BLACKSTONE MORTGAGE TRUST, INC. (BXMT)

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

References herein to “Blackstone Mortgage Trust,” “Company,” “we,” “us,” or “our” refer to Blackstone Mortgage

Trust, Inc. and its subsidiaries unless the context specifically requires otherwise.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction

with the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on

Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical

data, this discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities

Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the

Exchange Act, which reflect our current views with respect to, among other things, our business, operations and financial

performance. You can identify these forward-looking statements by the use of words such as “intend,” “goal,” “estimate,”

“expect,” “project,” “projections,” “plans,” “seeks,” “anticipates,” “should,” “could,” “may,” “designed to,”

“foreseeable future,” “believe,” “scheduled,” and similar expressions. Such forward-looking statements are subject to

various 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 Item 1A. Risk Factors

in our Annual Report on Form 10-K for the year ended December 31, 2025 and elsewhere in this Quarterly Report on

Form 10-Q.

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. Blackstone Real Estate operates as one globally integrated business with 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.

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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 realized gains and losses, and book value

per share. For the three months ended June 30, 2026, we recorded basic net loss per share of $0.48, declared a dividend of

$0.47 per share, reported $0.31 per share of Distributable Earnings, and reported $0.48 per share of Distributable Earnings

prior to realized gains and losses. In addition, our book value as of June 30, 2026 was $19.31 per share, which is net of

cumulative CECL reserves of $2.43 per share, and accumulated depreciation and amortization of owned real estate assets,

including our share related to unconsolidated entities, of $0.76 per share.

As further described below, Distributable Earnings and Distributable Earnings prior to realized gains and losses 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 realized gains and losses help us to evaluate

our performance, excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily

indicative of our current investments and operations. In addition, Distributable Earnings and Distributable Earnings prior to

realized gains and losses 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 loss per share and dividends declared per share ($ in thousands,

except per share data):

(1)Represents net loss attributable to Blackstone Mortgage Trust, Inc. Refer to Note 14 to our consolidated financial

statements for the calculation of diluted net loss per share.

Distributable Earnings and Distributable Earnings Prior to Realized Gains and Losses

Distributable Earnings and Distributable Earnings prior to realized gains and losses 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 realized gains and losses is calculated net

of the incentive fee expense that would have been recognized if such realized gains or losses 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,

Distributable Earnings has been a strong indicator of our dividends per share. As a REIT, we generally must distribute

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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 16 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 investment 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 realized gains and losses, which include but

are not limited 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 realized gains or losses. We

may make similar adjustments with respect to other types of investments, if and when applicable transactions occur. During

the period from the first quarter of 2024 to the fourth quarter of 2025, we reported this metric as Distributable Earnings

prior to charge-offs of CECL reserves, as the only applicable realized gains or losses during such period were charge-offs

of CECL reserves. We utilize Distributable Earnings prior to realized gains and losses 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 realized gains and losses is

calculated net of the incentive fee expense that would have been recognized if such realized gains or losses had not

occurred.

Distributable Earnings and Distributable Earnings prior to realized gains and losses 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 realized

gains and losses 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 realized gains and losses may not be comparable to similar metrics reported by other companies.

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The following table prov

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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 ended December 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):

(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,

88

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

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