I'm excited to host Camden Property Trust. For those of you who don't know me, I'm Joshua Dennerlein. I cover the residential REITs at BofA. I'm here with Camden's Executive Vice Chairman and President, Keith Oden. I'll pass it. Kim Callahan is here as well. I'm gonna pass off to Keith for opening remarks, and as always, I encourage you to be interactive. If you have any questions, feel free to jump in. I'll ask the field as well, but I got tons as well. But Keith, with that, pass it over to you. Great. Thank you, sir. Good afternoon, and we thank you for joining us today. Since we only have about 30 minutes for our discussion, I'm gonna keep my prepared remarks brief, to allow for as much possible time for Q&A. As a reminder, we may make forward-looking statements today based on our current expectations and beliefs. Additional information is detailed on page two of our investor presentation, which is available on our website, and now the lawyers are happy. For those of you not familiar with Camden, we're a multifamily REIT with over 58,000 apartment homes located in 15 major markets across the U.S. We're an S&P 500 company with a total market cap of over $15 billion, and we recently celebrated our 30th anniversary as a public company. Camden's strategy is to focus on high-growth markets, and that's as measured by projected unemployment, population, and migration growth. We operate a diverse portfolio of assets, both geographically diverse, between A and B asset class, and both urban and suburban. We recycle capital through acquisitions and dispositions. We create value through development, redevelopment, and repositioning programs, and we invest in technology to streamline operations and improve cash flow. We've always maintained a strong balance sheet with low leverage, high level of liquidity, and great access to capital. From an operating standpoint, overall, our markets are performing well, and our results to date are in line with our expectations and the guidance we provided last month in conjunction with our second quarter 2023 earnings release. Growth rates for new leases, renewals, and blended rates moderated slightly as expected during July and August, as we return to more of a normal pattern of seasonality than we'd experienced over the past few years. Our guidance for the second half of 2023 calls for effective new lease growth of 1.5%, renewals at 5%, resulting in a blended rate of growth of 3.25%. To date, for July and August, we've achieved 1.5% effective growth for new leases, 6.2% growth for renewals, and a blended growth rate of 3.9%, positioning us well for the remainder of the year. Occupancy remains strong, despite elevated levels of move-outs from skips and evictions. We average 95.7% occupancy for July and August, and our guidance for the second half of 2023 is to average 95.6%. Further details on all these stats can be found on slides eight through eleven of our investor presentation. We know there's been a lot of headlines and concern about Sun Belt supply, but given the outsized levels of job growth, population growth, and migration into our markets, demand has remained strong. Deliveries in most of our markets will likely remain elevated through 2024, but not all of that new supply will pose direct competition for Camden's assets. Looking at the multifamily projects currently under construction in Camden's major markets, with completion scheduled later this year or during 2024, we believe that less than 20% of that new supply will be delivered in submarkets where we have newer assets, and that's defined as assets under 15 years old, which could face competition from new deliveries. We are actively monitoring the performance of our communities that might be impacted by new supply and adjusting our pricing and occupancy strategies accordingly. Our resident retention is high, and turnover remains at historically low rates. Move-outs to purchase homes have averaged 10.8% year to date, which is one of the lowest levels we've seen in our over 30-year history. From a balance sheet perspective, we have one of the best balance sheets and the lowest leverage ratios in the multifamily sector, with manageable debt maturities over the next several years. As most of you know, the transaction market has been very quiet this year. To date, we've disposed of one older asset in Southern California for approximately $61 million and have not acquired any assets or started any new developments. Our current guidance does not contemplate any additional acquisitions or dispositions during 2023, but we are certainly keeping an eye out for any opportunities to recycle capital. At this point, I'll open it up to questions from the BofA team and the audience here today. I appreciate those opening remarks, Keith. I guess maybe, since supply is the hot topic and you mentioned it in your opening remarks, maybe could we dig into that a little bit more? Just like, mention you're, you know, adjusting the strategy a little bit, where you're seeing the supply. Maybe if we could just start with, like, where within your portfolio are you seeing, like, the competitive supply? So the three markets that have been most impacted so far this year in Camden's markets would be Austin. We certainly have seen a lot of new deliveries in Phoenix, and most recently, Atlanta has seen a fair amount of new supply as well. So you've got you do have historically elevated levels of kinda headline supply across Camden's portfolios. Our markets, in our markets for 2023, it looks like a total supply delivery will be about 175,000 apartments. That number we think is pretty consistent with what we'll see in 2024. So we're gonna be dealing with the supply question for at least through the end of 2024, interestingly enough. with the, what we think is the coming decline in new apartment starts. We've seen little bits and pieces of it in the last couple of months, but we think the biggest drop in new starts is still ahead of us, and probably in the next three-six months, we would expect to see starts come down pretty dramatically from what the run rate has been this year. Which really sets up 2025 and 2026 as really constructive years from the standpoint of, you know, much lower deliveries, much lower supply across Camden's portfolio. How, I guess, maybe, why have things remained elevated this long, and, like, what's the why, why is that expectation that in the next few months it's gonna drop? So if when we laid out our game plan for the year, we would've expected to see the decline in starts happen sooner than what we've actually seen. And I think there's two reasons for that. One is, there was probably a bigger pool of what I'm gonna call is, you know, sort of on-the-shelf development opportunities that were in process, than most people had in their model, certainly than we had in ours. So there was just more of a backlog of deals that were kind of being worked on and being processed, but had not been brought to the point where they could actually start. And then secondly, it's just taken longer for developers to get their projects that pretty much had to have been already financed with or have a construction loan lined up, and then have their equity also lined up. Because in putting together a construction loan and an equity partner in today's environment strikes me as a, you know, kind of an impossible feat. So most of these things would've had to have been already pre-financed, both with equity and debt. But just getting the equity and debt and capital stack in place is different than saying, "I now have a permit to start construction." And my guess is that you're seeing the same challenges on the permitting side that we're seeing on the completion side, and getting certificates of occupancy as we deliver our units in our communities that are under construction. There just isn't enough capacity at the municipality level, and you're dealing with peak supply. Municipalities don't tend to change or enhance their workforce when volumes go up. They're just not geared up to do that. So you have in essence the same number of people working from the permitting and certificate of occupancy standpoint as you had before, and you got a lot more volume that they're having to deal with, so it just takes longer. So my guess is that there were more in the pipeline than people understood, and it's taken longer for them to get to the point they are. But once that bucket of kind of pre-financed and longer start time has been worked through, there really isn't anything to backfill that with, because no one has been processing new start activity, but not many people are processing new start activity that's gonna be able to fill the... When this great wave kind of gets through the pipeline, there's not much on the other side of that. So I think it's those two things. And so what we expect to see now is the decline is gonna happen later, but it's gonna be more precipitous. And so I think when you do see the downturn in starts, it's gonna be pretty dramatic, and I think you're looking at some time in the next three-six months, you're gonna see some headline numbers that'll be, you know, pretty eye-popping in terms of the decline in starts. Hmm. And then maybe thinking about just, like, the, the lag to work through all those starts and, like, thinking about the cadence of deliveries, does that imply, like, I think on my track, it looks like 2024 is peak, but if things are not gonna fall off for another couple of months, like, does that imply maybe 2025 is higher than? So we still think the starts numbers probably peaked at the peak will be in 2023. You've already seen a couple of months where starts have come down. They just haven't come down enough to, you know, to move the needle. But I think peak starts have already have already happened. That doesn't mean we're not still gonna you know, I think, and that maybe goes on for another couple of months, but at some point, you're gonna see the numbers really fall off. But I think peak starts will have when you look back a year from now, you'll see that peak starts actually happened in 2023. Sorry, I guess I was thinking about some deliveries, like- Oh, yeah. Does, like, peak delivery, like, land in 2024- So- or is it now 2025? So I think it's still 2024 for deliveries. And that's primarily because the pushback and the push of originally scheduled deliveries in 2023 have cycled over into 2024. So I think probably, you know, first quarter of 2024, somewhere in that timeframe, you'll see peak deliveries into Camden's markets. Okay. And that made me think about, like, the impact as it, like, kind of flows through, like, if things deliver in 2024, and just seems like maybe it's towards the second half, like, does that imply, like, impacts into 2025 as far as concessions and just lease out? I think there may be some of the 2024 is still yet to be, you know, a firmed up date for delivery that rolls into 2025. I do think that couple of we use Ron Witten, and we use RealPage as our data providers for the way they schedule the deliveries. And I will say that in the last two quarterly updates, it looks like they've gotten a lot better handle on the timing of the deliveries. You know, for a period there, no matter how much they pushed the time frames out, it always went past that. And a lot of that has to do with the fact that it's taking so much longer to get to the finish line on these multifamily construction projects. And again, that gets back to the log jam that exists in the municipalities, just getting them through the process. So, I think they've done a better job of kind of trying to, you know, be realistic about how long it takes. For years, you know, for two years, we've been using... People wanted to use the old metrics around garden apartments delivery you know, you're gonna deliver from the start date to the first delivery of a occupiable apartment is gonna take 18 months. Well, that used to be true, and pre-COVID, it was true, and that was a pretty good rule of thumb that you could work from, but it's not true anymore. That number is probably closer to 24 months. On mid-rise product, the rule of thumb, structured parking, but mid-rise, the rule of thumb used to be 24 months till you get the first delivery of an occupiable unit. That number is probably closer to 30 months. And then, of course, high-rises has, you know, moved out from what used to be 30 months to probably 36 months. So it's everything takes longer, and I don't think the municipalities have not adjusted to change the cadence of when things are gonna be delivered. You know, maybe sometime in the next cycle, they'll do it differently or. But in the foreseeable future, I think we're stuck with the time frames that I just laid out. Any questions from the field on supply? Anything? Let me just kind of turn to demand. Like, you know, I have a JOLTS data tracker, just looking at, like, job openings, and, like, this Sun Belt's definitely outperforming the rest of the country. Just trying to think through, like, obviously, supply is, you know, it's coming, but what about, like, the jobs, the demand? Like, do you think it's, like, plenty to absorb it, and this is not, maybe not as big of an issue as we would have thought? Well, I think that the amount of job growth in 2023, I think, has certainly exceeded our expectations and probably most people's. I think it's been a surprise. And despite the elevated level of supply in our markets in 2023, the job growth that's occurred has been more than sufficient to absorb the apartments that are being delivered. So, my presumption is that if 2024, we have roughly the same level of new supply that's being delivered, if we get a similar result on job growth, I think we'll also see a similar result in terms of demand for our assets. This year, we've maintained occupancy above 95% for the entire year. Our guidance for the year is 5% top-line rental growth, which, you know, in, in, in the multifamily world, if it wasn't for the fact that we were coming off of a 16% top-line rental growth last in 2022, 5% would look really good. This is a long-term, over the 30 years as a public company, this is a 3%, 3.5% top-line rental growth, growth business. So when I see 5% in a year, if, if this, if this were compared to Camden's other 30 years as a public company, it would be our fifth, fifth best performance in that 30-year time frame at a 5% top-line rental growth. So without all the, you know, despite the deceleration story, and despite the supply story, and despite some other what appear, you know, what appear to be headwinds, our portfolio is performing extremely well. And, and I, and I think it's, what we've already talked about, the, you know, the demand drivers in, in Camden's 15 markets, in addition to the in-migration that continues apace from, you know, even, even beyond the COVID years, is, is more than sufficient to handle the level of supply that, that we're dealing with in 2023, and my guess is 2024 is a similar story. And maybe just picking on that comment that you mentioned, like, top-line growth kind of was historically like 3%. I'm assuming that was a, that was a different inflationary environment if I look like pre-COVID, when I look at the stats. Like, what's kind of your working assumption or thought process around... Is that 3% a number we're gonna see going forward, or is it like accelerated as inflation seems to maybe kind of steady, stayed at a higher rate? I mean, the Fed assures us that's great—they're gonna be at 2% here in the, you know, before they stop the, you know, the trail that they're on. Yeah, I mean, obviously, that you're gonna have to inflation adjust those numbers, but they've been... And we've been, you know, for a good part of that 30 years, we've been in a declining rate environment, and not, you know, in a probably overall a 2% inflation environment for most of that, for the, for at least the last 15 years. And if we return to that, then I think we're still back to, you know, inflation plus 150 or 200 basis points over, you know, some reasonable period of time. So if inflation stays elevated, then my guess is that the rents are also gonna stay elevated. Our residents, we actually don't get much pushback from our residents on renewals. We've renewed our leases this year in the 5%-6% range for the first nine months of the year, that's looks like we'll be able to achieve that kind of between now and the end of the year as well. So our residents, despite the talk of a 2% target, I think their lived experience is that they go to the grocery store, and they buy gas, and they, you know, they travel, and they go out and entertain themselves. And my guess is that their experience of inflation is not anything close to four or two. It's probably closer to seven or eight. And so when we present them with a 5% rental renewal, you know, I think they think that that seems fair in today's environment, and they're living in a Camden community, which is, from a customer experience standpoint, as good as it gets. And I think they believe that they get better than fair value for their rental dollar. So, yeah, I think you're right. I think if we're still in a 4% inflation environment, and the Fed's still, you know, accelerating into the wall, as they've kinda indicated that their proclivity is, that, you know, rents may be elevated as well. Across the markets, are there any markets that are performing a bit better or worse than you had been anticipating over the spring leasing period? So I would say that overall, of our 15 markets, if you just, you know, you kinda put a bracket of, you know, 50 basis points around our expectations, every market is within our expectations, both on rents and NOI. I mean, the markets where we have, we've had some occupancy challenges at Austin, for sure, and Phoenix, for sure. We knew that. I mean, they're the two of the markets that have, by far and away, the most supply that is most impactful to Camden's portfolio. And just, it's a lot, it's just geography, where the stuff is being built and where our assets are. So we knew those were gonna be more challenged at the beginning of the year, but we planned accordingly. In the middle of... So in the middle of the third, second quarter, we saw a decline, or excuse me, in July and August, we saw a decline in both, Austin and in Phoenix, and the occupancy rate. At one point, we were down to 94% on both—in both of those markets. But we adjusted, we adjusted pricing, and we've recovered nicely back into the 96%+ occupancy rate in both of those markets. So something you gotta, you know, you just gotta constantly work and monitor, but we've got a great system, and we've got, long years of and depth of experience with our YieldStar system, and, and so I think we're in pretty good shape for this year in, in terms of, where we expected to be in our markets. Okay. One area that's been very topical on, like, inbound questions from investors to me has been just on the operating expense side. The first one's really been insurance. Could you just remind us when the renewal date is? Then, just, like, kind of, if you had to reprice insurance today, what kind of, like, premium increase would you expect to see? Yeah. So fortunately, we're. Our renewal was in May, May 31st. And, unfortunately, our increase in insurance expense, as a result of that renewal, was up about 40% over the prior year. So it's a big number, and it reflects a lot of different things, but primarily, the carriers' losses, not just in the multifamily space, but in the property and casualty, generally in real estate, have been excessive in the last 5 years. We've had our share, hurricanes, tornadoes, fires, you know, locusts are next, I'm pretty sure. But we're, you know, we're working our way through the list of the plagues right now, but so that's part of it. And also, if you—when we go to do our renewals and we shop it, we shop our... Put together, it's a daunting process to put together a stack of insurance on a company, which, you know, in multifamily, $20 billion in assets. But there's just an overall negative sentiment towards habitational risk, and that includes multifamily, in the insurance world right now. And part of it has to do with, you know, the losses that have been incurred. Part of it has to do with there's perceived more risk of things, insurable risk happening in multifamily because they involve humans. And also in our and all the other multifamily companies, there's been a structural change in how our buildings are used, you know? In the pre-COVID years, our 90% of our residents left the community at 7:00 A.M. and got home at 6:00 P.M. and, you know, had dinner and rinse and repeat. But in the COVID years, and then it's persisted beyond that, with hybrid work from home, with outright work from home, our resident base is particularly well-suited to doing their jobs from home. You know, we don't have a lot of frontline workers and that, you know, that are required to show up to work every day to do their jobs. And the result of which is, we have not 10% of our residents home during the day. We have probably close to 50% of our residents home in the day, and they use things in ways that they didn't in the past. And so there's a lot of wear and tear on our asset, and that's—I think that's being reflected in the insurance claims, and the insurance cost is reflecting that as well. So yeah, that's a big one. Fortunately, it's only about 9% of our total expense. The offsetting that for us has been the opportunity in property taxes, one of which is the state of Texas, where we have, obviously, a big presence, just reduced the school tax component of property taxes pretty significantly. And it's got to be ratified by the voters in November, but everybody thinks it's gonna pass. But you're talking multiple millions of dollars in savings just for Camden's portfolio this year, and that's only a partial year. So we're in line to see some pretty significant property tax savings in our Texas portfolio. Broader than that, from a standpoint of if you think about what's been driving the property tax expense in our portfolio and everybody else's, has been valuations. I mean, we went from pre-COVID, broadly speaking, valuations in the multifamily business of 5.75 cap rates ±. And at the bottom, we were probably closer to 4.25 cap rates, and everybody knew that that was the cap rate that this asset class was gonna trade at forever and ever. But the property taxes reflected that. So the increases in value don't change the millage rate, but you just—your property values have gone up, and they went up every year, going into COVID, and then, and then they've continued that escalation up until a year ago. Well, that's reversed, and when that reverses, the taxing authorities are obligated to take into consideration that property values can go up and property values can fall. And so I think that will begin to be reflected in our entire portfolio, not just Texas, beginning in 2024, and I think we'll see big, big results and big positive results in 2025, just on the property tax question. Now, to put that in perspective, property taxes represent over 40% of our entire operating expense budget in any given year. So it's like 42%-43% of our every dollar we spend is on property taxes. So, you know, a meaningful reduction in property tax, property tax expense, occasioned by adjusting property valuations to kind of what the world is experiencing in transacted sales, is a potentially big-time tailwind to the entire sector in the next couple of years. So those are the two big ones. There's some other minor things that are going on around, you know, water usage and the like, because people are at home more, and common area R&M, because people are home more. Also, the tail end of the COVID, you know, the COVID rent strikers that are now... We're getting pretty close to the point where we can actually get control of our real estate again. They tend to not be the best residents in the world in terms of how they exit, because they're facing a forced relocation, and they always end up moving out in the middle of the night instead of going through the process. So that's a minor thing, but the other two are pretty important. What about the personnel expense? Any potential savings on that front, or is that behind us? So I don't think there's much relief on the horizon there because the labor markets are still incredibly tight. 3.7% national unemployment rate, it's much lower than that in almost every one of Camden's markets. Sure feels to me like there's a long way to go if the Fed wants to, you know, get back to a 2% target. They got a lot of wood to chop on wages. So I don't. I'm not hopeful necessarily, that we're gonna see much relief in 2024. We still. Our open positions have gotten back closer to historical norms. For almost all of 2022 and 2021, we operated with very elevated open positions because we literally could not fill the positions. There weren't enough applicants. That's changed a little bit. I mean, I sense that there's a little bit of a shift in people coming back in the workforce. There's a little bit less pressure on hiring and replacing open positions now than there was last year. But, you know, if you're asking, you know, what is—what do you think it takes to, you know, kind of what's the market clearing price for the quality of individuals that we're looking for to work for Camden? My guess is 2024 is gonna be another above-trend year for wage growth, but we'll see. Any questions from the field? Let me, just turning to the operating platform, any, technology initiatives your team is working on to drive revenue or maybe manage expenses? So the biggest thing that we're working on right now is what I would call just fine-tuning and perfecting the completely self-guided tour. And by that I mean, you know, we sort of fast-forwarded a lot of things in COVID, just to get to the point where we didn't have to have contacted tours, but it wasn't the best experience because we didn't have all the pieces in place. But we're very close now, and we're piloting a completely self-guided tour that does not require any human, Camden human involvement. And that could happen after hours, it can happen on the weekends. We now, with our Chirp smart locks in place, and now we're with a way—a really robust and accurate wayfinding GPS-driven, like... How do I find the apartment? Is one of the big sticking points, because a lot of our communities are complex. When you get in the middle of one, it's like, what? I'm just trying to find unit 1503, and I'm only-- I don't even know what building it's in. But we have now have that to the point where an individual can go online, book an appointment, say, you know, I want to tour an apartment, do it, do it completely online, have an access code provided for if there's a gate code at the front, and then have a smart lock-enabled access to the actual apartment that they want to, want to view. And, and it's. One of the things that we discovered through the, you know, necessity is the mother of all invention. One of the things we discovered that was really interesting is, when we survey our residents about their preferences for a guided tour with a Camden employee or a self-guided tour, we're to the point now where almost half of our residents say that they would prefer a self-guided tour. Now, this is hurtful to people who've been in this industry for a long time and know that our Camden employees are so good at what they do and so incredible at delivering customer service, that these people are actually opting to not go with a Camden person on a tour. That half of them actually say, "I prefer to do it myself." And after I got past the hurt part, it occurred to me that in my own experience, when you wanna go and experience what might be your home for the next few years, it's ultimately uncomfortable to be there with another human who's on a schedule, and you know they're on a schedule, and you might wanna experience the space in a way that they might think is weird. Like, sit on the floor or walk, you know, take 12 laps around the apartment, or go in the apartment, and then go out of the apartment and go on a tour of your building, as opposed to a tour of your particular community. So I'm over the hurt. 50% of our people wanted self-guided tours, and we're gonna deliver them an experience that's unlike anything that's available in today's multifamily world. Maybe just turning to the balance sheet, you have some debt coming due next year. Just kinda curious on early thoughts on refinancing that and just kind of maybe the cost of refinancing? Yeah. So, fortunately, given our balance sheet, we have tons of options available, including, you know, just doing a 10-year bond, which right now would, you know, that's certainly an option. We think that right now, for Camden, we could issue somewhere in the 5.5% range for a 10-year. You know, we have to internally, we're having a lot of conversations about if we can do that, but are there other options that might make more sense? And that gets back to: what is your view, and what is our collective view of what's gonna happen to rates? You know, what's the cadence of the Fed gonna be? Are they really done? Are they gonna start, are they gonna flip and start easing next year? If so, then maybe you would be better served to wait off, you know, to wait and put and look at longer-term debt then. The good news is that we have tons of options. We can put it on our line, the maturities, we've got plenty of room on our line. The option to sell assets is always an option that's out there. You could, you know... The other one, the other one, if our view becomes that it'll be more advantageous for Camden to term that debt out two years from now, there are all kinds of instruments that we can just kind of move those maturities into the future by a couple of years. So the good news is, we're at 20% gross leverage at, you know, 4.4 times debt to EBITDA. We've got lots of, lots of options for, for, handling those debt maturities. But right now, it's, we're just in this weird place where our, the cost of our, line is actually... So the 10-year would be slightly accreted to the cost of our line right now, but, you know, that's just where we are. So we're about out of time, but we're asking all the management teams three rapid-fire questions. The first question is actually a two-parter. Do you believe the Fed is done hiking, yes or no? And do you expect the Fed to cut rates in 2024, yes or no? No, on the done hiking, and, yes- Do you- - to 2024. Do you believe real estate transactions will meaningfully pick up by, A, the fourth quarter of 2023, B, the first half of 2024, or, C, the second half of 2024? First half of 2024. Are you using AI today to help, help you run your business, yes or no? Do you plan to ramp up spending on AI initiatives over the next year, yes or no? Yes and yes. Fantastic. Thank you, Keith. ... I'm probably gonna go shut the door here in a minute, because I think we're- It's a good turnout for 4:30 P.M.. Yeah, absolutely. It looked like you guys had, like, a good full set. We did. Yeah, we had a really good... I think because, you hit the schedule the right way. Okay. I feel like there was something last week that no one could do because it's not just everyone, and this week, everyone's back to the summer and ready to, so good attending you guys, it looks like. Yeah. I'm just going to go ahead and get started, if that's okay. My pleasure. Okay. Okay, we're gonna go ahead and get started. Good afternoon, everyone. I'm Derek Hewett. I am the Bank of America Senior Equity Analyst covering the specialty finance sector, which includes the commercial mortgage REIT sector as well. So today, we have Katie Keenan, CEO of Blackstone Mortgage Trust. That's ticker BXMT. So, Katie, thank you for joining us today. So, Katie, would you first maybe spend a couple minutes providing a brief overview of BXMT, maybe your lending strategy, and then also maybe some of the company's competitive advantages? Absolutely. So thank you all for being here. I know four thirty panel is later in the day, so I appreciate everyone's interest. So BXMT is the first mortgage floating rate lending vehicle of the Blackstone Real Estate platform. Our mandate is to make first mortgage, 65% LTV on average, floating rate loans to institutional borrowers who typically have a tremendous amount of real estate expertise, as well as capital, you know, sort of look along the lines of the sponsorship that we're a part of. I would say the very significant competitive advantage of BXMT is we manage it as a fully integrated part of the Blackstone Real Estate business, which is the largest in the world. And the competitive advantages that that affords us in terms of information flow, access to pipeline, access to capital, ability to drive very favorable structure and, pricing on our capital, and that- how that all inures to the benefit in terms of our cost of capital and the risk we need to take in order to generate our returns. All of that comes together in terms of the risk profile of the overall business. The mandate of the business is really about current income. We've paid our $0.62 dividend with, you know, no break for 34 consecutive quarters? Thirty-three. 33 consecutive quarters, and we're covering it at 127% today. So we're really seeing the benefit of the floating rate part of our business model come through in the portfolio. And I think that the interesting dynamic right now, when we sort of looked at the credit environment a year ago, coming into what was obviously a more challenging time, we identified that you had these offsetting factors of much higher earnings with some limited amount of credit issues, and that's really what we've seen play out. Our book value has been relatively stable over the last year. We've increased our reserves to deal with a small component of the portfolio that is going through credit issues. We've taken some loans onto non-accrual, but notwithstanding that, the performance and the more significant income being generated by the vast majority of our floating rate portfolio has really offset those credit concerns in the small part of the overall portfolio. So that's sort of the dynamic of being a first mortgage floating rate lender right now, and that's what we're sort of seeing in the performance of the business. Okay. And then, how would you describe the current macro backdrop for commercial real estate? And then, more importantly, how is BXMT, BXMT positioned? And it because it seems like the overwhelming question is are we going to be in a systemic, CRE cycle, or is it going to be a CRE cycle that is going to be more manageable? Yeah. So let me take the second half of the question first. You know, I think when we look broadly across the macro environment, and, you know, certainly one of the benefits of running this business inside of Blackstone is we have macro economists, we have information flow from all across the economy and all of our different investment vehicles. All of that sort of funnels through, and the level of information flow and dialogue about these questions is very high within the business. Our perspective is that when you think about commercial real estate and, you know, where we are in the cycle, commercial real estate is not a huge part of bank balance sheets. For example, I think office, where you see more of the real systemic challenges, is only 3%-4% of the overall bank market, the insurance market. The other element right now is if you compare where we are relative to the GFC. I mean, residential was 20%. We're talking about 3% of the office sector. You had 80% LTV loans generally, you know, in the GFC. Today, leverage is more 65%-70%. The banks are less leveraged as a whole. Overall leverage in the market generally, we think it's just a lot lower than the GFC. So I think as far as whether we're entering into something that's sort of broader, more systemic, we really don't see that. We think that the fundamental issues are going to be largely limited to the office sector. That's a small part of the overall market. We can talk more about office specifically. We think it's gonna be a subset of the office sector, but more broadly, the sort of orderly de-leveraging cycle, there's certainly gonna be some challenges, some losses here and there. But from a market perspective, overall macro perspective, and sort of bank balance sheet, insurance company, et cetera, perspective, we think it's really gonna be well absorbed by the performance that everyone's seeing more broadly in their portfolios. I think as far as how BXMT is positioned, you know, we have certainly come into this. We, a year and a half ago, thought that we were going into a much more challenging period, and we took the opportunity to really sort of build up our, you know, the stability in our balance sheet, you know, buttress our liquidity, make sure that we pushed out all of our corporate debt maturities, and really put our business in a position for resilience. So through the last year, we've been running at record levels of liquidity. We've seen record earnings levels. We have no corporate debt maturities. We've never had any capital markets mark to market in our business. So we've really created a very stable, long-dated balance sheet, record liquidity, and what we're doing now is really looking out there, preserving our optionality, making sure our business is really well positioned for what we think will be a pretty opportunistic investment environment, while also making sure that we, you know, run the business conservatively to be able to handle, you know, a range of potential outcomes from an economic perspective. Okay. And then you had mentioned office earlier as which is the most stressed collateral type, and if you look at Blackstone's exposure to office, it's like almost roughly a third of the portfolio, though although maybe only a quarter of the portfolio if you only include U.S. office. So how do you think investors should view Blackstone's U.S. office exposure? Yeah. So I think that, you know, one thing that's important to take a step back and think about is, the business that we're in is fundamentally different in some ways from the broader market. We lend to the best capitalized borrowers. We tend to lend on larger assets, larger loans, which historically have been more liquid, but most importantly, generally have better positioned borrowers and where we are also able to drive better terms. So the largest office loan in our portfolio, I think, is a really important reflection of this. Some in the room will obviously know about this loan. We talk about it a lot, but our largest office loan is the Spiral on Hudson Yards. It's Pfizer's headquarters. It's a 45% loan to cost loan. There's $1 billion of subordinate equity in that deal. You know, frankly, rents in that market are higher today than they were before. So the best quality office is performing well, and when we set these loans up to start from, we were making lower leverage loans, better structure, more guardrails, more opportunities for us to bring in more sponsor equity to our deals to sort of right size our leverage point over time if we saw things moving. You know, we've talked a lot about this in previous calls, but we really tried to get ahead of the curve in terms of bringing more equity into our deals over time. We've brought, I think, over $1 billion of additional subordinate sponsor equity into our deals over the last year, really by negotiating with our borrowers. Whenever there's a moment in time for us to force them to the table and try and rightsize the loan a bit, little bit, we've been pretty proactive about doing that, and we've really moved a lot of our loans, you know, further into the safety zone from that perspective. Not all of them, and certainly office remains the biggest focus, and there are gonna be challenges in the office market. What we see is that there is a divergence in terms of fundamental performance, where you're seeing people make space decisions, where people are staying versus going in rent rolls, and commodity office is much more challenged. You can see that in the vacancy rates, you can see it in rent rates. In our portfolio, away from our, you know, four and five watchlisted loans, more than half of our portfolio is post-2015 vintage. In most of, you know, major American cities, that number is less than 10%. So, you know, the quality of our office portfolio, we think, is superior relative to the market. Our sponsors are definitely superior relatives to the market in terms of their access to capital, their ability to support their assets. But big picture, you know, we're certainly cognizant of the broader, you know, secular overhang on office, and we've taken a lot of watchlists and reserves to sort of address that challenge. Okay. And then, multifamily is the second largest collateral sector at about a quarter of the portfolio. So what is your outlook for the multifamily sector? Is it... could it be the, potentially the next shoe to drop? And then how comfortable are you with, like, multifamily valuations, for deals that you did in, like, the maybe the 2021 kind of type vintage when, collateral values were at or near peak levels? Yeah. So I think taking a step back, in terms of our broader view on the multifamily sector, I think that we're still pretty positive on the long-term fundamentals of multifamily. You're gonna see a pop of new supply, more impactful in certain Sun Belt markets than others over the next year, year and a half. But on the back half of that supply wave, there's almost nothing. It's impossible to get a construction deal capitalized today. The numbers don't pencil. Replacement cost is much higher, rates are much higher. Supply is gonna have this sort of peak and trough moment where, you know, you'll have a period of you know, temporary weakness. But if you look at the big picture, under supply of multifamily and really housing in this country, we continue to believe that that's a tailwind for multifamily generally. I think the other element that is really important for multifamily, and we've seen this in various cycles, is that the presence of the agencies in the market, the GSEs, the presence of insurance capital, which is, looks very favorably upon multifamily, you know, the continued investor interest in multifamily. You have real liquidity for the sector in a way that you obviously don't in office right now. And so that is just gonna create, much more of a support over time to, you know, see these assets through. So I do think in multifamily, you know, when you were asked about 2021 loans, there was a very wide range of kind of lending going on in the multifamily space. People see it as a stable asset class. It traditionally has been something that people are more willing to lean into in terms of higher leverage in multi. The weighted average LTV in our portfolio in multi is 66%. If you look across the market, there were definitely much higher leverage, sort of multifamily lending programs going on. And so, you know, if you're a borrower and you're seeing a period where rates are higher and your equity is impinged, if you only have 20 points of equity to protect, that's a different situation than if you have 35 points of equity to protect. And we've already seen, obviously, some distress come into the multifamily lending market. I don't think that'll be the end. There's certainly gonna be assets that are less well-capitalized, where people are sort of struggling to absorb the impact in rates relative to cash flows. But there has been a lot of NOI growth in the multifamily sector, generally from 2021 till today. So there is a lot of margin for people to absorb these higher rates. I think biggest picture, because of the continued institutional liquidity in multifamily, you'll see some challenges here and there, but I really don't think it's gonna be, you know, on the same level as what we're seeing in the office market right now. Okay. And then when you are seeing signs of stress within the multifamily market, what are there specific types of multifamily assets where you're starting to see the most stress? I think there's two things I would point to on that. One, because the markets were so liquid in 2021 for multi, there was really a lack of differentiation in terms of quality of asset, growth profile of asset, and, you know, those elements, location relative to cap rates. So really, like, most every multifamily asset was trading sort of mid- to high-3s cap rates in the kind of very active period. And the reality is that a newer build asset in a market that has higher barriers to entry has a much higher growth profile than an older vintage asset in a market with a lot of new supply that needs a lot of CapEx to keep it competitive. Those are sort of different, you know, investment models, obviously. And I think that you had some lack of differentiation in terms of valuations. And so as you see the growth profile of those two types of assets play out over time, I think you're gonna see underperformance in, you know, the older vintage, more susceptible to new supply, you know, less, you know, slower growing markets, more so. I think the other element that's really important, especially in multi, that's going through like a little bit of a cyclical sort of cash flow issue, as opposed to more secular, is availability of capital to get through a short period. 'Cause basically, you know, if you think about a lot of these assets, they have, you know, positive growing cash flows, but rates went up more quickly, right? So rates are up. They're sort of staying where they are. You have this moment where there's, you know, a less good debt service coverage, but it's very likely temporary, and it can certainly be solved by deleveraging the asset a little bit. If it's an asset that's owned by an insurance company or a very well-capitalized fund, they're probably gonna take the view that dealing with a year or two of, you know, slightly negative debt service coverage, if they think there's real equity value on the other side, they'll support it through that. If you're dealing with someone that was raising syndicated equity from, you know, high net worth people that never thought they were gonna get another call to put more money in and just thought they were gonna get their sort of cash income, current income check for the next whatever, that's sort of a different situation. And so I think that you'll see folks who can construct a strong investment case to delever their assets a little bit and see them through to the other side, but just don't have access to capital to do that. And that's really, I think, the story of, you know, the loans that, you know, have started getting a lot of press attention. Okay. Then moving on to reserves, how should investors view Blackstone's overall reserve level? Should we think about it more from just relative to your peers? Are there other financials that investors maybe should look at to comp you against that? Or is it a little bit more nuanced, and we should need to look at reserves relative to, like, either, like, higher risk, like, watch list and impaired loans? So how should investors look at reserves since there's a variance, but amongst the- Yeah. I think that looking at reserve... Reserves, certainly, I think, should be looked at relative to watchlist loans, because, you know, a, a one or two rated loan, you know, there's a theoretical general reserve against it. But I think from our perspective, being a 65% lender or even lower leverage on those, you know, those loans, you know, feel very good in terms of their recoverability and our three rated loans as well. So I think looking it on the universe of four and five is really, you know, the, the right way to look at it.... I think that, you know, again, as when we, when we step back and, and think about the business model, what we expect at the beginning of this, we would see reserves tick up over time. I do think we're sort of midstream in terms of the credit cycle. So, you know, I think there is certainly the potential for more movement over time. But at the same time, we've seen this excess level of earnings accruing into our book value. So the increasing reserves have been largely insulated by the continued income generation of our business. And I think that, you know, with rates being high, staying high, that dynamic really will continue to play out. Okay, I have a question. Sure. So, you benefit from the high floor, the Fed policy of higher short-term rates. If they're- I guess, but yeah. If they're done raising rates, would your current earnings level sort of plateau for the next couple of quarters, or what impact would it be - what impact in earnings would it the Fed done raising short-term rates? Well, it is the impact of rates in our business is relatively, it's felt relatively quickly. So yeah, I mean, if the sort of positive correlation of our business to rising rates, if the Fed flattens out, that'll flatten out. We are global, so, you know, we do expect some continued rate increases in Europe and, you know, we'll see about Australia. So there's obviously some of that dynamic. But I think generally, yeah, I mean, if the Fed holds rates where they are, you know, the rates impact on our business will be relatively, will be stable. Okay. Okay, and then, maybe moving on to leverage. Stated GAAP leverage is a little over 3.5x, which is, in my calculation, about maybe a turn, a little bit of, over a turn higher than peers. But then you had mentioned earlier that Blackstone has record liquidity. So kind of how do you balance the two? I suspect leverage in this type of environment will come down, but what is kind of the range of leverage that you're comfortable operating in, in this- Yeah ... environment? And then, is there a kind of a, quote-unquote, "normalized leverage environment," that you're looking to target longer term? Yeah. So I think that, you know, we're comfortably in the range. I think the thing that you and we have brought leverage down a bit over the last couple of quarters, as you mentioned. I think in terms of looking at our leverage relative to the overall market, it's really important to keep in mind that our business is a senior lending business. So we've opted to take less asset risk, more stable assets, more predictable cash flow, and, you know, use those loans to, you know, backstop a very sort of long duration and stable capital structure, but at a little bit of a higher leverage level, relative to taking more, being in more businesses that may have more cash flow volatility, more asset risk at a lower leverage level. So you know, it really comes down to what is the business model and how variable could the performance of the business be over time, relative to what type of leverage could be attracted by those assets. I think if you think about our business relative to banks, relative to BDCs, we're relatively low leverage relative to those businesses. Obviously, we should be, because those are different business models, but we are a senior loan portfolio. We're making 65% LTV senior loans, so the look-through leverage of our capital structure is in, like, the 55% LTV range relative to origination value. I think that's a really important component. The other thing that we spend a ton of time on, and I think it's really critical, is the structure of the leverage. So our asset level leverage, as I mentioned, no capital markets mark to market at all, limited credit mark to market, term matched on an asset level, which is a really key thing, both from a maturity perspective and from, you know, locking in the rates on our financing and, and sort of locking in our net interest margin perspective. We pushed all of our corporate debt maturities out to 2026 and beyond, and record levels of liquidity. So from a balance sheet perspective, we think we've made, you know, we've created a really resilient structure. And, you know, I think it's really a question of, you know, maintaining and balancing that structure with the opportunities we may see on the investment side, as well as sort of continuing to maintain that strong current income that we've generated. Okay. And then you had mentioned funding. What is the funding environment like for Blackstone right now? Are lenders willing to continue to finance on standard terms? Are you seeing or are you seeing any signs of pullback from what we see and hear in the financial press, whether it's has to do with advance rates or higher spreads, or maybe the reluctance to have an office asset as a part of the collateral base? Yeah. So I think it's interesting. If you think about the capital markets, and the funding markets are pretty related to capital markets. First quarter of this year was really frozen. Coming into the end of the second quarter and really over the summer, we've seen a lot more opening in the capital markets, whether it's CMBS, CLOs, elsewhere in the corporate debt market. And the result of that has been, you know, more repayments in the commercial real estate sector as a whole, also in our portfolio, also in the bank portfolios. I think you also have the dynamic of banks seeing the prospect of more capital markets liquidity because that's happening. Finally, I think the banks, like everyone, you know, there was a moment in time when they were really going through their portfolio, focusing on their regulatory capital, focusing on making sure they had the right reserves. The large banks have really come through that at this point, and I would say are much more open to business today than they were certainly in the first quarter and even over the second quarter. We have a lot of banks who we're meeting with, and we have great dialogue, who are very eager to expand their credit facility relationships with us. These credit facilities are very favorable from a bank perspective. They're crossed, they're recourse, they have the benefit of a lot of known collateral that these banks have lived with for years. So adding incremental credit to these facilities that's crossed in with 30 other performing assets at a higher rate, because rates today are higher, that's really credit positive for these banks, and they're certainly actively looking at new deals for us and willing to lend. It's not true across the board. There's probably some small regional banks or, you know, multinationals that have been in or out of the market. But I think that the sort of large money center banks are much more interested in lending today than they were, you know, in the first quarter. Spreads are wider, but obviously the loans that, you know, the rates that we would be lending out to our borrowers are also wider, so the net interest margin is pretty consistent. I think it's really just a question of finding the investment opportunities that we think would, you know, fit our eye from a credit perspective and from a return perspective. Okay. And then also from the bank's perspective, are you seeing that same behavior for any sort of bank financing that you're getting for assets that are outside the U.S.? Yeah. I mean, interestingly, I would say the European market is pretty healthy, and Australia even more so. So yeah, I think that, you know, our constraint, we're fortunate to be in the position that capital availability, you know, has always been an advantage. And I think that really comes from our track record, our relationship with the banks. If they're going to sort of consolidate their relationships and their activity, which they were definitely looking at, you know, earlier in the year, and I think to some degree, continue, they're gonna be consolidating that with their best relationships, with the folks that they have the most level of comfort in terms of their performance. And I think that we're a beneficiary of that. You know, I think that the scale of our business, our track record with these banks, that advantage definitely extends to Europe as well as the U.S.. Okay. All right, and then asset management is a big focus for investors. So could you discuss the Blackstone Asset Management group and then, how the overall Blackstone platform helps you with your loan resolutions? Yeah. I mean, I think asset management is a huge focus, and we are really fortunate to have a very well-developed and seasoned asset management team that is part of our business. They sit on our floor. We have 26 full-time asset managers that have known these loans since we originated them, and you know, know the sponsors, have been very well integrated in the strategy of our business and are really actively managing the portfolio. We've been quite proactive in asset managing our business. You know, I mentioned earlier, all the work we've done with our sponsors in terms of bringing new equity into the deals. You know, our general view is that if sponsors are investing capital, paying down our loan, we're open to giving them more time, and that's a trade that's beneficial to them as well. We've been quite proactive in setting up loans for, you know, stability from that perspective. I think the other critical path thing in terms of our asset management approach is, you know, being an integrated part of Blackstone Real Estate also gives us a huge amount of information and expertise when we're dealing with more challenging situations. So we have large portfolio companies that, you know, in many cases, are the largest owners and operators of most of the types of real estate that we lend on. So when we're dealing with, you know, if we have an office building in a market, and we're trying to figure out where lease rates really are, what approach we should be taking, we're talking to people who are owning and operating very similar assets in that market and getting, you know, well-informed, real-time information. We have no walls between our debt and equity business. We're very integrated. You know, our investment committee includes the senior leadership of the overall Blackstone Real Estate business. And the way we manage the portfolio is very well informed, and I think benefits from the expertise that we have in the broader platform. Okay, thank you. And then, could you talk a little bit about loan modifications and extensions, which is, again, another key theme for investors. Could you explain, maybe the criteria for extending a loan? Like, what are the key variables, whether you would extend it, you-- or modify it, or you would just end up just selling it, or in a, I guess, the worst-case scenario, going to just take over ownership? Yeah, I mean, look, I think I wouldn't say we see any of those as better or worse. Really for us, it's about what is, what is gonna be the best path for recovery for our loan over time. So plan A is always to work with our borrowers. If they are willing to invest meaningful amounts of capital in the asset, subordinate to our basis, continue paying our interest, and we think they're the best people to manage the asset, they're working the asset and they're incentivized, you know, that's gonna be, I think, the best path for a loan in our portfolio. We've seen a lot of instances where sponsors are coming up with new equity, paying down our loan in order to have more time to pursue their business plan. So, you know, that's certainly a conversation that we actively engage in, and we think it's the right thing for an asset. If something doesn't go that way, we're really looking at that sort of short, medium, and long-term risk-return perspective. So we're looking at how much capital does an asset need? What's the opportunity cost of that capital? What do we think we can do as far as the business plan on the asset to maximize value? We're obviously doing all of that in concert with our colleagues on the equity side, so folks who are really experienced in assessing these business plans. We've set up our balance sheet and obviously our liquidity base, to be able to make sure that we can access sort of all the tools in the toolkit to maximize value. So, you know, I think one of the things you see, you know, if you have smaller banks or folks who are a little less well-experienced in owning and operating real estate, is there's a real aversion to needing to be in the seat where you're making business decisions for assets. That's not where we wanna be. We want our borrowers to be in that seat, but if they don't have the capital to pursue the right business plan, or if they're not focused, we're not afraid of that position because we have an entire business that's built on making those types of decisions and maximizing business plans. Okay. And then, under kind of a worst-case scenario where you're forced to take back an asset, which I don't think has happened yet, what is your willingness to work with that sponsor on new deals if they do decide to hand back the keys? How do you handle that? Yeah. You know, I think it's really a facts and circumstances analysis. I mean, I think one of the things that's happened, you know, over the last couple of years is obviously the impact of COVID on the office market is not something that any of our sponsors did. So if we have a sponsor who bought an asset in 2019 with a very sound business plan, you know, did the right thing along the way in terms of pursuing their business plan, investing capital, really working the asset, and at the end of the day, it's an office building in D.C. that was predicated on a GSA tenant market, like, we're not going to hold it against our sponsor that they got caught in that sort of bad investment, as long as they've done right by us along the way in terms of the way they've acted, you know, cooperating with us if we need to exercise remedies on an asset, obviously, you know, being entirely forthright about, you know, how the asset is operating and the business plan, et cetera. So, you know, we're a non-recourse lender. So, you know, Our sponsors, at the end of the day, their job is to exercise their fiduciary responsibilities for their investors. We're the same way. We're not going to fault someone for having a bad deal if they have, you know, done their utmost to protect the deal. You know, there's a lot of factors playing into, you know, real estate values right now that are out of our sponsors' control. But conversely, if we have a sponsor who we think is not giving it their all, is not focused, frustrates our ability to exercise remedies somehow, you know, thankfully, we really haven't had situations like that. But, you know, that would be where we would be, you know, more focused. I think one of the many sort of key things about being part of Blackstone is we have great relationships with all of our sponsors. They are frequently repeat borrowers. They frequently borrow from other parts of our business. A lot of times they're engaged in deals with other parts of the real estate business as a whole. So these relationships run really deep, and there are a lot of, you know, touch points between us and our borrowers for the most part. And so, you know, I think that everyone brings their best performance when they deal with us, and, you know, that's really what we can ask of them. Okay. Thank you. And maybe I'll end my last question with what do you view as kind of the compelling investment reason that investors need to kind of reexamine Blackstone? And I'll just kind of leave it open-ended. Yeah. You know, I think for BXMT, I think that there's a really unique dynamic right now where we're paying an 11% dividend yield. We're covering it at record levels, 127% dividend coverage, and we're trading at a discount to book value. So it's one of the few moments in time where you can buy a very stable current income stock at a discount to book value with all of the downside protection and return possibility that that offers. And so I think that, you know, you, you have that moment where, you know, we think about it from a lending, from an investment perspective, discount to, to par value, discount to replacement cost, current income, sustainable current income, well covered, and the potential to really buy in at a good basis for the duration, right? I mean, the dividend yield you can buy into today is a dividend yield that will persist. And so having the opportunity to access that stream of current income at a discount is pretty unusual. Okay. That was it for me. Does the... Any questions from the audience? Just talk about the competitive landscape. You know, everybody holds pretty much credit on, not all, not all of which have certain, you know, legacy asset issues in their portfolio. So what, what do you kind of see in, in terms of are they, are they lending at different parts of cap structure? Are they doing it differently, you know, in a material way versus what you guys are trying to do? So what are you really kind of seeing in that sense? Yeah, I mean, I think that when you think about the competitive dynamic, generally, like, our presence and scale in the market is so much greater than folks who, you know, have sort of decided to enter into the market to start. I think that you sort of take a step back, like, borrowers who are borrowing in the private market care about who their lender is. They care about their experience. They want someone who understands their business plan, who can structure a loan in a way that works for them. It's very helpful when they have a track record of dealing with that lender, so they know how people are going to behave. I think it's very difficult to replicate the, you know, decade plus of track record that we have in the direct lending space from, you know, a whole host of assets. So, you know, I feel very good. And that, you know, add to that the overall Blackstone market presence, our ability to drive cost to capital, you know, all of the sort of, you know, additional aspects. So I feel very good about our long-term. Well, really, in all cases, our sort of competitive advantage in terms of accessing the market. I think the challenge right now is just transaction volumes are way, way down. I mean, it, you know, look at market or different asset class, we're running at 40% or 50% of historical transaction volume levels. So the addressable market is smaller. But I do think that, you know, you have some new debt funds coming in the space. A lot of the banks really have pulled back significantly from the direct lending business. There's going to be a gap there. I think big picture, like, this business has been very, well able to source attractive investment opportunities in, like, a whole range of competitive environments, and I think that, you know, we'll continue to see that going forward. Okay. All right. I think we are over our time allotment, so thank you very much, Katie. Thank you. Thank you all. Feel free to reach out if you want to learn more.