Skip to content
    BXMT
    Earnings call· Jun 2026(Q2 FY26)

    BLACKSTONE MORTGAGE TRUST Q2 FY26 earnings call BXMT

    Jul 30, 2026 Source

    Executive summary

    Blackstone Mortgage Trust Q2 FY26 — Strategic Portfolio Rotation and Watchlist Reduction

    Blackstone Mortgage Trust executed a strategic portfolio rotation in Q2 FY26, reinvesting capital from legacy loan repayments into high-conviction sectors and significantly reducing office exposure. While facing increased pressure on a subset of watchlist loans and a GAAP net loss, the company strengthened its balance sheet with successful debt issuance and aims to further diversify its portfolio for long-term performance. Management expects near-term DE impact from impairments and repayment timing, but remains focused on long-term earnings power.

    Highlights

    5

    • Received $1.2 billion in repayments in Q2 FY26, nearly all from seasoned loans originated before 2023.

    • Reinvested $1.4 billion into new investments concentrated in high-conviction sectors like residential, industrial, and net lease.

    • Reduced overall watchlist by 23% from last quarter, resolving an impaired multifamily loan and modifying the largest watchlist loan.

    • Successfully issued $450 million of senior secured notes at the tightest new issue spread ever achieved, extending corporate debt maturities to 2029.

    • Reduced total office exposure from 36% to 21% of the portfolio.

    Concerns

    5

    • Reported a GAAP net loss of $0.48 per share for Q2 FY26.

    • Distributable earnings prior to realized gains and losses were $0.48 per share, down $0.01 from prior quarter, barely covering the $0.47 dividend.

    • Book value ended the quarter at $19.31 per share, down 4% from Q1, primarily due to an $0.80 per share increase in CECL reserves.

    • Observed increased pressure on a $1 billion subset of watchlist loans (5% of total investments), predominantly office assets, leading to three new impairments.

    • Debt-to-equity ratio increased to 3.9 times from 3.7 times in Q1, mainly due to timing of repayments and increased CECL.

    Guidance & targets

    2
    CategoryTargetConfidence
    Reduction in office and legacy pre-2023 loan exposure
    40% or more reduction
    high materiality
    High
    Distributable Earnings (DE)
    Impacted by impairments and repayment timing
    medium materiality
    High

    Operational metrics

    32
    GAAP Net Loss per share
    $0.48
    Q2 FY26

    For the second quarter, we reported a gap net loss of $0.48 per share

    Distributable Earnings per share
    $0.31
    Q2 FY26

    while distributable earnings were $0.31 per share

    Distributable Earnings per share prior to realized gains and losses
    $0.48down a penny from the prior quarter
    Q2 FY26

    and distributable earnings prior to realized gains and losses were $0.48 per share. ... down a penny from the prior quarter.

    Dividend per share
    $0.47
    Q2 FY26

    A few weeks ago, we paid a dividend of $0.47 per share with respect to the second quarter.

    Repayments
    $1.2 billion
    Q2 FY26

    We received $1.2 billion of repayments in the second quarter, nearly all of which were seasoned loans originated before 2023.

    New Investments
    $1.4 billion
    Q2 FY26

    We reinvested our capital into $1.4 billion of new investments concentrated in sectors with strong underlying fundamentals

    Office Exposure
    21%from 36%
    Q2 FY26

    As a result, we've reduced our total office exposure from 36% of our portfolio to just 21% today

    Watchlist Loans
    $2 billiondown from $2.5 billion last quarter
    Q2 FY26

    Our watch list today sits at $2 billion, down from $2.5 billion last quarter. This reflects an upgrade of our largest watch list loan after completing a credit enhancing modification that we mentioned on last quarter's call.

    Watchlist Loans impacted by higher rates
    $1 billion
    Q2 FY26

    Recently, we've observed increased pressure on a subset of our portfolio, approximately $1 billion of watch list loans, or about 5% of our total investments.

    Subordinate Capital Invested by Borrowers
    $800 million
    Since end of 2023

    supported by our institutional borrowers who have invested nearly $800 million of subordinate capital into these assets since the end of 2023.

    Average Investment Size
    $20 milliondeclining from over $130 million just a few years ago
    Q2 FY26

    as evidenced by our average investment size declining from over $130 million just a few years ago to approximately $20 million today.

    Net Lease Portfolio Value
    $661 million
    Q2 FY26

    Our portfolio now stands at $661 million. When we entered the net lease sector... And while just 3% of our portfolio today, we see continued growth ahead

    Net Lease Acquisitions
    over $135 million
    Q2 FY26

    to grow our net lease strategy, where we acquired over $135 million of properties at Chair.

    Net Lease Acquisitions
    over $150 million
    July 2026

    with over $150 million of acquisitions closed or in closing so far in July.

    Homebuilder Finance Loans Acquired
    approximately $130 million
    Q2 FY26

    We entered the homebuilder finance sector, acquiring approximately $130 million of loans at share in a newly established joint venture. ... The initial portfolio consisted of 36 loans, across 10 states with an average loan commitment of just $12 million.

    Homebuilder Finance Total Addressable Market
    $200 billion
    Current

    We see a large scale growth opportunity with a total addressable market of $200 billion.

    Loan Portfolio Value
    $17 billion
    Q2 FY26

    Our loan portfolio ended the quarter at $17 billion across 133 loans

    Portfolio Performing Rate
    97%down slightly from 98% last quarter
    Q2 FY26

    portfolio was 97% performing at quarter end, down slightly from 98% last quarter

    Owned Real Estate Portfolio Carrying Value
    $1.4 billion
    Q2 FY26

    Our owned real estate portfolio consisted of 14 assets with $1.4 billion of carrying value at quarter end.

    Book Value per share
    $19.31down 4% from Q1
    Q2 FY26

    Book value ended the second quarter at $19.31 per share, down 4% from Q1

    Total CECL Reserves per share
    $2.43
    Q2 FY26

    In total, book value includes $2.43 per share of total CECL reserves, of which $1.13 per share is the general reserve and $1.30 per share are the asset-specific reserves.

    CECL Reserve Increase
    $0.80
    Q2 FY26

    primarily due to an $0.80 per share increase in CECL reserves

    Liquidity
    $1.2 billion
    Q2 FY26

    we enter the quarter with $1.2 billion of liquidity.

    Debt-to-Equity Ratio
    3.9xfrom 3.7 times in Q1
    Q2 FY26

    Our Q2 debt-to-equity ratio increased to 3.9 times from 3.7 times in Q1

    Senior Secured Notes Issued
    $450 million
    May 2026

    In May, we issued $450 million of senior secured notes

    Weighted Average Remaining Term on Corporate Debt
    nearly five years
    Q2 FY26

    Upon repayment of the 2027 notes, we will have nearly five years of weighted average remaining term on our corporate debt

    Non-Mark-to-Market Borrowings as % of Total Debt
    88%
    Q2 FY26

    balance sheet continues to be very well positioned with total non-mark-to-market borrowings now representing about 88% of total debt

    Repayments
    $1.4 billion
    July 2026

    And in July, we've collected another $1.4 billion of similar vintage.

    Dublin Mixed-Use Loan Paydown
    450 million Euro
    July 2026

    This includes a 450 million Euro pay down on our Dublin mixed use loan, our largest position as of last quarter. This loan now represents just 25% of our initial commitment and generates a double-digit debt yield.

    Capital Invested in Joint Ventures
    $322 millionfrom $244 million as in Q1
    Q2 FY26

    Altogether, we had $322 million of capital invested in our joint venture investments at quarter end. from $244 million as in Q1

    Distributable Earnings from Joint Ventures
    over $9 million
    Q2 FY26

    and recognized a little over $9 million of DE this quarter from these diversified strategies.

    NOI from Owned Real Estate
    $15 millionup about $1 million from Q1
    Q2 FY26

    We also recognized higher seasonal net revenues generated by our New York hotel, which contributed to $15 million of NOI we earned from our own real estate assets this quarter, up about $1 million from Q1.

    Industry KPIs

    4
    MetricValueDetails
    Disposition volumeover $1 billionUSD
    Investment volume closed$1.4 billionUSD
    Ffo core ffo normalized ffo per share$0.31USD per share
    Third party strategic capital fund jv platform$322 millionUSD

    Orderbook & backlog

    2
    Loans for Saleover $1 billionRecently initiated

    mostly office

    Net Lease Acquisitions Under Contractover $150 millionJuly 2026

    closed or in closing so far in July

    Deals & partnerships

    3
    Largest private lender in the sectorPartnership to grow footprint in homebuilder finance sector.approximately $130 million

    BXMT entered the homebuilder finance sector through a newly established joint venture with the largest private lender, acquiring approximately $130 million of loans at share. The initial portfolio consisted of 36 loans across 10 states, with an average commitment of $12 million.

    Borrower of $345 million Chicago office loanRestructure of a defaulted $345 million Chicago office loan.

    Subsequent to quarter end, BXMT substantially agreed terms on a restructure with the borrower of a $345 million Chicago office loan that defaulted in June. The borrower intends to commit significant new capital at a reset basis in exchange for additional term and a reduction of the loan balance.

    Unnamed borrowerCredit-enhancing modification of the largest watchlist loan.

    BXMT completed a credit-enhancing modification of its largest watchlist loan. In exchange for a term extension and slightly reduced economics, the borrower invested significant new equity, putting the loan on stable footing for the long term.

    Risks & headwinds

    3
    Increased pressure on a subset of watchlist loans due to elevated interest rates and lagging fundamentals.Q2 FY26

    Approximately $1 billion of watchlist loans (5% of total investments), predominantly office assets. Led to three new impairments.

    Mitigation: Proactive asset management, engaging with borrowers, potential for strategic sales of certain assets.

    Potential impact on book value and earnings from strategies to accelerate portfolio turnover and address watchlists.Near-term

    May see some impact

    Mitigation: Management will consider these factors, along with interest rates and the investment environment, when discussing the dividend. The goal is long-term performance.

    Elevated interest rates impacting legacy watchlist assets, particularly office assets with lower in-place cash flow.Ongoing

    10-year Treasury up more than 60 basis points since early March.

    Mitigation: Focus on portfolio rotation into high-conviction sectors, proactive asset management, and strategic sales.

    What to watch in Q3 FY26

    5

    Reduction in office and legacy pre-2023 loan exposure

    By year-end FY26
    CurrentOffice exposure 21% (from 36%); average investment size ~$20M (from >$130M)
    Target40% or more reduction in exposure

    Why it matters

    This is a key strategic goal for portfolio transformation and risk reduction.

    Between increased repayment activity and our proactive asset management approach, we see a path to reducing our exposure to both office loans and to legacy pre-2023 loans by 40% or more by year-end.

    Q&A highlights

    6

    Are the $1 billion in loans being marketed for sale marked to current bid prices, and is there potential for additional reserves if sales proceed?

    Management stated the loan sale process is early stage and optional. There are no current reserves against the $1 billion of loans being marketed. They will evaluate bids and assess potential reserves next quarter if sales occur.

    “So there are not reserves against those billion dollars of loans today. And as we evaluate what we receive in terms of bids, we'll walk through that next quarter after we have more information.”

    asked by Tom Catherwood · answered by Timothy Johnson

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Portfolio Reallocation

    BXMT is actively rotating its portfolio, receiving $1.2 billion in Q2 repayments (mostly pre-2023 loans) and reinvesting $1.4 billion into high-conviction sectors like residential, industrial, and net lease. This strategy has reduced total office exposure from 36% to 21% and decreased the average investment size from over $130 million to approximately $20 million, aiming for a more diversified and granular portfolio.

    02

    Watchlist Management and Impairments

    The company made progress in resolving legacy investments, including an impaired multifamily loan and modifying its largest watchlist loan, contributing to a 23% reduction in the overall watchlist to $2 billion. However, $1 billion of watchlist loans, primarily office assets, faced increased pressure from elevated interest rates, leading to three new impairments in Q2.

    03

    New Investment Strategies

    BXMT expanded into new areas, acquiring over $135 million in net lease properties, growing its net lease portfolio to $661 million (3% of total). It also entered the single-family homebuilder finance sector through a joint venture, acquiring $130 million of loans, targeting a $200 billion total addressable market with granular, diversified loans.

    04

    Balance Sheet and Liquidity

    BXMT maintained $1.2 billion in liquidity and successfully issued $450 million of senior secured notes in May at favorable terms, pushing corporate debt maturities out to 2029. The debt-to-equity ratio increased slightly to 3.9x, primarily due to the timing of📎 repayments and increased CECL reserves.

    05

    CECL Reserves and Book Value Impact

    Book value declined 4% to $19.31 per share, mainly due to an $0.80 per share increase in CECL reserves, bringing total reserves to $2.43 per share ($1.13 general, $1.30 asset-specific). The majority of the increase was for a $345 million Chicago office loan, which is now undergoing a restructure with new borrower capital.

    06

    Market Tailwinds and Repayment Activity

    The real estate market is showing signs of recovery, with CMBS issuance near a 20-year high, new supply down significantly, and values improving for 10 consecutive quarters. These tailwinds have supported $13 billion in repayments over the past year, enabling capital reallocation. An additional $1.4 billion in repayments was collected in July.

    AI-generated summary of the company’s earnings call. Not investment advice.