Good day, ladies and gentlemen and welcome to the Blackstone Mortgage Trust First Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions] I would now like to turn the conference over to your host for today, Mr. Weston Tucker, Head of Investor Relations. Please proceed.

Great, thanks. Good morning and welcome to Blackstone Mortgage Trust’s first quarter 2015 conference call. I’m joined today by Steve Plavin, President and CEO; Mike Nash, Executive Chairman; Paul Quinlan, CFO; Doug Armer, Treasurer and Head of Capital Markets; and Tony Marone, Principal Accounting Officer. Last night we filed our Form 10-K and issued a press release with a presentation of our results, which hopefully you’ve all had some time to review. I’d like to remind everyone that today’s call may include forward-looking statements, which by their nature are uncertain and outside of the company’s control. Actual results may differ materially. For discussion of some of the risks that could affect the company’s results, please see the Risk Factor Section of our most recent Form 10-K and our Form 10-Q for the first quarter of 2015. We do not undertake any duty to update forward-looking statements. We will refer to certain non-GAAP measures on the call. For reconciliations to GAAP, you should refer to the press release and to our Form 10-Q, each of which have been posted on our website and have been filed with the SEC. This audio cast is copyrighted material of Blackstone Mortgage Trust and may not be duplicated without consent. For a quick recap of our results, before I turn things over to Steve. We reported core earnings per share of $0.54 for the first quarter up 26% versus the prior year first quarter due to greater net interest income from the growth in our loan origination portfolio. A few weeks ago we paid a dividend also of $0.52 per share with respect to the first quarter. If you have any questions following today’s call, you can reach out to me or to Doug directly. And with that, I’ll now turn the call over to Steve.

Thanks Weston, and good morning, everyone. In the first quarter the BXMT continued on its path of strong organic growth with $937 million of originations in core earnings of $0.54 per share. We also added $1.1 billion to our financing capacity and key element of our ability to grow and drive returns. We increased total by 11% in the quarter on the incremental $570 million net of repayments we now have an additional $1 billion of directly originated loans with agreed terms that we expect to close over the coming months. With increasingly competitive direct origination market we continue to achieve strong deal - stable or alive or maintain the conservative credit profile of our senior mortgage business. Our organic deal [indiscernible] charge from the $4.6 billion - GE Capital portfolio acquisition that we announced post quarter end. We’re thrilled about this opportunity to expand our senior loan business and deliver the better at the greater scale in employment to BXMT and its shareholders. Paul will go into more detail on the earnings power of this transaction in a moment. I’d like to focus on its great fit and strategic benefits for our business. The GE ones are all senior mortgages and are markedly similar to our directly originated portfolio and LPD in credit spread. The loans brings 54 new sponsor relationship with BXMT which is particularly significant given the success we’ve had mining existing borrow relationship. Within half of our directly originated loans balances with sponsors with BXMT to a more times. These new borrow relationships will lead to a broadening of our origination pipeline in addition of value from our acquisition. In a similar vein the GE portfolio expands our presence in the U.S. and Europe and also establishes a very strong position for BXMT in Canada, a…

Thank you Steve and good morning everyone. I will begin my remarks by touching on first quarter highlights and then provide some additional forward looking context in connection with the GE Capital portfolio acquisition and related equity offering that we just completed. Core earnings in 1Q were $0.54 per share as our loan portfolio reached nearly $5 billion. During the quarter BXMT funded $903 million of loans including $118 million under previously existing commitments. This was partially offset by $333 million of repayments resulting in net funding of $570 million. Net loan funding were capitalized using available liquidity under our revolving repurchase facilities and $355 million of assets specific financing. At quarter end we had total financing capacity of $5.4 billion, $1.8 billion of which remains available for new funding. A 12% increase in our loan portfolio generated net interest income of $39 million up 7% versus 4Q. On the expense side, management fees were roughly flat at $5.5 million. Core G&A was $1.5 million up from $1.1 million in 4Q primarily due to several onetime expenses incurred during the quarter. Core earnings were up 4% from the fourth quarter and exceeded the incentive fee threshold on a four quarter look-back basis resulting in incentive fees of $1.2 million. Book value ended the quarter at $24.87 per share down from $25.10 per share in 4Q due impart due to re-measurement of our net investment in loans denominated in Euros and pounds which although unrealized is recognized through OCI on our consolidated balance sheet. This was partially offset by -- in our CT portfolio which generated $8.4 million of GAAP income or $0.14 per share contributing to $0.60 per share of GAAP net income for the quarter. The CT legacy income was related to the fair value mark-to-market of an asset…

[Operator Instructions] Your first question comes from the line of Dan Altscher of FBR. Please proceed.

Thanks and good morning everyone. I appreciate you take my question. I was wondering if you can talk a little about the GE transaction. One of the I think major questions and things that folks have been wondering about is really kind of the credit quality of the GE portfolio and I know Steve I think you mentioned in terms of spread in LTV that looks very similar to the existing portfolio which seems to be true. Can just talk a little about that credit quality where maybe it falls within your internal fixed ratings, that might be helpful kind of a metric?

Sure Dan. I think that the quality of the portfolio as I mentioned is in-line with our directly originated portfolio. The loans are little bit more seasons than the loans that we have originated. Our originated loans, when we did back to May of 2013, several of the GE loans originated in the period before that. So in terms of the transitional properties a lot of them are further advanced that we see in cash flow. So I would say in general there are loans have higher debt yields in that loans, they are more diverse, they tend to do larger portfolio and smaller loans, cross collateral portfolios so there aren’t there very nice complements to our sort of bigger more core urban loans that we have -- in the recent quarters in BXMT. So I guess the good mix and again I think consistent overall in quality to the loans we have originated.

Okay. I guess just speaking with that point as well I think it was maybe reported that I think maybe third or so portfolio was maybe pre 2011 which certainly would be consistent in your comment or more seasoned. For those loans that are pre 2011 is this -- that there is substantial call protection at this point that those haven't been able to refinance as opposed to borrowers not maybe being on track with whatever plan they might have?

GE has a strategy of really trying to maintain their loan for long term and they have a great history in doing so especially in the manufacturing housing segment, but there are originators were highly incentive and maintain loans and you obviously there is less effort to extend and maintain loans then is to originate and philosophically that was their objective and they were generally successful in doing that and it is nicely sort of develop the relations they have with those borrowers where in addition to it extending the existing and older loans they had the dialogue at nuances as well.

Okay. I see. Got it. Something that I felt was maybe missed by lot of folks was the add-on feature that I think was referenced in the script. You can maybe just talk, can you talk a little bit more about that the nuances around that really be benefit of that really the price will hold with funding the deal?

Yes, Dan its Dough. That's a great question. The add-on feature to the Well's financing was very important for us because it enabled us to fully debt funds the portion of the loans that we expect to repay in the very near term and so the $225 million that the additional 5% advance 80% to 85% represents it can really be thought of as the full hair cut on 20% to 25% of the total portfolio. So it’s a $1.1 billion - $1.2 billion of loans are actually 100% debt funded and the remaining loans are 80% debt funded. So that means we didn't need to raise equity in order to fund that portion of the portfolio and instead we will have more a slightly more lever down sheet around that particularly opportunistic piece of the investment.

Okay that's perfect. I appreciate that and then maybe just one more from me and then I will let others take a crack. Just also with the GE portfolio I think what was shown in the 8-K that there is maybe roughly 45% of the portfolio of either eligible or scheduled to mature over the next year or so what maybe your expectations of what could actually repay because I think a lot of others are eligible as opposed to scheduled?

Yes, I think that - when we look at the portfolio I think Doug we talked about and we structured the add-on, we looked it sort of in the $1 billion to $2 billion range the repaying in the first 12 to 18 months and so it’s very difficult to predict when the rest of the floating rate loans will repay. A meaningful portion of the portfolio is fixed rate with sort of fixed rate like yield like swap rate provisions which provides little more protection for several loans that a longer duration than that but it’s a pretty even mix over the sort of one to three year time frame in terms of how we see the loans repay.

Okay. Great. I will drop back in queue. Thanks so much.

Thanks Dan.

Your next question comes from the line of Don Fandetti of Citigroup. Please proceed.

Steve, I was wondering if you could talk a little bit about spread compression I guess you spend a little bit of that what is your expectation on a going forward basis and do you think that will eventually push you into looking at some other areas and then how is the pipeline outside of the GE capital deal in terms of targeted new investments?

Well, as it relates to spread compression we can see the other market continues to be very competitive. I think as it relates to our, the finance companies mortgage rates the people we can compete with our one-to-one basis I think we continue to win more than our fair share of business. The challenge from the competitive environment is banks reaching in risk. We still are not seeing a lot of that it still sort of facing the regulatory challenges of taking greater risk in the real estate lending but in term - we just take one or two banks in a competitive situation to decide that they want to lend 5% or 10% more they want to take a leaping risk they might not nearly take and so that's what we feel occasionally and that was the greatest competitive influence of our business. Interestingly enough the single biggest competitor of business over the last year had been GE so that's sort of another additional benefit of this transaction - one of our biggest competitors are out of the market. Pipeline is - pipeline we have obviously have a good forward pipeline as we sit today. I noted that we have a billion dollars of loans that we have with agreed terms that are in the closing process. And the four pipelines has been building pretty well. We haven't been very spending huge amount of time, everybody on the staff in terms of working as GE transaction so we are still originating and I think we will still build additional direct origination opportunities for Q3 and Q4 but definitely the focus has been on taking these 82, new 82 GE loans and making sure that we are included on top of them to great [indiscernible] to our loan portfolio.

Thank you.

Your next question comes from the line of Rick Shane of JPMorgan. Please proceed.

Hi guys thanks for taking my questions this morning. I really - talk a little bit about potential operating leverage and in context of your long term ROE objectives. What you guys have basically said historically is LIBOR plus 8% sort of the target. Does the GE acquisition and effectively doubling the portfolio change that in any meaningful way at this point?

I think it does - its Doug here. We have talked about the accretion that we expect to experience as a result of the increase scale which is really the root of the increased operating leverage that you are referring to and in just really around numbers we talked about $0.25 on a per annum basis in terms of accretion and that works out to roughly a point in terms of the yield on book value which is in the same range. So, I think 8% target which translates to a low $0.50 per quarter yield is probably closer to $0.60 target given that increased operating leverage.

Got it. Okay, great. Thank you guys.

Your next question comes from the line of Tony Gleason of Neuberger. Please proceed

Hey good morning guys, thanks for the call and the clarification on the GE deal. Just wanted to have sort of sometime horizon times, some of the things that you were talking about, can you refresh me as to what percentage of that will be fixed, pro forma the GE acquisition. How longer - what timeframe do you have in your own forecast for getting sort of that back to offloading portfolio, one and then two what sort of timeframe should we will be expecting to get that equity back down to the three level that you have mentioned just trying to get a little time horizon there and side comment very happy to see you guys step up and buy some more stock but Steve like the other way?

Thank you. Is that the portfolio is on a pro forma basis combined on the 23% fixed as Paul mentioned there also some floating rate loans with LIBOR floors which suturing to the correlation with U.S. dollar LIBOR in the near term but talking about the fixed rate loans they got an average duration of 2.1 years they also have an average coup under 5.3%, so they relatively high yielding but that two years time horizon is really I think the right benchmark with regard to the fixed rate portfolio. And on the leverage question, we think that we will move towards the three times leveraged pro forma stabilized level really over the course of the next year or so which is the term for the add-on advance from Wells. So the next 12 to 18 months is when we expect to sort of return to our sort of target leverage level after the turbo charged component from the add-on turns off.

Okay. Thank you. That’s very helpful appreciate it.

Thanks Tony.

Your final question comes from the line of Jade Rahmani of KBW. Please proceed.

Hi, thanks for taking the question. Just a clarification on the ROE because I think the term you use is core earnings which historically definition has included the add-back of the incentive fee, so I want to just confirm or clarify that the accretion you expect from GE deals is after the incentive fee?

We are talking in terms of core earnings which you are right is, before the incentive fee. I think we expect that core earnings and the dividend. We will continue to move in step. I think the relationship between two will be different overtime as we move through the ramp period into more stabilized full scale business model but the accretion we expect to be that we are discussing is in terms of core earnings which is before the incentive fee.

So to put it in other way do you expect a similar level of accretion to the dividend?

We don't give guidance about the dividend specifically but I think we expect to a similar level of accretion, I think in our priorities are obviously to maintain book value and so we don't expect to pay out more - to payout book value in our dividends outside of the ramp page of the company and so there could be as I say at a different stage of the company be on the ramp stage. There could be a slightly different relationship between core earnings and dividend. We want to make sure that the dividend is sustainable, predictable and always increasing never decreasing and so it may not be on top - right on top of or ahead of core earning outside of the ramp says but it will in line it will be higher post the GE transaction than it would beforehand.

Okay. So the payout ratio is likely to moderate on a stabilized basis. Okay. Just a couple of other items, can you jut prescribe that due diligence underwriting process on the GE loans given how quick the entire process was and then secondly can you clarify expansion plans for headcount at the breads platform?

Sure. I mean on the underwriting side we are acquiring 82 loans and although it is enormous amount of work. We have really great resources to evaluate the loans in the new collateral. If you think about in terms of CMBS deal, a current market CMBS you might have 100 loans and [indiscernible] look at finding that and sort of similar time table. So yes, it was compressed. We did an enormous amount of work in a very short period of time but certainly felt like we had adequate time to fully evaluate the loans in the collateral that we were acquiring before we entered into agreement with GE and with Wells. As it relates to people we do plan to expand the platform we are – I think in most significantly asset management we looked at it in all areas where we have various discussions ongoing too early to say exactly was the final result of that will be but we certainly hope to add to our platform to our capabilities as another sort of benefit of this transaction.

And is there a process underway to preserve the existing relationships with all of the new many borrowers that you are gaining access to? From an origination and new business perspective?

Yes we have coordinated process with GE to reach out and we meet the borrowers and make sure there is dialogue prior to the closing of the long sale. So we have a great relationship with GE in terms of coordinating that process and that sort of ongoing as we still have the countdown to next couple of weeks towards being close, but yes, we have we have reached out, had a dialogue with almost all the significant clients.

Okay. And just with respect to ongoing origination you sighted the billion dollars of loans that are in process of closing can just clarify what time period you expect that to take place and also I think your broader comments for that we should expect somewhat of a pause in the pace of origination as the focus shifts to absorbing this large portfolio?

Yes, looking at this sort of billion dollars of loans I think our expectation is that they will close in Q2. This was one larger loan that could possible role into Q2 so I think our expectation as we said they will all close later this quarter. We still have – we do have some good deal, we’re getting some deal benefit from this transaction. Our pipeline transaction are some of the new relationships that we will be inheriting so that will be added to our pipeline but all of our resources have been dedicated over the last three or four weeks to getting a position to close the GE deal as quickly as we can.

Okay and just lastly an investor question I got from an investor just, can you clarify what’s the role of the sequential decline in book value per share?

Yes sure, so, hi Jade, it’s Paul. The sequential decline in book value per share was really driven by the OCI impact of the re-measurement of our net investment in Euros and Pounds which are presently un-hedged. So that is an unrealized loss that was through OCI that was partially offset by the gains that we experienced in our CTO legacy portfolio.

Okay. Thanks very much.

And we do have a follow up question from the line of Dan Altscher of FBR. Please proceed.

Hey guys. Thanks for taking my question, sorry to extend the call little bit longer. But had a specific question related to the CT legacy and I think if I recollect there was a deal that Blackstone did what Paul said and I think he was referencing the Q, the three pack JV. I think I understand that’s the unrealized gain that was what was in the quarter but just give a sense at the timing of one that might close and is that capital that comes back to you that can then be redeployed into the loan segment – the loan business?

That transaction is expected to close in mid May and the large non-refundable deposits being posted and yes, the cash will come back to and it will be available to be redeployed.

Okay, that’s great and just one other quickie, we found on the residential side we have seen a lot of mortgage rates gain access [indiscernible] which is interesting, I suspect you guys may have been in the process of also exploring of FHLB couple of quarters ago, any update on that side where you might currently stand?

Hey Dan, it’s Paul. I would say no update that time being we are monitoring the ongoing dialogue as it relates to mortgage re-access to the FHLB and keeping a close eye on it but no update at this point.

Okay. Thanks so much.

At this time there are no additional questions in the queue and I would like to turn the call back over to Weston Tucker for closing remarks. Please proceed.

Great. Thank you and thanks everyone for joining the call this morning.