manage the assets in our portfolio and work with our borrowers throughout periods of economic stress and uncertainty.
We conduct our operations as a REIT for U.S. federal income tax purposes. We generally will not be subject to U.S. federal
income taxes on our taxable income to the extent that we annually distribute all of our net taxable income to stockholders
and maintain our qualification as a REIT. We also operate our business in a manner that permits us to maintain an
exclusion from registration under the Investment Company Act of 1940, as amended. We are organized as a holding
company and conduct our business primarily through our various subsidiaries.
2025 Highlights
Operating results:
•GAAP net income of $109.6 million, or $0.64 per share, Distributable Earnings was a loss of $245.3 million, or
$1.43 per share, and Distributable Earnings prior to charge-offs of CECL reserves was $317.6 million, or $1.86
per share, with dividends declared of $320.6 million, or $1.88 per share.
•Book value per share of $20.75 as of December 31, 2025, which is net of cumulative CECL reserves of $1.76 per
share and accumulated depreciation and amortization of owned real estate assets of $0.47 per share.
Investment portfolio:
•Investment Portfolio of $20.0 billion as of December 31, 2025, which consisted of (i) our Loan Portfolio of
$17.8 billion, which represents net book value less total loans receivable CECL reserves, (ii) our $589.7 million
share of the carrying value of loans held by the Bank Loan Portfolio Joint Venture, (iii) our $321.1 million share
of the fair value of assets held by the Net Lease Joint Venture, and (iv) the aggregate carrying value of our owned
real estate assets of $1.3 billion.
•Loan Portfolio of 131 loans as of December 31, 2025, with a weighted-average origination loan-to-value ratio of
64.9% and weighted-average all-in yield of +3.39%, excluding impaired, cost-recovery, and non-accrual loans.
•Closed $5.7 billion of loan originations or acquisitions.
•Realized $6.1 billion of loan repayments and sales, including $2.3 billion of office loans.
•99% of loans, based on net loan exposure, are performing as of December 31, 2025.
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•Resolved $2.3 billion of impaired loans across 12 transactions during the year. Generated $32.7 million of
incremental book value as aggregate charge-offs were within CECL reserve levels.
•Acquired or otherwise consolidated five additional owned real estate assets with an aggregate acquisition date fair
value of $654.3 million. Held 12 owned real estate assets with an aggregate carrying value of $1.3 billion as of
December 31, 2025.
•Invested $104.3 million into the Net Lease Joint Venture to acquire 178 triple net lease assets at an aggregate price
of $316.4 million, at share.
•Invested $102.8 million into our Bank Loan Portfolio Joint Venture to acquire two portfolios of performing
commercial mortgage loans, with an aggregate principal balance of $719.4 million, at share.
Capital markets, financing, and liquidity:
•Refinanced an aggregate $2.2 billion of our corporate debt, reducing cost under our term loan facilities by 0.70%
while extending the weighted-average maturity by 1.6 years.
•Lowered the weighted-average credit spread on our $10.1 billion of secured debt to +1.83% over respective
benchmark rates as of December 31, 2025, relative to +1.92% as of December 31, 2024.
•Issued a $1.0 billion commercial real estate CLO securitization, further diversifying our balance sheet with a non-
mark-to-market, non-recourse financing structure.
•Maintained substantial liquidity throughout the year, with liquidity of $1.0 billion as of December 31, 2025.
•Repurchased $109.4 million of common stock, generating $0.13 of book value per share accretion. Authorized an
incremental increase to our share repurchase program in October to repurchase up to $150.0 million of common
stock.
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I. Key Financial Measures and Indicators
As a real estate finance company, we believe the key financial measures and indicators for our business are earnings per
share, dividends declared, Distributable Earnings, Distributable Earnings prior to charge-offs, and book value per share.
For the three months endedDecember 31, 2025, we recorded basic net earnings per share of $0.24, declared a dividend of
$0.47 per share, reported $(2.07) per share of Distributable Earnings, and reported $0.51 per share of Distributable
Earnings prior to charge-offs. In addition, our book value as of December 31, 2025 was $20.75 per share, which is net of
cumulative CECL reserves of $1.76 per share and accumulated depreciation and amortization of owned real estate assets of
$0.47 per share.
As further described below, Distributable Earnings and Distributable Earnings prior to charge-offs are measures that are
not prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP.
Distributable Earnings and Distributable Earnings prior to charge-offs helps us to evaluate our performance, excluding the
effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan
portfolio and operations. In addition, Distributable Earnings and Distributable Earnings prior to charge-offs are
performance metrics we consider when declaring our dividends.
Earnings Per Share and Dividends Declared
The following table sets forth the calculation of basic net income (loss) per share and dividends declared per share ($ in
thousands, except per share data):
Three Months Ended Year Ended December 31,
Net income (loss) per share, basic $0.24 $0.64 $(1.17)
Dividends declared per share $0.47 $1.88 $2.18
(1)Represents net income (loss) attributable to Blackstone Mortgage Trust. Refer to Note 15 to our consolidated
financial statements for the calculation of diluted net (loss) income per share.
Distributable Earnings and Distributable Earnings Prior to Charge-Offs
Distributable Earnings and Distributable Earnings prior to charge-offs of CECL reserves are non-GAAP measures. We
define Distributable Earnings as GAAP net income (loss), including realized gains and losses not otherwise recognized in
current period GAAP net income (loss), and excluding (i) non-cash equity compensation expense, (ii) depreciation and
amortization, (iii) unrealized gains (losses), and (iv) certain non-cash items. Distributable Earnings may also be adjusted
from time to time to exclude one-time events pursuant to changes in GAAP and certain other non-cash charges as
determined by our Manager, subject to approval by a majority of our independent directors. Distributable Earnings mirrors
the terms of our management agreement between our Manager and us, or our Management Agreement, for purposes of
calculating our incentive fee expense. Therefore, Distributable Earnings prior to charge-offs of CECL reserves is calculated
net of the incentive fee expense that would have been recognized if such charge-offs had not occurred.
Our CECL reserves have been excluded from Distributable Earnings consistent with other unrealized gains (losses)
pursuant to our existing policy for reporting Distributable Earnings. We expect to only recognize such potential credit
losses in Distributable Earnings if and when such amounts are realized and deemed non-recoverable upon a realization
event. This is generally at the time a loan is repaid, or in the case of foreclosure, when the underlying asset is sold, but
realization and non-recoverability may also be concluded if, in our determination, it is nearly certain that all amounts due
will not be collected. The timing of any such credit loss realization in our Distributable Earnings may differ materially from
the timing of CECL reserves or charge-offs in our consolidated financial statements prepared in accordance with GAAP.
The realized loss amount reflected in Distributable Earnings will equal the difference between the cash received, or
expected to be received, and the book value of the asset, and is reflective of our economic experience as it relates to the
ultimate realization of the loan.
We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss)
and cash flow from operating activities determined in accordance with GAAP. We believe Distributable Earnings is a
useful financial metric for existing and potential future holders of our class A common stock as historically, over time,
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Distributable Earnings has been a strong indicator of our dividends per share. As a REIT, we generally must distribute
annually at least 90% of our net taxable income, subject to certain adjustments, and therefore we believe our dividends are
one of the principal reasons stockholders may invest in our class A common stock. Refer to Note 17 to our consolidated
financial statements for further discussion of our distribution requirements as a REIT. Further, Distributable Earnings helps
us to evaluate our performance, excluding the effects of certain transactions and GAAP adjustments that we believe are not
necessarily indicative of our current loan portfolio and operations, and is a performance metric we consider when declaring
our dividends.
Furthermore, we believe it is useful to present Distributable Earnings prior to charge-offs of CECL reserves to reflect our
direct operating results and help existing and potential future holders of our class A common stock assess the performance
of our business excluding such charge-offs. We utilize Distributable Earnings prior to charge-offs of CECL reserves as an
additional performance metric to consider when declaring our dividends. Distributable Earnings mirrors the terms of our
Management Agreement for purposes of calculating our incentive fee expense. Therefore, Distributable Earnings prior to
charge-offs of CECL reserves is calculated net of the incentive fee expense that would have been recognized if such
charge-offs had not occurred.
Distributable Earnings and Distributable Earnings prior to charge-offs of CECL reserves do not represent net income (loss)
or cash generated from operating activities and should not be considered as alternatives to GAAP net income (loss), or
indicators of our GAAP cash flows from operations, measures of our liquidity, or indicators of funds available for our cash
needs. In addition, our methodology for calculating Distributable Earnings and Distributable Earnings prior to charge-offs
of CECL reserves may differ from the methodologies employed by other companies to calculate the same or similar
supplemental performance measures, and accordingly, our reported Distributable Earnings and Distributable Earnings prior
to charge-offs of CECL reserves may not be comparable to similar metrics reported by other companies.
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The following table provides a reconciliation of Distributable Earnings and Distributable Earnings prior to charge-offs of
CECL reserves to GAAP net income (loss) ($ in thousands, except per share data):
Three Months Ended Year Ended December 31,
Realized hedging and foreign currency loss, net(4) (25) (3,476) (2,018)
Allocable share of adjustments related to unconsolidated entities(5) (8) 762 —
Contingent liabilities(7) — — 5,653
Adjustments attributable to non-controlling interests, net (1) (188) 248
Incentive fee related to charge-offs of CECL reserves(8) — — (6,272)
Distributable Earnings per share, basic $(2.07) $(1.43) $(0.03)
(1)Represents net income (loss) attributable to Blackstone Mortgage Trust.
(2)Represents realized losses related to loan principal amounts deemed non-recoverable.
(3)Represents depreciation of owned real estate assets and amortization of intangible real estate assets and liabilities.
(4)Represents realized losses on the repatriation of unhedged foreign currency. These amounts were not included in
GAAP net income (loss), but rather as a component of other comprehensive income in our consolidated financial
statements.
(5)Allocable share of adjustments related to unconsolidated entities for the three months endedDecember 31, 2025
reflects our share of non-cash items such as (i) $(2.0) million of unrealized gains recorded by such unconsolidated
entities, (ii)$2.0 million of depreciation and amortization, and (iii) related adjustments for realized gains, if any. For
the year endedDecember 31, 2025, reflects our share of non-cash items such as (i) $(3.4) million of unrealized gains
recorded by such unconsolidated entities, (ii) $4.2 million of depreciation and amortization, and (iii) related
adjustments for realized gains, if any.
(6)Represents (i) the non-cash income recognized under GAAP related to our Agency Multifamily Lending
Partnership, in which we receive a portion of origination, servicing, and other fees for loans we refer to MTRCC for
origination, offset by the related loss-sharing obligation accruals and (ii) the cash received related to such income
previously recognized under GAAP. Refer to Note 2 to our consolidated financial statements for further information
on our Agency Multifamily Lending Partnership.
(7)Represents a contingent liability related to a sale of a loan.
(8)Represents the implied incentive fee expense that would have been incurred if such charge-offs had not occurred, as
calculated on a quarterly basis. No incentive fee expense would have been incurred for the periods presented except
the $6.3 million would have been incurred in the three months ended March 31, 2024.
(9)The weighted-average shares outstanding, basic, exclude shares issuable from a potential conversion of our
Convertible Notes then outstanding. Consistent with the treatment of other unrealized adjustments to Distributable
Earnings, these potentially issuable shares are excluded until a conversion occurs. Refer to Note 15 to our
consolidated financial statements for the calculation of diluted net income per share.
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Book Value Per Share
The following table calculates our book value per share ($ in thousands, except per share data):
Shares
(1)The book value per share excludes shares issuable from a potential conversion of our Convertible Notes then
outstanding. Refer to Note 15 to our consolidated financial statements for the calculation of diluted net income per
share.
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II. Investments
Investment Portfolio
Our Investment Portfolio consists of our Loan Portfolio, our investments in our Bank Loan Portfolio Joint Venture and Net
Lease Joint Venture, and our owned real estate assets. The chart below details the composition of our Investment Portfolio
as of December 31, 2025:
Investment Portfolio(1)(2)
Included in our Loan Portfolio(3)
______________
(1)Our Investment Portfolio reflects the gross amount of our investments as of December 31, 2025, which consists of
(i) our Loan Portfolio, which represents net book value less total loans receivable CECL reserves, (ii) our share of
the carrying value of investments held by our Net Lease Joint Venture, (iii) our share of the fair value of the loans
held by our Bank Loan Portfolio Joint Venture, and (iv) the aggregate carrying value of our owned real estate assets.
(2)Assets in our Loan Portfolio with multiple components are proportioned into the relevant property types based on
the allocated value of each property type.
(3)Represents the types of properties securing the loans in our Loan Portfolio.
Refer to section VII of this Item 7 for details of our Loan Portfolio, on a loan-by-loan basis.
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Loan Portfolio
Loan Originations
During the year endedDecember 31, 2025, we originated or acquired $5.7 billion of loans, inclusive of additional
commitments made under existing loans.
Loan Portfolio Activity
During the year endedDecember 31, 2025, loan fundings totaled $5.6 billion and loan repayments and sales totaled
$6.1 billion. During the year endedDecember 31, 2025, we generated interest income of $1.4 billion and incurred interest
expense of $988.9 million, which resulted in $367.5 million of net interest income.
The following table details our loan portfolio activity ($ in thousands):
Three Months Ended December 31, 2025 Year EndedDecember 31, 2025
(1)Excludes amounts for loans held by our Bank Loan Portfolio Joint Venture, which are included in investments in
unconsolidated entities on our consolidated balance sheets.
The following table details overall statistics for our Loan Portfolio as of December 31, 2025 ($ in thousands):
Number of loans 131
Weighted-average cash coupon(2) + 3.19%
Weighted-average all-in yield(2) + 3.39%
Weighted-average maximum maturity (years)(3) 2.5
Origination loan-to-value (LTV)(4) 64.9%
(1)Unfunded commitments will primarily be funded to finance our borrowers’ construction or development of real
estate-related assets, capital improvements of existing assets, or lease-related expenditures. These commitments will
generally be funded over the term of each loan, subject in certain cases to an expiration date.
(2)The weighted-average cash coupon and all-in yield are expressed as a spread over the relevant floating benchmark
rates, which include SOFR, SONIA, EURIBOR, CORRA, and other indices as applicable to each loan. As of
December 31, 2025, 97% of our loans by principal balance earned a floating rate of interest, primarily indexed to
SOFR. The remaining 3% of our loans by principal balance earned a fixed rate of interest.
(3)Maximum maturity assumes all extension options are exercised by the borrower; however, our loans and other
investments may be repaid prior to such date. Excludes loans accounted for under the cost-recovery and nonaccrual
methods, if any. As of December 31, 2025,40% of our loans by principal balance were subject to yield maintenance
or other prepayment restrictions and 60% were open to repayment by the borrower without penalty.
(4)Based on LTV as of the dates loans were originated or acquired by us, excluding any loans that are impaired.
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The following table details the index rate floors for our Loan Portfolio as of December 31, 2025 ($ in thousands):
Loan Portfolio Principal Balance
Index Rate Floors USD Non-USD(1) Total
(1)Includes Euro, British Pound Sterling, Swedish Krona, Australian Dollar, and Canadian Dollar currencies.
(2)Includes all impaired loans.
(3)As of December 31, 2025, the weighted-average index rate floor of our floating-rate Loan Portfolio principal
balance was 1.31%. Excluding 0.0% index rate floors and loans with no floor, the weighted-average index rate floor
was 1.92%.
The following table details the floating benchmark rates for our Loan Portfolio as of December 31, 2025 (Loan Portfolio
principal balance amounts in thousands):
(1)We use foreign currency forward contracts to protect the value or fix the amount of certain investments or cash
flows in terms of the U.S. dollar. We earn forward points on our forward contracts that reflect the interest rate
differentials between the applicable base rate for our foreign currency investments and prevailing U.S. interest rates.
These forward contracts effectively convert the foreign currency rate exposure for such investments to USD-
equivalent interest rates.
(2)In addition to cash coupon, all-in yield includes the amortization of deferred origination and extension fees, loan
origination costs, and purchase discounts, as well as the accrual of exit fees. Excludes loans accounted for under the
cost-recovery and nonaccrual methods, if any.
(3)Includes floating rate loans indexed to STIBOR, CORRA, and BBSY indices.
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The charts below detail the geographic distribution and types of properties securing our Loan Portfolio, as of December 31,
2025:
Geographic Diversification
(Net Loan Exposure)(1)
Collateral Diversification
(Net Loan Exposure)(1)(2)
______________
(1)Net loan exposure reflects the amount of each loan that is subject to risk of credit loss to us as of December 31,
2025, which is our principal balance net of (i) $999.8 million of asset-specific debt, (ii) $24.5 million of cost-
recovery proceeds, and (iii) our total loans receivable CECL reserve of $284.4 million. Our asset-specific debt is
structurally non-recourse and term-matched to the corresponding collateral loans. Geographic locations that
represent less than 1% of net loan exposure are excluded from the chart.
(2)Assets with multiple components are proportioned into the relevant property types based on the allocated value of
each property type.
Refer to section VII of this Item 7 for details of our loan portfolio, on a loan-by-loan basis.
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Portfolio Management
As of December 31, 2025,99% of our loans, based on net loan exposure, were performing with risk ratings of “1” through
“4,” and the remaining 1% were impaired with a risk rating of “5.” As of December 31, 2025, one of our performing loans
with an amortized cost basis of $98.3 million was in technical default as a result of the non-payment of an extension fee.
The loan was not past its maturity date and was current on its interest payment, and had a risk rating of “4.” All other
borrowers under performing loans were in compliance with the applicable contractual terms of each respective loan,
including any required payment of interest. We believe this demonstrates the overall strength of our loan portfolio and the
commitment and financial wherewithal of our borrowers generally, which are primarily affiliated with large real estate
private equity funds and other strong, well-capitalized, and experienced sponsors.
We maintain a robust asset management relationship with our borrowers and utilize these relationships to maximize the
performance of our portfolio, including during periods of volatility. We believe that we benefit from these relationships and
from our long-standing core business model of originating senior loans collateralized by large assets in major markets with
experienced, well-capitalized institutional sponsors. While we believe the principal amounts of our loans are generally
adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of
certain investments. As of December 31, 2025, we had an aggregate $87.3 million asset-specific CECL reserve related to
six of our loans receivable, with an aggregate amortized cost basis of $174.6 million, net of cost-recovery proceeds. This
CECL reserve was recorded based on our estimation of the fair value of each of the loan's underlying collateral as of
December 31, 2025.
We benefit from the deep knowledge, experience and information advantages of our Manager, which is a part of
Blackstone Real Estate. Blackstone Real Estate was founded in 1991 and is the world’s largest owner of commercial real
estate, with787 real estate professionals globally as of December 31, 2025 and investments in North America, Europe,
Asia and Latin America. In the United States, Blackstone Real Estate is one of the largest owners of rental housing,
industrial, office, hospitality and retail assets.
As discussed in Note 2 to our consolidated financial statements, we perform a quarterly review of our loan portfolio, assess
the performance of each loan, and assign it a risk rating between “1” and “5”, from less risk to greater risk. Our loan
portfolio had a weighted-average risk rating of 3.0, based on net loan exposure, as of both December 31, 2025 and
December 31, 2024.
The following table allocates the net book value and net loan exposure balances based on our internal risk ratings as of
December 31, 2025 ($ in thousands):
Risk Rating Number of Loans Net Book Value Net Loan Exposure(1)
(1)Net loan exposure reflects the amount of each loan that is subject to risk of credit loss to us as of December 31,
2025, which is our principal balance net of (i) $999.8 million of asset-specific debt, (ii) $24.5 million of cost-
recovery proceeds, and (iii) our total loans receivable CECL reserve of $284.4 million. Our asset-specific debt is
structurally non-recourse and term-matched to the corresponding collateral loans.
Current Expected Credit Loss Reserve
The CECL reserves required by GAAP reflect our current estimate of potential credit losses related to our loans and notes
receivable included in our consolidated balance sheets. Other than a few narrow exceptions, GAAP requires that all
financial instruments subject to the CECL model have some amount of loss reserve to reflect the principle underlying the
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CECL model that all loans and similar assets have some inherent risk of loss, regardless of credit quality, subordinate
capital, or other mitigating factors.
During the year endedDecember 31, 2025, we recorded a net decrease of $449.5 million in the CECL reserves against our
loans receivable portfolio, primarily driven by a $493.3 milliondecrease in our asset-specific CECL reserve. This decrease
was driven by charge-offs of our CECL reserves of $556.1 million primarily related to (i) the resolution of eight previously
impaired loans resulting in aggregate charge-offs of $338.0 million, and (ii) $218.1 million of charge-offs related to three
previously impaired subordinate loans that were deemed non-recoverable as part of our ongoing assessment of collectibility
of our impaired loan portfolio. These charge-offs of CECL reserves were concentrated in the office sector, with
$338.1 millionof such charge-offs, generally driven by adverse trends in the office sector in recent years, including
reduced tenant demand for office space and limited liquidity for office assets in capital markets. This decrease in our asset-
specific CECL reserve was partially offset by a $43.8 millionincrease in our general CECL reserve, bringing our total
loans receivable CECL reserves to $284.4 million as of December 31, 2025. The increase in our general CECL reserve was
primarily as a result of an increase in the historical loss rate used in reserve calculations related to the additional CECL
charge-offs.
As of December 31, 2025, we had an aggregate $87.3 million asset-specific CECL reserve related to six of our loans
receivable, with a total amortized cost basis of $174.6 million, net of cost-recovery proceeds. Impairments are each
determined individually as a result of changes in the specific credit quality factors for each such loan. These factors
included, among others, (i) the underlying collateral performance, (ii) discussions with the borrower, (iii) borrower events
of default, and (iv) other facts that impact the borrower’s ability to pay the contractual amounts due under the terms of the
loan. This asset-specific CECL reserve was recorded based on our estimation of the fair value of each loan’s underlying
collateral as of December 31, 2025.
No income was recorded on our impaired loans subsequent to determining that they were impaired. During the year ended
December 31, 2025, we received an aggregate $42.4 million of cash proceeds from such loans that were applied as a
reduction to the amortized cost basis of each respective loan.
Refer to Note 2 to our consolidated financial statements for further discussion of our policies on revenue recognition and
our CECL reserves.
Owned Real Estate
As part of our portfolio management strategy to maximize economic outcomes, we may hold certain owned real estate
assets, resulting from transactions in which 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. As of December 31, 2025, we had 12
owned real estate assets with an aggregate carrying value of $1.3 billion.
The following table provides details of our owned real estate asset as of December 31, 2025 ($ in thousands):
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Bank Loan Portfolio Joint Venture
In the second quarter of 2025, we entered into a joint venture with a Blackstone-advised investment vehicle to acquire
portfolios of performing commercial mortgage loans, or our Bank Loan Portfolio Joint Venture. In the second quarter of
2025, the Bank Loan Portfolio Joint Venture acquired a $1.4 billion portfolio of 171 performing senior commercial real
estate loans from a regional bank. The loans are secured primarily by retail and multifamily properties located across
various markets in the Mid-Atlantic region, are primarily fixed rate, and were acquired at a discount to par. In the third
quarter of 2025, the Bank Loan Portfolio Joint Venture acquired a $606.0 million portfolio of 425 performing senior
commercial real estate loans from a regional bank. The loans are secured primarily by net lease retail assets located
throughout the United States, are fixed rate, and were acquired at a discount to par. We have an aggregate 35% ownership
interest in the joint venture as of December 31, 2025.
Our Bank Loan Portfolio Joint Venture is recorded on our consolidated balance sheets as an investment in unconsolidated
entities. As of December 31, 2025, our investment in the joint venture totaled $111.0 million. During the year ended
December 31, 2025, we contributed $102.8 million to the joint venture, received $1.5 million of distributions, and recorded
$9.7 million of income from unconsolidated entities in our consolidated statements of operations.
Net Lease Joint Venture
In the fourth quarter of 2024, we entered into a joint venture with a Blackstone-advised investment vehicle to invest in
triple net lease properties, or our Net Lease Joint Venture. Our investment in the joint venture is recorded on our
consolidated balance sheets as an investment in unconsolidated entities. As of December 31, 2025, our investment in
unconsolidated entities related to the joint venture totaled $106.5 million. During the year endedDecember 31, 2025, we
contributed $104.3 million to the joint venture, and recorded a $1.4 millionloss from unconsolidated entities in our
consolidated statements of operations, inclusive of $4.2 million of depreciation and amortization expense.
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The following table details the tenant industries and the geographic location of the assets held by our Net Lease Joint
Venture as of December 31, 2025:
Tenant Industry Number of Properties % of Annualized Base Rent
Early Childhood Education 27 23%
Restaurants - Quick Service 52 20
Automotive Service 22 12
Medical / Dental 9 6
Convenience Stores 14 5
Other Retail 2 2
Home Improvement 2 2
Wholesale Trade 1 2
Grocery 3 2
Industrial 2 1
Other Services 2 —
State Number ofProperties % of Annualized Base Rent
Georgia 6 5
Virginia 3 4
As of December 31, 2025, our Net Lease Joint Venture’s leases had a weighted average remaining lease term of over 15
years (based on annualized base rent), with weighted average annual rent increases of approximately 2%, and a rent
coverage ratio of approximately 3x.
Agency Multifamily Lending Partnership
In the second quarter of 2024, we entered into an agreement with M&T Realty Capital Corporation, or MTRCC, a
subsidiary of M&T Bank, that allows our borrowers to access multifamily agency financing through MTRCC’s Fannie
Mae DUS and Freddie Mac Optigo lending platforms, or our Agency Multifamily Lending Partnership. We will receive a
portion of origination, servicing, and other fees for loans that we refer to MTRCC for origination under both the Fannie
Mae and Freddie Mac programs. Additionally, we will share in losses with MTRCC and Fannie Mae on loans that we refer
to MTRCC for origination under the Fannie Mae program. During the year endedDecember 31, 2025, we referred one loan
to MTRCC.
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Core+ Real Estate Debt Fund
In the fourth quarter of 2025, we made a $75.0 million capital commitment at the initial closing of a new BREDS-advised
private fund formed to invest in Core+ real estate debt investments in the U.S. and Canada. Blackstone affiliates, including
us, do not pay management fees or carried interest with respect to their investments in the BREDS-advised private fund.
Our capital commitment represented a minority of the total capital commitments the BREDS-advised private fund had
received as of December 31, 2025. As of December 31, 2025, the BREDS-advised private fund had not called any capital
or made any investments. To fund its future investments, the BREDS-advised private fund will draw down on capital
commitments made by its investors, including us, on a pro rata basis.
III. Financings
Loan Portfolio Financings
Our loan portfolio financing consists of secured debt, securitizations, and asset-specific debt. The following table details
our portfolio financing ($ in thousands):
Portfolio FinancingOutstanding Principal Balance
Secured Debt
The following table details our secured credit facilities by spread over the applicable base rates as of December 31, 2025 ($
in thousands):
(1)The spread, all-in cost, and all-in yield are expressed over the relevant floating benchmark rates, which include
SOFR, SONIA, EURIBOR, CORRA, and other indices as applicable.
(2)Represents the amount of new borrowings we closed during the year endedDecember 31, 2025.
(3)In addition to spread, the cost includes the associated deferred fees and expenses related to the respective
borrowings. In addition to cash coupon, all-in yield includes the amortization of deferred origination and extension
fees, loan origination costs, and purchase discounts, as well as the accrual of exit fees. All-in yield excludes loans
accounted for under the cost-recovery and nonaccrual methods, if any, and owned real estate assets.
(4)Represents the weighted-average all-in cost as of December 31, 2025 and is not necessarily indicative of the spread
applicable to recent or future borrowings.
(5)Represents the principal balance of the collateral loan assets and the carrying value of the collateral owned real
estate assets.
(6)Represents the difference between the weighted-average all-in yield and weighted-average all-in cost.
(7)Includes an interest rate swap with a $35.6 million notional amount that effectively converts our floating rate
liability to a fixed rate liability to align with the financed fixed rate loan exposure.
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Securitizations
We have financed certain pools of our loans through CLOs and have also financed one of our loans through a securitization
vehicle, or the European Loan Securitization. The following table details our securitized debt obligations and the
underlying collateral assets that are financed by our CLOs and the European Loan Securitization ($ in thousands):
CLOs
2025 FL5 Collateralized Loan Obligation
2021 FL4 Collateralized Loan Obligation
2020 FL2 Collateralized Loan Obligation
Total
Securitizations
European Loan Securitization
Total
(1)The book value of underlying collateral assets excludes any applicable CECL reserves.
(2)In addition to cash coupon, all-in yield includes the amortization of deferred origination and extension fees, loan
origination costs, purchase discounts, and accrual of exit fees.
(3)The weighted-average all-in yield and cost are expressed as a spread over the relevant floating benchmark rates,
which is SOFR for the CLOs and EURIBOR for theEuropean Loan Securitization. All-in yield excludes loans
accounted for under the cost-recovery and nonaccrual methods, if any, and owned real estate assets.
(4)Underlying collateral assets term represents the weighted-average final maturity of such loans, assuming all
extension options are exercised by the borrower, and excludes owned real estate assets. Repayments of securitized
debt obligations are tied to timing of the related collateral loan asset repayments. The term of these obligations
represents the rated final distribution date of the securitizations.
(5)We financed our $55.8 million retained interests in the securitization under a repurchase agreement structured
without capital markets-based mark-to-market provisions. The amount of the financing is included in other liabilities
on our consolidated balance sheets.
(6)During the year endedDecember 31, 2025, we recorded $140.0 million of interest expense related to our securitized
debt obligations.
Refer to Note 8 and Note 20 to our consolidated financial statements for additional details of our securitized debt
obligations.
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Asset-Specific Debt
The following table details our asset-specific debt ($ in thousands):
(1)The book value of underlying collateral assets excludes any applicable CECL reserves.
(2)The weighted-average all-in yield and cost are expressed as a spread over the relevant floating benchmark rates,
which include SOFR and CORRA, as applicable. These floating rate loans and related liabilities are currency and
index-matched to the applicable benchmark rate relevant in each arrangement. In addition to cash coupon, yield/cost
includes the amortization of deferred origination fees and financing costs.
(3)The weighted-average term is determined based on the maximum maturity of the corresponding loans, assuming all
extension options are exercised by the borrower. Our non-recourse, asset-specific debt is term-matched in each case
to the corresponding collateral loans.
Corporate Financing
The following table details our outstanding corporate financing ($ in thousands):
Corporate FinancingOutstanding Principal Balance
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The following table details our outstanding senior term loan facilities, or Term Loans, our outstanding senior secured notes,
or Senior Secured Notes, and convertible senior notes, or Convertible Notes, as of December 31, 2025 ($ in thousands):
Corporate Financing Face Value Interest Rate(1) All-in Cost(1)(2) Maturity
Term Loans
Senior Secured Notes
Total senior secured notes $785,316
Convertible Notes
Total corporate financings $2,899,199
(1)The B-6 Term Loan and B-7 Term Loan borrowings are subject to a benchmark interest rate floor of0.50%.
(2)Includes issue discounts, transaction expenses, and/or issuance costs, as applicable, that are amortized through
interest expense over the life of each respective financing.
(3)Represents the stated coupon rate of the notes. We have entered into an interest rate swap that effectively converts
our fixed rate exposure to a SOFR + 3.95% floating rate exposure. Refer to Note 12 to our consolidated financial
statements for further information.
(4)The conversion price of the Convertible Notes is $36.27, which represents the price of class A common stock per
share based on a conversion rate of 27.5702. The conversion rate represents the number of shares of class A
common stock issuable per $1,000 principal amount of Convertible Notes. The cumulative dividend threshold has
not been exceeded as of December 31, 2025.
Subsequent to December 31, 2025, we borrowed an additional $770.8 million under a B-9 Term Loan, the proceeds of
which were used, among other things, to repay all $695.8 million in principal outstanding under the B-6 Term Loan. The
B-9 Term Loan bears interest at SOFR + 2.50% and matures in December 2030.
Refer to Note 2, Note 11, Note 12, and Note 13 to our consolidated financial statements for further discussion of our Term
Loans, Senior Secured Notes, and Convertible Notes.
Floating Rate Loan Portfolio
Generally, our business model is such that rising interest rates will increase our net income, while declining interest rates
will decrease net income. As of December 31, 2025, 97% of our loans by principal balance earned a floating rate of
interest, primarily indexed to SOFR, and were financed with liabilities that pay interest at floating rates, which resulted in
an amount of net equity that is positively correlated to rising interest rates, subject to the impact of interest rate floors on
certain of our floating rate loans.
Our liabilities are generally currency and index-matched to each collateral asset, resulting in a net exposure to movements
in benchmark rates that varies by currency silo based on the relative proportion of floating rate assets and liabilities.
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The following table details our investment portfolio’s exposure to interest rates by currency as of December 31, 2025
(amounts in thousands):
USD GBP EUR All Other(1)
Floating rate corporate financings(8) (2,297,726) — — —
(1)Includes Australian Dollar, Canadian Dollar, and Swedish Krona currencies.
(2)Our floating rate loans and related liabilities are currency and index-matched to the applicable benchmark rate
relevant in each arrangement.
(3)Excludes $181.5 million of principal balance on floating rate impaired loans.
(4)Our loan agreements generally require our borrowers to purchase interest rate caps, which mitigates our borrowers’
exposure to an increase in interest rates.
(5)Excludes amounts related to our investments in unconsolidated entities.
(6)Includes amounts outstanding under secured debt, securitizations, and asset-specific debt. Excludes amounts related
to the indebtedness of unconsolidated entities.
(7)Excludes an interest rate swap with a $35.6 million notional amount that effectively converts our floating rate
liability to a fixed rate liability to align with the financed fixed rate loan exposure.
(8)Includes amounts outstanding under Term Loans and the Senior Secured Notes due 2029. In connection with the
issuance of the Senior Secured Notes due 2029, we entered into an interest rate swap with a notional amount of
$450.0 million to effectively convert our fixed rate exposure to floating rate exposure for such notes.
(9)Represents the U.S. dollar equivalent as of December 31, 2025.
In addition to the risks related to fluctuations in cash flows and asset values associated with movements in interest rates,
there is also the risk of non-performance on floating rate assets. In the case of a significant increase in interest rates, the
cash flows of the collateral real estate assets may not be sufficient to pay debt service due under our loans, which may
contribute to non-performance or, in severe cases, default. This risk is partially mitigated by our consideration of rising rate
stress-testing during our underwriting process, which generally includes a requirement for our borrower to purchase an
interest rate cap contract with an unaffiliated third party, provide an interest reserve deposit, and/or provide interest
guarantees or other structural protections.
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IV. Our Results of Operations
Operating Results
The following table sets forth information regarding our consolidated results of operations for the years ended
December 31, 2025 and 2024 ($ in thousands, except per share data):
Year Ended December 31, Change
Income from loans and other investments
Gain on extinguishment of debt — 5,352 (5,352)
Expenses
Net income attributable to non-controlling interests (100) (2,255) 2,155
Dividends declared per share $1.88 $2.18 $(0.30)
Income from loans and other investments, net
Income from loans and other investments, net decreased$111.6 million during the year endedDecember 31, 2025
compared to the year endedDecember 31, 2024. The decrease was primarily due to (i) a $3.5 billion decrease in the
weighted-average principal balance of our loan portfolio during the year endedDecember 31, 2025 compared to the year
endedDecember 31, 2024, and (ii) a decline in interest income related to additional loans accounted for under the cost-
recovery method or loans that are now accounted for as owned real estate assets during the year endedDecember 31, 2025.
This was offset by a $2.1 billion decrease in the weighted-average principal balance of our outstanding financing
arrangements for the year endedDecember 31, 2025 compared to the year endedDecember 31, 2024.
Revenue from owned real estate
Revenue from owned real estateincreased by $171.9 million during the year endedDecember 31, 2025, primarily due to
the acquisition of five additional owned real estate assets.
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Gain on extinguishment of debt
Gain on extinguishment of debt decreased by $5.4 million during the year endedDecember 31, 2025 compared to the year
endedDecember 31, 2024. During the year endedDecember 31, 2025, we did not recognize any gains on extinguishment
of debt. During the year endedDecember 31, 2024, we recognized an aggregate gain on extinguishment of debt of
$5.4 million related to the repurchase of an aggregate principal amount of $33.8 million, $30.8 million, and $2.3 million, of
our Convertible Notes, the Senior Secured Notes due 2027, and B-1 Term Loan, respectively.
Expenses
Expenses include management and incentive fees payable to our Manager, general and administrative expenses, expenses
from owned real estate, and other expenses. Expenses increased by $178.9 million during the year endedDecember 31,
2025 compared to the year endedDecember 31, 2024 primarily due to a $193.5 million increase in expenses from owned
real estate due to the acquisition or consolidation of five additional owned real estate assets. This was partially offset by (i)
a decrease of $7.2 million of management fees payable to our Manager, driven primarily by lower Distributable Earnings
and repurchases of class A common shares, both of which decrease Equity, as defined in our Management Agreement, (ii)
a $5.7 million decrease in other expenses, which represented a contingent liability recorded during the year ended
December 31, 2024 related to the sale of a loan, and (iii) a $1.7 million decrease in general and administrative expenses.
These decreases were partially offset by an increase in other operating expenses and professional fees, primarily due to an
increase in loan originations during the year endedDecember 31, 2025 compared to the year endedDecember 31, 2024.
Changes in current expected credit loss reserve
During the year endedDecember 31, 2025, we recorded a $112.5 million increase in our CECL reserves, as compared to a
$538.8 million increase during the year endedDecember 31, 2024. This increase primarily relates to an increase in our
general CECL reserve primarily as a result of an increase in the historical loss rate used in reserve calculations related to
the additional charge-offs of CECL reserves during the year endedDecember 31, 2025, as well as additional loans that
were impaired during the year endedDecember 31, 2025.
We may be required to record further increases to our CECL reserves in the future, depending on the performance of our
loan portfolio and changes in 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 ofDecember 31, 2025.
Income (loss) from unconsolidated entities
During the year endedDecember 31, 2025, we recorded income from unconsolidated entities of $8.3 million compared to a
loss of $2.7 million during the year endedDecember 31, 2024. The increase was primarily due to income generated by our
Bank Loan Portfolio Joint Venture, which acquired two loan portfolios during the year endedDecember 31, 2025. The loss
during the year endedDecember 31, 2024 represented our share of the start-up costs that were incurred related to our Net
Lease Joint Venture. The Bank Loan Portfolio Joint Venture did not exist during the year endedDecember 31, 2024.
Income tax provision
The income tax provision increased by $1.3 million during the year endedDecember 31, 2025 as compared to the year
endedDecember 31, 2024, due to an increase in the income tax provisions related to our taxable REIT subsidiaries.
Dividends per share
During the year endedDecember 31, 2025, we declared dividends of $1.88 per share, or $320.6 million in aggregate.
During the year endedDecember 31, 2024, we declared dividends of $2.18 per share, or $377.8 million in aggregate.
Refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our
Annual Report on Form 10-K for the year endedDecember 31, 2024 for discussion of our consolidation results of
operations for the year endedDecember 31, 2024 compared to the year endedDecember 31, 2023.
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The following table sets forth information regarding our consolidated results of operations for the three months ended
December 31, 2025 and September 30, 2025 ($ in thousands, except per share data):
Three Months Ended Change
Income from loans and other investments
Expenses
Other expenses — 6 (6)
Net income attributable to non-controlling interests (68) (11) (57)
Net income per share of common stock, basic and diluted $0.24 $0.37 $(0.13)
Dividends declared per share $0.47 $0.47 $—
Income from loans and other investments, net