Blackstone Mortgage Trust, Inc. · NYSE:BXMT
Blackstone Mortgage Trust — Capital Trust — Investor Presentation (March 2004)
34 slides from Blackstone Mortgage Trust's investor presentation, Mar 16, 2004
Slide 1: Company Presentation March 2004
Company Presentation March 2004
Slide 2: Disclaimer
Disclaimer Except for historical information contained herein, the statements in this presentation regarding the Company's business, strategy, portfolio management and results of operations are forward-looking statements that are dependent upon certain risks and uncertainties, including those relate
Slide 3: Table of Contents
I. Overview ; II. The Real Estate Mezzanine Market III. CT’s Real Estate Mezzanine Strategy IV. Capital Trust, Inc. TABLE OF CONTENTS
Slide 4: Capital Trust
2 CAPITALT RUST
Slide 5: Capital Trust, Inc.
Capital Trust, Inc. Specialty finance/investment management company focused on structured financial products Founded in 1997 by Sam Zell (Chairman) and John Klopp (CEO) Publicly traded (NYSE: CT) real estate investment trust Unique Business Model Balance Sheet Investor Investment Manager Expandable
Slide 6: Existing Platform
Existing Platform Largest dedicated real estate mezzanine investor in the US Originated over $3.4 billion of mezzanine investments 117 transactions to date Unparalleled track record Over 60% of portfolio realized: 20%+ return Less than 1.0% loss experience on the entire portfolio Fully integrated in
Slide 7: 2003 Initiatives
2003 Initiatives OVERVIEW Elected to be taxed as a REIT Modified investment management venture with Citigroup Completed 1-for-3 reverse stock split Privately placed 1.1 million common shares Restarted balance sheet investment program (senior and small balance mezzanine investments) Raised $425 milli
Slide 8: Business Plan
Business Plan Leverage our unique platform to generate consistent net income growth by increasing balance sheet investments and growing our funds under management. Continue to grow balance sheet assets with senior and small balance (under $15 million) mezzanine investments Continue to sponsor and ma
Slide 9: Share Price
NYSE: CT Share Price High (3/4/04) $25.74 Low (4/03/03) $14.49 Current (3/4/04) $25.74 YTD Daily Volume High 126,100 Average 17,558 TTM Return: 55% Note: (1) Source Bloomberg: assumes reinvestment of dividends. (1) Trailing 12-Month Performance OVERVIEW I - 5 4Q’ 03 Div. 1Q’ 03 Div. 2Q’ 03 Div. 3Q’
Slide 10: The Real Estate Mezzanine Market
The Real Estate Mezzanine Market
Slide 11: A Large and Dynamic Market
A LARGE AND DYNAMIC MARKET THE REAL ESTATE MEZZANINE MARKET II - 1 U.S. Commercial Real Estate Debt: $2.0 Trillion Life Ins. Cos. 13% Banks 42% CMBS 17% Agency & Govt Pools 10% Savings & Loans 8% Other 10%
Slide 12: Growth of Securitization
GROWTH OF SECURITIZATION II - 2 THE REAL ESTATE MEZZANINE MARKET Historical US CMBS Issuance 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0 500.0 US Conduit US Other Cumulative US CMBS
Slide 13: Traditional vs Current Capital Structure
Senior Equity Senior Equity Traditional Capital Structure % Capital 75% 25% % Capital 60% 20% 20% Current Capital Structure II - 3 Mezzanine THE REAL ESTATE MEZZANINE MARKET
Slide 14: Relative Value
Senior Equity Mezzanine % Capital 60% 20% 20% Gross Unleveraged Return L + 25 to 150 bps L + 250 to 1000 bps 5 – 15% Credit AAA to BBB- BB+ to UR RELATIVE VALUE II - 4 THE REAL ESTATE MEZZANINE MARKET
Slide 15: Risk and Structure
CMBS Rake Bond / B Note Preferred Equity Common Equity First Mortgage Mezzanine Loan Pledge Loan Partnership Interest Single Loan Risk Pooled Risk RISK AND STRUCTURE II - 5 THE REAL ESTATE MEZZANINE MARKET
Slide 16: CT's Real Estate Mezzanine Strategy
CT’s Real Estate Mezzanine Strategy
Slide 17: CT Targets
CMBS Rake Bond / B Note Preferred Equity Common Equity First Mortgage Mezzanine Loan Pledge Loan Partnership Interest Single Loan Risk Pooled Risk CT TARGETS III - 1 CT Balance Sheet Transactions CT Mezzanine Partners Transactions CT’s REAL ESTATE MEZZANINE STRATEGY
Slide 18: Mezzanine Loan Characteristics
III - 2 Capital Trust CT’s REAL ESTATE MEZZANINE STRATEGY Mezzanine Loan Characteristics: Fund III B Notes/Senior Mezzanine Mezzanine Mezzanine Size: $5-50 million $5-15 million $15-100 million Term: 2-10 years 2-10 years 3-5 years DSC: > 1.1x > 1.1x > 1.1x LTV: 50-70% 60-85% 60-85% Asset Types: All
Slide 19: Exit Strategy / Risk Profile
Exit Strategy RISK PROFILE III - 3 CT’s REAL ESTATE MEZZANINE STRATEGY Property Type Core vs. Special Use Market Type Primary vs. Secondary vs. Tertiary Size/Quality Large Loan vs. Small Loan Loan to Value Subordinated Debt vs. Quasi Equity Duration Short (1 to 5 years) vs. Long (7 to 10 years) Inde
Slide 20: Capital Trust's Mezzanine Investments Emphasize
Capital Trust’s Mezzanine Investments Emphasize: Large, high-quality assets In-place cash flow coverage Significant borrower equity III - 4 CT’s REAL ESTATE MEZZANINE STRATEGY
Slide 21: CT's Strategy
III - 5 CT’s REAL ESTATE MEZZANINE STRATEGY
Slide 22: Senior Debt Provided by Various Lenders
Senior Debt Provided by Goldman Sachs Cadillac Fairview Portfolio Nationwide $320 Million Senior Debt Provided by UBS F/G/S/R Portfolio Nationwide $100 Million Senior Debt Provided by Citigroup Pecanland Mall Monroe, LA $50 Million Senior Debt Provided by CDC Capital Westgate Mall Amarillo, TX $62 M
Slide 23: Capital Trust's Competitive Advantages
Capital Trust’s Competitive Advantages: Investment Origination Broad Network Established Relationships Quick Turnaround / Certainty of Closing Creativity and Flexibility Transaction Execution Underwriting Experience Structuring Expertise Efficient Approval Process Capital Access Equity Sources Debt
Slide 24: Capital Trust's Investment Process
Origination Asset Mgmt. Approval Underwriting III - 8 Originators Due Diligence Capital Trust’s Investment Process: CT’s REAL ESTATE MEZZANINE STRATEGY Senior Lenders Borrowers Brokers Deal Team Business Credit Team Finance/Capital Markets Team Legal Structure Investment Committee Board of Directors
Slide 25: Capital Trust, Inc. Team and Board
COO, Stephen D. Plavin CFO, Brian H. Oswald Jeremy FitzGerald, MD Peter Ginsberg, MD Marc Bosnyak, Director Jeffrey Wiseman, VP Ian Carlos, Associate Ryan Totaro, Associate Corinne Packard, Analyst Mitchell Rosen, Analyst Thomas Ruffing, Director Jonathan Goldberg, Asset Manager Daniel Clasen, Asset
Slide 26: Capital Trust, Inc.
Capital Trust, Inc.
Slide 27: Corporate Structure
CT Mezzanine Partners III, Inc. (1) Assets $1,275 Liabilities $850 Equity $425 Capital Trust, Inc. 12/31/03 Assets $397 Liabilities $212 CTP $89 Equity $97 CT Investment Management Co., LLC (TRS) (100% owned) (Management Contracts) CT Mezzanine Partners II LP Assets $514 Liabilities $342 Equity $171
Slide 28: Capital Trust, Inc. Assets
IV - 2 CAPITAL TRUST, INC. Assets ($000s) FHLMC Freddie Gold 6.5s MBS Face Value: $19,291 Coupon 6.5% GAAP Yield: 6.07% Stated Maturity: 2031 WAL: 2.4 years CMBS Issues/Bonds: 12/18 Face Value: $215,512 Fixed/Variable: 98% / 2% GAAP Yield: 11.63% WAL: 7.8 years Average Rating: BB Fund Investments $V
Slide 29: Liabilities and Equity
Liabilities and Equity ($000s) IV - 3 CAPITAL TRUST, INC. Secured Debt Over $400 million of committed credit facilities Multiple providers (Morgan Stanley, Goldman Sachs, Bear Stearns, Citigroup, etc.) Coupon: LIBOR flat to LIBOR + 225 bps GAAP Cost of Funds: 3.25% Convertible Trust Preferred (CTP)
Slide 30: Risk Management Principles
Risk Management Principles: Build portfolios of investments diversified by asset category, property type and geographic market Manage a matched book by controlling asset/liability mix (index & duration) and by using derivative instruments to hedge interest rate exposure Prudently employ leverage in
Slide 31: Investment Management
Investment Management $1.35 billion of third party equity raised in three funds to date CT Mezzanine Partners I, LLC March 2000 – March 2001 $330 million of investments Remaining assets purchased by Capital Trust in January 2003 CT Mezzanine Partners II LP April 2001 – April 2003 $1.2 billion of inv
Slide 32: Investment Management Fees
CT Mezzanine Partners III, Inc. (1) Assets $1,275 Liabilities $850 Equity $425 CT Investment Management Co., LLC (TRS) CT Mezzanine Partners II LP Assets $514 Liabilities $342 Equity $171 IV - 6 CAPITAL TRUST, INC. Investment Management Note: (1) Represents full equity commitments drawn and invested
Slide 33: Income Statement
Portfolio Net Interest Margin Income Income Interest Expense Net Interest Margin Other Revenue Fund Base Management Fees Fund Incentive Comp. Fund Investment Income Advisory Fees Other Subtotal Other Expenses G&A Other Subtotal Income Taxes Convertible Trust Preferred Net Income Net Income per share
Slide 34: Conclusion
CONCLUSION Dominant franchise in an attractive/growing market niche Organic growth through: Balance sheet investments Net interest margin Assets under management Base management fees Incentive management fees Scalable/expandable platform Other real estate strategies Specialty finance/structured prod