Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of the Registrant’s outstanding shares of class A common stock, par value $0.01 per share, as of ~~July 22,~~October 21, 2014 was ~~48,479,505.~~57,679,508.


	June 30,			December 31,			September 30,			December 31,
	2014			2013			2014			2013
Assets
Cash and cash equivalents	$	120,456		$	52,342		$	63,343		$	52,342
Restricted cash		11,392			10,096			10,855			10,096
Loans receivable, net		3,488,179			2,047,223			3,906,226			2,047,223
Equity investments in unconsolidated subsidiaries		14,038			22,480			14,990			22,480
Accrued interest receivable, prepaid expenses, and other assets		120,704			80,639			103,059			80,639

Total assets	$	3,754,769		$	2,212,780		$	4,098,473		$	2,212,780

Liabilities and equity
Accounts payable, accrued expenses, and other liabilities	$	71,345		$	97,153		$	83,011		$	97,153
Repurchase obligations		1,779,650			1,109,353
Revolving repurchase facilities								1,669,406			863,622
Asset-specific repurchase agreements								226,961			245,731
Loan participations sold								447,977			90,000
Convertible notes, net		160,671			159,524			161,259			159,524
Participations sold		461,078			90,000

Total liabilities		2,472,744			1,456,030			2,588,614			1,456,030

Equity
Class A common stock, $0.01 par value, 100,000 shares authorized, 47,935 and 28,802 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively		479			288
Restricted class A common stock, $0.01 par value, 544 and 700 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively		5			7
Class A common stock, $0.01 par value, 100,000 shares authorized, 57,194 and 28,802 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively								572			288
Restricted class A common stock, $0.01 par value, 486 and 700 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively								5			7
Additional paid-in capital		1,767,954			1,252,986			2,022,093			1,252,986
Accumulated other comprehensive income		2,728			798
Accumulated other comprehensive (loss) income								(6,205	)		798
Accumulated deficit		(531,858	)		(536,170	)		(538,726	)		(536,170	)

Total Blackstone Mortgage Trust, Inc. stockholders’ equity		1,239,308			717,909			1,477,739			717,909
Non-controlling interests		42,717			38,841			32,120			38,841

Total equity		1,282,025			756,750			1,509,859			756,750

Total liabilities and equity	$	3,754,769		$	2,212,780		$	4,098,473		$	2,212,780


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2014			2013			2014			2013			2014			2013			2014			2013
Income from loans and other investments
Interest and related income	$	42,466		$	6,017		$	76,122		$	7,473		$	50,386		$	18,853		$	126,507		$	26,327
Less: Interest and related expenses		15,720			1,306			27,794			2,083			19,903			4,407			47,697			6,492

Income from loans and other investments, net		26,746			4,711			48,328			5,390			30,483			14,446			78,810			19,835
Other expenses
Management fees		4,410			920			7,807			983
Management and incentive fees														5,412			2,433			13,219			3,416
General and administrative expenses		15,356			2,507			18,554			4,482			3,368			1,615			21,920			6,096

Total other expenses		19,766			3,427			26,361			5,465			8,780			4,048			35,139			9,512
Valuation allowance on loans held-for-sale		—			2,000			—			1,800			—			(600	)		—			1,200
Gain on investments at fair value		7,163			4,000			5,824			4,000			1,780			464			7,604			4,464
Income from equity investments in unconsolidated subsidiaries		24,294			—			24,294			—			—			—			24,294			—
Gain on extinguishment of debt		—			38			—			38			—			—			—			38

Income before income taxes		38,437			7,322			52,085			5,763			23,483			10,262			75,569			16,025
Income tax (benefit) provision		(2	)		554			530			593			(118	)		(264	)		412			329

Net income		38,439			6,768			51,555			5,170			23,601			10,526			75,157			15,696
Net income attributable to non-controlling interests		(4,973	)		(4,020	)		(5,024	)		(5,537	)		(1,577	)		(2,206	)		(6,602	)		(7,743	)

Net income (loss) attributable to Blackstone Mortgage Trust, Inc.	$	33,466		$	2,748		$	46,531		$	(367	)
Net income attributable to Blackstone Mortgage Trust, Inc.													$	22,024		$	8,320		$	68,555		$	7,953

Net income (loss) per share of common stock
Basic	$	0.70		$	0.22		$	1.08		$	(0.05	)
Net income per share of common stock, basic and diluted													$	0.45		$	0.29		$	1.52		$	0.53

Diluted	$	0.70		$	0.22		$	1.08		$	(0.05	)

Weighted-average shares of common stock outstanding
Basic		47,977,813			12,401,274			43,000,242			7,734,774

Diluted		47,977,813			12,401,274			43,000,242			7,734,774
Weighted-average shares of common stock outstanding, basic and diluted														49,211,205			28,894,515			45,093,314			14,865,530

Dividends declared per share of common stock	$	0.48		$	—		$	0.96		$	—		$	0.50		$	0.27		$	1.46		$	0.27


	Blackstone Mortgage Trust, Inc.																						Blackstone Mortgage Trust, Inc.
	Class A			Restricted			Additional		Accumulated Other														Class A			Restricted			Additional		Accumulated Other
	Common			Class A			Paid-In		Comprehensive		Accumulated						Non-Controlling						Common			Class A			Paid-In		Comprehensive			Accumulated						Non-Controlling			Total
	Stock			Common Stock			Capital		Income		Deficit			Total			Interests			Total			Stock			Common Stock			Capital		Income (loss)			Deficit			Equity			Interests			Equity
Balance at December 31, 2012	$	293		$	—		$	609,002	$	—	$	(535,851	)	$	73,444		$	80,009		$	153,453		$	293		$	—		$	609,002	$	—		$	(535,851	)	$	73,444		$	80,009		$	153,453
Reverse stock split		(263	)		—			263		—		—			—			—			—			(263	)		—			263		—			—			—			—			—
Shares of class A common stock issued		258			—			633,552		—		—			633,810			—			633,810			258			—			633,552		—			—			633,810			—			633,810
Deferred directors’ compensation		—			—			75		—		—			75			—			75			—			—			169		—			—			169			—			169
Net (loss) income		—			—			—		—		(367	)		(367	)		5,537			5,170
Net income																								—			—			—		—			7,953			7,953			7,743			15,696
Consolidation of subsidiary		—			—			—		—		5,727			5,727			6,235			11,962			—			—			—		—			5,727			5,727			6,235			11,962
Contributions from non-controlling interests		—			—			—		—		—			—			15,000			15,000			—			—			—		—			—			—			15,000			15,000
Dividends declared on common stock																								—			—			—		—			(7,776	)		(7,776	)		—			(7,776	)
Purchase of and distributions to non-controlling interests		—			—			—		—		—			—			(17,803	)		(17,803	)		—			—			—		—			—			—			(18,772	)		(18,772	)

Balance at June 30, 2013	$	288		$	—		$	1,242,892	$	—	$	(530,491	)	$	712,689		$	88,978		$	801,667
Balance at September 30, 2013																							$	288		$	—		$	1,242,986	$	—		$	(529,947	)	$	713,327		$	90,215		$	803,542

Balance at December 31, 2013	$	288		$	7		$	1,252,986	$	798	$	(536,170	)	$	717,909		$	38,841		$	756,750		$	288		$	7		$	1,252,986	$	798		$	(536,170	)	$	717,909		$	38,841		$	756,750
Shares of class A common stock issued		191			—			510,654		—		—			510,845			—			510,845			284			—			763,123		—			—			763,407			—			763,407
Restricted class A common stock earned		—			(2	)		4,029		—		—			4,027			—			4,027			—			(2	)		5,554		—			—			5,552			—			5,552
Dividends reinvested		—			—			97		—		(97	)		—			—			—			—			—			149		—			(149	)		—			—			—
Deferred directors’ compensation		—			—			188		—		—			188			—			188			—			—			281		—			—			281			—			281
Other comprehensive income		—			—			—		1,930		—			1,930			—			1,930
Other comprehensive loss																								—			—			—		(7,003	)		—			(7,003	)		—			(7,003	)
Net income		—			—			—		—		46,531			46,531			5,024			51,555			—			—			—		—			68,555			68,555			6,602			75,157
Dividends declared on common stock		—			—			—		—		(42,122	)		(42,122	)		—			(42,122	)		—			—			—		—			(70,962	)		(70,962	)		—			(70,962	)
Distributions to non-controlling interests		—			—			—		—		—			—			(1,148	)		(1,148	)		—			—			—		—			—			—			(13,323	)		(13,323	)

Balance at June 30, 2014	$	479		$	5		$	1,767,954	$	2,728	$	(531,858	)	$	1,239,308		$	42,717		$	1,282,025
Balance at September 30, 2014																							$	572		$	5		$	2,022,093	$	(6,205	)	$	(538,726	)	$	1,477,739		$	32,120		$	1,509,859


	Six Months Ended June 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Cash flows from operating activities
Net income	$	51,555		$	5,170		$	75,157		$	15,696
Adjustments to reconcile net income to net cash provided by operating activities
Valuation allowance on loans held-for-sale		—			(1,800	)		—			(1,200	)
Gain on investments at fair value		(5,824	)		(4,000	)		(7,604	)		(4,464	)
Income from equity investments in unconsolidated subsidiaries		(24,294	)		—			(24,294	)		—
Gain on extinguishment of debt		—			(38	)		—			(38	)
Non-cash compensation expense		4,769			1,586			6,824			2,138
Distributions of income from unconsolidated subsidiaries		14,125			—			14,125			—
Amortization of deferred interest on loans		(7,702	)		(434	)		(12,763	)		(3,265	)
Amortization of deferred financing costs and premiums/discount on debt obligations		4,103			401			6,842			1,381
Changes in assets and liabilities, net
Accrued interest receivable, prepaid expenses, and other assets		(5,236	)		2,205			(8,184	)		1,182
Accounts payable, accrued expenses, and other liabilities		2,513			1,293			7,357			3,015

Net cash provided by operating activities		34,009			4,383			57,460			14,445

Cash flows from investing activities
Originations and fundings of loans receivable		(1,740,977	)		(756,638	)		(2,297,545	)		(1,385,729	)
Origination and exit fees received on loans receivable		21,751			4,219			28,015			9,036
Principal collections and proceeds from the sale of loans receivable and other assets		271,884			96,895			403,189			239,631
Distributions from equity investments								—			3,518
Increase in restricted cash		(1,296	)		(7,726	)		(759	)		(62,150	)

Net cash used in investing activities		(1,448,638	)		(663,250	)		(1,867,100	)		(1,195,694	)

Cash flows from financing activities
Borrowings under repurchase obligations		1,835,136			216,464
Repayments under repurchase obligations		(1,167,507	)		(71,439	)
Borrowings under revolving repurchase obligations								2,348,197			580,781
Repayments under revolving repurchase obligations								(1,537,138	)		(261,678	)
Borrowings under asset-specific repurchase agreements								163,088			310,827
Repayments under asset-specific repurchase agreements								(181,858	)		(7,104	)
Repayment of other liabilities		(20,794	)		(64,674	)		(20,794	)		(64,943	)
Proceeds from sales of loan participations		368,850			—			368,850			—
Payment of deferred financing costs		(10,510	)		(2,175	)		(12,780	)		(5,744	)
Settlement of interest rate swaps								—			(6,123	)
Contributions from non-controlling interests		—			15,000			—			15,000
Purchase of and distributions to non-controlling interests		(1,148	)		(17,672	)		(13,323	)		(18,717	)
Settlement of interest rate swaps		—			(6,123	)
Proceeds from issuance of class A common stock		510,845			633,810			763,407			633,810
Dividends paid on class A common stock		(32,129	)		—			(55,399	)		—

Net cash provided by financing activities		1,482,743			703,191			1,822,250			1,176,109

Net increase in cash and cash equivalents		68,114			44,324			12,610			(5,140	)
Cash and cash equivalents at beginning of period		52,342			15,423			52,342			15,423
Effects of currency translation on cash and cash equivalents								(1,609	)		—

Cash and cash equivalents at end of period	$	120,456		$	59,747		$	63,343		$	10,283

Supplemental disclosure of cash flows information
Payments of interest	$	(21,522	)	$	(1,434	)	$	(35,977	)	$	(4,801	)

Payments of income taxes	$	(1,159	)	$	(410	)	$	(1,398	)	$	(218	)

Supplemental disclosure of non-cash investing and financing activities
Dividends declared, not paid	$	23,322		$	—		$	28,892		$	—

Participations sold							$	368,850		$	—

Consolidation of subsidiaries	$	—		$	(38,913	)	$	—		$	(38,913	)

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.

Blackstone Mortgage Trust is a real estate finance company that primarily originates and purchases senior loans collateralized by properties in ~~the United States~~North America and Europe. We are externally managed by BXMT Advisors L.L.C., or our Manager, a subsidiary of The Blackstone Group L.P., 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 are headquartered in New York City.

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 our exemption from registration under the Investment Company Act of 1940, as amended, or the Investment Company Act. We are organized as a holding company and conduct our business primarily through our various subsidiaries. Our business is organized into two operating segments: the Loan Origination segment and the CT Legacy Portfolio segment.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The consolidated financial statements, including the notes, are unaudited and exclude some of the disclosures required in audited financial statements. Management believes it has made all necessary adjustments, consisting of only normal recurring items, so that the consolidated financial statements are presented fairly and that estimates made in preparing its consolidated financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and the related management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the Securities and Exchange Commission.

The accompanying consolidated financial statements have been prepared in accordance with GAAP and include, on a consolidated basis, our accounts, the accounts of our wholly-owned subsidiaries, majority-owned subsidiaries, and variable interest entities, or VIEs, of which we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Certain of the assets and credit of our consolidated subsidiaries are not available to satisfy the debt or other obligations of us, our affiliates, or other entities.

Our subsidiary, CT Legacy Partners, LLC, or CT Legacy Partners, accounts for its operations in accordance with industry-specific GAAP accounting guidance for investment companies, pursuant to which it reports its investments at fair value. We have retained this accounting treatment in consolidation and, accordingly, report the loans and other investments of CT Legacy Partners at fair value on our consolidated balance sheets.

Certain reclassifications have been made in the presentation of the prior period consolidated financial statements to conform to the current presentation including reclassifying loans receivable, at fair value, into accrued interest receivable, prepaid expenses, and other assets and reclassifying securitized debt obligations into accounts payable, accrued expenses, and other liabilities.

We consolidate all entities that we control through either majority ownership or voting rights. In addition, we consolidate all VIEs of which we are considered the primarily beneficiary. VIEs are defined as entities in which equity investors (i) do not have the characteristics of a controlling financial interest and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The entity that consolidates a VIE is known as its primary beneficiary and is generally the entity with (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE.

Certain assets of consolidated VIEs can only be used to satisfy the obligations of those VIEs. The liabilities of consolidated VIEs are non-recourse to us. As of ~~June~~September 30, 2014, our consolidated balance sheet included $28.9 million of other assets, and ~~$19.6~~$20.0 million of other liabilities that were attributable to consolidated VIEs. As of December 31, 2013, our consolidated balance sheet included $49.8 million of other assets, and $40.2 million of other liabilities, ~~all of which~~that were attributable to consolidated VIEs. As of both ~~June~~September 30, 2014 and December 31, 2013, all assets and liabilities of consolidated VIEs were part of our CT Legacy Portfolio segment.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may ultimately differ from those estimates.

Interest income from our loans receivable is recognized over the life of each investment using the effective interest method and is recorded on the accrual basis. Recognition of fees, premiums, discounts, and direct costs associated with these investments is deferred until the loan is advanced and is then 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 the opinion of our Manager, recovery of income and principal becomes doubtful. Income is then recorded on the basis of cash received until accrual is resumed when the loan becomes contractually current and performance is demonstrated to be resumed.

Cash and cash equivalents represent cash held in banks, cash on hand, and liquid investments with original maturities of three months or less. We may have bank balances in excess of federally insured amounts; however, we deposit our cash and cash equivalents with high credit-quality institutions to minimize credit risk exposure. We have not experienced, and do not expect, any losses on our cash or cash equivalents.

We classify the cash balances held by CT Legacy Partners as restricted because, while these cash balances are available for use by CT Legacy Partners for its operations, they cannot be used by us until our allocable share is distributed from CT Legacy Partners and cannot be commingled with any of our unrestricted cash balances.

We ~~purchase~~originate and ~~originate~~purchase commercial real estate debt and related instruments generally to be held as long-term investments at amortized cost. We are required to periodically evaluate each of these loans for possible impairment. Impairment is indicated when it is deemed probable that we will not be able to collect all amounts due ~~according~~to us pursuant to the contractual terms of the loan. If a loan is determined to be impaired, we write down the loan through a charge to the provision for loan losses. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral to the book value of the respective loan. These valuations require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders, and other factors deemed necessary by our Manager. Actual losses, if any, could ultimately differ from these estimates.

Our Manager performs a quarterly review of our portfolio of loans. In conjunction with this review, our Manager assesses the performance of each loan, and assigns a risk rating based on several factors, including risk of loss, loan-to-value ratio, or LTV, collateral performance, structure, exit plan, and sponsorship.

Loans are rated “1” through “8,” from less risk to greater risk, which ratings are defined as follows:

In certain cases, we may classify loans as held-for-sale based upon the specific facts and circumstances of particular loans, including known or expected transactions. Loans held-for-sale are carried at the lower of their amortized cost basis or fair value, less costs to sell. A reduction in the fair value of loans held-for-sale is recorded as a charge to our consolidated statements of operations as a valuation allowance on loans held-for-sale.

Participations sold represent senior interests in certain loans that we sold. We present these participations sold as both assets and non-recourse liabilities because these arrangements do not qualify as sales under GAAP. Generally, participations sold are recorded as assets and liabilities in equal amounts on our consolidated balance sheets, and an equivalent amount of interest income and interest expense is recorded on our consolidated statements of operations.

Our carried interest in CT Opportunity Partners I, LP, or CTOPI, is accounted for using the equity method. CTOPI’s assets and liabilities are not consolidated into our financial statements due to our determination that (i) it is not a VIE and (ii) the other investors in CTOPI have sufficient rights to preclude consolidation by us. As such, we report our allocable percentage of the net assets of CTOPI on our consolidated balance sheets. The recognition of income from CTOPI is generally deferred until cash is collected or appropriate contingencies have been eliminated.

The deferred financing costs that are included in accrued interest receivable, prepaid expenses, and other assets on our consolidated balance sheets include issuance and other costs related to our debt obligations. These costs are amortized as interest expense using the effective interest method over the life of the related obligations.

We record investments financed with repurchase ~~obligations~~agreements as separate assets and the related borrowings under any repurchase agreements are recorded as separate liabilities on our consolidated balance sheets. Interest income earned on the investments and interest expense incurred on the repurchase ~~obligations~~agreements are reported separately on our consolidated statements of operations.

Loan participations sold represent senior interests in certain loans that we sold, however we present these loan participations sold as liabilities because these arrangements do not qualify as sales under GAAP. These participations are non-recourse and remain on our consolidated balance sheet until the loan is repaid. The gross presentation of loan participations sold does not impact stockholders’ equity or net income.

The “Debt with Conversion and Other Options” Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or Codification, requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The initial proceeds from the sale of convertible notes are allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonconvertible debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the notes as of the date of issuance. We measured the fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. The equity component of the convertible notes is reflected within additional paid-in capital on our consolidated balance sheet, and the resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding (the maturity date) as additional non-cash interest expense. The additional non-cash interest expense attributable to the convertible notes will increase in subsequent periods through the maturity date as the notes accrete to their par value over the same period.

The “Fair Value Measurements and Disclosures” Topic of the Codification defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements under GAAP. Specifically, this guidance defines fair value based on exit price, or the price that would be received upon the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date.

The “Fair Value Measurement and Disclosures” Topic of the Codification also establishes a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring financial instruments. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument, and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination, as follows:

The value of each asset recorded at fair value using Level 3 inputs is determined by an internal committee composed of members of senior management of our Manager, including our Chief Executive Officer, Chief Financial Officer, and other senior officers.

Certain of our other assets are recorded at fair value either (i) on a recurring basis, as of each quarter-end, or (ii) on a nonrecurring basis, as a result of impairment or other events. Our assets that are recorded at fair value are discussed further in Note 12. We generally value our assets recorded at fair value by either (i) discounting expected cash flows based on assumptions regarding the collection of principal and interest and estimated market rates, or (ii) obtaining

assessments from third-party dealers. For collateral dependent loans that are identified as impaired, we measure impairment by comparing our Manager’s estimation of fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. These valuations may require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders, and other factors deemed necessary by our Manager.

We are also required by GAAP to disclose fair value information about financial instruments, which are not otherwise reported at fair value in our consolidated balance sheet, to the extent it is practicable to estimate a fair value for those instruments. These disclosure requirements exclude certain financial instruments and all non-financial instruments.

The following methods and assumptions ~~were~~are used to estimate the fair value of each class of financial instruments, for which it is practicable to estimate that value:

Our financial results generally do not reflect provisions for current or deferred income taxes on our REIT taxable income. We believe that we operate in a manner that will continue to allow us to be taxed as a REIT and, as a result, we generally do not expect to pay substantial corporate level taxes other than those payable by our taxable REIT subsidiaries. If we were to fail to meet these requirements, we may be subject to federal, state, and local income tax on current and past income, and penalties. Refer to Note 10 for additional information.

Our stock-based compensation consists of awards issued to our Manager and certain of its employees that vest over the life of the ~~awards.~~awards as well as deferred stock units issued to certain members of our Board of Directors. Stock-based compensation expense is recognized for these awards in net income on a variable basis over the applicable vesting period of the awards, based on the value of our class A common stock. Refer to Note 11 for additional information.

Basic earnings per share, or Basic EPS, is computed in accordance with the two-class method and is based on the net earnings allocable to our class A common stock, restricted class A common stock, and deferred stock units, divided by the weighted-average number of shares of class A common stock, restricted class A common stock, and deferred stock units outstanding during the period. Our restricted class A common stock is considered a participating security, as defined by GAAP, and has been included in our Basic EPS under the two-class method as these restricted shares have the same rights as our other shares of class A common stock, including participating in any gains or losses.

Diluted earnings per share, or Diluted EPS, is determined using the treasury stock method, and is based on the net earnings allocable to our class A common stock, restricted class A common stock, and deferred stock units, divided by the weighted-average number of shares of class A common stock, restricted class A common stock, and deferred stock units. Refer to Note 8 for additional discussion of earnings per share.

In the normal course of business, we enter into transactions not denominated in United States, or U.S., dollars. Foreign exchange gains and losses arising on such transactions are recorded as a gain or loss in our consolidated statements of operations. In addition, we consolidate entities that have a non-U.S. dollar functional currency. Non-U.S. dollar denominated assets and liabilities are translated to U.S. dollars at the exchange rate prevailing at the reporting date and income, expenses, gains, and losses are translated at the prevailing exchange rate on the dates that they were recorded. Cumulative translation adjustments arising from the translation of non-U.S. dollar denominated subsidiaries are recorded in other comprehensive income.

We operate our real estate finance business through a Loan Origination segment and a CT Legacy Portfolio segment. The Loan Origination segment includes our activities associated with the origination and acquisition of mortgage loans, the capitalization of our loan portfolio, and the costs associated with operating our business generally. The CT Legacy Portfolio segment includes our activities specifically related to CT Legacy Partners, CT CDO I, a securitization vehicle formed in 2004, and our equity investment in CTOPI. Our Manager makes operating decisions and assesses the performance of each of our business segments based on financial and operating data and metrics generated from our internal information systems.

In June 2013, the FASB issued ASU 2013-08, “Financial Services-Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements,” or ASU 2013-08. ASU 2013-08 amends the criteria for qualification as an investment company under Topic 946 of the FASB Accounting Standards Codification, or Topic 946, and requires additional disclosure by investment companies. ASU 2013-08 is effective for the first interim or annual period beginning after December 15, 2013, and is to be applied prospectively. We currently consolidate CT Legacy Partners, which accounts for its operations as an investment company under Topic 946. ~~The~~Our adoption of ASU 2013-08 on January 1, 2014 did not impact CT Legacy Partners’ status as an investment company. Further, because ASU 2013-08 specifically excluded REITs from its scope, it did not otherwise impact our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” or ASU 2014-09. ASU 2014-09 broadly amends the accounting guidance for revenue recognition. ASU 2013-08 is effective for the first interim or annual period beginning after December 15, 2016, and is to be applied prospectively. We do not anticipate that the adoption of ASU 2014-09 will have a material impact on our consolidated financial statements.

In June 2014, the FASB issued ASU 2014-11, “Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures,” or ASU 2014-11. ASU 2014-11 amends the accounting guidance for repurchase-to-maturity transactions and repurchase agreements executed as repurchase financings, and requires additional disclosure about certain transactions by the transferor. ASU 2014-11 is effective for certain transactions that qualify for sales treatment for the first interim or annual period beginning after December 15, 2014. The new disclosure requirements for repurchase agreements, securities lending transactions and repurchase-to-maturity transactions that qualify for secured borrowing treatment is effective for annual periods beginning after December 15, 2014 and for interim periods beginning after March 15, ~~2014.~~2015. We currently record our repurchase arrangements as secured borrowings and do not anticipate that ASU 2014-11 will have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” or ASU 2014-15. ASU 2014-15 introduces an explicit requirement for management to assess and provide certain disclosures if there is substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 is effective for the annual period ending after December 15, 2016. We do not anticipate that the adoption of ASU 2014-15 will have a material impact on our consolidated financial statements.

As discussed in Note 2, we deposit our cash and cash equivalents, including restricted cash, with high credit-quality institutions to minimize credit risk exposure.

The following table provides details of our cash and cash equivalents, including restricted cash balances ($ in thousands):


Asset Category	Depository	Credit Rating⁽¹⁾	June 30, 2014		December 31, 2013		Depository	Credit Rating⁽¹⁾	September 30, 2014	December 31, 2013
Cash and cash equivalents	Bank of America	A-1	$	120,456	$	52,342	Bank of America	A-1	$63,343	$52,342
Restricted cash	Bank of America	A-1		11,392		10,096	Bank of America	A-1	10,855	10,096

			$	131,848	$	62,438			$74,198	$62,438

The following table details overall statistics for our loans receivable portfolio ($ in thousands):


	Principal			Deferred Fees and			Net Book
	Balance			Other Items⁽¹⁾			Value			Principal Balance			Deferred Fees and Other Items			Net Book Value
December 31, 2013	$	2,076,411		$	(29,188	)	$	2,047,223		$	2,077,227		$	(30,004	)	$	2,047,223
Loan fundings		1,740,977			—			1,740,977			2,297,545			—			2,297,545
Loan repayments and sales		(265,809	)		—			(265,809	)		(374,946	)		—			(374,946	)
Unrealized loss on foreign currency translation											(21,653	)		309			(21,344	)
Deferred origination fees and expenses		—			(21,751	)		(21,751	)		—			(28,015	)		(28,015	)
Amortization of deferred fees and expenses		—			7,702			7,702			—			12,763			12,763
Unrealized gain on foreign currency translation		—			6,837			6,837
Realized loan losses		(10,547	)		10,547			—
Realized loan losses⁽¹⁾											(10,547	)		10,547			—
Reclassification to other assets		(27,000	)		—			(27,000	)		(27,000	)		—			(27,000	)

June 30, 2014	$	3,514,032		$	(25,853	)	$	3,488,179
September 30, 2014										$	3,940,626		$	(34,400	)	$	3,906,226

As of June 30, 2014, we had unfunded commitments of $407.3 million related to 28 loans receivable, which amounts will primarily be funded to finance property improvements or lease-related expenditures by the borrowers. These future commitments will expire over the next five years.

~~The following table details overall statistics for our loans receivable portfolio ($ in thousands):~~

The tables below detail the types of loans in our loan portfolio, as well as the property type and geographic distribution of the properties securing these loans ($ in thousands):


	June 30, 2014					December 31, 2013					September 30, 2014					December 31, 2013
	Net Book					Net Book					Net Book					Net Book
Asset Type	Value		Percentage			Value		Percentage			Value		Percentage			Value		Percentage
Senior loans⁽¹⁾	$	3,285,398		94	%	$	1,800,329		88	%	$	3,701,763		95	%	$	1,800,329		88	%
Subordinate loans⁽²⁾		202,781		6			246,894		12			204,463		5			246,894		12

	$	3,488,179		100	%	$	2,047,223		100	%	$	3,906,226		100	%	$	2,047,223		100	%


	Net Book					Net Book					Net Book					Net Book
Property Type	Value		Percentage			Value		Percentage			Value		Percentage			Value		Percentage
Office	$	1,296,464		37	%	$	864,666		42	%	$	1,698,674		43	%	$	864,666		42	%
Hotel		1,117,724		32			390,492		19			1,080,034		28			390,492		19
Multifamily		451,193		13			341,819		17			384,188		10			341,819		17
Condominium		317,876		9			275,645		13			323,773		8			275,645		13
Retail												190,865		5			43,115		2
Other		304,922		9			174,601		9			228,692		6			131,486		6

	$	3,488,179		100	%	$	2,047,223		100	%	$	3,906,226		100	%	$	2,047,223		100	%


	Net Book					Net Book					Net Book					Net Book
Geographic Location	Value		Percentage			Value		Percentage			Value		Percentage			Value		Percentage
United States
Northeast	$	1,149,246		33	%	$	828,571		40	%	$	1,201,003		31	%	$	828,571		40	%
West		708,564		20			469,262		23			668,419		17			469,262		23
Southeast		437,627		12			243,798		12			503,345		13			243,798		12
Southwest		304,747		9			216,429		11			357,777		9			216,429		11
Northwest		240,685		7			166,207		8			242,203		6			166,207		8
Midwest		100,865		3			85,708		4			322,635		8			85,708		4

Subtotal		2,941,734		84			2,009,975		98			3,295,382		84			2,009,975		98
International
United Kingdom		508,872		15			37,248		2			490,558		13			37,248		2
Spain												85,329		2			—		—
Netherlands		37,573		1			—		—			34,957		1			—		—

Subtotal		546,445		16			37,248		2			610,844		16			37,248		2

Total	$	3,488,179		100	%	$	2,047,223		100	%	$	3,906,226		100	%	$	2,047,223		100	%

As described in Note 2, our Manager evaluates our loan portfolio on a quarterly basis. In conjunction with our quarterly loan portfolio review, our Manager assesses the performance of each loan, and assigns a risk rating based on several factors. One of the primary factors considered is how senior or junior each loan is relative to other debt obligations of the borrower. Additional factors considered in the assessment include risk of loss, current LTV, collateral performance, structure, exit plan, and sponsorship. Loans are rated “1” (less risk) through “8” (greater risk), which ratings are defined in Note 2.

The following table allocates the principal balance and net book value of our loans receivable based on our internal risk ratings as of ~~June~~September 30, 2014 ($ in thousands):


	Senior Loans⁽¹⁾						Subordinate Loans⁽²⁾						Total		Senior Loans⁽¹⁾						Subordinate Loans⁽²⁾						Total
Risk	Number		Principal		Net		Number		Principal		Net		Net		Number		Principal		Net		Number		Principal		Net		Net
Rating	of Loans		Balance		Book Value		of Loans		Balance		Book Value		Book Value		of Loans		Balance		Book Value		of Loans		Balance		Book Value		Book Value
1 - 3		46	$	3,306,575	$	3,285,398		2	$	207,457	$	202,781	$	3,488,179		53	$	3,732,929	$	3,701,763		2	$	207,697	$	204,463	$	3,906,226
4 - 5		—		—		—		—		—		—		—		—		—		—		—		—		—		—
6 - 8		—		—		—		—		—		—		—		—		—		—		—		—		—		—

		46	$	3,306,575	$	3,285,398		2	$	207,457	$	202,781	$	3,488,179		53	$	3,732,929	$	3,701,763		2	$	207,697	$	204,463	$	3,906,226

The following table allocates the principal balance and net book value of our loans receivable based on our internal risk ratings as of December 31, 2013 ($ in thousands):

We do not have any loan impairments, nonaccrual loans, or loans in maturity default as of ~~June~~September 30, 2014. We did not have any material interest receivable accrued on nonperforming loans as of September 30, 2014 or December 31, 2013. As of December 31, 2013, CT CDO I, which is a component of our CT Legacy Portfolio segment, had one impaired subordinate interest in a mortgage loan with a gross book value of $10.5 million that was delinquent on its contractual payments. As of December 31, 2013, this loan was on nonaccrual status and we had recorded a 100% loan loss reserve on this loan. This loan was subsequently written-off resulting in ~~an aggregate~~a loan loss reserve of zero as of ~~June~~September 30, 2014. As of December 31, 2013, CT CDO I had one loan with a net book value of $27.0 million in maturity default, but which had no reserve recorded due to our expectation of future repayment. In June 2014, this loan was restructured and reclassified to other assets.

As of June 30, 2014, we did not have any nonaccrual loans in our loan portfolio. As of December 31, 2013, CT CDO I had one subordinate interest in a mortgage loan on nonaccrual status with a principal balance of $10.5 million and a net book value of zero. This loan was subsequently written-off resulting in an aggregate loan loss reserve of zero as of June 30, 2014. In accordance with our revenue recognition policies discussed in Note 2, we do not accrue interest on loans that are 90 days past due or, in the opinion of our Manager, are otherwise uncollectable. Accordingly, we did not have any material interest receivable accrued on nonperforming loans as of June 30, 2014 or December 31, 2013.

As of ~~June~~September 30, 2014, our equity investments in unconsolidated subsidiaries consisted solely of our carried interest in CTOPI, a fund sponsored and managed by an affiliate of our Manager. Activity relating to our equity investments in unconsolidated subsidiaries was ($ in thousands):


	CTOPI			CTOPI
	Carried Interest			Carried Interest
Total as of December 31, 2013	$	22,480		$	22,480
Distributions		(14,125	)		(14,125	)
Deferred income allocation⁽¹⁾		5,683			6,635

Total as of June 30, 2014	$	14,038
Total as of September 30, 2014				$	14,990

Our carried interest in CTOPI entitles us to earn promote revenue in an amount equal to 17.7% of the fund’s profits, after a 9% preferred return and 100% return of capital to the CTOPI partners. As of ~~June~~September 30, 2014, we had been allocated ~~$14.0~~$15.0 million of promote revenue from CTOPI based on a hypothetical liquidation of the fund at its net asset value. Accordingly, we have recognized this allocation as an equity investment in CTOPI on our consolidated balance sheets. Generally, we defer recognition of income from CTOPI until cash is received and appropriate contingencies have been eliminated. During the ~~three~~nine months ended ~~June~~September 30, 2014, we received a $14.1 million distribution from CTOPI in respect of our carried interest and recorded such amount as income in our consolidated statement of operations. In addition, we had previously recorded, but deferred recognition of, $10.2 million of advance distributions in respect of our carried interest to allow us to pay any ~~income~~taxes owed on phantom taxable income allocated to us from the partnership. We recognized ~~these prior~~$24.3 million of distributions as income during the ~~three~~nine months ended ~~June~~September 30, 2014 as all fund-level contingencies ~~have~~had been satisfied.

In January 2011, we created a management compensation pool for employees equal to 45% of the CTOPI promote distributions received by us. As of ~~June~~September 30, 2014, we had granted 96% of the pool, and the remainder was unallocated. If any awards remain unallocated at the time promote distributions are received by us, any amounts otherwise payable to the unallocated awards will be distributed pro rata to the plan participants then employed by an affiliate of our Manager.

Approximately 65% of these grants have the following vesting schedule: (i) one-third on the date of grant; (ii) one-third on September 13, 2012; and (iii) the remainder is contingent on continued employment with an affiliate of our Manager and upon our receipt of promote distributions from CTOPI. Of the remaining 35% of these grants, 31% are fully vested as a result of an acceleration event, and 4% vest solely upon our receipt of promote distributions from CTOPI or the disposition of certain investments owned by CTOPI.

During the ~~three~~nine months ended ~~June~~September 30, 2014, we made payments of $11.2 million under the CTOPI incentive plan, which amount was recognized as a component of general and administrative expenses in our consolidated statement of operations.

As of September 30, 2014, our secured financings included revolving repurchase facilities, asset-specific financings, and senior loan participations sold. During the ~~six~~nine months ended ~~June~~September 30, 2014, we entered into three revolving repurchase facilities, ~~and~~ one asset-specific repurchase agreement, and sold two senior loan participations, providing an additional ~~$1.6~~$2.0 billion of credit capacity.

The following table details our revolving repurchase ~~obligations~~facilities outstanding ($ in thousands):


	June 30, 2014										Dec. 31, 2013		September 30, 2014										Dec. 31, 2013 Borrowings Outstanding
	Maximum		Collateral		Repurchase Borrowings⁽³⁾						Borrowings		Maximum		Collateral		Repurchase Borrowings⁽³⁾
Lender	Facility Size⁽¹⁾		Assets⁽²⁾		Potential		Outstanding		Available		Outstanding		Facility Size⁽¹⁾		Assets⁽²⁾		Potential		Outstanding		Available
Revolving Repurchase Facilities
Wells Fargo													$	500,000	$	574,395	$	447,994	$	360,725	$	87,269	$	—
Bank of America	$	500,000	$	517,280	$	406,653	$	387,653	$	19,000	$	271,320		500,000		537,159		424,404		353,542		70,862		271,320
Citibank		500,000		611,459		461,556		351,245		110,311		334,692		500,000		584,020		441,567		324,429		117,138		334,692
JP Morgan⁽⁴⁾		510,697		467,722		354,776		293,600		61,176		257,610		498,546		519,159		396,587		269,618		126,969		257,610
Wells Fargo		500,000		301,083		231,600		190,125		41,475		—
MetLife														500,000		341,524		263,889		232,389		31,500		—
Morgan Stanley⁽⁵⁾		425,875		169,804		135,765		135,765		—		—		406,025		168,930		128,703		128,703		—		—
MetLife		500,000		214,524		165,369		165,369		—		—

Subtotal		2,936,572		2,281,872		1,755,719		1,523,757		231,962		863,622
													$	2,904,571	$	2,725,187	$	2,103,144	$	1,669,406	$	433,738	$	863,622
Asset-Specific Repurchase Agreements
Wells Fargo⁽⁶⁾		148,110		155,184		120,485		120,485		—		245,731
Goldman Sachs		194,400		169,260		135,408		135,408		—		—

Total	$	3,279,082	$	2,606,316	$	2,011,612	$	1,779,650	$	231,962	$	1,109,353

The weighted-average outstanding balance of our revolving repurchase ~~obligation balance~~facilities was ~~$1.4~~$1.6 billion and ~~$1.3~~$1.2 billion for the three and ~~six~~nine months ended ~~June~~September 30, 2014, respectively.

As of ~~June~~September 30, 2014, we had aggregate borrowings of ~~$1.5~~$1.7 billion outstanding under our revolving repurchase facilities, with a weighted-average cash coupon of LIBOR plus ~~1.95%~~1.90% per annum and a weighted-average all-in cost of credit, including associated fees and expenses, of LIBOR plus ~~2.19%~~2.14% per annum. As of ~~June~~September 30, 2014, outstanding borrowings under these facilities had a weighted-average maturity, excluding extension options and term-out provisions, of ~~2.3~~2.1 years. Borrowings under each facility are subject to the initial approval of eligible collateral loans by the lender and the maximum advance rate and pricing rate of individual advances are determined with reference to the attributes of the respective collateral loan.

Our $500.0 million master repurchase agreement with Bank of America has an initial maturity date of May 21, 2017, subject to two one-year extension options, each of which may be exercised by us. The weighted-average pricing rate of the $387.7 million of borrowings outstanding as of June 30, 2014 was LIBOR plus 1.78% and the weighted-average maximum advance rate was 78.7%. We guarantee 50% of the advances related to senior collateral and 100% of the advances related to mezzanine and junior mortgage collateral under this facility. Otherwise, obligations under this repurchase agreement are not recourse to us.

Our $500.0 million master repurchase agreement with Citibank has an initial facility expiration date of June 12, 2017, which may be extended annually by us. If upon the initial facility expiration date, Citibank does not extend the facility availability period, in its sole discretion, then no new advances may be drawn and all collateral interest and principal proceeds would be required to repay existing advances, subject to certain provisions for REIT income distribution requirements. In either case, individual advances mature upon the maturity date of the respective collateral maturity dates.

The ~~weighted-average pricing rate~~following table outlines the key terms of the $351.2 million of borrowings outstanding as of June 30, 2014 was LIBOR plus 1.95% and the weighted-average maximum advance rate was 75.6%. We guarantee 25% of the advances under this facility. Otherwise, obligations under this masterour revolving repurchase ~~agreement are not recourse to us.~~

Our $250.0 million master repurchase agreement with JP Morgan specifies an availability period ending on June 28, 2015, during which new advances can be made and which availability period is renewable at the discretion of JP Morgan. In the event that the availability period is not renewed, it is followed by a two-year ‘stabilization’ period and then a ‘term out’ period, during which all collateral interest and principal proceeds would be required to repay existing advances, subject to certain provisions for REIT income distribution requirements. Maturity dates for individual advances are tied to their respective collateral loan maturity dates. Our £153.0 million ($260.7 million as of June 30, 2014) master repurchase agreement with JP Morgan is linked to the $250.0 million agreement through cross-collateralization and cross-default provisions. Individual advances can be made under this agreement at any time prior to the maturity date of December 20, 2016. The weighted-average pricing rate of the $293.6 million of borrowings outstanding under the JP Morgan facilities as of June 30, 2014 was LIBOR plus 2.02% and the weighted-average maximum advance rate was 75.8%. We guarantee 25% of the advances related to senior mortgage collateral and 100% of the advances related to mezzanine and junior mortgage collateral under these facilities. Otherwise, obligations under these master repurchase agreements are not recourse to us.

Our $500.0 million master repurchase agreement with Wells Fargo specifies a one-year availability period, during which new advances can be made and which availability period is renewable at the discretion of Wells Fargo. Maturity dates for individual advances are tied to their respective collateral loan maturity dates subject to annual renewal at our discretion. The weighted-average pricing rate of the $190.1 million of borrowings outstanding as of June 30, 2014 was LIBOR plus 2.00% and the weighted-average maximum advance rate was 77.0%. We guarantee 25% of the advances under this facility. Otherwise, obligations under this master repurchase agreement are not recourse to us.

Our £250.0 million ($425.9 million as of June 30, 2014) master repurchase agreement with Morgan Stanley provides for advances at any time prior to its maturity date of March 3, 2017. The weighted-average pricing rate of the $135.8 million of borrowings outstanding as of June 30, 2014 was three-month LIBOR plus 2.32% and the weighted-average maximum advance rate was 78.6%. We guarantee 25% of the advances under this facility. Otherwise, obligations under this master repurchase agreement are not recourse to us.

Our $500.0 million master repurchase agreement with MetLife has an initial facility expiration date of June 29, 2015, subject to five one-year extension options, each of which may be exercised at our option. Maturity dates for individual advances are tied to their respective collateral loan maturity dates subject to annual renewal at our discretion. The weighted-average pricing rate of the $165.4 million of borrowings outstanding as of June 30, 2014 was LIBOR plus 1.89% and the weighted-average maximum advance rate was 77.0%. We guarantee 50% of the advances under this facility. Otherwise, obligations under this master repurchase agreement are not recourse to us.

Our $88.3 million asset-specific repurchase agreement with Wells Fargo accrues interest at a per annum pricing rate equal to LIBOR plus a margin of 2.50%. The initial maturity date of the facility is June 7, 2016, which may be extended pursuant to (i) two one-year extension options, each of which may be exercised by us, and (ii) an additional one-year extension option, contingent upon notice regarding the failure of the collateral mortgage loan to be repaid at its final maturity. We do not guarantee the obligations under this repurchase agreement other than in the case of customary “bad-boy” events.

Our $59.8 million asset-specific repurchase agreement with Wells Fargo accrues interest at a per annum pricing rate equal to LIBOR plus a margin of 2.25%. The initial maturity date of the facility is August 8, 2015, which may be extended pursuant to three one-year extension options, each of which may be exercised by us. We do not guarantee the obligations under this repurchase agreement other than in the case of customary “bad-boy” events.

Our $32.0 million asset-specific repurchase agreement with Wells Fargo was repaid in full on May 23, 2014 in conjunction with the repayment of its collateral asset. Advances under the repurchase agreement accrued interest at a per annum pricing rate equal to LIBOR plus a margin of 4.00%.

Our $194.4 million asset-specific repurchase agreement with Goldman Sachs accrues interest at a per annum pricing rate equal to LIBOR plus a margin of 2.75%. The initial maturity date of the facility is April 25, 2017. We guarantee 50% of the advances under this facility. Otherwise, obligations under this repurchase agreement

(1)	Represents a weighted-average based on collateral assets pledged and borrowings outstanding as of September 30, 2014.

(2)	Represents weighted-average cash coupon on borrowings outstanding as of September 30, 2014. As of September 30, 2014, 91% of our revolving repurchase agreements are indexed to one-month USD LIBOR, 7% are indexed to three-month GBP LIBOR, and 2% referencing other floating rate indices.

(3)	Other than amounts guaranteed based on specific collateral asset types, borrowings under our revolving repurchase facilities are not recourse to us.

(4)	Margin call provisions under our revolving repurchase facilities do not permit valuation adjustments based on capital markets activity, and are limited to collateral-specific credit marks.

(5)	Includes two one-year extension options which may be exercised at our sole discretion.

(6)	These revolving repurchase facilities have various availability periods during which new advances can be made and which are generally subject to each lender’s discretion. Maturity dates for advances outstanding are tied to the term of each respective collateral asset.

(7)	Borrowings denominated in British pound sterling under this facility mature on December 30, 2016.

(8)	Includes five one-year extension options which may be exercised at our sole discretion.

The following table details overall statistics for our asset-specific repurchase agreements ($ in thousands):

The weighted-average outstanding asset-specific balance was $256.9 million and $251.7 million for the three and nine months ended September 30, 2014, respectively.

Each of the guarantees related to our ~~master~~revolving repurchase ~~agreements~~facilities and asset-specific repurchase agreements contain the following uniform financial covenants: (i) our ratio of earnings before interest, taxes, depreciation, and amortization, or EBITDA, to fixed charges shall be not less than 1.40 to 1.0; (ii) our tangible net worth, as defined in the agreements, shall not be less than ~~$908.1 million~~$1.1 billion as of September 30, 2014 plus 75% of the net cash proceeds of future equity ~~issuances;~~issuances subsequent to September 30, 2014; (iii) cash liquidity shall not be less than the greater of (x) $10.0 million or (y) 5% of our recourse indebtedness; and (iv) our indebtedness shall not exceed 83.33% of our total assets. As of ~~June~~September 30, 2014 and December 31, 2013, we were in compliance with these covenants.

Loan participations sold represent senior interests in certain loans that we sold, however we present these participations sold as liabilities because these arrangements do not qualify as sales under GAAP. These participations are non-recourse and remain on our consolidated balance sheet until the loan is repaid. The gross presentation of loan participations sold does not impact stockholders’ equity or net income.

The following table details overall statistics for our loan participations sold ($ in thousands):

In November 2013, we issued $172.5 million of 5.25% convertible senior notes due on December 1, 2018, or Convertible Notes. The Convertible Notes’ issuance costs are amortized through interest expense over the life of the Convertible Notes using the effective interest method. Including this amortization, our all-in cost of the Convertible Notes is 5.87% per annum. As of ~~June~~September 30, 2014, the Convertible Notes were carried on our consolidated balance sheet at ~~$160.7~~$161.3 million, net of an unamortized discount of ~~$8.2~~$7.8 million.

The Convertible Notes are convertible at the holders’ option into shares of our class A common stock, only under specific circumstances, prior to the close of business on August 31, 2018, at the applicable conversion rate in effect on the conversion date. Thereafter, the Convertible Notes are convertible at the option of the holder at any time until the second scheduled trading day immediately preceding the maturity date. The Convertible Notes were not convertible as of September 30, 2014. The conversion rate iswas initially set to equal 34.8943 shares of class A common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of $28.66 per share of class A common stock, subject to adjustment upon the occurrence of certain events. We may not redeem the Convertible Notes prior to maturity. As of ~~June~~September 30, 2014 we had the intent and ability to settle the Convertible Notes in cash. As a result, the Convertible Notes did not have any impact on our diluted earnings per share.

We recorded a $9.1 million discount upon issuance of the Convertible Notes based on the implied value of the conversion option and an assumed effective interest rate of 6.50%. Including the amortization of this discount and the issuance costs, our total cost of the Convertible Notes is 7.16% per annum. Refer to Note 2 for additional discussion of our accounting policies for the Convertible Notes.

Participations sold represent senior interests in certain loans that we sold. We present these participations sold as both assets and non-recourse liabilities because these arrangements do not qualify as sales under GAAP. The income earned on these loan participations is recorded as interest income and an identical amount is recorded as interest expense on our consolidated statements of operations.

~~The following table details overall statistics for our participations sold ($ in thousands):~~

Total equity increased ~~$525.3~~by $753.1 million during the ~~six~~nine months ended ~~June~~September 30, 2014 to ~~$1.3~~$1.5 billion. This increase was primarily driven by the issuance of additional shares of our class A common ~~stock in January and April 2014.~~stock. See below for further discussion of ~~the~~our share ~~issuance.~~issuances.

We have the authority to issue up to 200,000,000 shares of stock, consisting of 100,000,000 shares of class A common stock and 100,000,000 shares of preferred stock. Subject to applicable NYSE listing requirements, our board of directors is authorized to cause us to issue additional shares of authorized stock without stockholder approval. In addition, to the extent not issued, currently authorized stock may be reclassified between class A common stock and preferred stock. We do not have any shares of preferred stock issued and outstanding as of September 30, 2014.

Holders of shares of our class A common stock are entitled to vote on all matters submitted to a vote of stockholders and are entitled to receive such dividends as may be authorized by our board of directors and declared by us, in all cases subject to the rights of the holders of shares of outstanding preferred stock, if any. ~~On January 14, 2014, we issued 9,775,000 shares~~

The following table details our issuances of class A common stock during the nine months ended September 30, 2014 ($ in ~~a public offering at a price to the underwriters of $26.25~~thousands, except per share. We generated net proceeds from the issuance of $256.1 million after underwriting discounts and other offering expenses. On April 7, 2014, we issued 9,200,000 shares of class A common stock in a public offering at a price to the underwriters of $27.72 per share. We generated net proceeds from the issuance of $254.8 million after underwriting discounts and other offering expenses.share data):

In addition to our class A common stock, we also issue deferred stock units to certain members of our board of directors in lieu of cash compensation for services rendered. These deferred stock units are non-voting, but carry the right to receive dividends in the form of additional deferred stock units in an amount equivalent to the cash dividends paid to holders of shares of class A common stock. During the three months ended June 30, 2014, we issued 2,851 shares of class A common stock to Joshua A. Polan in exchange for his deferred stock units upon his decision not to stand for reelection to our board of directors.

The following table details the movement in our outstanding shares of class A common stock, restricted class A common stock, and deferred stock units:


	Six Months Ended June 30,					Nine Months Ended September 30,
Common Stock Outstanding⁽¹⁾	2014			2013		2014		2013
Beginning balance		29,602,884			3,016,405		29,602,884		3,016,407
Issuance of class A common stock		19,130,868			25,875,000		28,175,003		25,875,000
Issuance of deferred stock units		10,009			3,070		15,104		6,758
Vesting of restricted class A common stock		(155,867	)		—

Ending balance		48,587,894			28,894,475		57,792,991		28,898,165

On March 25, 2014, we adopted a dividend reinvestment and direct stock purchase plan, under which we registered and reserved for issuance, in the aggregate, 10,000,000 shares of class A common stock. Under the dividend reinvestment component of this plan, our class A common stockholders can designate all or a portion of their cash dividends to be reinvested in additional shares of class A common stock. The direct stock purchase component allows stockholders and new investors, subject to our approval, to purchase shares of class A common stock directly from us. During the nine months ended September 30, 2014, we issued three shares of class A common stock under the dividend reinvestment component and zero shares under the direct stock purchase plan component. As of September 30, 2014, 9,999,997 shares of class A common stock, in the aggregate, remain available for issuance under the dividend reinvestment and direct stock purchase plan.

On May 9, 2014, we entered into equity distribution agreements, or ATM Agreements, pursuant to which we may sell, from time to time, up to an aggregate sales price of $200.0 million of our class A common stock. Sales of class A common stock made pursuant to the ATM Agreements, if any, may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended. Actual sales will depend on a variety of factors including market conditions, the trading price of our class A common stock, capital needs, and our determination of the appropriate sources of funding to meet such needs. As of ~~June~~September 30, 2014, we had not sold any shares of class A common stock under the ATM Agreements.

~~We do not have any shares of preferred stock issued and outstanding as of June 30, 2014.~~Notes to Consolidated Financial Statements (continued)

We generally intend to distribute ~~each year~~ substantially all of our taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to our stockholders each year to comply with the REIT provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code.

Our dividend policy remains subject to revision at the discretion of our board of directors. All distributions will be made at the discretion of our board of directors and will depend upon our taxable income, our financial condition, our maintenance of REIT status, applicable law, and other factors as our board of directors deems relevant.

On ~~June 13,~~September 15, 2014, we declared a dividend of ~~$0.48~~$0.50 per share, or ~~$23.3~~$28.8 million, which was paid on ~~July~~October 15, 2014 to stockholders of record as of ~~June~~September 30, 2014. ~~On March 14,~~During the nine months ended September 30, 2014, we declared ~~a dividend~~aggregate dividends of ~~$0.48~~$1.46 per share, or ~~$18.9 million, which was paid on April 15, 2014 to stockholders of record as of March 31, 2014. No dividends were declared during~~$71.0 million. During the ~~six~~nine months ended ~~June~~September 30, ~~2013.~~

~~On March 25, 2014,~~2013, we ~~adopted a dividend reinvestment and direct stock purchase plan, under which we registered and reserved for issuance, in the~~declared aggregate ~~10,000,000 shares~~dividends of ~~class A common stock. Under the dividend reinvestment component of this plan, our class A common stockholders can designate all~~$0.27 per share, or a portion of their cash dividends to be reinvested in additional shares of class A common stock. The direct stock purchase component allows stockholders and new investors, subject to our approval, to purchase shares of class A common stock directly from us. During the six months ended June 30, 2014, we issued one share of class A common stock under the dividend reinvestment component and zero shares under the direct stock purchase plan component. As of June 30, 2014, 9,999,999 shares of class A common stock, in the aggregate remain available for issuance under the dividend reinvestment and direct stock purchase plan.$7.8 million.

We calculate our basic and diluted earnings per share using the two-class method for all periods presented as the unvested shares of our restricted class A common stock qualify as participating securities, as defined by GAAP. These restricted shares have the same rights as our other shares of class A common stock, including participating in any gains and losses, and therefore have been included in our basic and diluted net income per share calculation.

The following table sets forth the calculation of basic and diluted earnings per share based on the weighted-average of our shares of class A common stock, restricted class A common stock, and deferred stock units outstanding ($ in thousands, except per share data):

Refer to Note 14 for the allocation of our results of operations to each of our operating segments.

As of ~~June~~September 30, 2014, total accumulated other comprehensive ~~income~~loss was ~~$2.7~~$6.2 million, representing the cumulative currency translation adjustment on assets and liabilities denominated in a foreign currency. OfDuring the ~~total accumulated~~nine months ended September 30, 2014, we recorded a $7.0 million currency translation loss in other comprehensive ~~income, $1.9 million represents the currency translation adjustment for the six months ended June 30, 2014.~~income. We did not have any accumulated other comprehensive income or loss as of, or for the ~~six~~nine months ended ~~June~~September 30, 2013.

The non-controlling interests included on our consolidated balance sheets represent the equity interests in CT Legacy Partners that are not owned by us. A portion of CT Legacy Partners’ consolidated equity and results of operations are allocated to these non-controlling interests based on their pro rata ownership of CT Legacy Partners. ~~The following table details the components~~As of ~~non-controlling interests in~~September 30, 2014, CT Legacy ~~Partners ($ in thousands):~~Partners’ total equity was $55.0 million, of which $22.9 million was owned by Blackstone Mortgage Trust, Inc., and $32.1 million was allocated to non-controlling interests.

Our other expenses consist of the management and inventive fees we pay to our Manager and our general and administrative expenses.

Pursuant to our management agreement, our Manager earns a base management fee in an amount ~~generally~~ equal to 1.50% per annum multiplied by our outstanding Equity balance, as defined in the management agreement. In addition, our Manager is entitled to an incentive fee in an amount equal to the product of (i) 20% and (ii) the excess of (a) our Core Earnings (as defined in the management agreement) for the previous 12-month period over (b) an amount equal to 7.00% per annum multiplied by our outstanding Equity, provided that our Core Earnings over the prior three-year period (or the period since the date of the first offering of our class A common stock following December 19, 2012, whichever is shorter) is greater than zero. Core Earnings is generally equal to our net income (loss) prepared in accordance with GAAP, excluding (i) certain non-cash items and (ii) the net income (loss) related to our legacy portfolio.

During the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, we incurred ~~$7.8~~$12.4 million and ~~$1.0~~$3.4 million of management fees payable to our Manager, respectively. During the three months ended ~~June~~September 30, 2014 and 2013, we incurred ~~$4.4~~$4.6 million and ~~$920,000~~$2.4 million of management fees payable to our Manager, respectively. During the three and nine months ended September 30, 2014, we incurred $842,000 of incentive fees payable to our Manager. We did not incur any incentive fees payable to our Manager during the three or ~~six~~nine months ended ~~June~~September 30, ~~2014 and~~ 2013.

General and administrative expenses consisted of the following ($ in thousands):


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2014		2013		2014		2013		2014		2013		2014		2013
Professional services	$	758	$	846	$	1,283	$	1,267	$	701	$	843	$	1,983	$	2,109
Operating and other costs		474		577		1,043		975		461		148		1,503		1,123
Management incentive awards plan - CTOPI⁽¹⁾		11,190		—		11,190		—

		12,422		1,423		13,516		2,242		1,162		991		3,486		3,232

Non-cash compensation expenses
Non-cash and CT Legacy Portfolio compensation expenses
Management incentive awards plan - CTOPI⁽¹⁾										—		—		11,190		—
Management incentive awards plan - CT Legacy Partners⁽²⁾		416		548		552		1,511		458		458		1,010		1,969
Director stock-based compensation		94		37		188		75		94		94		281		169
Restricted class A common stock earned		2,289		—		4,029		—		1,525		—		5,554		—

		2,799		585		4,769		1,586		2,077		552		18,035		2,138

Expenses of consolidated securitization vehicles		135		499		269		654		129		72		399		726

	$	15,356	$	2,507	$	18,554	$	4,482	$	3,368	$	1,615	$	21,920	$	6,096

In conjunction with our March 2011 Restructuring, we created an employee pool for up to 6.75% of the distributions paid to the common equity holders of CT Legacy Partners (subject to certain caps and priority distributions). As of ~~June~~September 30, 2014, incentive awards for 94% of the pool have been granted, and the remainder was unallocated. If any awards remain unallocated at the time distributions are paid, any amounts otherwise payable to the unallocated awards will be distributed pro rata to the plan participants then employed by an affiliate of our Manager.

Approximately 53% of these grants have the following vesting schedule: (i) 25% on the date of grant; (ii) 25% in March 2013; (iii) 25% in March 2014; and (iv) the remainder is contingent on continued employment with an affiliate of our Manager and our receipt of distributions from CT Legacy Partners. Of the remaining 47% of these grants, 29% are fully vested as a result of an acceleration event, and 18% vest only upon our receipt of distributions from CT Legacy Partners.

We accrue a liability for the amounts due under these grants based on the value of CT Legacy Partners and the periodic vesting of the awards granted. Accrued payables for these awards were ~~$3.4~~$2.4 million and $2.8 million as of ~~June~~September 30, 2014 and December 31, 2013, respectively.

We elected to be taxed as a REIT, effective January 1, 2003, 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 that we distribute. 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 ~~June~~September 30, 2014 and December 31, 2013, we were in compliance with all REIT requirements.

During the ~~six~~nine months ended ~~June~~September 30, 2014, we recorded a current income tax provision of ~~$530,000~~$412,000 comprised of (i) ~~$342,000~~$219,000 related to activities of our taxable REIT subsidiaries, (ii) a $124,000 provision reflecting our estimated risk of loss related to an uncertain tax position taken during the period, and (iii) ~~$64,000~~$69,000 related to other items. During the ~~six~~nine months ended ~~June~~September 30, 2013, we recorded a current income tax provision of ~~$593,000 comprised of (i) $554,000~~$329,000 related to activities of our taxable REIT ~~subsidiaries and (ii) $39,000 related to other items.~~subsidiaries. We did not have any deferred tax assets or liabilities as of ~~June~~September 30, 2014 or December 31, 2013.

As a result of our issuance of 25,875,000 shares of class A common stock in May 2013, the availability of our net operating losses, or NOLs, and net capital losses, or NCLs, is generally limited to $2.0 million per annum by change of control provisions promulgated by the Internal Revenue Service with respect to the ownership of Blackstone Mortgage Trust. As of December 31, 2013, we had NOLs of ~~$161.5~~$159.0 million and NCLs of ~~$39.2~~$41.5 million available to be carried forward and utilized in current or future periods. If we are unable to utilize our NOLs, they will expire in 2029. If we are unable to utilize our NCLs, ~~$7.0~~$9.5 million will expire in 2014, $31.4 million will expire in 2015, and ~~$782,000~~$602,000 will expire in 2016 or later.

As of ~~June~~September 30, 2014, tax years 2010 through 2013 remain subject to examination by taxing authorities.

We do not have any employees as we are externally managed by our Manager. However, as of ~~June~~September 30, 2014, our Manager, certain individuals employed by an affiliate of our Manager, and certain members of our board of directors are compensated, in part, through the issuance of stock-based instruments. ~~In addition, certain of our former employees continue to participate in the CTOPI incentive management fee grants and the CT Legacy Partners management incentive awards plan.~~

We had stock-based incentive awards outstanding under five benefit plans as of ~~June~~September 30, 2014: (i) our amended and restated 1997 non-employee director stock plan, or 1997 Plan; (ii) our 2007 long-term incentive plan, or 2007 Plan; (iii) our 2011 long-term incentive plan, or 2011 Plan; (iv) our 2013 stock incentive plan, or 2013 Plan; and (v) our 2013 manager incentive plan, or 2013 Manager Plan. We refer to our 1997 Plan, our 2007 Plan, and our 2011 Plan collectively as our Expired Plans and we refer to our 2013 Plan and 2013 Manager Plan collectively as our Current Plans.

Our Expired Plans have expired and no new awards may be issued under them. Under our Current Plans, a maximum of 2,160,106 shares of our class A common stock may be issued to our Manager, our directors and officers, and certain employees of affiliates of our Manager. As of ~~June~~September 30, 2014, there were ~~1,440,228~~1,435,133 shares available under the Current Plans.

During 2013, we issued 700,000 shares of restricted class A common stock under our Current Plans. These shares generally vest in quarterly installments over a three-year period, pursuant to the terms of the respective award agreements and the terms of the Current Plans. The ~~544,133~~485,606 shares of restricted class A common stock outstanding as of ~~June~~September 30, 2014 will vest as follows: ~~116,642~~58,310 shares will vest in 2014; ~~233,284~~233,239 shares will vest in 2015; and ~~194,207~~194,057 shares will vest in 2016.

The following table details the movement in our outstanding shares of restricted class A common stock and the weighted-average grant date fair value per share:


	Restricted Class A Common Stock			Weighted-Average Grant Date Fair Value Per Share		Restricted Class A Common Stock			Weighted-Average Grant Date Fair Value Per Share
Balance as of December 31, 2013		700,000		$	25.69		700,000		$	25.69
Vested		(155,867	)		25.51		(214,394	)		25.56

Balance as of June 30, 2014		544,133		$	25.74
Balance as of September 30, 2014							485,606		$	25.75

The following table summarizes our assets measured at fair value on a recurring basis ($ in thousands):


	Level 1		Level 2		Level 3		Fair Value⁽¹⁾		Level 1		Level 2		Level 3		Fair Value⁽¹⁾
June 30, 2014
September 30, 2014
Other assets, at fair value⁽²⁾	$	—	$	1,737	$	59,964	$	61,701	$	—	$	1,625	$	42,296	$	43,921
December 31, 2013
Other assets, at fair value⁽²⁾	$	—	$	1,944	$	54,461	$	56,405	$	—	$	1,944	$	54,461	$	56,405

The following table reconciles the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs ($ in thousands):


	Six Months Ended June 30,											2014			2013
	2014			2013								Other			Loans			Other			Investment in
	Other			Loans		Other			Investment in			Assets			Held-for-Sale, net			Assets			CT Legacy Assets
	Assets			Held-for-Sale, net		Assets			CT Legacy Assets
Balance, beginning	$	54,461		$	—	$	—		$	132,000
January 1,												$	54,461		$	—		$	—		$	132,000
Consolidation of CT Legacy Partners		—			—		166,094			(132,000	)		—			—			166,094			(132,000	)
Transfer from loans receivable, at fair value		—			2,000		—			—			—			2,000			—			—
Proceeds from investments		(326	)		—		(37,279	)		—			(19,781	)		(3,200	)		(85,547	)		—
Deferred interest		—			—		195			—			—			—			325			—
Adjustments to fair value included in earnings
Gain on investments at fair value		5,829			—		4,000			—			7,616			—			4,463			—
Valuation allowance on loans held-for-sale		—			1,800		—			—			—			1,200			—			—

Balance, ending	$	59,964		$	3,800	$	133,010		$	—
September 30,												$	42,296		$	—		$	85,335		$	—

Our other assets include loans, securities, equity investments, and other receivables that are carried at fair value.

The following describes the key assumptions used in arriving at the fair value of each of these assets as of ~~June~~September 30, 2014 and December 31, 2013.

Securities: As of September 30, 2014, our securities, which had a book value of $10.1 million, were valued by obtaining assessments from third-party dealers.

Loans: The following table lists the range of key assumptions for each type of loans receivable as of ~~June~~September 30, 2014 and December 31, 2013 ($ in millions):


	Assumption Ranges for Significant						Book Value
	Unobservable Inputs (Level 3)⁽¹⁾						Sensitivity to a
		Recovery			Book		100 bp Discount				Recovery			Fair Value as of
Collateral Type	Discount Rate	Percentage⁽²⁾			Value		Rate Increase			Discount Rate	Percentage⁽¹⁾			September 30, 2014		December 31, 2013
Hotel	7%		100	%	$	15.0		(0.4	%)	(2)		100	%	$	15.0	$	15.0
Office	8% - 15%		100	%		23.4		(0.3	%)	(3)		100	%		4.0		25.7

					$	38.4								$	19.0	$	40.7

~~The following table lists the range of key assumptions for each type of loans receivable as of December 31, 2013 ($ in millions):~~

~~Securities: As of June 30, 2014, all securities were valued by obtaining assessments from third-party dealers.~~

Equity investments and other receivables: ~~Equity~~As of September 30, 2014, equity investments and other receivables, ~~are~~which had an aggregate book value of $13.2 million, were generally valued by discounting expected cash flows and assumptions regarding the collection of principal on the underlying loans and investments.

There were no liabilities recorded at fair value as of ~~June~~September 30, 2014 or December 31, 2013. Refer to Note 2 for further discussion regarding fair value measurement.

As discussed in Note 2, GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial position, for which it is practicable to estimate that value.

The following table details the carrying amount, face amount, and fair value of the financial instruments described in Note 2 ($ in thousands):


	June 30, 2014							December 31, 2013						September 30, 2014						December 31, 2013
	Carrying			Face		Fair		Carrying		Face		Fair		Carrying		Face		Fair		Carrying		Face		Fair
	Amount			Amount		Value		Amount		Amount		Value		Amount		Amount		Value		Amount		Amount		Value
Financial assets
Cash and cash equivalents	$	120,456	��	$	120,456	$	120,456	$	52,342	$	52,342	$	52,342	$	63,343	$	63,343	$	63,343	$	52,342	$	52,342	$	52,342
Restricted cash		11,392			11,392		11,392		10,096		10,096		10,096		10,855		10,855		10,855		10,096		10,096		10,096
Loans receivable, net		3,488,179			3,514,032		3,514,032		2,047,223		2,076,411		2,058,699		3,906,226		3,940,626		3,940,626		2,047,223		2,077,227		2,058,699

Financial liabilities
Repurchase obligations		1,779,650			1,779,650		1,779,650		1,109,353		1,109,353		1,109,353
Revolving repurchase facilities															1,669,406		1,669,406		1,669,406		863,622		863,622		863,622
Asset-specific repurchase agreements															226,961		226,961		226,961		245,731		245,731		245,731
Loan participations sold															447,977		447,977		447,977		90,000		90,000		90,000
Convertible notes, net		160,671			172,500		186,300		159,524		172,500		181,772		161,259		172,500		178,934		159,524		172,500		181,772
Participations sold		461,078			461,078		462,603		90,000		90,000		90,304

Estimates of fair value for cash, cash equivalents and convertible notes are measured using observable, quoted market prices, or Level 1 inputs. All other fair value significant estimates are measured using unobservable inputs, or Level 3 inputs. See Note 2 for further discussion regarding fair value measurement of certain of our assets and liabilities.

As of ~~June~~September 30, 2014, our consolidated balance sheet included ~~$4.4~~$5.4 million of accrued management and incentive fees and ~~$25,000~~$50,000 of expense reimbursements payable to our Manager. During the ~~six~~nine months ended ~~June~~September 30, 2014, we paid ~~$5.9~~$10.3 million of management fees to our Manager and reimbursed our Manager for $90,000 of expenses incurred on our behalf. In addition, as of ~~June~~September 30, 2014, our consolidated balance sheet included ~~$191,000~~$151,000 of preferred distributions payable by CT Legacy Partners to an affiliate of our Manager. During the ~~six~~nine months ended ~~June~~September 30, 2014, CT Legacy Partners made aggregate preferred distributions of ~~$1.2~~$1.7 million to such affiliate.

On October 3, 2013, we issued 339,431 shares of restricted class A common stock with a grant date fair value of $8.5 million to our Manager under the 2013 Manager Plan. The shares of restricted class A common stock vest ratably in quarterly installments over three years from the date of issuance. We recorded a non-cash expense related to these shares of ~~$1.7~~$2.4 million during the ~~six~~nine months ended ~~June~~September 30, 2014. Refer to Note 11 for further discussion of our restricted class A common stock.

During the ~~six~~nine months ended ~~June~~September 30, 2014, CT CDO I, which is consolidated by us, ~~paid $139,000~~incurred $393,000 of special servicing fees to an affiliate of our Manager, of which it paid $139,000.

During the nine months ended September 30, 2014, we paid $26,000 of fees to a third-party service provider for equity capital markets data services. This service provider was acquired by an affiliate of our Manager on August 6, 2014.

During the nine months ended September 30, 2014, we incurred $50,000 of fees to a third-party service provider for various administrative services that was owned by an affiliate of our Manager.

There may be conflicts between us and our Manager with respect to certain of the investments in the CT Legacy Partners and CTOPI portfolios where an affiliate of our Manager holds a related investment that is senior, junior, or

pari passu to the investments held by these portfolios. In addition, the Management Agreement with our Manager excludes from the management fee calculation our interests in CT Legacy Partners, CTOPI, and CT CDO I, which may result in further conflicts between our economic interests and those of our Manager. Refer to Note 9 for further discussion of the Management Agreement with our Manager.

On June 20, 2014, CT CDO I, CT Legacy Partners, CTOPI, and other affiliates of our Manager entered into a deed-in-lieu of foreclosure transaction which resulted in a restructuring of the interests held by each entity with respect to certain loans in our CT Legacy Portfolio segment with an aggregate principal balance of $35.0 million and an aggregate book value of $27.0 million.

We operate our real estate finance business through a Loan Origination segment and a CT Legacy Portfolio segment. The Loan Origination segment includes our activities associated with the origination and acquisition of mortgage loans, the capitalization of our loan portfolio, and the costs associated with operating our business generally. The CT Legacy Portfolio segment includes our activities specifically related to CT Legacy Partners, CT CDO I, and our equity investment in CTOPI. Our Manager makes operating decisions and assesses the performance of each of our business segments based on financial and operating data and metrics generated from our internal information systems.

There were no transactions between our operating segments during the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013. For the three and ~~six~~nine months ended ~~June~~September 30, 2014, 6%14% and 9%10% of our revenues were generated from international sources, respectively. Substantially all of our revenues for the three and ~~six~~nine months ended ~~June~~September 30, 2013 were generated from domestic sources.

The following table presents our consolidated statement of operations for each segment for the three months ended ~~June~~September 30, 2014 and 2013 ($ in thousands):


	Three Months Ended June 30, 2014									Three Months Ended September 30, 2014
	Loan			CT Legacy						Loan			CT Legacy
	Origination			Portfolio			Total			Origination			Portfolio			Total
Income from loans and other investments
Interest and related income	$	41,372		$	1,094		$	42,466		$	49,720		$	666		$	50,386
Less: Interest and related expenses		15,503			217			15,720			19,713			190			19,903

Income from loans and other investments, net		25,869			877			26,746			30,007			476			30,483
Other expenses
Management fees		4,410			—			4,410
Management and incentive fees											5,412			—			5,412
General and administrative expenses		3,501			11,855			15,356			2,705			663			3,368

Total other expenses		7,911			11,855			19,766			8,117			663			8,780
Gain on investments at fair value		—			7,163			7,163			—			1,780			1,780
Income from equity investments in unconsolidated subsidiaries		—			24,294			24,294

Income before income taxes		17,958			20,479			38,437			21,890			1,593			23,483
Income tax benefit		—			(2	)		(2	)		—			(118	)		(118	)

Net income		17,958			20,481			38,439			21,890			1,711			23,601
Net income attributable to non-controlling interests		—			(4,973	)		(4,973	)		—			(1,577	)		(1,577	)

Net income attributable to Blackstone Mortgage Trust, Inc.	$	17,958		$	15,508		$	33,466		$	21,890		$	134		$	22,024


	Three Months Ended June 30, 2013									Three Months Ended September 30, 2013
	Loan			CT Legacy						Loan			CT Legacy
	Origination			Portfolio			Total			Origination			Portfolio			Total
Income from loans and other investments
Interest and related income	$	1,908		$	4,109		$	6,017		$	15,143		$	3,710		$	18,853
Less: Interest and related expenses		168			1,138			1,306			3,822			585			4,407

Income from loans and other investments, net		1,740			2,971			4,711			11,321			3,125			14,446
Other expenses
Management fees		920			—			920
Management and incentive fees											2,433			—			2,433
General and administrative expenses		1,233			1,274			2,507			1,026			589			1,615

Total other expenses		2,153			1,274			3,427			3,459			589			4,048
Valuation allowance on loans held-for-sale		—			2,000			2,000			—			(600	)		(600	)
Gain on investments at fair value		—			4,000			4,000			—			464			464
Gain on extinguishment of debt		—			38			38

(Loss) income before income taxes		(413	)		7,735			7,322
Income tax provision		2			552			554
Income before income taxes											7,862			2,400			10,262
Income tax benefit											(21	)		(243	)		(264	)

Net (loss) income		(415	)		7,183			6,768
Net income											7,883			2,643			10,526
Net income attributable to non-controlling interests		—			(4,020	)		(4,020	)		—			(2,206	)		(2,206	)

Net (loss) income attributable to Blackstone Mortgage Trust, Inc.	$	(415	)	$	3,163		$	2,748
Net income attributable to Blackstone Mortgage Trust, Inc.										$	7,883		$	437		$	8,320

The following table presents our consolidated statement of operations for each segment for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013 ($ in thousands):


	Six Months Ended June 30, 2014									Nine Months Ended September 30, 2014
	Loan			CT Legacy						Loan			CT Legacy
	Origination			Portfolio			Total			Origination			Portfolio			Total
Income from loans and other investments
Interest and related income	$	73,408		$	2,714		$	76,122		$	123,127		$	3,380		$	126,507
Less: Interest and related expenses		27,130			664			27,794			46,843			854			47,697

Income from loans and other investments, net		46,278			2,050			48,328			76,284			2,526			78,810
Other expenses
Management fees		7,807			—			7,807
Management and incentive fees											13,219			—			13,219
General and administrative expenses		6,346			12,208			18,554			9,049			12,871			21,920

Total other expenses		14,153			12,208			26,361			22,268			12,871			35,139
Gain on investments at fair value		—			5,824			5,824			—			7,604			7,604
Income from equity investments in unconsolidated subsidiaries		—			24,294			24,294			—			24,294			24,294

Income before income taxes		32,125			19,960			52,085			54,016			21,553			75,569
Income tax provision		131			399			530			131			281			412

Net income		31,994			19,561			51,555			53,885			21,272			75,157
Net income attributable to non-controlling interests		—			(5,024	)		(5,024	)		—			(6,602	)		(6,602	)

Net income attributable to Blackstone Mortgage Trust, Inc.	$	31,994		$	14,537		$	46,531		$	53,885		$	14,670		$	68,555


	Six Months Ended June 30, 2013									Nine Months Ended September 30, 2013
	Loan			CT Legacy						Loan			CT Legacy
	Origination			Portfolio			Total			Origination			Portfolio			Total
Income from loans and other investments
Interest and related income	$	1,908		$	5,565		$	7,473		$	17,051		$	9,276		$	26,327
Less: Interest and related expenses		168			1,915			2,083			3,991			2,501			6,492

Income from loans and other investments, net		1,740			3,650			5,390			13,060			6,775			19,835
Other expenses
Management fees		983			—			983
Management and incentive fees											3,416			—			3,416
General and administrative expenses		1,900			2,582			4,482			2,923			3,173			6,096

Total other expenses		2,883			2,582			5,465			6,339			3,173			9,512
Valuation allowance on loans held-for-sale		—			1,800			1,800			—			1,200			1,200
Gain on investments at fair value		—			4,000			4,000			—			4,464			4,464
Gain on extinguishment of debt		—			38			38			—			38			38

(Loss) income before income taxes		(1,143	)		6,906			5,763
Income tax provision		40			553			593
Income before income taxes											6,721			9,304			16,025
Income tax benefit											(19	)		348			329

Net (loss) income		(1,183	)		6,353			5,170
Net income											6,740			8,956			15,696
Net income attributable to non-controlling interests		—			(5,537	)		(5,537	)		(193	)		(7,550	)		(7,743	)

Net (loss) income attributable to Blackstone Mortgage Trust, Inc.	$	(1,183	)	$	816		$	(367	)
Net income attributable to Blackstone Mortgage Trust, Inc.										$	6,547		$	1,406		$	7,953

The following table presents our consolidated balance sheet for each segment as of ~~June~~September 30, 2014 and December 31, 2013 ($ in thousands):


	June 30, 2014						September 30, 2014
	Loan		CT Legacy				Loan		CT Legacy
	Origination		Portfolio		Total		Origination		Portfolio		Total
Assets
Cash and cash equivalents	$	120,456	$	—	$	120,456	$	63,343	$	—	$	63,343
Restricted cash		—		11,392		11,392		—		10,855		10,855
Loans receivable, net		3,488,179		—		3,488,179		3,906,226		—		3,906,226
Equity investments in unconsolidated subsidiaries		—		14,038		14,038		—		14,990		14,990
Accrued interest receivable, prepaid expenses, and other assets		29,803		90,901		120,704		29,727		73,332		103,059

Total assets	$	3,638,438	$	116,331	$	3,754,769	$	3,999,296	$	99,177	$	4,098,473

Liabilities and Equity
Accounts payable, accrued expenses, and other liabilities	$	34,036	$	37,309	$	71,345	$	45,309	$	37,702	$	83,011
Repurchase obligations		1,779,650		—		1,779,650
Revolving repurchase facilities								1,669,406		—		1,669,406
Asset-specific repurchase agreements								226,961		—		226,961
Loans participations sold								447,977		—		447,977
Convertible notes, net		160,671		—		160,671		161,259		—		161,259
Participations sold		461,078		—		461,078

Total liabilities		2,435,435		37,309		2,472,744		2,550,912		37,702		2,588,614
Equity
Total Blackstone Mortgage Trust, Inc. stockholders’ equity		1,203,003		36,305		1,239,308		1,448,384		29,355		1,477,739
Non-controlling interests		—		42,717		42,717		—		32,120		32,120

Total equity		1,203,003		79,022		1,282,025		1,448,384		61,475		1,509,859

Total liabilities and equity	$	3,638,438	$	116,331	$	3,754,769	$	3,999,296	$	99,177	$	4,098,473


	December 31, 2013						December 31, 2013
	Loan		CT Legacy				Loan		CT Legacy
	Origination		Portfolio		Total		Origination		Portfolio		Total
Assets
Cash and cash equivalents	$	52,342	$	—	$	52,342	$	52,342	$	—	$	52,342
Restricted cash		—		10,096		10,096		—		10,096		10,096
Loans receivable, net		2,000,223		47,000		2,047,223		2,000,223		47,000		2,047,223
Equity investments in unconsolidated subsidiaries		—		22,480		22,480		—		22,480		22,480
Accrued interest receivable, prepaid expenses, and other assets		21,020		59,619		80,639		21,020		59,619		80,639

Total assets	$	2,073,585	$	139,195	$	2,212,780	$	2,073,585	$	139,195	$	2,212,780

Liabilities and Equity
Accounts payable, accrued expenses, and other liabilities	$	21,104	$	76,049	$	97,153	$	21,104	$	76,049	$	97,153
Repurchase obligations		1,109,353		—		1,109,353
Revolving repurchase facilities								863,622		—		863,622
Asset-specific repurchase agreements								245,731		—		245,731
Loan participations sold								90,000		—		90,000
Convertible notes, net		159,524		—		159,524		159,524		—		159,524
Participations sold		90,000		—		90,000

Total liabilities		1,379,981		76,049		1,456,030		1,379,981		76,049		1,456,030
Equity
Total Blackstone Mortgage Trust, Inc. stockholders’ equity		693,604		24,305		717,909		693,604		24,305		717,909
Non-controlling interests		—		38,841		38,841		—		38,841		38,841

Total equity		693,604		63,146		756,750		693,604		63,146		756,750

Total liabilities and equity	$	2,073,585	$	139,195	$	2,212,780	$	2,073,585	$	139,195	$	2,212,780

On July 24, 2014, CT Legacy Partners made a $20.0 million distribution to its Class A-1, Class A-2, and Class B common shareholders, including $8.3 million to us. We paid $1.4 million of this distribution under the CT Legacy Partner’s management incentive awards plan.

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 should be read in conjunction with the unaudited consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form10-Q. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion 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, 2013 and elsewhere in this quarterly report on Form 10-Q.

We operate our real estate finance business through a Loan Origination segment and a CT Legacy Portfolio segment. The Loan Origination segment includes our activities associated with the origination and acquisition of mortgage loans, the capitalization of our loan portfolio, and the costs associated with operating our business generally. The CT Legacy Portfolio segment includes the activities specifically related to our legacy investments which preceded the re-launch of our originations business in May 2013.

As a real estate finance company, we believe the key financial measures and indicators for our business are earnings per share, dividends declared, Core Earnings, and book value per share. For the three months ended ~~June~~September 30, 2014 we recorded earnings per share of ~~$0.70,~~$0.45, declared a dividend of ~~$0.48~~$0.50 per share, and reported ~~$0.43~~$0.50 per share of Core Earnings. In addition, our book value per share as of ~~June~~September 30, 2014 was ~~$25.51.~~$25.57. As further described below, Core Earnings is a measure that is not prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. We use Core Earnings to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that are not necessarily indicative of our current loan origination portfolio and operations.

The following table sets forth the calculation of basic and diluted net income per share and the allocation of basic and diluted net income per share between our two reportable segments based on the weighted-average of our shares of class A common stock, restricted class A common stock, and deferred stock units outstanding ($ in thousands, except per share data):


	Three Months Ended				Three Months ended September 30, 2014						Three Months ended
	June 30, 2014		March 31, 2014		Loan Origination		CT Legacy Portfolio		Total		June 30, 2014
Net income⁽¹⁾	$	33,466	$	13,065	$	21,890	$	134	$	22,024	$	33,466
Weighted-average shares outstanding, basic and diluted		47,977,813		37,967,365		49,211,205		49,211,205		49,211,205		47,977,813

Net income per share, basic and diluted	$	0.70	$	0.34	$	0.45	$	—	$	0.45	$	0.70

Dividends per share									$	0.50	$	0.48

The ~~$0.36~~$0.25 per share ~~increase~~decrease in net income for the three months ended September 30, 2014 as compared to the three months ended June 30, 2014 was primarily due to promote revenue that we recognized during the three months ended June 30, 2014 ~~was due to (i) continued growth in our Loan Origination segment, (ii) promote revenue~~ from our carried interest in CTOPI, and (iii) net gains on investments carried at fair value in the CT Legacy Portfolio. This was in part offset by an increase in the total number of shares outstanding as a result of our class A common stock offering in April 2014. The following table allocates our net income per share between our two reportable segments ($ in thousands, except per share data):

~~The following table compares our operating results for the three months ended June 30, 2014 and March 31, 2014 ($ in thousands, except per share data):~~

Income from loans and other investments increased $5.2 million, or 23.9%, on a net basis during the three months ended June 30, 2014 compared to the three months ended March 31, 2014. The increase was primarily due to (i) earning a full quarter of interest on the loans originated during the three months ended March 31, 2014, and (ii) additional interest earned on the $1.0 billion of loans funded during the three months ended June 30, 2014.CTOPI. This was partially offset by ~~additional interest expense incurred on our repurchase agreements and senior loan participations sold.~~

Other operating expenses are comprised of management fees paid to our Manager and general and administrative expenses. Other operating expenses increased by $13.2 million during the three months ended June 30, 2014 compared to the three months ended March 31, 2014 due to (i) $11.5 million of expenses related to the CT Legacy Portfolio segment incentive plans, primarily as a ~~result of payments triggered by CTOPI promote distributions received, (ii) $1.0 million of additional management fees payable to our Manager, and (iii) a $548,000~~16% increase in ~~non-cash restricted stock amortization related to~~ the ~~accelerated vesting of certain awards under the plan.~~

~~During the three months ended June 30, 2014, we recognized (i) $24.3 million of promote revenue from~~in our ~~carried interest in CTOPI, and (ii) $7.2 million of net gains on investments carried at fair value in the CT Legacy Portfolio.~~

~~During the three months ended March 31, 2014, we recognized $1.3 million of net losses on investments carried at fair value in the CT Legacy Portfolio.~~

On June 13, 2014, we declared a dividend of $0.48 per share, or $23.3 million, which was paid on July 15, 2014 to common stockholders of record as of June 30, 2014. On March 14, 2014, we declared a dividend of $0.48 per share, or $18.9 million, which was paid on April 15, 2014 to class A common stockholders of record as of March 31, 2014.

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 Core Earnings as described below.Loan Origination segment.

Core Earnings is a non-GAAP measure, which we define as GAAP net income (loss), including realized gains and losses not otherwise included in GAAP net income (loss), and excluding (i) net income (loss) attributable to our CT Legacy Portfolio segment, (ii) non-cash equity compensation expense, (iii) incentive management fees, (iv) depreciation and amortization, (v) unrealized gains (losses), and (vi) certain non-cash items. Core 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.

We believe that Core Earnings provides meaningful information to consider in addition to our net income and cash flow from operating activities determined in accordance with GAAP. This adjusted measure 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 origination portfolio and operations. We also use Core Earnings to calculate the incentive and base management fees due to our Manager under our management agreement and, as such, we believe that the disclosure of Core Earnings is useful to our investors.

Core Earnings does not represent net income or cash generated from operating activities and should not be considered as an alternative to GAAP net income, or an indication of our cash flow from GAAP operating activities, a measure of our liquidity, or an indication of funds available for our cash needs. In addition, our methodology for calculating Core Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported Core Earnings may not be comparable to the Core Earnings reported by other companies.

The following table provides a reconciliation of Core Earnings to GAAP net income ($ in thousands, except per share data):


	Three Months Ended					Three Months Ended
	June 30, 2014			March 31, 2014		September 30, 2014			June 30, 2014
Net income⁽¹⁾	$	33,466		$	13,065	$	22,024		$	33,466
CT Legacy Portfolio segment net (income) loss		(15,508	)		970
CT Legacy Portfolio segment net income							(134	)		(15,508	)
Incentive management fees							842			—
Amortization of discount on convertible notes		397			391		404			397
Unrealized (gain) loss on foreign currency remeasurement		(235	)		32
Unrealized gain on foreign currency remeasurement							—			(235	)
Non-cash compensation expense		2,382			1,834		1,619			2,382

Core earnings	$	20,502		$	16,292
Core Earnings						$	24,755		$	20,502

Weighted-average shares outstanding, basic and diluted		47,977,813			37,967,365		49,211,205			47,977,813

Core earnings per share, basic and diluted	$	0.43		$	0.43
Core Earnings per share, basic and diluted						$	0.50		$	0.43

The following table calculates our book value per share and the allocation of our book value per share between our two reportable segments ($ in thousands, except per share data):


					September 30, 2014
	June 30, 2014		March 31, 2014		Loan Origination		CT Legacy Portfolio		Total		June 30, 2014
Stockholders’ equity	$	1,239,308	$	970,083	$	1,448,384	$	29,355	$	1,477,739	$	1,239,308
Shares
Class A common stock		47,935,370		38,655,080		57,193,899		57,193,899		57,193,899		47,935,370
Restricted class A common stock		544,133		621,571		485,606		485,606		485,606		544,133
Stock units		108,391		106,188
Deferred stock units						113,486		113,486		113,486		108,391

		48,587,894		39,382,839		57,792,991		57,792,991		57,792,991		48,587,894

Book value per share	$	25.51	$	24.63	$	25.06	$	0.51	$	25.57	$	25.51

On a consolidated basis, our book value per share as of ~~June~~September 30, 2014 increased by ~~$0.88~~$0.06 from ~~March 31,~~June 30, 2014. The increase was due to the issuance of 9,200,000 shares of class A common stock in a public offering at a price to the underwriters of ~~$27.72~~$27.49 per share, partially offset by (i) foreign currency valuation adjustments and (ii) the excess of dividends declared over GAAP net income during the quarter. ~~The following table allocates book value per share between our two reportable segments ($ in thousands, except per share data):~~

The Loan Origination segment includes our activities associated with the origination and acquisition of mortgage loans, the capitalization of our loan portfolio, and the costs associated with operating our business generally. During the quarter ended ~~June~~September 30, 2014, our Loan Origination segment originated ~~$1.1 billion~~$670.5 million of new loan commitments, funded ~~$1.0 billion~~$556.6 million under new and existing loans, and generated interest income of ~~$41.4~~$49.7 million. These loan originations were primarily financed by ~~$541.9 million of proceeds from loans sales and principal collections, $254.8~~$252.6 million of net proceeds from the sale of our class A common stock, ~~and $246.3~~$124.7 million of additional net borrowings under our ~~repurchase facilities.~~secured financings, and $109.1 million of proceeds from loans sales and principal collections. We incurred interest expense of ~~$15.5~~$19.7 million during the quarter, which resulted in ~~$25.9~~$30.0 million of net interest income during the quarter.

The following table details our loan originations activity during the quarter ended ~~June~~September 30, 2014 ($ in thousands):


	Loans		Loan		Loan		Loans		Loan		Loan
	Originated		Commitments⁽²⁾		Fundings⁽³⁾		Originated		Commitments⁽²⁾		Fundings⁽³⁾
Senior loans⁽¹⁾		11	$	1,097,542	$	1,000,694		8	$	670,514	$	556,328
Subordinate loans		—		—		48		—		—		240

Total		11	$	1,097,542	$	1,000,742		8	$	670,514	$	556,568

As of ~~June~~September 30, 2014, the majority of loans in the Loan Origination segment were senior mortgage loans or investments that are not structured as mortgages, but have risk exposure substantially similar to senior mortgage loans.

The following table details overall statistics for our ~~loans receivable~~loan portfolio within the Loan Origination segment ($ in thousands):


	June 30, 2014			September 30, 2014
Number of loans		48			55
Principal balance	$	3,514,032		$	3,940,626
Net book value	$	3,488,179		$	3,906,226
Weighted-average cash coupon⁽¹⁾		L+4.46	%		L+4.42	%
Weighted-average all-in yield⁽¹⁾		L+5.02	%		L+4.97	%
Weighted-average maximum maturity (years)⁽²⁾		4.1			3.9

The charts below detail the geographic distribution and types of properties securing these loans, as of ~~June~~September 30, 2014 (net book value, % of total):

Refer to section V of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for details of our loan portfolio, on a loan-by-loan basis.

We actively manage the investments in our Loan Origination portfolio and exercise the rights afforded to us as a lender, including collateral level budget approvals, lease approvals, loan covenant enforcement, escrow/reserve management/collection, collateral release approvals and other rights that we may negotiate.

As discussed in Note 2 to our consolidated financial statements, our Manager performs a quarterly review of our loan portfolio, assesses the performance of each loan, and assigns iteach loan a risk rating between “1” (less risk) to “8” (greater risk). Loans that pose a higher risk of non-performance and/or loss are placed on our watch list. Watch list loans are those with an internal risk rating of “4” or higher.

~~As of June 30, 2014, all~~All of the investments in the Loan Origination segment are performing as expected and the weighted-average risk rating of our loan portfolio was ~~2.8. As~~2.8 as of both September 30, 2014 and December 31, ~~2013, the weighted-average risk rating of our loan portfolio was 2.8.~~2013.

During the three months ended June 30, 2014, we entered into one revolving repurchase facility and one asset-specific repurchase agreement, providing an aggregate of $694.4 million of credit capacity.Secured Financings

The following table details our revolving repurchase ~~borrowings~~facilities outstanding ($ in thousands):


	June 30, 2014										Dec. 31, 2013		September 30, 2014										Dec. 31, 2013 Borrowings Outstanding
	Maximum		Collateral		Repurchase Borrowings⁽³⁾						Borrowings		Maximum		Collateral		Repurchase Borrowings⁽³⁾
Lender	Facility Size⁽¹⁾		Assets⁽²⁾		Potential		Outstanding		Available		Outstanding		Facility Size⁽¹⁾		Assets⁽²⁾		Potential		Outstanding		Available
Revolving Repurchase Facilities
Wells Fargo													$	500,000	$	574,395	$	447,994	$	360,725	$	87,269	$	—
Bank of America	$	500,000	$	517,280	$	406,653	$	387,653	$	19,000	$	271,320		500,000		537,159		424,404		353,542		70,862		271,320
Citibank		500,000		611,459		461,556		351,245		110,311		334,692		500,000		584,020		441,567		324,429		117,138		334,692
JP Morgan⁽⁴⁾		510,697		467,722		354,776		293,600		61,176		257,610		498,546		519,159		396,587		269,618		126,969		257,610
Wells Fargo		500,000		301,083		231,600		190,125		41,475		—
MetLife														500,000		341,524		263,889		232,389		31,500		—
Morgan Stanley⁽⁵⁾		425,875		169,804		135,765		135,765		—		—		406,025		168,930		128,703		128,703		—		—
MetLife		500,000		214,524		165,369		165,369		—		—

Subtotal		2,936,572		2,281,872		1,755,719		1,523,757		231,962		863,622
Asset-Specific Repurchase Agreements
Wells Fargo⁽⁶⁾		148,110		155,184		120,485		120,485		—		245,731
Goldman Sachs		194,400		169,260		135,408		135,408		—		—
													$	2,904,571	$	2,725,187	$	2,103,144	$	1,669,406	$	433,738	$	863,622
Total	$	3,279,082	$	2,606,316	$	2,011,612	$	1,779,650	$	231,962	$	1,109,353

The following table details our asset-specific repurchase agreements ~~outstanding with an aggregate book balance of $255.9 million, a cash coupon of 2.60%,~~ and ~~an all-in cost of 2.96%, as well as three~~ loan participations sold ~~outstanding with an aggregate book balance~~as of ~~$461.1 million, a cash coupon of LIBOR plus 2.99%, and an all-in cost of LIBOR plus 3.21%.~~ September 30, 2014 ($ in thousands):

Refer to ~~Notes~~Note 6 ~~and 7~~ to our consolidated financial statements for additional terms and details of our ~~repurchase facilities and participations sold,~~secured financings, including certain financial covenants.

Our Loan Origination portfolio as of ~~June~~September 30, 2014 was comprised of floating rate loans financed by floating rate secured debt, which results in a return on equity that is correlated to LIBOR. Generally, our business model is such that rising interest rates will increase our net income, while declining interest rates will decrease net income. For instance, all other things being equal, as of ~~June~~September 30, 2014, a 100 basis point increase in LIBOR would have increased our net income by ~~$11.8~~$15.0 million per annum, or ~~$0.25~~$0.26 per share.

The following table details our Loan Origination segment’s sensitivity to interest rates ($ in thousands):


	June 30, 2014			September 30, 2014
Floating rate loans⁽¹⁾	$	3,514,032		$	3,940,626
Floating rate debt⁽¹⁾⁽²⁾		(2,240,728	)		(2,344,344	)

Net floating rate exposure	$	1,273,304		$	1,596,282

Net income impact from 100 bps increase in LIBOR⁽³⁾	$	11,806		$	15,038

Per share amount, basic and diluted	$	0.25		$	0.26

In November 2013, we issued $172.5 million aggregate principal amount of 5.25% convertible senior notes due on December 1, 2018, or the Convertible Notes. The Convertible Notes issuance costs, including underwriter discounts, are amortized through interest expense over the life of the Convertible Notes using the effective interest method. Including this amortization, our all-in cash cost of the Convertible Notes is 5.87%.

Refer to Notes 2 and 67 to our consolidated financial statements for additional discussion of our Convertible Notes.

Our CT Legacy Portfolio consists of: (i) our interests in CT Legacy Partners; (ii) our carried interest in CTOPI, a private investment fund that was previously under our management and is now managed by an affiliate of our Manager; and (iii) our subordinate interests in CT CDO I, a consolidated securitization vehicle.

During the three months ended ~~June~~September 30, 2014, our CT Legacy Portfolio segment recorded net income of ~~$15.5 million~~$134,000 driven primarily by ~~promote revenue from our carried interest in CTOPI and~~ net unrealized gains on investments carried at fair value in CT Legacy Partners.

Our investment in CT Legacy Partners represents our 52% equity interest in a vehicle we formed to own and finance certain assets that we retained in connection with a comprehensive debt restructuring in 2011. As of June 30, 2014, the CT Legacy Partners portfolio consisted of cash, loans, securities, and other assets.

The following table details the components of our gross investment in CT Legacy Partners included in our consolidated balance sheet, as well as our net investment in CT Legacy Partners after future payments under the management incentive awards plan as of June 30, 2014 ($ in thousands):

CT Legacy Partners is a subsidiary that holds certain of our legacy assets and is beneficially owned 52% by us and 48% by other third-party investors. In addition to its common equity, CT Legacy Partners has also issued class B common shares, a subordinate class of equity which entitles its holders to receive approximately 25% of the dividends that would otherwise be payable to us on our equity interest in CT Legacy Partners. Further, CT Legacy Partners has issued class A preferred shares which entitle their holder, an affiliate of our Manager, to cumulative preferred distributions in an amount generally equal to the greater of (i) 2.5% of certain of CT Legacy Partners’ assets, and (ii) $1.0 million per annum.

As of September 30, 2014, the CT Legacy Partners portfolio consisted of cash, loans, securities, and other assets. As of September 30, 2014, CT Legacy Partners’ total equity was $55.0 million, of which $22.9 million was owned by Blackstone Mortgage Trust, Inc., and $32.1 million was allocated to non-controlling interests. Assuming a $4.3 million fully-vested payment of the related management incentive awards plan, our net interest in CT Legacy Partners would be $18.6 million. We periodically accrue a payable for the management incentive awards plan based on the vesting schedule for the awards and continued employment with an affiliate of our Manager of the award recipients. As of September 30, 2014, our balance sheet includes $2.4 million in accounts payable and accrued expenses for the management incentive awards plan. Refer to Note 9 to our consolidated financial statements for additional discussion of the CT Legacy Partners management incentive plan.

CTOPI is a private equity real estate fund that we sponsored and formed in 2007. The fund invested $491.6 million in 39 transactions between 2007 and the end of its investment period in 2012. To date, $452.3 million of these investments have been realized and $39.3 million remain outstanding (carried at their estimated fair value of $64.2 million or 1.6x cost) as of June 30, 2014. In 2012, we transferred our management of CTOPI and sold our 4.6% co-investment to Blackstone. However, we retained our carried interest in CTOPI following the ~~sale.~~

~~Our carried interest in CTOPI~~sale, which entitles us to earn promote revenue in an amount equal to 17.7% of the fund’s profits, after a 9% preferred return and 100% return of capital to the CTOPI partners. We own a net 55% of the carried interest of CTOPI’s general partner; the remaining 45% is payable under previously issued incentive awards. Refer to Note 5 to our consolidated financial statements for additional discussion of the CTOPI incentive awards.

During the ~~three~~nine months ended ~~June~~September 30, 2014, CTOPI returned all capital to its limited partners and made a $14.1 million promote distribution to us. In addition, the return of investor capital by CTOPI eliminated the remaining contingencies related to our recognition of $10.2 million of prior tax advance distributions, resulting in total promote revenue recognized of $24.3 million.

As of ~~June~~September 30, 2014, we had been allocated ~~$7.7~~$8.2 million of promote revenue from CTOPI based on a hypothetical liquidation of the fund at its net asset value, and after payment of the related incentive awards. ~~We have elected to~~Generally, we defer the recognition of income on our carried interest in CTOPI until cash is collected or appropriate contingencies have been eliminated. As a result, our net investment in the CTOPI carried interest had a book value of zero as of ~~June~~September 30, 2014.

~~Refer to Note 5 of our consolidated financial statements for additional discussion of the CTOPI incentive management fee awards to our former employees.~~

As of ~~June~~September 30, 2014, our consolidated balance sheet included an aggregate $28.9 million of assets and ~~$19.6~~$20.0 million of liabilities related to CT CDO I, a highly-levered securitization vehicle that we formed in 2004.

Specifically, we own the subordinate debt and equity positions of CT CDO I. As a result of consolidation, our subordinate debt and equity ownership interests in CT CDO I are not included on our balance sheet, which instead reflects both the assets held and debt issued by CT CDO I to third parties. Similarly, our operating results and cash flows include the gross amounts related to the assets and liabilities of CT CDO I, as opposed to our net economic interests in this entity.

Our economic interest in the loans receivable assets held by CT CDO I ~~which is consolidated on our balance sheet,~~ is restricted by the structural provisions of CT CDO I, and our recovery of these assets will be limited by its distribution provisions. The liabilities of CT CDO I, which are also consolidated on our balance sheet, are non-recourse to us, and can only be satisfied by proceeds from its collateral asset pool. We are not obligated to provide, nor have we provided, any financial support to CT CDO I.

The following table compares our Loan Origination segment’s operating results for the three months ended September 30, 2014 and June 30, 2014 ($ in thousands, except per share data):

Income from loans and other investments increased $4.1 million, or 16.0%, on a net basis during the three months ended September 30, 2014 compared to the three months ended June 30, 2014. The increase was primarily due to (i) earning a full quarter of interest on the loans originated during the three months ended June 30, 2014, and (ii) additional interest earned on the $556.6 million of loans funded during the three months ended September 30, 2014. This was partially offset by additional interest expense incurred on our repurchase agreements and senior loan participations sold.

Other operating expenses are comprised of management and incentive fees payable to our Manager and general and administrative expenses. Other operating expenses increased by $206,000 during the three months ended September 30, 2014 compared to the three months ended June 30, 2014 due to (i) $842,000 of incentive fees incurred during the third quarter, and (ii) an increase of $160,000 of management fees. This was partially offset by a $764,000 decrease in non-cash restricted stock amortization resulting from a second quarter accelerated vesting of certain awards under the plan.

The following table sets forth information regarding our consolidated results of operations and certain key operating metrics ~~for the three months ended June 30, 2014 and 2013~~ ($ in thousands, except per share data):


														Three Months Ended						2014 vs		Nine Months Ended						2014 vs
													September 30,						2013		September 30,						2013
	2014			2013			$			%			2014			2013			$		2014			2013			$
Income from loans and other investments
Interest and related income	$	42,466		$	6,017		$	36,449			605.8	%	$	50,386		$	18,853		$	31,533	$	126,507		$	26,327		$	100,180
Less: Interest and related expenses		15,720			1,306			14,414			N/M			19,903			4,407			15,496		47,697			6,492			41,205

Income from loans and other investments, net		26,746			4,711			22,035			467.7	%		30,483			14,446			16,037		78,810			19,835			58,975
Other expenses
Management fees		4,410			920			3,490			379.3	%
Management and incentive fees														5,412			2,433			2,979		13,219			3,416			9,803
General and administrative expenses		15,356			2,507			12,849			512.5	%		3,368			1,615			1,753		21,920			6,096			15,824

Total other expenses		19,766			3,427			16,339			476.8	%		8,780			4,048			4,732		35,139			9,512			25,627
Impairments, provisions, and valuation adjustments														1,780			(136	)		1,916		7,604			5,702			1,902
Income from equity investments in unconsolidated subsidiaries		24,294			—			24,294			100.0	%		—			—			—		24,294			—			24,294
Impairments, provisions, and valuation adjustments		7,163			6,038			1,125			18.6	%

Income before provision for taxes		38,437			7,322			31,115			425.0	%		23,483			10,262			13,221		75,569			16,025			59,544
Income tax (benefit) provision		(2	)		554			(556	)		N/M			(118	)		(264	)		146		412			329			83

Net income	$	38,439		$	6,768		$	31,671			468.0	%	$	23,601		$	10,526		$	13,075	$	75,157		$	15,696		$	59,461
Net income attributable to non-controlling interests		(4,973	)		(4,020	)		(953	)		23.7	%		(1,577	)		(2,206	)		629		(6,602	)		(7,743	)		1,141

Net income attributable to Blackstone Mortgage Trust, Inc.	$	33,466		$	2,748		$	30,718			N/M		$	22,024		$	8,320		$	13,704	$	68,555		$	7,953		$	60,602

Net income per share - basic and diluted	$	0.70		$	0.22		$	0.48			218.2	%	$	0.45		$	0.29		$	0.16	$	1.52		$	0.53		$	0.99
Dividends per share	$	0.48		$	—		$	0.48			100.0	%	$	0.50		$	0.27		$	0.23	$	1.46		$	0.27		$	1.19

Income from loans and other investments, net ~~was $26.7~~increased $16.0 million and $59.0 million for the three and nine months ended ~~June~~September 30, 2014, ~~representing an increase of $22.0 million~~respectively, as compared to the ~~three months ended June 30,~~corresponding periods in 2013. ~~This increase is~~These increases were a result of the ~~re-launch~~continued growth of our loan originations business that was re-launched in May 2013.

Other expenses ~~include~~includes management and incentive fees ~~paid~~payable to our Manager and general and administrative expenses. Other expenses increased by ~~$16.3~~$4.7 million during the three months ended ~~June~~September 30, 2014 compared to the three months ended ~~June~~September 30, 2013 primarily due to (i) an increase of $11.1 million of compensation expenses associated with our CT Legacy Portfolio segment incentive plans, primarily as a result of payments triggered by CTOPI promote distributions received, (ii) an increase of $3.5$2.2 million of management fees payable to our Manager ~~primarily driven by~~as a result of an ~~increase to our~~increased outstanding Equity balance, as defined in ~~the~~our management agreement, ~~as a result of~~due to additional net proceeds received from the sale of shares of our class A common stock, ~~and (iii) $2.3~~(ii) $1.5 million of non-cash restricted stock amortization related to shares awarded under our long-term incentive plans, ~~which awards were issued during the three months ended December 31, 2013. This was offset by a $499,000 reduction~~(iii) $842,000 of ~~professional fees, operating costs, and other expenses which were incurred as a result of the re-launch of our business in May 2013.~~

~~During the three months ended June 30, 2014, we recognized $24.3 million of promote revenue from CTOPI. No such income was recognized during the three months ended June 30, 2013.~~

During the three months ended June 30, 2014, we recognized $7.2 million of net unrealized gains on investments carried at fair value by CT Legacy Partners. During the three months ended June 30, 2013, we recognized (i) $4.0 million of net unrealized gains on investments held by CT Legacy Partners and (ii) a $2.0 million positive valuation adjustment on CT CDO I’s loan classified as held-for-sale.

During the three months ended June 30, 2014, we declared a dividend of $0.48 per share, or $23.3 million, which was paid on July 15, 2014 to common stockholders of record as of June 30, 2014. We did not declare any dividends during the three months ended June 30, 2013.

The following table sets forth information regarding our consolidated results of operations and certain key operating metrics for the six months ended June 30, 2014 and 2013 ($ in thousands, except per share data):

Income from loans and other investments, net was $48.3 million for the six months ended June 30, 2014, representing an increase of $42.9 million compared to the six months ended June 30, 2013. This increase is a result of the re-launch of our originations business in May 2013.

~~Other expenses includes~~incentive management fees, ~~paid to our Manager~~ and (iv) $249,000 of additional general ~~and administrative~~operating expenses.

Other expenses increased by ~~$20.9~~$25.6 million during the ~~six~~nine months ended ~~June~~September 30, 2014 compared to the ~~six~~nine months ended ~~June~~September 30, 2013 primarily due to (i) a $10.2 million increase in compensation expenses associated with our CT Legacy Portfolio segment incentive plans, primarily as a result of payments triggered by CTOPI promote distributions received, (ii) an increase of ~~$6.8~~$9.0 million of management fees payable to our Manager, primarily ~~driven by an increase to our outstanding Equity balance, as defined in the management agreement,~~ as a result of additional net proceeds received from the sale of shares of our class A common stock, ~~and~~ (iii) ~~$4.0~~$5.6 million of non-cash restricted stock amortization related to shares awarded under our long-term incentive plans, ~~which awards were issued during~~and (iv) $842,000 of incentive management fees.

During the three and nine months ended September 30, 2014, impairments, provisions, and valuation adjustments represented net gains on investments carried at fair value by CT Legacy Partners.

During the three months ended ~~December 31, 2013. This was offset~~September 30, 2013, we recognized (i) $464,000 of net gains on investments held by CT Legacy Partners and (ii) a ~~$190,000 reduction~~$600,000 negative valuation adjustment on CT CDO I’s loan classified as held-for-sale. During the nine months ended September 30, 2013, we recognized (i) $4.5 million of ~~professional fees, operating costs,~~net gains on investments held by CT Legacy Partners and ~~other expenses which were incurred in the prior year~~(ii) a $1.2 million positive valuation adjustment on CT CDO I’s loan classified as ~~a result of the re-launch of our business in May 2013.~~held-for-sale.

During the ~~six~~nine months ended ~~June~~September 30, 2014, we recognized $24.3 million of promote revenue from CTOPI. No such income was recognized during the ~~six~~nine months ended ~~June~~September 30, 2013.

During the six months ended June 30, 2014, we recognized $5.8 million of net unrealized gains on investments owned by CT Legacy Partners. During the six months ended June 30, 2013, we recognized (i) $4.0 million of net unrealized gains on investments held by CT Legacy Partners and (ii) a $1.8 million positive valuation adjustment on CT CDO I’s loan classified as held-for-sale.

During the ~~six~~three months ended ~~June~~September 30, 2014, we declared ~~dividends~~a dividend of ~~$0.96~~$0.50 per share, or ~~$42.1 million. We did not declare any dividends during~~$28.8 million, which was paid on October 15, 2014 to common stockholders of record as of September 30, 2014. During the ~~six~~three months ended ~~June~~September 30, 2013, we declared a dividend of $0.27 per share, or $7.8 million, which was paid on October 15, 2013 to common stockholders of record as of September 30, 2013.

During the nine months ended September 30, 2014, we declared aggregate dividends of $1.46 per share, or $71.0 million. During the nine months ended September 30, 2013, we declared aggregate dividends of $0.27 per share, or $7.8 million.

~~On January 14,~~During the first nine months of 2014, we issued ~~9,775,000~~28,175,000 shares of our class A common stock in a public ~~offering~~offerings at a weighted-average price to the underwriters of ~~$26.25~~$27.13 per share. We generated aggregate net proceeds from ~~the issuance~~these issuances of ~~$256.1~~$763.4 million after underwriting discounts and other offering expenses. On April 7, 2014, we issued 9,200,000 shares of class A common stock in a public offering at a price to the underwriters of $27.72 per share. We generated net proceeds from the issuance of $254.8 million afterdeducting underwriting discounts and other offering expenses.

See Note 8 to our consolidated financial statements for additional details regarding our recent equity offerings.

During the ~~six~~nine months ended 2014, we entered into three revolving repurchase facilities, ~~and~~ one asset-specific repurchase agreement, and sold two senior loan participations, providing an additional ~~$1.6~~$2.0 billion of credit capacity. As of ~~June~~September 30, 2014, we had aggregate borrowings of ~~$1.5~~$1.7 billion outstanding under our revolving repurchase facilities, with a weighted-average cash coupon of LIBOR plus ~~1.95%~~1.90% per annum and a weighted-average all-in cost of credit, including associated fees and expenses, of LIBOR plus ~~2.19%~~2.14% per ~~annum, and~~annum. As of September 30, 2014, outstanding borrowings under these facilities had a weighted-average ~~initial~~ maturity, excluding extension options and term-out provisions, of ~~2.3~~2.1 years. We also had three asset-specific repurchase agreements outstanding with an aggregate ~~book~~outstanding balance of ~~$255.9~~$227.0 million, a cash coupon of ~~2.60%~~2.62%, and an all-in cost of ~~2.96%~~3.00%, as well as three loan participations sold outstanding with an aggregate book balance of ~~$461.1~~$448.0 million, a cash coupon of LIBOR plus ~~2.99%~~3.01%, and an all-in cost of LIBOR plus ~~3.21%~~3.22%.

See Note 6 to our consolidated financial statements for additional details regarding our secured financings.

As of ~~June~~September 30, 2014, we also had $172.5 million aggregate principal amount of convertible notes outstanding with a net book value of ~~$160.7~~$164.7 million, which carry a cash coupon of LIBOR plus 5.25% and an all-in cost of 5.87%. These notes mature in December 2018.

See Note 7 to our consolidated financial statements for additional details regarding our convertible notes.

Our primary sources of liquidity include cash and cash equivalents and available borrowings under our revolving repurchase facilities, which are set forth in the following table ($ in thousands):


	June 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013
Cash and cash equivalents	$	120,456	$	52,342	$	63,343	$	52,342
Available borrowings under repurchase facilities		231,962		218,555
Available borrowings under revolving repurchase facilities						433,738		218,555

	$	352,418	$	270,897	$	497,081	$	270,897

~~See Note 6 to our consolidated financial statements for additional terms and details of our repurchase facilities.~~

In addition to our current sources of liquidity, we have access to liquidity through public offerings of debt and equity securities. To facilitate such offerings, in July 2013, we filed a shelf registration statement with the SEC that is effective for a term of three years and will expire in July 2016. 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. In addition, we adopted a dividend reinvestment and direct stock purchase plan, under which we registered and reserved for issuance, in the aggregate, 10,000,000 shares of class A common stock, and entered into equity distribution agreements pursuant to which we may sell, from time to time, up to an aggregate ~~sales price~~ of $200.0 million of our class A common stock.

In addition to our ongoing loan origination activity, our primary liquidity needs include interest and principal payments under our ~~$2.4~~$2.5 billion of outstanding ~~repurchase obligations,~~secured financings and convertible notes, ~~and participation agreements,~~ our ~~$407.3~~$513.4 million of unfunded loan commitments, dividend distributions to our stockholders, and operating expenses.

We have no obligations to provide financial support to CT Legacy Partners, CTOPI, or CT CDO I, and all debt obligations of these entities, some of which are consolidated onto our financial statements, are non-recourse to us.

We are also required to pay our Manager a base management fee, an incentive fee, and reimbursements for certain expenses pursuant to our management agreement. Refer to Note 9 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 ~~shareholders~~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 Core Earnings as described above.

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


	Six Months Ended June 30,						Nine Months Ended��September 30,
	2014			2013			2014			2013
Cash flows from operating activities	$	34,009		$	4,383		$	57,460		$	14,445
Cash flows from investing activities		(1,448,638	)		(663,250	)		(1,867,100	)		(1,195,694	)
Cash flows from financing activities		1,482,743			703,191			1,822,250			1,176,109

Net increase in cash and cash equivalents	$	68,114		$	44,324		$	12,610		$	(5,140	)

We experienced a net increase in cash of ~~$68.1~~$12.6 million for the ~~six~~nine months ended ~~June~~September 30, 2014, compared to a net ~~increase~~decrease of

~~$44.3~~ $5.1 million for the ~~six~~nine months ended ~~June~~September 30, 2013. The increase during the nine months ended September 30, 2014 was primarily due to the receipt of cash interest on loans in our Loan Origination segment portfolio, net of related interest expense, and other operating activities.

During the ~~six~~nine months ended ~~June~~September 30, 2014, we (i) had net borrowings of ~~$667.6~~$792.3 million under our revolving repurchase ~~facilities,~~obligations and asset-specific repurchase agreements, (ii) generated ~~$510.8~~$763.4 million of net proceeds from the sale of our class A common stock, ~~and~~ (iii) received ~~$271.9~~$403.2 million of loan principal ~~repayments.~~repayments, and (iv) sold $368.9 million of senior loan participations. We used the proceeds from our debt and equity financing activities to originate a net ~~$1.7~~$2.3 billion of new loans during the ~~six~~nine months ~~June~~ended September 30, 2014.

Our consolidated statements of cash flows also include the cash inflows and outflows of consolidated securitization vehicles. While this does not impact our net cash flow, it does increase certain gross cash flow disclosures. As discussed above, other than to the extent we receive cash distributions from the entities in our CT Legacy Portfolio, we generally do not have access to their liquidity.

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 ~~June~~September 30, 2014 and December 31, 2013, we were in compliance with all REIT requirements.

~~During the six months ended June 30, 2014, we recorded a current income tax provision of $530,000 comprised of (i) $342,000 related~~Refer to ~~activities~~Note 10 to our consolidated financial statements for additional discussion of our taxable REIT subsidiaries, (ii) a $124,000 provision reflecting our estimated risk of loss related to an uncertain tax position taken during the period, and (iii) $64,000 related to other items. During the six months ended June 30, 2013, we recorded a current income tax provision of $593,000 comprised of (i) $554,000 related to activities of our taxable REIT subsidiaries and (ii) $39,000 related to other items. We did not have any deferred tax assets or liabilities as of June 30, 2014 or December 31, 2013.taxes.

As a result of our issuance of 25,875,000 shares of class A common stock in May 2013, the availability of our net operating losses, or NOLs, and net capital losses, or NCLs, is generally limited to $2.0 million per annum by change of control provisions promulgated by the Internal Revenue Service with respect to the ownership of Blackstone Mortgage Trust. As of December 31, 2013, we had NOLs of $161.5 million and NCLs of $39.2 million available to be carried forward and utilized in current or future periods. If we are unable to utilize our NOLs, they will expire in 2029. If we are unable to utilize our NCLs, $7.0 million will expire in 2014, $31.4 million will expire in 2015, and $782,000 will expire in 2016 or later.

~~As of June 30, 2014, our tax years 2010 through 2013 remain subject to examination by taxing authorities.~~

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 our Manager 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. There have been no material changes to our Critical Accounting Policies described in our annual report on Form 10-K filed with the Securities and Exchange Commission on February 18, 2014.

The following table provides details of the Loan Origination segment’s portfolio, on a loan-by-loan basis, as of ~~June~~September 30, 2014 ($ in millions):


																			Risk Rating as of																						Risk Rating as of
		Principal		Book		Cash			All-in			Maximum		Geographic	Property	Origination			June 30,	December 31,		Origination		Principal		Book		Cash			All-in			Maximum		Geographic	Property	Origination			September 30,	December 31,
	Loan Type⁽¹⁾	Balance		Balance		Coupon⁽²⁾			Yield⁽²⁾			Maturity⁽³⁾		Location	Type	LTV			2014	2013	Loan Type⁽¹⁾	Date		Balance		Balance		Coupon⁽²⁾			Yield⁽²⁾			Maturity⁽³⁾		Location	Type	LTV			2014	2013
1	Senior loan	$	338.0	$	335.7		L + 4.00	%		L + 4.34	%		5/22/2019	UK	Hotel		57	%	3	N/A	Senior loan		5/22/2014	$	324.8	$	320.3		L + 4.00	%		L + 4.34	%		5/22/2019	UK	Hotel		57	%	3	N/A
2	Senior loan		181.0		179.5		L + 4.50	%		L + 4.86	%		11/9/2018	NY	Condo		68	%	3	3	Senior loan		11/21/2013		181.0		179.7		L + 4.50	%		L + 4.86	%		11/9/2018	NY	Condo		68	%	3	3
3	Sub. mortgage part.		173.8		169.0		L + 5.66	%		L + 9.25	%		4/9/2015	WA	Office		67	%	3	3	Sub. Mortgage part.		10/23/2013		173.8		170.5		L + 5.66	%		L + 9.25	%		4/9/2015	WA	Office		67	%	2	3
4	Senior loan		140.0		139.0		L + 4.75	%		L + 5.27	%		1/9/2019	NY	Office		70	%	3	3	Senior loan		7/31/2014		146.4		145.1		L + 3.50	%		L + 4.01	%		8/9/2019	IL	Office		70	%	3	N/A
5	Senior loan		125.0		124.4		L + 4.30	%		L + 4.63	%		12/1/2017	NY	Hotel		38	%	3	N/A	Senior loan		12/17/2013		140.0		139.1		L + 4.75	%		L + 5.27	%		1/9/2019	NY	Office		70	%	3	3
6	Senior loan		114.6		113.2		L + 5.75	%		L + 6.39	%		6/20/2016	CA	Hotel		43	%	3	N/A	Senior loan		1/30/2014		125.0		124.5		L + 4.30	%		L + 4.63	%		12/1/2017	NY	Hotel		38	%	3	N/A
7	Senior loan		105.9		105.6		L + 3.80	%		L + 3.97	%		6/15/2018	CA	Office		43	%	1	2	Senior loan		6/20/2014		117.5		116.3		L + 5.75	%		L + 6.39	%		6/20/2016	CA	Hotel		44	%	3	N/A
8	Senior loan		101.0		99.6		L + 4.40	%		L + 4.81	%		3/9/2019	Diversified	Hotel		49	%	3	N/A	Senior loan		1/7/2014		110.9		109.6		L + 4.75	%		L + 5.30	%		1/7/2019	Diversified	Other		66	%	3	N/A
9	Senior loan		95.7		95.2		L + 4.40	%		L + 4.58	%		3/9/2019	NY	Office		69	%	3	N/A	Senior loan		2/25/2014		101.0		99.7		L + 4.40	%		L + 4.81	%		3/9/2019	Diversified	Hotel		49	%	3	N/A
10	Senior loan		95.2		94.7		L + 4.38	%		L + 4.61	%		11/9/2018	CA	Hotel		72	%	2	2	Senior loan		2/20/2014		97.0		96.6		L + 4.40	%		L + 4.58	%		3/9/2019	NY	Office		69	%	3	N/A
11	Senior loan		91.0		89.6		L + 4.75	%		L + 5.43	%		1/7/2019	Diversified	Other		65	%	3	N/A	Senior loan		10/30/2013		96.6		96.1		L + 4.38	%		L + 4.61	%		11/9/2018	CA	Hotel		72	%	2	2
12	Senior loan		89.5		89.4		L + 3.70	%		L + 3.83	%		9/30/2020	NY	Multifamily		62	%	3	3	Senior loan		9/30/2013		89.5		89.4		L + 3.70	%		L + 3.83	%		9/30/2020	NY	Multifamily		62	%	3	3
13	Senior loan		87.0		86.1		L + 4.30	%		L + 4.83	%		7/15/2019	NY	Multifamily		79	%	3	N/A	Senior loan		6/26/2014		87.0		86.2		L + 4.30	%		L + 4.83	%		7/15/2019	NY	Multifamily		77	%	3	N/A
14	Senior loan		85.5		85.1		L + 4.25	%		L + 4.64	%		8/10/2018	Diversified	Diversified		59	%	3	3	Senior loan		3/17/2014		86.2		86.0		L + 4.75	%		L + 4.93	%		12/28/2016	NY	Condo		70	%	3	N/A
15	Senior loan		83.3		83.8		L + 4.00	%		L + 4.63	%		3/4/2018	UK	Office		50	%	3	N/A	Senior loan		9/8/2014		86.7		85.3		L + 4.00	%		L + 4.34	%		11/20/2019	ES	Retail		70	%	3	N/A
16	Senior loan		80.0		79.2		L + 4.00	%		L + 4.54	%		6/9/2019	DC	Office		79	%	3	N/A	Senior loan		3/4/2014		86.3		85.0		L + 4.00	%		L + 4.70	%		3/4/2018	UK	Office		52	%	3	N/A
17	Senior loan		79.7		79.5		L + 4.75	%		L + 4.93	%		12/28/2016	NY	Condo		68	%	3	N/A	Senior loan		8/8/2013		85.1		84.8		L + 4.25	%		L + 4.62	%		8/10/2018	Diversified	Diversified		59	%	3	3
18	Senior loan		78.2		77.6		L + 5.00	%		L + 5.38	%		9/14/2018	Diversified	Other		64	%	3	3	Senior loan		5/20/2014		80.0		79.3		L + 4.00	%		L + 4.54	%		6/9/2019	DC	Office		79	%	3	N/A
19	Senior loan		77.6		77.0		L + 3.85	%		L + 4.15	%		6/9/2019	FL	Office		74	%	3	N/A	Senior loan		10/2/2013		78.2		77.7		L + 5.00	%		L + 5.38	%		9/14/2018	Diversified	Other		64	%	2	3
20	Senior loan		77.4		77.1		L + 3.85	%		L + 4.03	%		7/9/2018	GA	Multifamily		74	%	3	3	Senior loan		5/16/2014		77.5		77.0		L + 3.85	%		L + 4.15	%		6/9/2019	FL	Office		74	%	3	N/A
21	Senior loan		73.5		73.4		L + 3.95	%		L + 3.89	%		6/9/2018	CA	Office		73	%	1	2	Senior loan		7/11/2014		76.0		75.2		L + 3.65	%		L + 4.03	%		8/9/2019	IL	Office		64	%	2	N/A
22	Senior loan		68.0		67.9		L + 4.00	%		L + 4.23	%		6/10/2016	NY	Office		68	%	3	3	Senior loan		6/27/2013		74.7		74.5		L + 3.85	%		L + 4.03	%		7/9/2018	GA	Multifamily		72	%	2	3
23	Senior loan		60.5		60.0		L + 4.35	%		L + 4.71	%		1/9/2019	NY	Office		70	%	3	N/A	Senior loan		5/21/2013		73.7		73.6		L + 3.95	%		L + 4.04	%		6/9/2018	CA	Office		73	%	1	2
24	Senior loan		59.0		58.6		L + 3.85	%		L + 4.24	%		10/10/2018	Diversified	Multifamily		76	%	3	3	Senior loan		5/22/2014		69.2		68.5		L + 4.50	%		L + 4.92	%		6/15/2019	CA	Office		67	%	3	N/A
25	Senior loan		55.3		54.7		L + 4.50	%		L + 4.92	%		4/9/2019	NY	Multifamily		65	%	3	N/A	Senior loan		8/8/2013		68.0		67.9		L + 4.00	%		L + 4.23	%		6/10/2016	NY	Office		68	%	3	3
26	Senior loan		52.3		51.5		L + 4.50	%		L + 5.05	%		6/15/2019	CA	Office		67	%	3	N/A	Senior loan		9/27/2013		60.5		60.1		L + 3.85	%		L + 4.23	%		10/10/2018	Diversified	Multifamily		76	%	3	3
27	Senior loan		50.0		49.6		L + 4.20	%		L + 4.73	%		4/9/2019	HI	Hotel		69	%	3	N/A	Senior loan		1/13/2014		60.5		60.0		L + 4.35	%		L + 4.71	%		1/9/2019	NY	Office		70	%	3	N/A
28	Senior loan		49.2		48.8		L + 5.00	%		L + 5.90	%		8/9/2018	VA	Office		74	%	3	3	Senior loan		8/28/2014		59.7		59.3		L + 4.00	%		L + 4.33	%		10/9/2018	NY	Office		57	%	3	N/A
29	Senior loan		48.5		48.9		L + 4.50	%		L + 4.86	%		6/5/2019	UK	Retail		80	%	3	N/A	Senior loan		7/26/2013		57.7		57.3		L + 5.00	%		L + 5.75	%		8/9/2018	VA	Office		75	%	3	3
30	Senior loan		48.4		48.7		L + 5.00	%		L + 5.68	%		12/9/2016	IL	Hotel		53	%	3	3	Senior loan		3/11/2014		55.7		55.2		L + 4.50	%		L + 4.92	%		4/9/2019	NY	Multifamily		65	%	3	N/A


																			Risk Rating as of																						Risk Rating as of
		Principal		Book		Cash			All-in			Maximum		Geographic	Property	Origination			June 30,	December 31,		Origination		Principal		Book		Cash			All-in			Maximum		Geographic	Property	Origination			September 30,	December 31,
	Loan Type⁽¹⁾	Balance		Balance		Coupon⁽²⁾			Yield⁽²⁾			Maturity⁽³⁾		Location	Type	LTV			2014	2013	Loan Type⁽¹⁾	Date		Balance		Balance		Coupon⁽²⁾			Yield⁽²⁾			Maturity⁽³⁾		Location	Type	LTV			2014	2013
31	Senior loan		46.3		46.0		L + 4.25	%		L + 4.64	%		7/10/2018	CO	Hotel		69	%	3	3	Senior loan		4/1/2014		50.0		49.6		L + 4.20	%		L + 4.73	%		4/9/2019	HI	Hotel		69	%	3	N/A
32	Senior loan		46.0		45.7		L + 4.25	%		L + 4.78	%		10/9/2018	CA	Hotel		51	%	3	3	Senior loan		6/25/2013		48.4		48.8		L + 5.00	%		L + 5.67	%		12/9/2016	IL	Hotel		53	%	3	3
33	Senior loan		45.5		45.1		L + 3.85	%		L + 4.26	%		9/10/2018	Diversified	Multifamily		76	%	3	3	Senior loan		9/9/2014		48.5		48.1		L + 4.00	%		L + 4.31	%		9/9/2019	FL	Office		71	%	3	N/A
34	Senior loan		44.3		43.8		L + 4.50	%		L + 4.94	%		1/9/2019	AZ	Office		68^	%	3	3	Senior loan		6/5/2014		47.1		46.7		L + 4.50	%		L + 4.86	%		6/5/2019	UK	Retail		80	%	3	N/A
35	Senior loan		43.5		43.2		L + 4.50	%		L + 5.11	%		7/16/2017	NY	Retail		69	%	3	3	Senior loan		9/4/2013		46.8		46.5		L + 3.85	%		L + 4.25	%		9/10/2018	Diversified	Multifamily		76	%	3	3
36	Senior loan		40.0		38.4		L + 4.00	%		L + 6.14	%		6/30/2018	CA	Office		71	%	3	N/A	Senior loan		7/2/2013		46.3		46.0		L + 4.25	%		L + 4.64	%		7/10/2018	CO	Hotel		69	%	3	3
37	Senior loan		39.1		38.7		L + 4.30	%		L + 4.70	%		4/9/2019	CA	Office		69	%	3	N/A	Senior loan		10/31/2013		46.0		45.8		L + 4.25	%		L + 4.78	%		10/9/2018	CA	Hotel		51	%	3	3
38	Senior loan		39.1		40.4		L + 4.63	%		L + 5.43	%		11/27/2018	UK	Office		71	%	3	3	Senior loan		12/30/2013		44.5		44.1		L + 4.50	%		L + 4.89	%		1/9/2019	AZ	Office		68	%	3	3
39	Senior loan		37.9		37.6		L + 4.00	%		L + 4.46	%		7/20/2019	NL	Office		69	%	3	N/A	Senior loan		7/17/2013		43.5		43.3		L + 4.50	%		L + 5.11	%		7/16/2017	NY	Retail		69	%	3	3
40	Senior loan		37.5		37.2		L + 3.85	%		L + 4.04	%		8/9/2018	IL	Office		68	%	2	2	Senior loan		6/7/2013		42.1		41.8		L + 3.80	%		L + 3.97	%		6/15/2018	CA	Office		27	%	1	2
41	Mezzanine loan⁽⁴⁾		33.6		33.8		L + 12.56	%		L + 12.35	%		12/13/2017	NY	Condo		78	%	3	3	Senior loan		9/26/2014		40.1		39.6		L + 4.00	%		L + 4.67	%		10/9/2019	TX	Office		70	%	3	N/A
42	Senior loan		32.9		33.0		L + 3.95	%		L + 4.20	%		8/9/2017	CO	Hotel		64	%	2	2	Senior loan		3/26/2014		39.8		39.5		L + 4.30	%		L + 4.70	%		4/9/2019	CA	Office		71	%	3	N/A
43	Senior loan		31.0		30.6		L + 4.10	%		L + 4.64	%		1/9/2019	CA	Office		43	%	3	3	Senior loan		6/12/2014		40.0		38.6		L + 4.00	%		L + 6.14	%		6/30/2018	CA	Office		71	%	3	N/A
44	Senior loan		28.0		27.8		L + 4.35	%		L + 4.71	%		12/9/2018	CA	Hotel		55	%	2	3	Senior loan		11/28/2013		39.2		38.6		L + 4.63	%		L + 5.43	%		11/27/2018	UK	Office		68	%	3	3
45	Senior loan		25.2		25.0		L + 5.00	%		L + 5.29	%		11/6/2016	NY	Condo		45	%	3	3	Senior loan		7/12/2013		37.5		37.2		L + 3.85	%		L + 4.04	%		8/9/2018	IL	Office		68	%	2	2
46	Senior loan		27.1		27.1		L + 3.87	%		L + 3.87	%		7/9/2017	NY	Hotel		32	%	2	1	Senior loan		6/18/2014		35.5		35.0		L + 4.00	%		L + 4.46	%		7/20/2019	NL	Office		69	%	3	N/A
47	Senior loan		26.9		26.6		L + 4.25	%		L + 4.66	%		4/9/2019	CA	Office		65	%	3	N/A	Mezzanine loan⁽⁴⁾		12/13/2013		33.9		34.0		L + 12.56	%		L + 12.35	%		12/13/2017	NY	Condo		75	%	3	3
48	Senior loan		26.0		25.8		L + 4.00	%		L + 4.27	%		3/9/2019	AZ	Other		69	%	2	N/A	Senior loan		7/25/2013		32.9		33.0		L + 3.95	%		L + 4.07	%		8/9/2017	CO	Hotel		64	%	2	2
49																					Senior loan		12/20/2013		31.0		30.7		L + 4.10	%		L + 4.64	%		1/9/2019	CA	Office		43	%	3	3
50																					Senior loan		12/9/2013		28.0		27.8		L + 4.35	%		L + 4.71	%		12/9/2018	CA	Hotel		55	%	2	3
51																					Senior loan		4/4/2014		27.6		27.3		L + 4.25	%		L + 4.66	%		4/9/2019	CA	Office		65	%	3	N/A
52																					Senior loan		2/28/2014		26.0		25.8		L + 4.00	%		L + 4.27	%		3/9/2019	AZ	Other		69	%	2	N/A
53																					Senior loan		9/23/2014		25.0		24.9		L + 6.84	%		L + 7.60	%		10/1/2017	NY	Condo		48	%	3	N/A
54																					Senior loan		10/8/2013		10.6		10.6		L + 5.00	%		L + 5.29	%		11/6/2016	NY	Condo		23	%	1	3
55																					Senior loan		7/23/2014		4.1		3.1		L + 5.00	%		L + 5.77	%		8/9/2019	GA	Office		43	%	3	N/A

		$	3,514.0	$	3,488.2		L + 4.46	%		L + 5.02	%		4.1 years				63	%	2.8	2.8				$	3,940.6	$	3,906.2		L + 4.42	%		L + 4.97	%		3.9 years				64	%	2.8	2.8

Our business is exposed to the risks related to interest rate fluctuations. We generally originate floating rate assets and finance those assets with index-matched floating rate liabilities. As a result, we significantly reduce our exposure to changes in portfolio value and cash flow variability related to changes in interest rates.

Our Loan Origination investments are exposed to the risks related to interest rate fluctuations discussed above. The table below details our interest rate exposure to this portfolio ($ in thousands):


	June 30, 2014			September 30, 2014
Floating rate loans⁽¹⁾	$	3,514,032		$	3,940,626
Floating rate debt⁽¹⁾⁽²⁾		(2,240,728	)		(2,344,344	)

Net floating rate exposure	$	1,273,304		$	1,596,282

Net income impact from 100 bps increase in LIBOR⁽³⁾	$	11,806		$	15,038

Per share amount, basic and diluted	$	0.25		$	0.26

Our investments in CT Legacy Partners and CT CDO I are also exposed to the risks related to interest rate fluctuations discussed above, however as liquidating portfolios these investments are more sensitive to credit risk than interest rate risk.

Although our carried interest investment in CTOPI generally relates to a portfolio of interest earning assets, our economic interest in this portfolio relates primarily to the realization of investments purchased at a discount by CTOPI. Accordingly, our investment in this portfolio is not exposed to a significant degree of interest rate risk. Refer to Note 5 to our consolidated financial statements for additional discussion of CTOPI.

In addition to the risks related to fluctuations in asset values and cash flows 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 additional debt service payments due from our borrowers may strain the operating cash flows of the collateral real estate assets and, potentially, contribute to non-performance or, in severe cases, default. This risk is partially mitigated by certain facts we consider during our underwriting process, which in certain cases include a requirement for our borrower to purchase an interest rate cap contract.

Our loans and investments are also subject to credit risk. The performance and value of our loans and investments depend upon the owners’ ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our Manager’s asset management team reviews our investment portfolios and in certain instances is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.

In addition, we are exposed to the risks generally associated with the commercial real estate market, including variances in occupancy rates, capitalization rates, absorption rates, and other macroeconomic factors beyond our control. We seek to manage these risks through our underwriting and asset management processes.

We are exposed to risks related to the equity capital markets, and our related ability to raise capital through the issuance of our class A common stock or other equity instruments. We are also exposed to risks related to the debt

capital markets, and our related ability to finance our business through borrowings under credit facilities or other debt instruments. As a REIT, we are required to distribute a significant portion of our taxable income annually, which constrains our ability to accumulate operating cash flow and therefore requires us to utilize debt or equity capital to finance our business. We seek to mitigate these risks by monitoring the debt and equity capital markets to inform our decisions on the amount, timing, and terms of capital we raise.

The nature of our business requires us to hold our cash and cash equivalents and obtain financing from various financial institutions. This exposes us to the risk that these financial institutions may not fulfill their obligations to us under these various contractual arrangements. We mitigate this exposure by depositing our cash and cash equivalents and entering into financing agreements with high credit-quality institutions.

The nature of our loans and investments also exposes us to the risk that our counterparties do not make required interest and principal payments on scheduled due dates. We seek to manage this risk through a comprehensive credit analysis prior to making an investment and ~~actively~~active monitoring of the asset portfolios that serve as our collateral.

Our loans and investments that are denominated in a foreign currency are also subject to risks related to fluctuations in currency rates. We mitigate this exposure by matching the currency of our foreign currency assets to the currency of the borrowings that finance those assets. As a result, we substantially reduce our exposure to changes in portfolio value related to changes in foreign currency rates.

The following table outlines our assets and liabilities that are denominated in a foreign currency (£/€ in thousands):


	June 30, 2014						September 30, 2014
Foreign currency assets	£	302,518		€	28,098		£	306,403		€	96,591
Foreign currency liabilities		(238,621	)		(22,419	)		(240,511	)		(22,583	)

Net exposure to exchange rate fluctuations	£	63,897		€	5,679		£	65,892		€	74,008

We estimate that a 10% decline in the rate of exchange ~~between~~from the US dollar to the British pound sterling and from the U.S. dollar ~~and~~to the Euro ~~and the U.S. dollar~~ would result in a decline of ~~$10.9~~$10.7 million and ~~$775,000,~~$9.4 million, respectively, in our net assets denominated in foreign currencies, as of ~~June~~September 30, 2014.

An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this quarterly report on Form 10-Q was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by Securities and Exchange Commission rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no significant changes in our “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of ~~June~~September 30, 2014, we were not involved in any material legal proceedings.

There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013.

On October 23, 2014, we entered into a Second Amended and Restated Management Agreement, dated as of October 23, 2014, or Second Amended and Restated Management Agreement, with the Manager, an affiliate of Blackstone that serves as our external manager. As of October 23, 2014, affiliates of Blackstone owned approximately 6.9% of our outstanding shares of class A common stock. The Second Amended and Restated Management Agreement amends and restates the existing Amended and Restated Management Agreement, dated as of March 26, 2013, as amended by Amendment No. 1 to the Amended and Restated Management Agreement, dated as of July 30, 2013, or the Existing Agreement. The amendments to the Existing Agreement that were effected by the Second Amended and Restated Management Agreement include the following:

The foregoing description of the Second Amended and Restated Management Agreement does not purport to be complete and is qualified in its entirety by reference to the complete terms of the Second Amended and Restated Management Agreement, a copy of which is filed as Exhibit 10.1 to this quarterly report on Form 10-Q and is incorporated herein by reference.

On October 23, 2014, our board of directors approved our Fourth Amended and Restated Bylaws, amending and restating our existing bylaws to, among other things, reflect our May 2013 name change, reflect recent developments in Maryland law and public company governance, clarify certain corporate procedures, remove obsolete provisions and make conforming language and stylistic changes.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the Fourth Amended and Restated Bylaws, which is filed as Exhibit 3.1 to this quarterly report on Form 10-Q and is incorporated herein by reference. In addition, a version of the Fourth Amended and Restated Bylaws that has been marked to show changes from the bylaws that were previously in effect is included as Exhibit 3.2 and is incorporated herein by reference.

On October 23, 2014, we and a special-purpose wholly-owned subsidiary of ours entered into Amendment No. 1 to the Amended and Restated Master Repurchase and Securities Contract with Wells Fargo Bank, National Association, or the Buyer, that was originally entered into on April 4, 2014, in order to increase the facility amount from $500.0 million to $1.0 billion. All other material terms, including the maturity date of the facility, remain the same.

The Buyer or its affiliates have provided, or may in the future provide, certain commercial banking, financial advisory, investment banking and other services to us in the ordinary course of business, for which they receive customary fees and commissions.

On October 23, 2014, our Compensation Committee adopted new forms of award agreements for restricted stock awards pursuant to the Blackstone Mortgage Trust, Inc. 2013 Stock Incentive Plan and the Blackstone Mortgage Trust, Inc. 2013 Manager Incentive Plan. The award agreements include, among other provisions, vesting, termination, and transferability provisions. Copies of the forms of award agreements are filed as exhibit 10.3 and 10.4, respectively, herewith.

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, or ITRA, which added Section 13(r) of the Exchange Act, we hereby incorporate by reference herein Exhibit 99.1 of this report, which includes disclosures publicly filed and/or provided to Blackstone by Travelport Limited, which may be considered an affiliate of Blackstone and therefore our affiliate.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



PART I.	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	2

	Unaudited Consolidated Financial Statements

	Consolidated Balance Sheets as of ~~June~~September 30, 2014 and December 31, 2013	2

	Consolidated Statements of Operations for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2014 and 2013	3

	Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2014 and 2013	4

	Consolidated Statements of Changes in Equity for the ~~Six~~Nine Months Ended ~~June~~September 30, 2014 and 2013	5

	Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2014 and 2013	6

	Notes to Consolidated Financial Statements	7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3231

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4744

ITEM 4.	CONTROLS AND PROCEDURES	4845

PART II.	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	4946

ITEM 1A.	RISK FACTORS	4946

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4946

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	4946

ITEM 4.	MINE SAFETY DISCLOSURES	4946

ITEM 5.	OTHER INFORMATION	4946

ITEM 6.	EXHIBITS	5048

SIGNATURES		5149


Lender	Rate⁽¹⁾⁽²⁾	Guarantee⁽¹⁾⁽³⁾	Advance Rate⁽¹⁾	Margin Call⁽⁴⁾	Term/Maturity
Wells Fargo	L+1.85%	25%	78.47%	Collateral marks only	Term matched⁽⁶⁾
Bank of America	L+1.75%	50%	79.57%	Collateral marks only	May 21, 2019⁽⁵⁾
Citibank	L+1.94%	25%	76.06%	Collateral marks only	Term matched⁽⁶⁾
JP Morgan	L+1.98%	25%	77.37%	Collateral marks only	Term matched⁽⁶⁾⁽⁷⁾
MetLife	L+1.82%	50%	77.64%	Collateral marks only	June 29, 2020⁽⁸⁾
Morgan Stanley	L+2.32%	25%	78.61%	Collateral marks only	March 3, 2017


	September 30, 2014						December 31, 2013
	Participations			Underlying			Participations			Underlying
	Sold			Loans			Sold			Loans
Number of loans		3			3			1			1
Principal balance	$	447,977		$	619,323		$	90,000		$	173,837
Weighted-average cash coupon⁽¹⁾		L+3.01	%		L+4.56	%		L+5.12	%		L+5.66	%
Weighted-average all-in yield / cost⁽¹⁾		L+3.22	%		L+5.81	%		L+5.26	%		L+9.25	%


	June 30, 2014						December 31, 2013
	Underlying Loans			Participations Sold			Underlying Loans			Participations Sold
Number of loans		3			3			1			1
Principal balance	$	632,503		$	461,078		$	173,837		$	90,000
Weighted-average cash coupon⁽¹⁾		L+4.55	%		L+2.99	%		L+5.66	%		L+5.12	%
Weighted-average all-in yield / cost⁽¹⁾		L+5.77	%		L+3.21	%		L+9.25	%		L+5.26	%


1		-		Low Risk: A loan that is expected to perform through maturity, with relatively lower LTV, higher in-place debt yield, and stable projected cash flow.


2		2 -		Average Risk: A loan that is expected to perform through maturity, with medium LTV, average in-place debt yield, and stable projected cash flow.


3		3 -		Acceptable Risk: A loan that is expected to perform through maturity, with relatively higher LTV, acceptable in-place debt yield, and some uncertainty (due to lease rollover or other factors) in projected cash flow.


4		4 -		Higher Risk: A loan that is expected to perform through maturity, but has exhibited a material deterioration in cash flow and/or other credit factors. If negative trends continue, default could occur.


5		5 -		Low Probability of Default/Loss: A loan with one or more identified weaknesses that we expect to have a 15% probability of default or principal loss.


6		6 -		Medium Probability of Default/Loss: A loan with one or more identified weaknesses that we expect to have a 33% probability of default or principal loss.


7		7 -		High Probability of Default/Loss: A loan with one or more identified weaknesses that we expect to have a 67% or higher probability of default or principal loss.


8		8 -		In Default: A loan which is in contractual default and/or that has a very high likelihood of principal loss.


	September 30, 2014						December 31, 2013
	Repurchase			Collateral			Repurchase			Collateral
	Agreements			Assets			Agreements			Assets
Number of loans		3			4			4			4
Principal balance	$	226,961		$	288,831		$	245,731		$	334,857
Weighted-average cash coupon⁽¹⁾		L+2.62	%		L+4.73	%		L+2.55	%		L+4.79	%
Weighted-average all-in yield / cost⁽¹⁾		L+3.00	%		L+5.22	%		L+3.03	%		L+5.38	%


	Class A Common Stock Offerings						2014 Total /
	January 2014		April 2014		September 2014		Wtd.-Avg.
Shares Issued		9,775,000		9,200,000		9,200,000		28,175,000
Issue Price⁽¹⁾	$	26.25	$	27.72	$	27.49	$	27.13
Net Proceeds⁽²⁾	$	256,092	$	254,758	$	252,555	$	763,405


	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Net income (loss)⁽¹⁾	$	33,466	$	2,748	$	46,531	$	(367	)
Weighted-average shares outstanding, basic and diluted		47,977,813		12,401,274		43,000,242		7,734,774

Per share amount, basic and diluted	$	0.70	$	0.22	$	1.08	$	(0.05	)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Net income⁽¹⁾	$	22,024	$	8,320	$	68,555	$	7,953
Weighted-average shares outstanding,basic and diluted		49,211,205		28,894,515		45,093,314		14,865,530

Per share amount, basic and diluted	$	0.45	$	0.29	$	1.52	$	0.53


	Q2 2014			Q1 2014			$ Change			% Change
Income from loans and other investments
Interest and related income	$	42,466		$	33,656		$	8,810			26.2	%
Less: Interest and related expenses		15,720			12,074			3,646			30.2	%

Income from loans and other investments, net		26,746			21,582			5,164			23.9	%
Other operating expenses		19,766			6,596			13,170			199.7	%
Other income (loss)		31,457			(1,339	)		32,796			N/M

Income before income taxes		38,437			13,647			24,790			181.7	%
Income tax (benefit) provision		(2	)		531			(533	)		N/M

Net income		38,439			13,116			25,323			193.1	%
Net income attributable to non-controlling interests		(4,973	)		(51	)		(4,922	)		N/M
Net income attributable to Blackstone Mortgage Trust, Inc.	$	33,466		$	13,065		$	20,401			156.2	%

Dividends per share	$	0.48		$	0.48		$	0.00			0.0	%


	Asset-specific
	Repurchase Agreements						Loan Participations Sold⁽²⁾
	Repurchase			Collateral			Participations			Underlying
	Agreements			Assets			Sold			Loans
Number of loans		3			4			3			3
Principal balance	$	226,961		$	288,831		$	447,977		$	619,323
Weighted-average cash coupon⁽¹⁾		L+2.62	%		L+4.73	%		L+3.01	%		L+4.56	%
Weighted-average all-in yield / cost⁽¹⁾		L+3.00	%		L+5.22	%		L+3.22	%		L+5.81	%


3.1	Fourth Amended and Restated Bylaws of Blackstone Mortgage Trust, Inc.

3.2	Fourth Amended and Restated Bylaws of Blackstone Mortgage Trust, Inc. (marked).

10.1	~~10.1~~	~~Master Repurchase~~Second Amended and Restated Management Agreement, dated as of ~~April 25,~~October 23, 2014, by and between ~~643 Single Family Finco 2014, LLC~~Blackstone Mortgage Trust, Inc. and ~~Goldman Sachs Bank USA~~ BXMT Advisors L.L.C.

10.2	~~10.2~~	~~Guaranty, dated as of April 25, 2014, made by Blackstone Mortgage Trust, Inc, in favor of Goldman Sachs Bank~~ ~~USA~~

	~~10.3~~	~~Master Repurchase Agreement, dated as of June 27, 2014, between Parlex 7 Finco, LLC and Metropolitan Life Insurance Company~~

	~~10.4~~	Guaranty, dated as of June 27, 2014, made by Blackstone Mortgage Trust, Inc, in favor of Metropolitan Life Insurance Company

10.3	Form of Restricted Stock Award of Blackstone Mortgage Trust, Inc. 2013 Stock Incentive Plan

10.4	Form of Restricted Stock Award of Blackstone Mortgage Trust, Inc. 2013 Manager Incentive Plan

31.1	Certification of Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2	Certification of Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1 + ~~32.1~~	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 +	~~+ 32.2~~	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	99.1	Section 13(r) Disclosure

	101.INS	XBRL Instance Document

	101.SCH	XBRL Taxonomy Extension Schema Document

	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

	101.LAB	XBRL Taxonomy Extension Label Linkbase Document

	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document


						BLACKSTONE MORTGAGE TRUST, INC.

~~July 29,~~October 28, 2014						~~/s/~~ /s/ Stephen D. Plavin
Date						Stephen D. Plavin
						Chief Executive Officer
						(Principal Executive Officer)

~~July 29,~~October 28, 2014						~~/s/~~ /s/ Paul D. Quinlan
Date						Paul D. Quinlan
						Chief Financial Officer
						(Principal Financial Officer)

~~July 29,~~October 28, 2014						~~/s/~~ /s/ Anthony F. Marone, Jr.
Date						Anthony F. Marone, Jr.
						Principal Accounting Officer

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