Good day, ladies and gentlemen and thank you for standing by. Welcome to Blackstone Mortgage Trust 2013 Quarterly Earnings Results Conference Call with Weston Tucker. My name is Marie and I will be your operator for today. At this time, all participants are in a listen-only mode. But later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. But now, I would like to hand the call over to Weston Tucker. Please proceed.

Good morning, and welcome to Blackstone Mortgage Trust’s Fourth Quarter 2013 Conference Call. I am joined today by Steve Plavin, President and CEO; Mike Nash, Executive Chairman; Paul Quinlan, CFO; Doug Armer, Treasurer and Head of Capital Markets; and Tony Marone, Principal Accounting Officer. Last night, we filed our 10-K report and issued a press release with a presentation of our 4Q results, which hopefully you have all had some time to review. I would like to remind everyone that today’s call may include forward-looking statements, which by their nature are uncertain and outside of the company’s control. Actual results may differ materially. For a discussion of some of the risks that could affect the company’s results, please see the Risk Factors section of our Form 10-K. We do not undertake any duty to update forward-looking statements. We will refer to non-GAAP measures on this call. For reconciliations to GAAP measures, you should refer to the press release and to our Form 10-K filing. This audiocast is copyrighted material of Blackstone Mortgage Trust and may not be duplicated without consent. So a quick recap of our results before I turn things over to Steve. We reported core earnings per share of $0.41 for the fourth quarter, up from $0.28 in the third quarter, which was our first full quarter of operations since our recapitalization last May. The increase was driven by continued strong growth in our loan origination portfolio. Last month, we paid a dividend of $0.45 per share with respect to the fourth quarter. If you have any additional questions following today’s call, you can reach out to me or Doug directly after the call. With that, I will now turn the call over to Steve.

Thanks, Weston, and good morning. The fourth quarter capped an exciting and transformative year for BXMT. It’s only been 9 months since our re-launch last May, yet we have established BXMT as a market leading REIT and a floating rate senior mortgage origination business. In our 2013 operations as BXMT, we closed $2.5 billion of loans, raised $1.9 billion of bank debt and completed 2 public market capital raises totaling $832 million. We have ramped up our earnings, paid our first 2 dividends and significantly increased our liquidity and scale and now have an equity market cap of over $1.1 billion. But we are still early in the evolution of BXMT, the market opportunity to grow the business is enormous and we have the capacity in our platform to address it. We are seeing increased transactional activity and strong borrower demand for our floating rate financing. Our loans facilitate our clients' ability to acquire or refinance transitional assets that maybe a renovation or a few weeks away from achieving optimal performance and our execution is customized and value-add, not standardized. Our deal flow underwriting, asset management and capital raising, all greatly benefit from our affiliation with Blackstone, the leading real estate investment platform in the world. The competitive advantages that emanate from this market position run through all aspects of BXMT’s business. We focus our origination efforts on larger loans and markets to better match our debt business to the Blackstone real estate equity business and maximize the synergies. Because of this emphasis on larger assets and markets, at year end 61% of the properties underlying our loans were New York or California. We are also building our presence in Europe and see an expanding opportunity there. This expansion will be greatly facilitated by Blackstone’s strong presence in the region.…

Thank you, Steve. And good morning, everyone. My comments today will largely focus on fourth quarter results and quarter-over-quarter comparisons rather than annual ones, given the May 2013 relaunch of BXMT. BXMT’s financial results in the fourth quarter reflected the continued sharp growth in our loan origination portfolio. Core earnings were $0.41 per share, up 46% versus the third quarter. This was driven by a 37% sequential increase in net interest income to $16 million, as our loan origination portfolio grew by 56%. The nearly $1 billion of fourth quarter originations closed on average about halfway through the quarter providing additional embedded earnings growth moving into 2014. A few statistics on the financial drivers behind core earnings: the weighted average portfolio yield was 5.3% over 1 month LIBOR as of 12/31; and the cost of our credit facilities was 2.6% over 1 month LIBOR; our levered ROEs, assuming full leverage at the investment level, were 12% and are also indexed to LIBOR. Given our floating rate lending and secured financing model, our net income will increase with the rise in short-term interest rates. At year end, a 100 basis point increase in LIBOR would have created incremental net income of $8 million per year. In addition to our loan originations program, we continued to drive positive resolutions in the wind down of our CT Legacy portfolio. The CT Legacy portfolio is not included in core earnings. However, it does generate taxable income and therefore contributes to dividends, essentially supplementing our yield as core earnings continue to ramp. Our focus in the legacy portfolio is less on GAAP earnings, which are volatile, and more on capital events, which will allow us to effectively shift capital from the legacy portfolio to our core business. During the quarter, we experienced 2 such capital…

Thank you. (Operator Instructions) And we have our first question and it comes from the line of Don Fandetti from Citi. Please proceed.

Yes, good morning. Steve 2 quick questions: one, I was wondering if you can talk about the general spread environment if you are seeing any signs of compression? It’s hard to tell just given there is not a tremendous amount of actual loans being originated here, that are larger obviously. And then secondly, can you talk a little bit about Loan 2 in terms of how you got that deal and what some of the risks are and the ability to finance that asset given that it looks like it’s sort of like a higher yielding B note?

Sure, Don. Let me take your first question about spread. You can see during the quarter we essentially maintained our yields that we have established during the period of operations since we have been originating loans in May in the quarter. And it also continued to yield -- I think increased the pace of origination. So we haven’t really seen any spread compression in our business. The business has become more competitive, but also we are seeing a greater flow of opportunities. So I think in general we are seeing more opportunities to lend than we've seen at any point in time since we started the business and do expect us to maintain our spreads at least for the time being given the competitive environment that we see. As it relates to Loan #3, Loan #3 was a junior participation that we acquired in the market. We had a unique access to deal given our special servicing activities and so we saw an opportunity to make this investment that will in a way that wasn’t wildly marketed or available to others. The risk profile of this investment is consistent with the risk profile of the first mortgage loans that we are making and that the LTV and basis of the investment, as well as within the parameters that we are running our business. We didn’t finance this asset in a traditional way, since it is subordinated. We did sell a senior interest in it which acted in some regard as financing for it, but the overall yield of the investment are always retained as consistent with the equity returns we make on our financed first mortgage loans.

Okay, thank you. And our next question comes from the line of Steve DeLaney from JMP Securities. Please proceed.

Thank you. Good morning,, everyone. And congratulation on a strong quarter. The first thing I have is really a housekeeping item, so I apologize for that. But just looking at your book value per share calculation, we can’t get to the $24.25 using the reported shares outstanding of 28.8 million which was, flat versus September 30. We looked at restricted shares and that was about $101. That couldn’t get us there, so could you help me just understand we are using reported common equity of $717.9 million and taking your $24.25 reported book value we are just trying to understand the share count? Thank you.

Yes, Steve, I would point you to Page 58 in the 10-K where we have that full reconciliation. There are, in addition to the numbers you just mentioned, there is the restricted Class A common stock of 700,000 shares, which were the LTIP shares issued during the fourth quarter.

Okay, great. And that helps me. They were issued in the fourth quarter? Because I was trying to reconcile from $24.68 to $24.25 and your excess of the div over the GAAP EPS was $21 of that, but the share count answers that Paul, so thank you very much. And lastly more strategic, I mean, given the $400 million plus capital that we have seen coming in late 4Q and now in January and the run rate Steve described $280 million closed and another $600 million, you seem to be on process to stay within that range of $500 million to $1 billion per quarter. Would it be realistic to think that we are looking at a new target portfolio in the neighborhood of $3.5 billion and that we would possibly get there by middle of 2014? Thanks.

I think that the size of the portfolio will obviously depend upon continuing origination pace that we see and also the timing of any repayments that may come in. Don’t expect to see a steady flow of repayments until later this year and into next year. So I do think that your arithmetic is generally accurate and that we do expect to continue to originate in that $500 million to $1 billion pace and that will get us into the mid-$3 billion at mid-year.

And Steve regarding your comment about prepays was there something you had about $180 million in the fourth quarter, was that anything unusual about that? You are indicating maybe you wouldn’t expect a lot of prepays in the next quarter or 2.

I don’t think -- in 1 case it was expected that we made it. 1 of our loans, it was a portfolio loan and the strategy of the borrower was to sell individual buildings from the portfolio over time and repay us steadily over an extended period. And so that was consistent with our expectation. We had 1 other loan where there was also a portfolio loan, where there was a property release which wasn’t expected fully; but we did ultimately make the loan to the buyer of the assets that were sold out of the portfolio. So we are actually able to maintain the collateral in the loan just in the form of the new loan as opposed to the existing loan that we had.

Okay, thank you. And our next question comes from the line of Jade Rahmani from KBW. Please proceed.

Thanks for taking the question. Just a follow up to Steve’s question, with respect to capital issuance and with the stock trading at a healthy premium, offset against the equity you just raised and your available capacity, can you just talk about how you think about potential capital issuance?

I think that the capital issuance will again depend upon market conditions and our pace of origination and any repayments that we receive that we netted from that. And I think we feel like we have appropriate capital to get us into sort of the general middle of the year. It’s hard to be more specific on that given sort of the uncertainties of the origination market. But we have capital remaining to deploy from the capital that we raised in the fourth quarter and the first quarter, and we have also have remaining credit capacity. So we are good for now, but we will clearly need to access the market at some point during the middle of the year.

Great, I think those comments are helpful. Regarding originations, typically some peers of yours have cited some seasonality in the first quarter. Do you think that the pickup that you have cited in activity is strong enough to likely offset that, or do you think the timing of loan closings with respect to your pipeline could result in seasonality?

That’s a really good question. Typically we do see seasonality in the first quarter; it’s a combination of I think the holiday season and also some industry conferences that take place in early January it seem to push the first quarter closings out. We have had a very strong origination quarter in Q1. I think encouraging, in that it usually is a slower quarter. In terms of the timing of closings I think they will be more sort of back-ended in terms of the quarter than maybe they would be in a typical quarter, but in general the origination activity is very encouraging.

Okay, great. And then the participation interest you sold, which I think shows up in the balance sheet at around $90 million, do you -- is there an effective interest cost that you could disclose?

Sure, Jade. Hey it’s Doug here. There is a 5 handle on that participation, and that’s relative to the all-in yield over 9% in Loan #3 that Steve referred to. And the math there gets you to the ROE in line with the ROEs than our business generally for that loan.

Okay. Thank you. (Operator Instructions) And we do have another question and this comes from the line of Gabe Kim from Wellington Management. Please proceed.

Good morning. Can you just remind me what is a good rate of pre-payment that we should expect, or repayment, on originations?

I think the ultimate repayments will depend upon market activity as the call protection of our loans expires over time. So we do produce information regarding the specific maturities. And the call protection related to those maturities is typically sort of 18 months to 2 years from the origination date of the loans. So we don’t expect to see significant repayments from the loans -- from this initial generation of loans till the fourth quarter of this year and then into next year. And again the pace will depend upon market conditions at that time.

Okay. And then once you pass sort of the 2 years, what’s kind of a -- what sort of repayment assumptions are you -- would be sort of normal?

I think a normal repayment assumption would be that to assume that the generic loan -- the generic loans would repay in sort of a 2 to 3 year window if we have market conditions like those that exist today.

A 2 to 3 year window. Okay, super. Great job. Thank you.

Okay. Thank you. And we have another question and it is from Arren Cyganovich from Evercore. Please proceed.

Thanks. The structured deal that you did in the quarter, do you have a target in the portfolio at all for those types of mezzanine or B note type of loans in your portfolio as it…?

We don’t and I think they’re -- and that’s certainly not the norm I mean we would certainly remain opportunistic at how we originate. And the overriding concern for us is maintaining the risk profile of our investments within what we consider to be traditional senior mortgage risk. We see other opportunities to earn sort of extraordinary rates of interest on things that might not be senior mortgages but are the risk equivalent then we’ll look to add those to the portfolio. But we don’t -- I don’t expect a lot of that business, but certainly nice when we see it.

Okay, thanks. And then the commercial property index has been raising particularly in the major markets to I guess it’s around pre-crisis peak now. What gives you confidence in financing properties now that they’ve kind of gotten back to the peak level of pricing?

In our underwriting, we’re really underwriting what we think is sort of sustainable value, and perhaps value at the end of the business plan of the assets transitional. So as long as we see an environment where those values can be realized then we’re confident in our lending. And remember we’re typically lending at sort of 65% to 75% of value, so we have a lot of room and a lot of equity cushion in our loans for there to be slight deviation to value in this specific individual properties in a market. So I think now given where markets are and the trends in the markets that we see, they’re very favorable for our business.

Great, thanks. And then just lastly just to verify the number that you said, you said you had closed $286 million quarter to-date and what was the amount that was in closing?

The amount in closing is $666 million.

Okay, thank you. And our next question comes from the line of Joel Houck from Wells Fargo. Please proceed.

Good morning. I guess couple strategy questions. One, can you talk about the European strategy as it relates to geography and where you see it going and also where -- I guess potentially how big Europe would get as a size of total portfolio? And then the second strategy question is also around conduit securitization business. Some other companies are heavier in this business. I am just curious as what are your thoughts and how that would fit in the BXMT profile, if at all?

Sure, I want to take your questions first as it relates to Europe. Certainly more opportunistic environment there as the markets are earlier stage of recovery. Our initial focus has been in the UK, I think more specifically London. Our office is based that we are seeing a particularly good deal flow from London. It’s an area that’s an areas of focus for the equity side of Blackstone’s real estate business as well, so it is very synergistic. The initial credit facility that we established to address that opportunity is pound based. So that initially limits us to UK, although we are very far advanced for additional pound and euro denominated credit. I think initially we will -- the activity is going to be in London and then in the UK, but over time have to see us branching out to the rest of Europe. And I think from a percentage of the portfolio standpoint, I think you could grow to be anywhere from 15% to 30% of our portfolio depending upon how things will unfold there and here. As it relates -- as it relates to your conduit securitization question, we have no plans to initiate conduit activities. They are not particularly well suited to a REIT I mean we have to do them in a tax for affiliate. And right now we are remaining singularly focused on our floating rate senior mortgage strategy, which is a balance sheet strategy and not a gain on sale business.

Okay, thank you. And now, ladies and gentlemen, I would like to hand back to Weston Tucker for closing remarks.

Great, thanks everybody for joining the call this morning. And, again, if you have any questions please let us know after the call.

Thank you. Ladies and gentlemen, that concludes the conference call for today. Thank you for joining us. You may now all disconnect. Thank you.