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 March 31, 2026, we recorded basic net loss per share of $0.04, declared a dividend

of $0.47 per share, reported $0.21 per share of Distributable Earnings, and reported $0.49 per share of Distributable

Earnings prior to realized gains and losses. In addition, our book value as of March 31, 2026 was $20.20 per share, which

is net of cumulative CECL reserves of $1.80 per share and accumulated depreciation and amortization of owned real estate

assets of $0.57 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 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 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 income (loss) per share and dividends declared per share ($ in

thousands, except per share data):

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

financial statements for the calculation of diluted net (loss) income 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,

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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 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 provides a reconci

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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 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):

(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 ended December 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 ended December 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):

(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 ended December 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 ended December 31, 2025, loan fundings totaled $5.6 billion and loan repayments and sales totaled

$6.1 billion. During the year ended December 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):

(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):

(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):

(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, 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.

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):

(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 ended December 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 million decrease 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 million of 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 million increase 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 ended December 31, 2025, we

contributed $104.3 million to the joint venture, and recorded a $1.4 million loss 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:

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 ended December 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):

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 ended December 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):

(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 the European 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 ended December 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):

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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):

(1)The B-6 Term Loan and B-7 Term Loan borrowings are subject to a benchmark interest rate floor of 0.50%.

(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):

(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):

Income from loans and other investments, net

Income from loans and other investments, net decreased $111.6 million during the year ended December 31, 2025

compared to the year ended December 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 ended December 31, 2025 compared to the year

ended December 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 ended December 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 ended December 31, 2025 compared to the year ended December 31, 2024.

Revenue from owned real estate

Revenue from owned real estate increased by $171.9 million during the year ended December 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 ended December 31, 2025 compared to the year

ended December 31, 2024. During the year ended December 31, 2025, we did not recognize any gains on extinguishment

of debt. During the year ended December 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 ended December 31,

2025 compared to the year ended December 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 ended December 31, 2025 compared to the year ended December 31, 2024.

Changes in current expected credit loss reserve

During the year ended December 31, 2025, we recorded a $112.5 million increase in our CECL reserves, as compared to a

$538.8 million increase during the year ended December 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 ended December 31, 2025, as well as additional loans that

were impaired during the year ended December 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 of December 31, 2025.

Income (loss) from unconsolidated entities

During the year ended December 31, 2025, we recorded income from unconsolidated entities of $8.3 million compared to a

loss of $2.7 million during the year ended December 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 ended December 31, 2025. The loss

during the year ended December 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 ended December 31, 2024.

Income tax provision

The income tax provision increased by $1.3 million during the year ended December 31, 2025 as compared to the year

ended December 31, 2024, due to an increase in the income tax provisions related to our taxable REIT subsidiaries.

Dividends per share

During the year ended December 31, 2025, we declared dividends of $1.88 per share, or $320.6 million in aggregate.

During the year ended December 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 ended December 31, 2024 for discussion of our consolidation results of

operations for the year ended December 31, 2024 compared to the year ended December 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):

Income from loans and other investments, net

Income from loans and other investments, net decreased $15.0 million during the three months ended December 31, 2025

compared to the three months ended September 30, 2025. The decrease was primarily driven by (i) a $677.5 million

decrease in the weighted-average principal balance of our loan portfolio during the three months ended December 31, 2025

compared to the three months ended September 30, 2025, and (ii) a $3.8 million decrease as a result of the receipt of

unaccrued default interest upon repayment of a loan that was previously in maturity default during the three months ended

September 30, 2025. This was offset by a decrease in the weighted-average principal balance of our outstanding financing

arrangements by $154.3 million during the three months ended December 31, 2025.

Revenue from owned real estate

Revenue from owned real estate increased by $41.7 million during the three months ended December 31, 2025 compared

to the three months ended September 30, 2025. The increase was primarily due to the acquisition or consolidation of two

additional owned real estate assets in September, as the three months ended December 31, 2025 reflected a full quarter of

income recognition compared to a partial period during the three months ended September 30, 2025. The seasonality of the

operations at our hospitality assets also contributed to the increase.

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 $35.4 million during the three months ended

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December 31, 2025 compared to the three months ended September 30, 2025, primarily due to a $35.3 million increase in

expenses from owned real estate as a result of the acquisition of two additional owned real estate assets in September. The

three months ended December 31, 2025 reflected a full quarter of expense recognition compared to a partial period during

the three months ended September 30, 2025.

Changes in current expected credit loss reserve

During the three months ended December 31, 2025, we recorded an $18.4 million increase in our CECL reserves, as

compared to a $987,000 decrease during the three months ended September 30, 2025. The increase during the three months

ended December 31, 2025 is primarily due to (i) an increase in our asset-specific CECL reserves, driven by increases on

certain of our existing impaired loans, and (ii) an increase in our general CECL reserves driven by an increase in the

historical loss rate used in reserve calculations related to the additional CECL charge-offs.

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 of December 31, 2025.

Income from unconsolidated entities

During the three months ended December 31, 2025, we recorded income from unconsolidated entities of $7.3 million

compared to income of $3.9 million during the three months ended September 30, 2025. This increase was primarily due to

our share of income from our Bank Loan Portfolio Joint Venture as the three months ended December 31, 2025 reflected a

full quarter of income recognition related to the portfolio our Bank Loan Portfolio Joint Venture acquired in September.

Income tax provision

The income tax provision decreased by $977,000 during the three months ended December 31, 2025 compared to the three

months ended September 30, 2025, primarily due to a decrease in the income tax provisions related to our taxable REIT

subsidiaries.

Dividends per share

During the three months ended December 31, 2025, we declared dividends of $0.47 per share, or $79.1 million in

aggregate. During the three months ended September 30, 2025, we declared dividends of $0.47 per share, or $80.2 million

in aggregate.

V. Liquidity and Capital Resources

Capitalization

We have capitalized our business to date primarily through the issuance and sale of shares of our class A common stock,

corporate debt, and asset-level financings. As of December 31, 2025, our capitalization structure included $3.5 billion of

common equity, $2.9 billion of corporate debt, and $13.3 billion of asset-level financings. Our $2.9 billion of corporate

debt includes $1.8 billion of Term Loan borrowings, $785.3 million of Senior Secured Notes, and $266.2 million of

Convertible Notes. Our $13.3 billion of asset-level financings includes $10.1 billion of secured debt, $2.1 billion of

securitizations, and $999.8 million of asset-specific debt. Our asset-level financings are generally structured to provide

currency, index and term-matched financing without capital markets-based mark-to-market provisions.

As of December 31, 2025, we had $1.0 billion of liquidity that can be used to satisfy our short-term cash requirements and

as working capital for our business.

See Notes 7, 8, 9, 11, 12, and 13 to our consolidated financial statements for additional details regarding our secured debt,

securitized debt obligations, asset-specific debt, Term Loans, Senior Secured Notes, and Convertible Notes, respectively.

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Debt-to-Equity Ratio and Total Leverage Ratio

The following table presents our debt-to-equity ratio and total leverage ratio:

(1)The debt and leverage amounts included in the calculations above use gross outstanding principal balances,

excluding any unamortized deferred financing costs and discounts.

(2)Represents, in each case at period end, the ratio of (i) total outstanding secured debt, asset-specific debt, Term

Loans, Senior Secured Notes, and convertible notes, less cash, to (ii) total equity.

(3)Represents, in each case at period end, the ratio of (i) total outstanding secured debt, securitizations, asset-specific

debt, Term Loans, Senior Secured Notes, and convertible notes, less cash, to (ii) total equity.

Sources of Liquidity

Our primary sources of liquidity include cash and cash equivalents, available borrowings under our secured debt facilities,

and net receivables from servicers related to loan repayments, which are set forth in the following table ($ in thousands):

(1)Represents loan principal payments held by our third-party servicer as of the balance sheet date, which were

remitted to us during the subsequent remittance cycle, net of the related secured debt balance.

During the year ended December 31, 2025, we generated cash flow from operating activities of $275.9 million and

received $6.2 billion from loan principal collections, sales proceeds, and cost-recovery proceeds. Furthermore, we are able

to generate incremental liquidity through provisions of certain of our CLOs, which allow us to effectively replace, for a

period of time, a repaid loan in the CLO with additional eligible CLO collateral to maintain the aggregate amount of

collateral assets in the CLO, and the related financing outstanding.

We have access to further liquidity through public and private offerings of equity and debt securities, syndicated term

loans, and similar transactions. To facilitate public offerings of securities, in July 2025, we filed a shelf registration

statement with the SEC that is effective for a term of three years and expires in July 2028. The amount of securities to be

issued pursuant to this shelf registration statement was not specified when it was filed and there is no specific dollar limit

on the amount of securities we may issue. The securities covered by this registration statement include: (i) class A common

stock; (ii) preferred stock; (iii) depositary shares representing preferred stock; (iv) debt securities; (v) warrants; (vi)

subscription rights; (vii) purchase contracts; and (viii) units consisting of one or more of such securities or any combination

of these securities. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be

described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

We may also access liquidity through our dividend reinvestment plan and direct stock purchase plan, under which

9,965,125 shares of class A common stock were available for issuance as of December 31, 2025, and our “at the market”

common stock offering program, pursuant to which we may sell, from time to time, up to $480.9 million of additional

shares of our class A common stock as of December 31, 2025. Refer to Note 15 to our consolidated financial statements for

additional details.

Uses of Liquidity

In addition to funding our lending and other investment activity and our general operating expenses, our primary uses of

liquidity include interest and principal payments with respect to our outstanding borrowings under secured debt, our asset-

specific debt, our Term Loans, our Senior Secured Notes, and our Convertible Notes. From time to time, we have

repurchased and may continue to repurchase our outstanding debt or shares of our class A common stock. Such

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repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and

other factors. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material.

In July 2024, our board of directors authorized the repurchase of up to $150.0 million of our class A common stock. In

October 2025, when the amount remaining available for repurchases under the program was $11.6 million, our board of

directors approved an amendment to the program to increase the amount available for repurchases under the program, as

amended, up to $150.0 million. Under the repurchase program, repurchases may be made from time to time in open market

transactions, in privately negotiated transactions, in agreements and arrangements structured in a manner consistent with

Rules 10b-18 and 10b5-1 under the Exchange Act or otherwise. The timing and the actual amounts repurchased will

depend on a variety of factors, including legal requirements, price and economic and market conditions. The repurchase

program may be changed, suspended or discontinued at any time and does not have a specified expiration date.

During the year ended December 31, 2025, we repurchased 6,010,699 shares of class A common stock at a weighted-

average price per share of $18.20, for a total cost of $109.4 million. As of December 31, 2025, the amount remaining

available for repurchases under the program was $149.6 million.

As of December 31, 2025, we had unfunded commitments of $1.2 billion related to 53 loans receivable and $754.8 million

of committed or identified financing for those commitments resulting in net unfunded commitments of $430.2 million. The

unfunded loan commitments comprise funding for capital expenditures and construction, leasing costs, and interest and

carry costs. Loan funding commitments are generally subject to certain conditions, including, without limitation, the

progress of capital projects, leasing, and cash flows at the properties securing our loans. Therefore, the exact timing and

amounts of such future loan fundings are uncertain and will depend on the current and future performance of the

underlying collateral assets. We expect to fund our loan commitments over the remaining term of the related loans, which

have a weighted-average future funding period of 2.0 years.

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Contractual Obligations and Commitments

Our contractual obligations and commitments as of December 31, 2025 were as follows ($ in thousands):

(1)Represents known and estimated short-term cash requirements related to our contractual obligations and

commitments. Refer to “Sources of Liquidity” above for information about our sources of funds to satisfy our short-

term cash requirements.

(2)The allocation of our unfunded loan commitments is based on the earlier of the commitment expiration date or the

final loan maturity date; however, we may be obligated to fund these commitments earlier than such date.

(3)Our secured debt and asset-specific debt agreements are generally term-matched to their underlying collateral.

Therefore, the allocation of both principal and interest payments under such agreements is generally allocated based

on the maximum maturity date of the collateral loans, assuming all extension options are exercised by the borrower.

In limited instances, the maturity date of the respective debt agreement is used.

(4)The Term Loans are partially amortizing, with an amount equal to 1.0% per annum of the initial principal balance

due in quarterly installments. Refer to Note 11 to our consolidated financial statements for further details on our

Term Loans.

(5)Reflects the outstanding principal balance of Convertible Notes, excluding any potential conversion premium. Refer

to Note 13 to our consolidated financial statements for further details on our Convertible Notes.

(6)Represents interest payments on our secured debt, asset-specific debt, Term Loans, Senior Secured Notes, and

Convertible Notes. Future interest payment obligations are estimated assuming the interest rates in effect as of

December 31, 2025 will remain constant into the future. This is only an estimate as actual amounts borrowed and

interest rates will vary over time.

(7)Total does not include $2.1 billion of consolidated securitized debt obligations, as the satisfaction of these liabilities

will not require cash outlays from us.

We are also required to settle our foreign exchange and interest rate derivatives with our derivative counterparties upon

maturity which, depending on foreign currency exchange and interest rate movements, may result in cash received from or

due to such counterparties. The table above does not include these amounts as they are not fixed and determinable. Refer to

Note 14 to our consolidated financial statements for details regarding our derivative contracts.

We are required to pay our Manager a base management fee, an incentive fee, and reimbursements for certain expenses

pursuant to our Management Agreement. The table above does not include the amounts payable to our Manager under our

Management Agreement as they are not fixed and determinable. Refer to Note 16 to our consolidated financial statements

for additional terms and details of the fees payable under our Management Agreement.

As a REIT, we generally must distribute substantially all of our net taxable income to stockholders in the form of dividends

to comply with the REIT provisions of the Internal Revenue Code. Our taxable income does not necessarily equal our net

income as calculated in accordance with GAAP, or our Distributable Earnings as described above.

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Cash Flows

The following table provides a breakdown of the net change in our cash and cash equivalents ($ in thousands):

We experienced a net increase in cash and cash equivalents of $120.9 million for the year ended December 31, 2025,

compared to a net decrease of $19.1 million for the year ended December 31, 2024. During the year ended December 31,

2025, we (i) received $6.2 billion from loan principal collections and sales proceeds, (ii) received $1.0 billion of net

proceeds from the issuance of a securitized debt obligation, and (iii) received a net $90.7 million under our secured term

loan borrowings. Also, during the year ended December 31, 2025, we (i) funded $5.6 billion of loans, (ii) repaid

$715.9 million of securitized debt obligations, (iii) paid $322.7 million of dividends on our class A common stock, (iv)

repaid a net $312.2 million of secured debt borrowings and asset-specific financings, (v) invested $207.1 million in

unconsolidated entities, and (vi) paid $109.5 million to repurchase shares of our class A common stock.

Refer to Note 3 to our consolidated financial statements for further discussion of our loan activity. Refer to Notes 7, 8, and

15 to our consolidated financial statements for further discussion of our secured debt, securitized debt obligations, and

equity, respectively.

VI. Other Items

Income Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code for U.S. federal income tax purposes. We

generally must distribute annually at least 90% of our net taxable income, subject to certain adjustments and excluding any

net capital gain, in order for U.S. federal income tax not to apply to our earnings. To the extent that we satisfy this

distribution requirement, but distribute less than 100% of our net taxable income, we will be subject to U.S. federal income

tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual

amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal

tax laws.

Our qualification as a REIT also depends on our ability to meet various other requirements imposed by the Internal

Revenue Code, which relate to organizational structure, diversity of stock ownership, and certain restrictions with regard to

the nature of our assets and the sources of our income. Even if we qualify as a REIT, we may be subject to certain U.S.

federal income and excise taxes and state and local taxes on our income and assets. If we fail to maintain our qualification

as a REIT for any taxable year, we may be subject to material penalties as well as federal, state, and local income tax on

our taxable income at regular corporate rates and we would not be able to qualify as a REIT for the subsequent four full

taxable years. As of December 31, 2025 and December 31, 2024, we were in compliance with all REIT requirements.

Furthermore, our taxable REIT subsidiaries are subject to federal, state, and local income tax on their net taxable income.

Refer to Note 17 to our consolidated financial statements for further discussion of our income taxes.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial

statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us

to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related

disclosure of contingent assets and liabilities. Actual results could differ from these estimates. We evaluated our critical

accounting policies and believe them to be appropriate. The following is a summary of our significant accounting policies

that we believe are the most affected by our judgments, estimates, and assumptions:

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Current Expected Credit Losses

The current expected credit loss, or CECL, reserve required under the FASB Accounting Standards Codification, or ASC,

Topic 326 “Financial Instruments – Credit Losses,” or ASC 326, reflects our current estimate of potential credit losses

related to our portfolio. We estimate our CECL reserves primarily using the Weighted-Average Remaining Maturity, or

WARM method, which has been identified as an acceptable loss-rate method for estimating CECL reserves in the Financial

Accounting Standards Board Staff Q&A Topic 326, No. 1. Estimating the CECL reserve requires judgment, including the

following assumptions:

•Historical loan loss reference data: To estimate the historic loan losses relevant to our portfolio, we have

augmented our historical loan performance with market loan loss data licensed from Trepp LLC. This database

includes commercial mortgage-backed securities, or CMBS, issued since January 1, 1999 through November 30,

2025. Within this database, we focused our historical loss reference calculations on the most relevant subset of

available CMBS data, which we determined based on loan metrics that are most comparable to our loan portfolio,

including asset type, geography, and origination loan-to-value, or LTV. We believe this CMBS data, which

includes month-over-month loan and property performance, is the most relevant, available, and comparable

dataset to our portfolio.

•Expected timing and amount of future loan fundings and repayments: Expected credit losses are estimated over

the contractual term of each loan, adjusted for expected repayments. As part of our quarterly review of our loan

portfolio, we assess the expected repayment date of each loan, which is used to determine the contractual term for

purposes of computing our CECL reserves. Additionally, the expected credit losses over the contractual period of

our loans are subject to the obligation to extend credit through our unfunded loan commitments. The CECL

reserve for unfunded loan commitments is adjusted quarterly, as we consider the expected timing of future

funding obligations over the estimated life of the loan. The considerations in estimating our CECL reserve for

unfunded loan commitments are similar to those used for the related outstanding loans receivable.

•Current credit quality of our portfolio: Our risk rating is our primary credit quality indicator in assessing our

CECL reserves. We perform a quarterly risk review of our portfolio of loans and assign each loan a risk rating

based on a variety of factors, including, without limitation, origination LTV, debt yield, property type, geographic

and local market dynamics, physical condition, cash flow volatility, leasing and tenant profile, loan structure and

exit plan, and project sponsorship.

•Expectations of performance and market conditions: Our CECL reserves are adjusted to reflect our estimation of

the current and future economic conditions that impact the performance of the commercial real estate assets

securing our loans. These estimations include unemployment rates, interest rates, expectations of inflation and/or

recession, and other macroeconomic factors impacting the likelihood and magnitude of potential credit losses for

our loans during their anticipated term. In addition to the CMBS data we have licensed from Trepp LLC, we have

also licensed certain macroeconomic financial forecasts to inform our view of the potential future impact that

broader economic conditions may have on our loan portfolio’s performance. We generally also incorporate

information from other sources, including information and opinions available to our Manager, to further inform

these estimations. This process requires significant judgments about future events that, while based on the

information available to us as of the balance sheet date, are ultimately indeterminate and the actual economic

condition impacting our portfolio could vary significantly from the estimates we made as of December 31, 2025.

•Impairment: impairment is indicated when it is deemed probable that we will not be able to collect all amounts

due to us pursuant to the contractual terms of the loan. Determining that a loan is impaired requires significant

judgment from management and is based on several factors including (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. If a loan is determined to be impaired, we

record the impairment as a component of our CECL reserves by applying the practical expedient for collateral

dependent loans. The CECL reserves are assessed on an individual basis for these loans by comparing the

estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. These

valuations require significant judgments, which include assumptions regarding capitalization rates, discount rates,

leasing, creditworthiness of major tenants, occupancy rates, availability and cost of financing, exit plan, loan

sponsorship, actions of other lenders, and other factors deemed relevant by us. Actual losses, if any, could

ultimately differ materially from these estimates. We only expect to charge off the impairment losses in our

consolidated financial statements prepared in accordance with GAAP if and when such amounts are deemed non-

recoverable. This is generally at the time a loan is repaid or foreclosed, or the underlying collateral assets are

otherwise consolidated. However, non-recoverability may also be concluded if, in our determination, it is nearly

certain that all amounts due will not be collected.

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These assumptions vary from quarter-to-quarter as our loan portfolio changes and market and economic conditions evolve.

The sensitivity of each assumption and its impact on the CECL reserves may change over time and from period to period.

During the year ended December 31, 2025, our CECL reserves decreased by $450.4 million, bringing our total reserves to

$296.1 million as of December 31, 2025. See Notes 2 and 3 to our consolidated financial statements for further discussion

of our CECL reserves.

Revenue Recognition

Interest income from our loans receivable portfolio is recognized over the life of each loan using the effective interest

method and is recorded on the accrual basis. Recognition of fees, premiums, and discounts associated with these

investments is deferred and recorded over the term of the loan as an adjustment to yield. Income accrual is generally

suspended for loans at the earlier of the date at which payments become 90 days past due or when, in our opinion, recovery

of income and principal becomes doubtful. Interest received is then recorded as income or as a reduction in the amortized

cost basis, based on the specific facts and circumstances, until accrual is resumed when the loan becomes contractually

current and performance is demonstrated to be resumed. In addition, for loans we originate, the related origination expenses

are deferred and recognized as a reduction to interest income; however, expenses related to loans we acquire are included

in general and administrative expenses as incurred.

The sources of revenue from our owned real estate assets, which is included in revenue from owned real estate on our

consolidated statements of operations, and the related revenue recognition policies are as follows:

Rental income primarily consists of base rent income arising from tenant leases at our office and multifamily properties.

We determine if an arrangement is a lease at contract inception, which is subject to the provisions of ASC 842. Base rent is

recognized on a straight-line basis over the life of the lease, including any rent steps or abatement provisions. We begin to

recognize revenue upon the acquisition of the related property or when a tenant takes possession of the leased space.

Other operating income primarily consists of income from our hospitality properties and tenant reimbursement income.

Revenue from our hospitality properties consists primarily of room revenue and food and beverage revenue. Room revenue

is recognized when the related room is occupied and other hospitality revenue is recognized when the service is rendered.

Tenant reimbursement income primarily consists of amounts due from tenants for costs related to common area

maintenance, real estate taxes, and other recoverable costs included in lease agreements.

We evaluate the collectibility of receivables related to rental revenue on an individual lease basis and exercise judgment in

assessing collectability considering the length of time a receivable has been outstanding, tenant credit-worthiness, payment

history, available information about the financial condition of the tenant, and current economic trends, among other factors.

Tenant receivables that are deemed uncollectible are recognized as a reduction to rental revenue.

Owned Real Estate

We may 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, resulting in us consolidating the real estate assets as VIEs. These real estate acquisitions

are classified as owned real estate, on our consolidated balance sheet and are initially recognized at fair value on the

acquisition date in accordance with the ASC Topic 805, “Business Combinations,” or ASC 805.

Upon acquisition of owned real estate assets, we assess the fair value of acquired tangible and intangible assets, which may

include land, buildings, tenant improvements, “above-market” and “below-market” leases, acquired in-place leases, other

identified intangible assets and assumed liabilities, as applicable, and allocate the fair value to the acquired assets and

assumed liabilities. We assess and consider fair value based on estimated cash flow projections that utilize discount and/or

capitalization rates that we deem appropriate, as well as other available market information. Estimates of future cash flows

are based on a number of factors, including the historical operating results, known and anticipated trends, and market and

economic conditions. We capitalize acquisition-related costs associated with asset acquisitions.

Real estate assets held for investment, except for land, are depreciated using the straight-line method over the assets’

estimated useful lives of up to 40 years for buildings, 15 years for land improvements, and 10 years for tenant

improvements. Renovations and/or replacements that improve or extend the life of the asset are capitalized and depreciated

over their estimated useful lives. Lease intangibles are amortized over the remaining term of applicable leases on a straight-

line basis. The cost of ordinary repairs and maintenance are expensed as incurred.

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Real estate assets held for investment are assessed for impairment on a quarterly basis. If the depreciated cost basis of the

asset exceeds the undiscounted cash flows over the remaining holding period, the asset is considered for impairment. The

impairment loss is recognized when the carrying value of the real estate assets exceed their fair value. The evaluation of

anticipated future cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental

rates, capital requirements and anticipated holding periods that could differ materially from actual results.

Real estate assets are classified as held for sale in the period when they meet the criteria under ASC Topic 360 “Property,

Plant, and Equipment.” Once a real estate asset is classified as held for sale, depreciation is suspended and the asset is

reported at the lower of its carrying value or fair value less cost to sell. If circumstances arise and we decide not to sell a

real estate asset previously classified as held for sale, the real estate asset is reclassified as held for investment. Upon

reclassification, the real estate asset is measured at the lower of (i) its carrying amount prior to classification as held for

sale, adjusted for depreciation expense that would have been recognized had the real estate been classified as held for

investment, and (ii) its estimated fair value at the time of reclassification.

As of December 31, 2025, we had 12 owned real estate assets that were all classified as held for investment.

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VII. Loan Portfolio Details

The following table provides details of our loan portfolio, on a loan-by-loan basis, as of December 31, 2025 ($ in millions):

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