Blackstone Mortgage Trust (BXMT) risk factors, FY2024 10-K

Risks Related to Our Lending and Investment Activities

1. 01Our loans and investments expose us to risks associated with debt-oriented real estate investments generally
2. 02Commercial 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
3. 03The timing of loan repayment is difficult to predict and may adversely affect our financial performance and cash flows
4. 04Difficulty in redeploying the proceeds from repayments of our existing loans and investments may cause our financial performance and returns to investors to suffer
5. 05If we are unable to successfully integrate new assets or businesses and manage our growth, our results of operations and financial condition may suffer
6. 06The illiquidity of certain assets we invest in may adversely affect our business
7. 07Any distressed loans or investments we make, or loans and investments that later become distressed, may subject us to losses and other risks
8. 08The success of our investment strategy depends, in part, on our ability to successfully effectuate loan modifications and/or restructurings
9. 09Financial or operating difficulties of our borrowers may result in our being subject to bankruptcy proceedings
10. 10We 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
11. 11As 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
12. 12Increases in our CECL reserves have had and could continue to have an adverse effect on our business, financial condition and results of operations
13. 13Control may be limited over certain of our loans and investments
14. 14B-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
15. 15Loans on properties in transition may involve a greater risk of loss than conventional mortgage loans
16. 16Risks of cost overruns and noncompletion of renovations of properties in transition may result in significant losses
17. 17There are increased risks involved with our construction lending activities
18. 18Loans 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
19. 19A 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
20. 20Transactions denominated in foreign currencies subject us to heightened risks, including foreign currency risks and regulatory risks
21. 21Our success depends on the availability of attractive investments and our ability to identify, structure, consummate, leverage, manage and realize returns on our investments
22. 22Real estate valuation is inherently subjective and uncertain, and is subject to change, especially during periods of volatility
23. 23Our loans and investments may be concentrated in terms of geography, asset types, and sponsors, which could subject us to increased risk of loss
24. 24Our due diligence process for investment opportunities may not reveal all relevant information
25. 25Insurance on properties underlying or securing our investments may not cover all losses
26. 26The impact of any future terrorist attacks and the availability of affordable terrorism insurance expose us to certain risks
27. 27The properties related to our investments may be subject to unknown liabilities, including environmental liabilities, that could affect the value of these properties and as a result, our investments
28. 28Risks associated with climate change may adversely affect our business and financial results and damage our reputation
29. 29We are subject to evolving sustainability disclosure standards and expectations that expose us to numerous risks
30. 30We may be subject to lender liability claims, and if we are held liable under such claims, we could be subject to losses
31. 31satisfy interest and principal payments and any other fees in connection with the trust or other conduit arrangement for such securities, we may incur significant losses
32. 32Investments in non-conforming and non-investment grade rated loans or securities involve increased risk of loss
33. 33CECL reserves are difficult to estimate
34. 34Some of our investments may be recorded at fair value and, as a result, there will be uncertainty as to the value of these investments
35. 35Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on joint venture partners’ financial condition and liquidity and disputes between us and our joint venture partners
36. 36Our investments in net leased commercial properties expose us to risks
37. 37We may make investments related to data centers which exposes us to related risks
38. 38The loss of, or changes in, our relationships with MTRCC, or of MTRCC’s relationships with Freddie Mae or Freddie Mac, could adversely affect us

Risks Related to Our Financing and Hedging

1. 39Our significant amount of debt may subject us to increased risk of loss and could adversely affect our results of operations and financial condition
2. 40Interest rate fluctuations could increase our financing costs, which could lead to a significant decrease in our results of operations, cash flows and the market value of our investments
3. 41Our secured debt agreements impose, and additional lending facilities may impose, restrictive covenants, which may restrict our flexibility to determine our operating policies and investment strategy
4. 42Our master repurchase agreements, credit facilities, or other financing that we may use in the future to finance our assets currently require, or in the future may require, us to provide additional collateral or pay down debt
5. 43Our use of leverage may create a mismatch with the duration and interest rate of the investments that we are financing
6. 44Our loans and investments may be subject to fluctuations in interest rates that may not be adequately protected, or protected at all, by our hedging strategies
7. 45Inability to access funding could have a material adverse effect on our results of operations, financial condition and business
8. 46We 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
9. 47We may be subject to losses arising from current and future guarantees of debt and contingent obligations of our subsidiaries, joint ventures or co-investments
10. 48Hedging against interest rate or currency exposure may adversely affect our earnings, which could reduce our cash available for distribution to our stockholders
11. 49We are subject to counterparty risk associated with our hedging activities
12. 50As an alternative to an exemption from registration, our Manager may register as a CPO with the CFTC and avail itself of certain disclosure, reporting and record-keeping relief under CFTC Rule 4.7

Risks Related to Our Relationship with Our Manager and its Affiliates

1. 51We depend on our Manager and its personnel for our success. We may not find a suitable replacement for our Manager if the Management Agreement is terminated, or if key personnel cease to be employed by our Manager or Blackstone or otherwise become unavailable to us
2. 52The personnel of our Manager, as our external manager, are not required to dedicate a specific portion of their time to the management of our business
3. 53Our Manager’s fee structure may not create proper incentives or may induce our Manager and its affiliates to cause us to make certain loans or investments, including speculative investments, which increase the risk of our loan and investment portfolio
4. 54opportunity, and other considerations deemed relevant in good faith in their sole discretion). There is no assurance that any conflicts will be resolved in our favor
5. 55Termination of our Management Agreement would be costly
6. 56Our Manager maintains a contractual as opposed to a fiduciary relationship with us. Our Manager’s liability is limited under our Management Agreement, and we have agreed to indemnify our Manager against certain liabilities
7. 57We do not own the Blackstone or BXMT name, but we may use it as part of our corporate name pursuant to a trademark license agreement with an affiliate of Blackstone. Use of the name by other parties or the termination of our trademark license agreement may harm our business

Risks Related to Our Company

1. 58Our investment strategy or guidelines, asset allocation and financing strategy may be changed without stockholder consent
2. 59We must manage our portfolio so that we do not become an investment company that is subject to regulation under the Investment Company Act
3. 60Rapid changes in the values of our other real estate-related investments may make it more difficult for us to maintain our qualification as a REIT or exclusion from regulation under the Investment Company Act
4. 61business practices, negatively impact our operations, cash flow or financial condition, impose additional costs on us, subject us to increased competition or otherwise adversely affect our business
5. 62State and foreign licensing requirements will cause us to incur expenses and our failure to be properly licensed may have a material adverse effect on us and our operations
6. 63We depend on our Manager and its affiliates to develop appropriate systems and procedures to control operational risk
7. 64Cybersecurity risks and data protection could result in the loss of data, interruptions in our business, damage to our reputation, and subject us to regulatory actions, increased costs and financial losses, each of which could have a material adverse effect on our business and results of operations
8. 65Accounting rules for certain of our transactions are highly complex and involve significant judgment and assumptions. Changes in accounting interpretations or assumptions could impact our ability to timely prepare consolidated financial statements

Risks Related to our REIT Status and Certain Other Tax Items

1. 66If we do not maintain our qualification as a REIT, we will be subject to tax as a regular corporation and could face a substantial tax liability. Our taxable REIT subsidiaries are subject to income tax
2. 67In certain circumstances we may incur tax liabilities that would reduce our cash available for distribution to our stockholders
3. 68Complying with REIT requirements may cause us to forego otherwise attractive opportunities and limit our expansion opportunities
4. 69Complying with REIT requirements may force us to liquidate or restructure otherwise attractive investments
5. 70Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities
6. 71Complying with REIT requirements may force us to borrow to pay dividends to stockholders
7. 72We may choose to make distributions in our own stock, in which case stockholders may be required to pay income taxes without receiving any cash distributions
8. 73Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
9. 74We are largely dependent on external sources of capital to finance our growth
10. 75The “taxable mortgage pool” rules may increase the taxes that we or our stockholders may incur, and may limit the manner in which we effect future securitizations
11. 76The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to qualify as a REIT
12. 77The failure of assets subject to repurchase agreements to qualify as real estate assets could adversely affect our ability to qualify as a REIT
13. 78Liquidation of assets may jeopardize our REIT qualification or create additional tax liability for us
14. 79Our ownership of and relationship with any TRS will be restricted, and a failure to comply with the restrictions would jeopardize our REIT status and may result in the application of a 100% excise tax
15. 80We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the price of our class A common stock

Risks Related to Our Class A Common Stock

1. 81The market price of our class A common stock has been, and may continue to be, volatile and may decline
2. 82Some of the provisions of Maryland law and our charter and bylaws discussed below could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our stockholders by providing them with the opportunity to sell their shares at a premium to the then current market price
3. 83Our charter contains provisions that are designed to reduce or eliminate duties of Blackstone and our directors with respect to corporate opportunities and competitive activities
4. 84We have not established a minimum distribution payment level and we cannot assure stockholders of our ability to pay dividends in the future
5. 85Investing in our class A common stock may involve a high degree of risk
6. 86Future issuances of equity or debt securities, which may include securities that would rank senior to our class A common stock, may adversely affect the market price of the shares of our class A common stock
7. 87We invest in derivative instruments, which would subject us to increased risk of loss
8. 88We are subject to counterparty risk associated with our debt obligations
9. 89We may enter into hedging transactions that could expose us to contingent liabilities in the future