BLACKSTONE MORTGAGE TRUST, INC. (Form: 10-Q, Received: 10/28/2014 16:05:18)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-14788

LOGO

Blackstone Mortgage Trust, Inc.

(Exact name of Registrant as specified in its charter)

Maryland

94-6181186

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

345 Park Avenue, 42nd Floor

New York, New York 10154

(Address of principal executive offices)(Zip Code)

(212) 655-0220

(Registrant’s telephone number, including area code)

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 October 21, 2014 was 57,679,508.

TABLE OF CONTENTS



PART I.	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	2

	Unaudited Consolidated Financial Statements

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

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

	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2014 and 2013	4

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

	Consolidated Statements of Cash Flows for the Nine Months Ended 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	31

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	44

ITEM 4.	CONTROLS AND PROCEDURES	45

PART II.	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	46

ITEM 1A.	RISK FACTORS	46

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	46

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	46

ITEM 4.	MINE SAFETY DISCLOSURES	46

ITEM 5.	OTHER INFORMATION	46

ITEM 6.	EXHIBITS	48

SIGNATURES		49

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Blackstone Mortgage Trust, Inc.

Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)


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

Total assets	$	4,098,473		$	2,212,780

Liabilities and equity
Accounts payable, accrued expenses, and other liabilities	$	83,011		$	97,153
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		161,259			159,524

Total liabilities		2,588,614			1,456,030
Equity
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		2,022,093			1,252,986
Accumulated other comprehensive (loss) income		(6,205	)		798
Accumulated deficit		(538,726	)		(536,170	)

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

Total equity		1,509,859			756,750

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

See accompanying notes to consolidated financial statements.

Blackstone Mortgage Trust, Inc.

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Income from loans and other investments
Interest and related income	$	50,386		$	18,853		$	126,507		$	26,327
Less: Interest and related expenses		19,903			4,407			47,697			6,492

Income from loans and other investments, net		30,483			14,446			78,810			19,835
Other expenses
Management and incentive fees		5,412			2,433			13,219			3,416
General and administrative expenses		3,368			1,615			21,920			6,096

Total other expenses		8,780			4,048			35,139			9,512
Valuation allowance on loans held-for-sale		—			(600	)		—			1,200
Gain on investments at fair value		1,780			464			7,604			4,464
Income from equity investments in unconsolidated subsidiaries		—			—			24,294			—
Gain on extinguishment of debt		—			—			—			38

Income before income taxes		23,483			10,262			75,569			16,025
Income tax (benefit) provision		(118	)		(264	)		412			329

Net income		23,601			10,526			75,157			15,696
Net income attributable to non-controlling interests		(1,577	)		(2,206	)		(6,602	)		(7,743	)

Net income attributable to Blackstone Mortgage Trust, Inc.	$	22,024		$	8,320		$	68,555		$	7,953

Net income per share of common stock, basic and diluted	$	0.45		$	0.29		$	1.52		$	0.53

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	$	0.50		$	0.27		$	1.46		$	0.27

See accompanying notes to consolidated financial statements.

Blackstone Mortgage Trust, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

(in thousands)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income	$	23,601		$	10,526		$	75,157		$	15,696
Other comprehensive loss:
Unrealized loss on foreign currency remeasurement		(8,932	)		—			(7,003	)		—

Comprehensive income		14,669			10,526			68,154			15,696
Comprehensive income attributable to non-controlling interests		(1,577	)		(2,206	)		(6,602	)		(7,743	)

Comprehensive income attributable to Blackstone Mortgage Trust, Inc.	$	13,092		$	8,320		$	61,552		$	7,953

See accompanying notes to consolidated financial statements.

Blackstone Mortgage Trust, Inc.

Consolidated Statements of Changes in Equity (Unaudited)

(in thousands)


	Blackstone Mortgage Trust, Inc.
	Class A			Restricted			Additional		Accumulated Other
	Common			Class A			Paid-In		Comprehensive			Accumulated						Non-Controlling			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
Reverse stock split		(263	)		—			263		—			—			—			—			—
Shares of class A common stock issued		258			—			633,552		—			—			633,810			—			633,810
Deferred directors’ compensation		—			—			169		—			—			169			—			169
Net income		—			—			—		—			7,953			7,953			7,743			15,696
Consolidation of subsidiary		—			—			—		—			5,727			5,727			6,235			11,962
Contributions from non-controlling interests		—			—			—		—			—			—			15,000			15,000
Dividends declared on common stock		—			—			—		—			(7,776	)		(7,776	)		—			(7,776	)
Purchase of and distributions to non-controlling interests		—			—			—		—			—			—			(18,772	)		(18,772	)

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
Shares of class A common stock issued		284			—			763,123		—			—			763,407			—			763,407
Restricted class A common stock earned		—			(2	)		5,554		—			—			5,552			—			5,552
Dividends reinvested		—			—			149		—			(149	)		—			—			—
Deferred directors’ compensation		—			—			281		—			—			281			—			281
Other comprehensive loss		—			—			—		(7,003	)		—			(7,003	)		—			(7,003	)
Net income		—			—			—		—			68,555			68,555			6,602			75,157
Dividends declared on common stock		—			—			—		—			(70,962	)		(70,962	)		—			(70,962	)
Distributions to non-controlling interests		—			—			—		—			—			—			(13,323	)		(13,323	)

Balance at September 30, 2014	$	572		$	5		$	2,022,093	$	(6,205	)	$	(538,726	)	$	1,477,739		$	32,120		$	1,509,859

See accompanying notes to consolidated financial statements.

Blackstone Mortgage Trust, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


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

Net cash provided by operating activities		57,460			14,445

Cash flows from investing activities
Originations and fundings of loans receivable		(2,297,545	)		(1,385,729	)
Origination and exit fees received on loans receivable		28,015			9,036
Principal collections and proceeds from the sale of loans receivable and other assets		403,189			239,631
Distributions from equity investments		—			3,518
Increase in restricted cash		(759	)		(62,150	)

Net cash used in investing activities		(1,867,100	)		(1,195,694	)

Cash flows from financing activities
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	)		(64,943	)
Proceeds from sales of loan participations		368,850			—
Payment of deferred financing costs		(12,780	)		(5,744	)
Settlement of interest rate swaps		—			(6,123	)
Contributions from non-controlling interests		—			15,000
Purchase of and distributions to non-controlling interests		(13,323	)		(18,717	)
Proceeds from issuance of class A common stock		763,407			633,810
Dividends paid on class A common stock		(55,399	)		—

Net cash provided by financing activities		1,822,250			1,176,109

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

Cash and cash equivalents at end of period	$	63,343		$	10,283

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

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

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

Participations sold	$	368,850		$	—

Consolidation of subsidiaries	$	—		$	(38,913	)

See accompanying notes to consolidated financial statements.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1. ORGANIZATION

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 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

Basis of Presentation

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.

Principles of Consolidation

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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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 September 30, 2014, our consolidated balance sheet included $28.9 million of other assets, and $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, that were attributable to consolidated VIEs. As of both September 30, 2014 and December 31, 2013, all assets and liabilities of consolidated VIEs were part of our CT Legacy Portfolio segment.

Use of Estimates

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.

Revenue Recognition

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

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.

Restricted Cash

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.

Loans Receivable and Provision for Loan Losses

We originate and 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 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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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

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 -

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 -

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 -

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 -

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 -

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 -

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 -

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

Loans Held-for-Sale and Related Allowance

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.

Equity Investments in Unconsolidated Subsidiaries

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.

Repurchase Agreements

We record investments financed with repurchase 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 agreements are reported separately on our consolidated statements of operations.

Loan Participations Sold

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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

Convertible Notes

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.

Deferred Financing Costs

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.

Fair Value of Financial Instruments

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:

•

Level 1: Generally includes only unadjusted quoted prices that are available in active markets for identical financial instruments as of the reporting date.

•

Level 2: Pricing inputs include quoted prices in active markets for similar instruments, quoted prices in less active or inactive markets for identical or similar instruments where multiple price quotes can be obtained, and other observable inputs, such as interest rates, yield curves, credit risks, and default rates.

•

Level 3: Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. These inputs require significant judgment or estimation by management of third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2.

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

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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 are used to estimate the fair value of each class of financial instruments, for which it is practicable to estimate that value:

•

Cash and cash equivalents: The carrying amount of cash on deposit and in money market funds approximates fair value.

•

Restricted cash: The carrying amount of restricted cash approximates fair value.

•

Loans receivable, net: The fair values for these loans were estimated by our Manager taking into consideration factors, including capitalization rates, leasing, occupancy rates, availability and cost of financing, exit plan, sponsorship, actions of other lenders, and indications of market value from other market participants. In the case of impaired loans receivable, fair value was determined based on the lower of amortized cost and the value of the underlying real estate collateral.

•

Repurchase obligations: The fair value was estimated based on the rate at which a similar credit facility would have currently priced.

•

Convertible notes, net: The convertible notes are actively traded and their fair values were obtained using quoted market prices based on recent transactions.

•

Participations sold: These obligations are recorded at their face value and not at fair value. The fair value was estimated based on the value of the related loan receivable asset.

Income Taxes

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.

Accounting for Stock-Based Compensation

Our stock-based compensation consists of awards issued to our Manager and certain of its employees that vest over the life of the 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.

Earnings per Share

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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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.

Foreign Currency

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.

Segment Reporting

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.

Recent Accounting Pronouncements

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. 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, 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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

3. CASH AND CASH EQUIVALENTS, INCLUDING RESTRICTED CASH

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⁾	September 30, 2014	December 31, 2013
Cash and cash equivalents	Bank of America	A-1	$63,343	$52,342
Restricted cash	Bank of America	A-1	10,855	10,096

			$74,198	$62,438

(1)	Represents the short-term credit rating for the Bank of America, N.A. legal entity as issued by Standard & Poor’s as of October 1, 2014.

4. LOANS RECEIVABLE

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


	September 30, 2014			December 31, 2013
Number of loans		55			31
Principal balance	$	3,940,626		$	2,077,227
Net book value	$	3,906,226		$	2,047,223
Unfunded commitments ⁽¹⁾	$	513,363		$	164,283
Weighted-average cash coupon ⁽²⁾		L+4.42	%		L+4.64	%
Weighted-average all-in yield ⁽²⁾		L+4.97	%		L+5.26	%
Weighted-average maximum maturity (years) ⁽³⁾		3.9			4.1

(1)	Unfunded commitments 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.

(2)

As of September 30, 2014, 83% of our loans are indexed to one-month USD LIBOR, 13% are indexed to three-month GBP LIBOR, and 4% referencing other floating rate indices. In addition, 17% of our loans currently earn interest based on LIBOR floors, with an average floor of 0.30%, as of September 30, 2014. In addition to cash coupon, all-in yield includes the amortization of deferred origination fees, loan origination costs, and accrual of exit fees.

(3)	Maximum maturity assumes all extension options are exercised, however our loans may be repaid prior to such date. As of September 30, 2014, 88% of our loans are subject to yield maintenance, lock-out provisions, or other prepayment restrictions and 12% are open to repayment by the borrower.

Activity relating to our loans receivable was ($ in thousands):


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

September 30, 2014	$	3,940,626		$	(34,400	)	$	3,906,226

(1)

Includes a loan loss reserve of $10.5 million as of December 31, 2013, related to one loan in the CT Legacy Portfolio segment, owned by CT CDO I, with a principal balance of $10.5 million. This loan was subsequently written-off resulting in an aggregate loan loss reserve of zero as of September 30, 2014.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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):


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

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


	Net Book					Net Book
Property Type	Value		Percentage			Value		Percentage
Office	$	1,698,674		43	%	$	864,666		42	%
Hotel		1,080,034		28			390,492		19
Multifamily		384,188		10			341,819		17
Condominium		323,773		8			275,645		13
Retail		190,865		5			43,115		2
Other		228,692		6			131,486		6

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


	Net Book					Net Book
Geographic Location	Value		Percentage			Value		Percentage
United States
Northeast	$	1,201,003		31	%	$	828,571		40	%
West		668,419		17			469,262		23
Southeast		503,345		13			243,798		12
Southwest		357,777		9			216,429		11
Northwest		242,203		6			166,207		8
Midwest		322,635		8			85,708		4

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

Subtotal		610,844		16			37,248		2

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

(1)	Includes senior mortgages and similar credit quality loans, including related contiguous subordinate loans, note financings of senior mortgage loans, and pari passu participations in senior mortgage loans.

(2)	Includes subordinate interests in mortgages and mezzanine loans.

Loan Risk Ratings

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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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


	Senior Loans ⁽¹⁾						Subordinate Loans ⁽²⁾						Total
Risk	Number		Principal		Net		Number		Principal		Net		Net
Rating	of Loans		Balance		Book Value		of Loans		Balance		Book Value		Book Value
1 - 3		53	$	3,732,929	$	3,701,763		2	$	207,697	$	204,463	$	3,906,226
4 - 5		—		—		—		—		—		—		—
6 - 8		—		—		—		—		—		—		—

		53	$	3,732,929	$	3,701,763		2	$	207,697	$	204,463	$	3,906,226

(1)	Includes senior mortgages and similar credit quality loans, including related contiguous subordinate loans, note financings of senior mortgage loans, and pari passu participations in senior mortgage loans.

(2)	Includes subordinate interests in mortgages and mezzanine loans.

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):


	Senior Loans ⁽¹⁾						Subordinate Loans ⁽²⁾						Total
Risk	Number		Principal		Net		Number		Principal		Net		Net
Rating	of Loans		Balance		Book Value		of Loans		Balance		Book Value		Book Value
1 - 3		26	$	1,811,513	$	1,800,329		3	$	227,350	$	219,894	$	2,020,223
4 - 5		—		—		—		—		—		—		—
6 - 8		—		—		—		2		37,548		27,000		27,000

		26	$	1,811,513	$	1,800,329		5	$	264,898	$	246,894	$	2,047,223

(1)	Includes senior mortgages and similar credit quality loans, including related contiguous subordinate loans, note financings of senior mortgage loans, and pari passu participations in senior mortgage loans.

(2)	Includes subordinate interests in mortgages and mezzanine loans.

Loan Impairments and Nonaccrual Loans

We do not have any loan impairments, nonaccrual loans, or loans in maturity default as of 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 a loan loss reserve of zero as of 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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

5. EQUITY INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

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

Total as of September 30, 2014	$	14,990

(1)

In instances where we have not received cash or all appropriate contingencies have not been eliminated, we have deferred the recognition of promote revenue allocated to us from CTOPI in respect of our carried interest in CTOPI, and recorded an offsetting liability as a component of accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets.

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 September 30, 2014, we had been allocated $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 nine months ended 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 taxes owed on phantom taxable income allocated to us from the partnership. We recognized $24.3 million of distributions as income during the nine months ended September 30, 2014 as all fund-level contingencies had been satisfied.

CTOPI Incentive Management Fee Grants

In January 2011, we created a management compensation pool for employees equal to 45% of the CTOPI promote distributions received by us. As of 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 nine months ended 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.

6. SECURED FINANCINGS

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

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

Repurchase Agreements

Revolving Repurchase Facilities

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


	September 30, 2014										Dec. 31, 2013 Borrowings Outstanding
	Maximum		Collateral		Repurchase Borrowings ⁽³⁾
Lender	Facility Size ⁽¹⁾		Assets ⁽²⁾		Potential		Outstanding		Available
Wells Fargo	$	500,000	$	574,395	$	447,994	$	360,725	$	87,269	$	—
Bank of America		500,000		537,159		424,404		353,542		70,862		271,320
Citibank		500,000		584,020		441,567		324,429		117,138		334,692
JP Morgan ⁽⁴⁾		498,546		519,159		396,587		269,618		126,969		257,610
MetLife		500,000		341,524		263,889		232,389		31,500		—
Morgan Stanley ⁽⁵⁾		406,025		168,930		128,703		128,703		—		—

	$	2,904,571	$	2,725,187	$	2,103,144	$	1,669,406	$	433,738	$	863,622

(1)	Maximum facility size represents the total amount of borrowings provided for in each repurchase agreement, however these borrowings are only available to us once sufficient collateral assets have been pledged under each facility.

(2)	Represents the principal balance of the collateral assets.

(3)	Potential borrowings represent the total amount we could draw under each facility based on collateral already approved and pledged. When undrawn, these amounts are immediately available to us at our sole discretion under the terms of each revolving credit facility.

(4)	The JP Morgan maximum facility size is composed of a $250.0 million facility and a £153.0 million ($248.5 million) facility.

(5)	The Morgan Stanley maximum facility size represents a £250.0 million ($406.0 million) facility.

The weighted-average outstanding balance of our revolving repurchase facilities was $1.6 billion and $1.2 billion for the three and nine months ended September 30, 2014, respectively. As of September 30, 2014, we had aggregate borrowings of $1.7 billion outstanding under our revolving repurchase facilities, with a weighted-average cash coupon of LIBOR plus 1.90% per annum and a weighted-average all-in cost of credit, including associated fees and expenses, of LIBOR plus 2.14% per annum. As of September 30, 2014, outstanding borrowings under these facilities had a weighted-average maturity, excluding extension options and term-out provisions, of 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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

The following table outlines the key terms of our revolving repurchase facilities:


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

(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.

Asset-Specific Repurchase Agreements

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


	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	%

(1)	As of September 30, 2014, all of our asset-specific repurchase agreements are indexed to one-month USD LIBOR. In addition to cash coupon, all-in yield / cost includes the amortization of deferred origination fees / financing costs.

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.

Debt Covenants

Each of the guarantees related to our revolving repurchase 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 $1.1 billion as of September 30, 2014 plus 75% of the net cash proceeds of future equity 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 September 30, 2014 and December 31, 2013, we were in compliance with these covenants.

Loan Participations Sold

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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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


	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	%

(1)	As of September 30, 2014, 40% of our participations sold are indexed to one-month LIBOR and 60% are indexed to three-month LIBOR. In addition to cash coupon, all-in yield / cost includes the amortization of deferred origination fees / financing costs.

7. CONVERTIBLE NOTES, NET

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 September 30, 2014, the Convertible Notes were carried on our consolidated balance sheet at $161.3 million, net of an unamortized discount of $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 was 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 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.

8. EQUITY

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

Share and Share Equivalents

Authorized Capital

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.

Class A Common Stock and Deferred Stock Units

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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

The following table details our issuances of class A common stock during the nine months ended September 30, 2014 ($ in thousands, except per share data):


	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

(1)	Represents price per share paid to the underwriters.

(2)	Net proceeds represents proceeds received from the underwriters less applicable transaction costs.

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:


	Nine Months Ended September 30,
Common Stock Outstanding ⁽¹⁾	2014		2013
Beginning balance		29,602,884		3,016,407
Issuance of class A common stock		28,175,003		25,875,000
Issuance of deferred stock units		15,104		6,758

Ending balance		57,792,991		28,898,165

(1)	Deferred stock units held by members of our board of directors totalled 113,486 and 96,514 as of September 30, 2014 and 2013, respectively.

Dividend Reinvestment and Direct Stock Purchase Plan

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.

At the Market Stock Offering Program

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 September 30, 2014, we had not sold any shares of class A common stock under the ATM Agreements.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

Dividends

We generally intend to distribute 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 September 15, 2014, we declared a dividend of $0.50 per share, or $28.8 million, which was paid on October 15, 2014 to stockholders of record as of September 30, 2014. 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.

Earnings Per Share

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):


	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

(1)	Represents net income attributable to Blackstone Mortgage Trust, Inc.

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

Other Balance Sheet Items

Accumulated Other Comprehensive Loss

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

Non-controlling Interests

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. 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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

9. OTHER EXPENSES

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

Management and Incentive Fees

Pursuant to our management agreement, our Manager earns a base management fee in an amount 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 nine months ended September 30, 2014 and 2013, we incurred $12.4 million and $3.4 million of management fees payable to our Manager, respectively. During the three months ended September 30, 2014 and 2013, we incurred $4.6 million and $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 nine months ended September 30, 2013.

General and Administrative Expenses

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Professional services	$	701	$	843	$	1,983	$	2,109
Operating and other costs		461		148		1,503		1,123

		1,162		991		3,486		3,232

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

		2,077		552		18,035		2,138

Expenses of consolidated securitization vehicles		129		72		399		726

	$	3,368	$	1,615	$	21,920	$	6,096

(1)	Represents the portion of CTOPI promote revenue paid under compensation awards. See Note 5 for further discussion.

(2)	Represents the accrual of amounts payable under the CT Legacy Partners management incentive awards during the period. See below for discussion of the CT Legacy Partners management incentive awards plan.

CT Legacy Partners Management Incentive Awards Plan

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 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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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 $2.4 million and $2.8 million as of September 30, 2014 and December 31, 2013, respectively.

10. INCOME TAXES

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

During the nine months ended September 30, 2014, we recorded a current income tax provision of $412,000 comprised of (i) $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) $69,000 related to other items. During the nine months ended September 30, 2013, we recorded a current income tax provision of $329,000 related to activities of our taxable REIT subsidiaries. We did not have any deferred tax assets or liabilities as of 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 $159.0 million and NCLs of $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, $9.5 million will expire in 2014, $31.4 million will expire in 2015, and $602,000 will expire in 2016 or later.

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

11. STOCK-BASED INCENTIVE PLANS

We do not have any employees as we are externally managed by our Manager. However, as of 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.

We had stock-based incentive awards outstanding under five benefit plans as of 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.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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 September 30, 2014, there were 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 485,606 shares of restricted class A common stock outstanding as of September 30, 2014 will vest as follows: 58,310 shares will vest in 2014; 233,239 shares will vest in 2015; and 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
Balance as of December 31, 2013		700,000		$	25.69
Vested		(214,394	)		25.56

Balance as of September 30, 2014		485,606		$	25.75

12. FAIR VALUES

Assets Recorded at Fair Value

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⁾
September 30, 2014
Other assets, at fair value ⁽²⁾	$	—	$	1,625	$	42,296	$	43,921
December 31, 2013
Other assets, at fair value ⁽²⁾	$	—	$	1,944	$	54,461	$	56,405

(1)	CT CDO I had one impaired loan with a principal balance of $10.5 million measured on a non-recurring basis that had a 100% loan loss reserve as of December 31, 2013. This loan was written off during the nine months ended September 30, 2014.

(2)	Other assets include loans, securities, equity investments, and other receivables carried at fair value.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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):


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

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 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 September 30, 2014 and December 31, 2013 ($ in millions):


		Recovery			Fair Value as of
Collateral Type	Discount Rate	Percentage ⁽¹⁾			September 30, 2014		December 31, 2013
Hotel	(2)		100	%	$	15.0	$	15.0
Office	(3)		100	%		4.0		25.7

					$	19.0	$	40.7

(1)	Represents the proportion of the principal expected to be collected relative to the loan balances as of September 30, 2014 and December 31, 2013, excluding loans for which there is no expectation of future cash flows.

(2)	The discount rate used to value our hotel loan portfolio was 7% as of September 30, 2014 and December 31, 2013. A 100 bp discount rate increase would result in a decrease in book value of 0.2% and 1.4% as of September 30, 2014 and December 31, 2013, respectively.

(3)	The discount rates used to value our office loan portfolio was 15% as of September 30, 2014 and ranged from 6% to 15% as of December 31, 2013. A 100 bp discount rate increase would result in a decrease in fair value of 1.5% and 0.3% as of September 30, 2014 and December 31, 2013, respectively.

Equity investments and other receivables: As of September 30, 2014, equity investments and other receivables, 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 September 30, 2014 or December 31, 2013. Refer to Note 2 for further discussion regarding fair value measurement.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

Fair Value of Financial Instruments

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):


	September 30, 2014						December 31, 2013
	Carrying		Face		Fair		Carrying		Face		Fair
	Amount		Amount		Value		Amount		Amount		Value
Financial assets
Cash and cash equivalents	$	63,343	$	63,343	$	63,343	$	52,342	$	52,342	$	52,342
Restricted cash		10,855		10,855		10,855		10,096		10,096		10,096
Loans receivable, net		3,906,226		3,940,626		3,940,626		2,047,223		2,077,227		2,058,699
Financial liabilities
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		161,259		172,500		178,934		159,524		172,500		181,772

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.

13. TRANSACTIONS WITH RELATED PARTIES

As of September 30, 2014, our consolidated balance sheet included $5.4 million of accrued management and incentive fees and $50,000 of expense reimbursements payable to our Manager. During the nine months ended September 30, 2014, we paid $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 September 30, 2014, our consolidated balance sheet included $151,000 of preferred distributions payable by CT Legacy Partners to an affiliate of our Manager. During the nine months ended September 30, 2014, CT Legacy Partners made aggregate preferred distributions of $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 $2.4 million during the nine months ended September 30, 2014. Refer to Note 11 for further discussion of our restricted class A common stock.

During the nine months ended September 30, 2014, CT CDO I, which is consolidated by us, 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

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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.

14. SEGMENT REPORTING

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 nine months ended September 30, 2014 and 2013. For the three and nine months ended September 30, 2014, 14% and 10% of our revenues were generated from international sources, respectively. Substantially all of our revenues for the three and nine months ended September 30, 2013 were generated from domestic sources.

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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


	Three Months Ended September 30, 2014
	Loan			CT Legacy
	Origination			Portfolio			Total
Income from loans and other investments
Interest and related income	$	49,720		$	666		$	50,386
Less: Interest and related expenses		19,713			190			19,903

Income from loans and other investments, net		30,007			476			30,483
Other expenses
Management and incentive fees		5,412			—			5,412
General and administrative expenses		2,705			663			3,368

Total other expenses		8,117			663			8,780
Gain on investments at fair value		—			1,780			1,780

Income before income taxes		21,890			1,593			23,483
Income tax benefit		—			(118	)		(118	)

Net income		21,890			1,711			23,601
Net income attributable to non-controlling interests		—			(1,577	)		(1,577	)

Net income attributable to Blackstone Mortgage Trust, Inc.	$	21,890		$	134		$	22,024


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

Income from loans and other investments, net		11,321			3,125			14,446
Other expenses
Management and incentive fees		2,433			—			2,433
General and administrative expenses		1,026			589			1,615

Total other expenses		3,459			589			4,048
Valuation allowance on loans held-for-sale		—			(600	)		(600	)
Gain on investments at fair value		—			464			464

Income before income taxes		7,862			2,400			10,262
Income tax benefit		(21	)		(243	)		(264	)

Net income		7,883			2,643			10,526
Net income attributable to non-controlling interests		—			(2,206	)		(2,206	)

Net income attributable to Blackstone Mortgage Trust, Inc.	$	7,883		$	437		$	8,320

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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


	Nine Months Ended September 30, 2014
	Loan			CT Legacy
	Origination			Portfolio			Total
Income from loans and other investments
Interest and related income	$	123,127		$	3,380		$	126,507
Less: Interest and related expenses		46,843			854			47,697

Income from loans and other investments, net		76,284			2,526			78,810
Other expenses
Management and incentive fees		13,219			—			13,219
General and administrative expenses		9,049			12,871			21,920

Total other expenses		22,268			12,871			35,139
Gain on investments at fair value		—			7,604			7,604
Income from equity investments in unconsolidated subsidiaries		—			24,294			24,294

Income before income taxes		54,016			21,553			75,569
Income tax provision		131			281			412

Net income		53,885			21,272			75,157
Net income attributable to non-controlling interests		—			(6,602	)		(6,602	)

Net income attributable to Blackstone Mortgage Trust, Inc.	$	53,885		$	14,670		$	68,555


	Nine Months Ended September 30, 2013
	Loan			CT Legacy
	Origination			Portfolio			Total
Income from loans and other investments
Interest and related income	$	17,051		$	9,276		$	26,327
Less: Interest and related expenses		3,991			2,501			6,492

Income from loans and other investments, net		13,060			6,775			19,835
Other expenses
Management and incentive fees		3,416			—			3,416
General and administrative expenses		2,923			3,173			6,096

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

Income before income taxes		6,721			9,304			16,025
Income tax benefit		(19	)		348			329

Net income		6,740			8,956			15,696
Net income attributable to non-controlling interests		(193	)		(7,550	)		(7,743	)

Net income attributable to Blackstone Mortgage Trust, Inc.	$	6,547		$	1,406		$	7,953

Blackstone Mortgage Trust, Inc.

Notes to Consolidated Financial Statements (continued)

(Unaudited)

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


	September 30, 2014
	Loan		CT Legacy
	Origination		Portfolio		Total
Assets
Cash and cash equivalents	$	63,343	$	—	$	63,343
Restricted cash		—		10,855		10,855
Loans receivable, net		3,906,226		—		3,906,226
Equity investments in unconsolidated subsidiaries		—		14,990		14,990
Accrued interest receivable, prepaid expenses, and other assets		29,727		73,332		103,059

Total assets	$	3,999,296	$	99,177	$	4,098,473

Liabilities and Equity
Accounts payable, accrued expenses, and other liabilities	$	45,309	$	37,702	$	83,011
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		161,259		—		161,259

Total liabilities		2,550,912		37,702		2,588,614
Equity
Total Blackstone Mortgage Trust, Inc. stockholders’ equity		1,448,384		29,355		1,477,739
Non-controlling interests		—		32,120		32,120

Total equity		1,448,384		61,475		1,509,859

Total liabilities and equity	$	3,999,296	$	99,177	$	4,098,473


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

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

Liabilities and Equity
Accounts payable, accrued expenses, and other liabilities	$	21,104	$	76,049	$	97,153
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

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

Total equity		693,604		63,146		756,750

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

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 Form 10-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.

Introduction

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.

I. Key Financial Measures and Indicators

As a real estate finance company, we believe the key financial measures and indicators for our business are earnings per share, dividends declared, Core Earnings, and book value per share. For the three months ended September 30, 2014 we recorded earnings per share of $0.45, declared a dividend of $0.50 per share, and reported $0.50 per share of Core Earnings. In addition, our book value per share as of September 30, 2014 was $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.

Earnings Per Share and Dividends Declared

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

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

Dividends per share					$	0.50	$	0.48

(1)	Represents net income attributable to Blackstone Mortgage Trust, Inc.

The $0.25 per share 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 from our carried interest in CTOPI. This was partially offset by a 16% increase in the net interest income in our Loan Origination segment.

Core Earnings

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

Core Earnings	$	24,755		$	20,502

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

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

(1)	Represents net income attributable to Blackstone Mortgage Trust, Inc.

Book Value Per Share

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
	Loan Origination		CT Legacy Portfolio		Total		June 30, 2014
Stockholders’ equity	$	1,448,384	$	29,355	$	1,477,739	$	1,239,308
Shares
Class A common stock		57,193,899		57,193,899		57,193,899		47,935,370
Restricted class A common stock		485,606		485,606		485,606		544,133
Deferred stock units		113,486		113,486		113,486		108,391

		57,792,991		57,792,991		57,792,991		48,587,894

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

On a consolidated basis, our book value per share as of September 30, 2014 increased by $0.06 from 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 $27.49 per share, partially offset by (i) foreign currency valuation adjustments and (ii) the excess of dividends declared over GAAP net income during the quarter.

II. Loan Origination Portfolio

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 September 30, 2014, our Loan Origination segment originated $670.5 million of new loan commitments, funded $556.6 million under new and existing loans, and generated interest income of $49.7 million. These loan originations were primarily financed by $252.6 million of net proceeds from the sale of our class A common stock, $124.7 million of additional net borrowings under our secured financings, and $109.1 million of proceeds from loans sales and principal collections. We incurred interest expense of $19.7 million during the quarter, which resulted in $30.0 million of net interest income during the quarter.

Portfolio Overview

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


	Loans		Loan		Loan
	Originated		Commitments ⁽²⁾		Fundings ⁽³⁾
Senior loans ⁽¹⁾		8	$	670,514	$	556,328
Subordinate loans		—		—		240

Total		8	$	670,514	$	556,568

(1)	Includes senior mortgages and similar credit quality loans, including related contiguous subordinate loans, note financings of senior mortgage loans, and pari passu participations in senior mortgage loans.

(2)	Includes new originations and additional commitments made under existing loan agreements.

(3)	Includes additional fundings of $67.6 million under existing loan commitments.

As of 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 loan portfolio within the Loan Origination segment ($ in thousands):


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

(1)

As of September 30, 2014, 83% of our loans are indexed to one-month USD LIBOR, 13% are indexed to three-month GBP LIBOR, and 4% are indexed to other floating index rates. In addition, 17% of our loans currently earn interest based on LIBOR floors, with an average floor of 0.30%, as of September 30, 2014. In addition to cash coupon, all-in yield includes the amortization of deferred origination fees, loan origination costs, and accrual of exit fees.

(2)	Maximum maturity assumes all extension options are exercised, however our loans may be repaid prior to such date. As of September 30, 2014, 88% of our loans are subject to yield maintenance, lock-out provisions, or other prepayment restrictions and 12% are open to repayment by the borrower.

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

Geographic Diversification

Collateral Diversification

LOGO

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.

Asset Management and Performance

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 each 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.

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 of both September 30, 2014 and December 31, 2013.

Secured Financings

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


	September 30, 2014										Dec. 31, 2013 Borrowings Outstanding
	Maximum		Collateral		Repurchase Borrowings ⁽³⁾
Lender	Facility Size ⁽¹⁾		Assets ⁽²⁾		Potential		Outstanding		Available
Wells Fargo	$	500,000	$	574,395	$	447,994	$	360,725	$	87,269	$	—
Bank of America		500,000		537,159		424,404		353,542		70,862		271,320
Citibank		500,000		584,020		441,567		324,429		117,138		334,692
JP Morgan ⁽⁴⁾		498,546		519,159		396,587		269,618		126,969		257,610
MetLife		500,000		341,524		263,889		232,389		31,500		—
Morgan Stanley ⁽⁵⁾		406,025		168,930		128,703		128,703		—		—

	$	2,904,571	$	2,725,187	$	2,103,144	$	1,669,406	$	433,738	$	863,622

(1)	Maximum facility size represents the total amount of borrowings provided for in each repurchase agreement; however these borrowings are only available to us once sufficient collateral assets have been pledged under each facility.

(2)	Represents the principal balance of the collateral assets.

(3)	Potential borrowings represent the total amount we could draw under each facility based on collateral already approved and pledged. When undrawn, these amounts are immediately available to us at our sole discretion under the terms of each revolving credit facility.

(4)	The JP Morgan maximum facility size is composed of a $250.0 million facility and a £153.0 million ($248.5 million) facility.

(5)	The Morgan Stanley maximum facility size represents a £250.0 million ($406.0 million) facility.

As of September 30, 2014, we had aggregate borrowings of $1.7 billion outstanding under our revolving repurchase facilities, with a weighted-average cash coupon of LIBOR plus 1.90% per annum and a weighted-average all-in cost of credit, including associated fees and expenses, of LIBOR plus 2.14% per annum. As of September 30, 2014, outstanding borrowings under these facilities had a weighted-average maturity, excluding extension options and term-out provisions, of 2.1 years.

The following table details our asset-specific repurchase agreements and loan participations sold as of September 30, 2014 ($ in thousands):


	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	%

(1)

As of September 30, 2014, all of our asset-specific repurchase agreements and 40% of our participations sold were indexed to one-month USD LIBOR and 60% of our participations sold were indexed to three-month GBP LIBOR. In addition to cash coupon, all-in yield / cost includes the amortization of deferred origination fees / financing costs.

(2)	We also sold a $110.0 million senior interest in a loan that qualified for sale accounting under GAAP and is therefore no longer included on our consolidated balance sheet.

Refer to Note 6 to our consolidated financial statements for additional terms and details of our secured financings, including certain financial covenants.

Floating Rate Portfolio

Our Loan Origination portfolio as of 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 September 30, 2014, a 100 basis point increase in LIBOR would have increased our net income by $15.0 million per annum, or $0.26 per share.

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


	September 30, 2014
Floating rate loans ⁽¹⁾	$	3,940,626
Floating rate debt ⁽¹⁾⁽²⁾		(2,344,344	)

Net floating rate exposure	$	1,596,282

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

Per share amount, basic and diluted	$	0.26

(1)	Our floating rate loans and debt are indexed to LIBOR as of September 30, 2014.

(2)	Includes borrowings under revolving repurchase facilities, asset-specific repurchase agreements, and loan participations sold.

(3)	Annualized net income includes the impact of LIBOR floors for our loan receivable investments where such floors are paying relative to LIBOR of 0.16% as of September 30, 2014.

Convertible Notes

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 7 to our consolidated financial statements for additional discussion of our Convertible Notes.

III. CT Legacy Portfolio

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 September 30, 2014, our CT Legacy Portfolio segment recorded net income of $134,000 driven primarily by net unrealized gains on investments carried at fair value in CT Legacy Partners.

CT Legacy Partners

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.

Carried Interest in CTOPI

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, 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 nine months ended 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 September 30, 2014, we had been allocated $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. 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 September 30, 2014.

CT CDO I

As of September 30, 2014, our consolidated balance sheet included an aggregate $28.9 million of assets and $20.0 million of liabilities related to CT CDO I, a highly-levered securitization vehicle that we formed in 2004. Our economic interest in the loans receivable assets held by CT CDO I 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.

IV. Results of Operations and Liquidity

Operating Results

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):


	September 30, 2014		June 30, 2014		$		%
Income from loans and other investments
Interest and related income	$	49,720	$	41,372	$	8,348		20.2	%
Less: Interest and related expenses		19,713		15,503		4,210		27.2	%

Income from loans and other investments, net		30,007		25,869		4,138		16.0	%
Other operating expenses		8,117		7,911		206		2.6	%

Net income ⁽¹⁾	$	21,890	$	17,958	$	3,932		21.9	%

Dividends per share	$	0.50	$	0.48	$	0.02		4.2	%

(1)	Represents net income attributable to Blackstone Mortgage Trust, Inc.

Income from loans and other investments, net

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

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.

Results of Operations

The following table sets forth information regarding our consolidated results of operations and certain key operating metrics ($ 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			$
Income from loans and other investments
Interest and related income	$	50,386		$	18,853		$	31,533	$	126,507		$	26,327		$	100,180
Less: Interest and related expenses		19,903			4,407			15,496		47,697			6,492			41,205

Income from loans and other investments, net		30,483			14,446			16,037		78,810			19,835			58,975
Other expenses
Management and incentive fees		5,412			2,433			2,979		13,219			3,416			9,803
General and administrative expenses		3,368			1,615			1,753		21,920			6,096			15,824

Total other expenses		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

Income before provision for taxes		23,483			10,262			13,221		75,569			16,025			59,544
Income tax (benefit) provision		(118	)		(264	)		146		412			329			83

Net income	$	23,601		$	10,526		$	13,075	$	75,157		$	15,696		$	59,461
Net income attributable to non-controlling interests		(1,577	)		(2,206	)		629		(6,602	)		(7,743	)		1,141

Net income attributable to Blackstone Mortgage Trust, Inc.	$	22,024		$	8,320		$	13,704	$	68,555		$	7,953		$	60,602

Net income per share - basic and diluted	$	0.45		$	0.29		$	0.16	$	1.52		$	0.53		$	0.99
Dividends per share	$	0.50		$	0.27		$	0.23	$	1.46		$	0.27		$	1.19

Income from loans and other investments, net

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

Other expenses

Other expenses includes management and incentive fees payable to our Manager and general and administrative expenses. Other expenses increased by $4.7 million during the three months ended September 30, 2014 compared to the three months ended September 30, 2013 primarily due to (i) $2.2 million of management fees payable to our Manager as a result of an increased outstanding Equity balance, as defined in our management agreement, due to additional net proceeds received from the sale of shares of our class A common stock, (ii) $1.5 million of non-cash restricted stock amortization related to shares awarded under our long-term incentive plans, (iii) $842,000 of incentive management fees, and (iv) $249,000 of additional general operating expenses.

Other expenses increased by $25.6 million during the nine months ended September 30, 2014 compared to the nine months ended 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 $9.0 million of management fees payable to our Manager, primarily as a result of additional net proceeds received from the sale of shares of our class A common stock, (iii) $5.6 million of non-cash restricted stock amortization related to shares awarded under our long-term incentive plans, and (iv) $842,000 of incentive management fees.

Impairments, provisions, and valuation adjustments

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 September 30, 2013, we recognized (i) $464,000 of net gains on investments held by CT Legacy Partners and (ii) a $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 net gains on investments held by CT Legacy Partners and (ii) a $1.2 million positive valuation adjustment on CT CDO I’s loan classified as held-for-sale.

Income from equity investments in unconsolidated subsidiaries

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

Dividends per share

During the three months ended September 30, 2014, we declared a dividend of $0.50 per share, or $28.8 million, which was paid on October 15, 2014 to common stockholders of record as of September 30, 2014. During the three months ended 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.

Liquidity and Capital Resources

Capitalization

During the first nine months of 2014, we issued 28,175,000 shares of our class A common stock in public offerings at a weighted-average price to the underwriters of $27.13 per share. We generated aggregate net proceeds from these issuances of $763.4 million after deducting underwriting discounts and other offering expenses.

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

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

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

As of September 30, 2014, we also had $172.5 million aggregate principal amount of convertible notes outstanding with a net book value of $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.

Sources of Liquidity

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):


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

	$	497,081	$	270,897

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 of $200.0 million of our class A common stock.

Liquidity Needs

In addition to our ongoing loan origination activity, our primary liquidity needs include interest and principal payments under our $2.5 billion of outstanding secured financings and convertible notes, our $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 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.

Cash Flows

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


	Nine Months Ended September 30,
	2014			2013
Cash flows from operating activities	$	57,460		$	14,445
Cash flows from investing activities		(1,867,100	)		(1,195,694	)
Cash flows from financing activities		1,822,250			1,176,109

Net increase in cash and cash equivalents	$	12,610		$	(5,140	)

We experienced a net increase in cash of $12.6 million for the nine months ended September 30, 2014, compared to a net decrease of $5.1 million for the nine months ended 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 nine months ended September 30, 2014, we (i) had net borrowings of $792.3 million under our revolving repurchase obligations and asset-specific repurchase agreements, (ii) generated $763.4 million of net proceeds from the sale of our class A common stock, (iii) received $403.2 million of loan principal 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 $2.3 billion of new loans during the nine months 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.

Income Taxes

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

Refer to Note 10 to our consolidated financial statements for additional discussion of our income taxes.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires 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.

V. Loan Portfolio Details

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


																					Risk Rating as of
		Origination		Principal		Book		Cash			All-in			Maximum		Geographic	Property	Origination			September 30,	December 31,
	Loan Type ⁽¹⁾	Date		Balance		Balance		Coupon ⁽²⁾			Yield ⁽²⁾			Maturity ⁽³⁾		Location	Type	LTV			2014	2013
1	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		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.		10/23/2013		173.8		170.5		L + 5.66	%		L + 9.25	%		4/9/2015	WA	Office		67	%	2	3
4	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		12/17/2013		140.0		139.1		L + 4.75	%		L + 5.27	%		1/9/2019	NY	Office		70	%	3	3
6	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		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		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		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		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		10/30/2013		96.6		96.1		L + 4.38	%		L + 4.61	%		11/9/2018	CA	Hotel		72	%	2	2
12	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		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		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		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		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		8/8/2013		85.1		84.8		L + 4.25	%		L + 4.62	%		8/10/2018	Diversified	Diversified		59	%	3	3
18	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		10/2/2013		78.2		77.7		L + 5.00	%		L + 5.38	%		9/14/2018	Diversified	Other		64	%	2	3
20	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		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		6/27/2013		74.7		74.5		L + 3.85	%		L + 4.03	%		7/9/2018	GA	Multifamily		72	%	2	3
23	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		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		8/8/2013		68.0		67.9		L + 4.00	%		L + 4.23	%		6/10/2016	NY	Office		68	%	3	3
26	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		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		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		7/26/2013		57.7		57.3		L + 5.00	%		L + 5.75	%		8/9/2018	VA	Office		75	%	3	3
30	Senior loan		3/11/2014		55.7		55.2		L + 4.50	%		L + 4.92	%		4/9/2019	NY	Multifamily		65	%	3	N/A

continued...


																					Risk Rating as of
		Origination		Principal		Book		Cash			All-in			Maximum		Geographic	Property	Origination			September 30,	December 31,
	Loan Type ⁽¹⁾	Date		Balance		Balance		Coupon ⁽²⁾			Yield ⁽²⁾			Maturity ⁽³⁾		Location	Type	LTV			2014	2013
31	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		6/25/2013		48.4		48.8		L + 5.00	%		L + 5.67	%		12/9/2016	IL	Hotel		53	%	3	3
33	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		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		9/4/2013		46.8		46.5		L + 3.85	%		L + 4.25	%		9/10/2018	Diversified	Multifamily		76	%	3	3
36	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		10/31/2013		46.0		45.8		L + 4.25	%		L + 4.78	%		10/9/2018	CA	Hotel		51	%	3	3
38	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		7/17/2013		43.5		43.3		L + 4.50	%		L + 5.11	%		7/16/2017	NY	Retail		69	%	3	3
40	Senior loan		6/7/2013		42.1		41.8		L + 3.80	%		L + 3.97	%		6/15/2018	CA	Office		27	%	1	2
41	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		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		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		11/28/2013		39.2		38.6		L + 4.63	%		L + 5.43	%		11/27/2018	UK	Office		68	%	3	3
45	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		6/18/2014		35.5		35.0		L + 4.00	%		L + 4.46	%		7/20/2019	NL	Office		69	%	3	N/A
47	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		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

				$	3,940.6	$	3,906.2		L + 4.42	%		L + 4.97	%		3.9 years				64	%	2.8	2.8

(1)	Includes senior mortgages and similar credit quality loans, including related contiguous subordinate loans, note financings of senior mortgage loans, and pari passu participations in senior mortgage loans.

(2)

(3)	Maximum maturity assumes all extension options are exercised, however our loans may be repaid prior to such date.

(4)	We originated the loan directly senior to this subordinate loan, but sold the senior loan to finance our overall investment.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

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.

Loan Origination Portfolio segment

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):


	September 30, 2014
Floating rate loans ⁽¹⁾	$	3,940,626
Floating rate debt ⁽¹⁾⁽²⁾		(2,344,344	)

Net floating rate exposure	$	1,596,282

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

Per share amount, basic and diluted	$	0.26

(1)	Amounts represent aggregate principal balances.

(2)	Includes borrowings under revolving repurchase facilities, asset-specific repurchase agreements, and loan participations sold.

(3)	Annualized net income includes the impact of LIBOR floors for our loan receivable investments where such floors are paying relative to LIBOR of 0.16% as of September 30, 2014.

CT Legacy Portfolio segment

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.

Risk of Non-Performance

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.

Credit Risks

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.

Capital Market Risks

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.

Counterparty Risk

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 active monitoring of the asset portfolios that serve as our collateral.

Currency Risk

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):


	September 30, 2014
Foreign currency assets	£	306,403		€	96,591
Foreign currency liabilities		(240,511	)		(22,583	)

Net exposure to exchange rate fluctuations	£	65,892		€	74,008

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

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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.

Changes in Internal Controls over Financial Reporting

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.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

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

ITEM 1A.

RISK FACTORS

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.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

Second Amended and Restated Management Agreement

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:

•

incorporation of the terms of Amendment No. 1 to the Amended and Restated Management Agreement, dated as of July 30, 2013;

•

amendment of our investment guidelines to increase the threshold required for approval by the investment risk management committee of our board of directors from any proposed investment in excess of $150.0 million to any proposed investment in excess of $250.0 million;

•

revisions of the definitions for Incentive Compensation and Management Fee (in each case as defined in the Second Amended and Restated Management Agreement) to remove wording regarding calculation of payments during the ramp-up periods that is no longer relevant from and after the fourth full calendar quarter following Blackstone’s December 2012 investment; and

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.

Fourth Amended and Restated Bylaws

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.

In particular, our Fourth Amended and Restated Bylaws include the following:

•

amendments to the stockholder meeting provisions to clarify (i) the information that must be submitted to us relating to each individual nominee for election and each matter proposed to be acted on and (ii) the circumstances under which we are entitled to cancel or adjourn a requested meeting;

•

revisions to the advance notice of director nominee and stockholder proposal provisions to provide the board of directors with sufficient time to consider stockholder nominations or business proposals and to provide the board of directors with additional information with respect thereto;

•

revisions to the provisions governing our directors clarifying (i) how directors may resign and how such resignation will become effective and (ii) the procedures determining who will preside as chairman and secretary of meetings of the board of directors;

•

amendments authorizing the board of directors and stockholders to ratify prior actions and inactions by us, and to allow the board of directors to take action during emergencies if a quorum of the board of directors may not be readily obtained;

•

amendments to clarify that a committee of the board of directors may delegate some or all of its power and authority to one or more subcommittees;

•

amendments relating to the provisions concerning our officers to provide us with additional flexibility as to, among other things, their appointment and removal; and

•

revisions to clarify that rights to indemnification vest immediately upon election as a director or an officer.

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.

Amendment of Existing Master Repurchase and Securities Contract

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.

Forms of Award Agreements

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.

Section 13(r) Disclosure

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.

ITEM 6.

EXHIBITS


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		Second Amended and Restated Management Agreement, dated as of October 23, 2014, by and between Blackstone Mortgage Trust, Inc. and BXMT Advisors L.L.C.

10.2		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 +		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 +		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

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.

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.

SIGNATURES

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.


				BLACKSTONE MORTGAGE TRUST, INC.

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

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

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

Exhibit 3.1

BLACKSTONE MORTGAGE TRUST, INC.

FOURTH AMENDED AND RESTATED

BYLAWS

Adopted as of October 23, 2014

TABLE OF CONTENTS


		Page

ARTICLE 1 OFFICES			1

Section 1.	PRINCIPAL OFFICE		1

Section 2.	ADDITIONAL OFFICES		1

ARTICLE II MEETINGS OF STOCKHOLDERS			1

Section 1.	PLACE		1

Section 2.	ANNUAL MEETING		1

Section 3.	SPECIAL MEETINGS		1

Section 4.	NOTICE		4

Section 5.	SCOPE OF NOTICE		4

Section 6.	ORGANIZATION AND CONDUCT		5

Section 7.	QUORUM		5

Section 8.	VOTING		6

Section 9.	PROXIES		6

Section 10.	VOTING OF STOCK BY CERTAIN HOLDERS		6

Section 11.	INSPECTORS		7

Section 12.	ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS		7

Section 13.	VOTING BY BALLOT		12

Section 14.	TELEPHONE MEETINGS		12

Section 15.	STOCKHOLDERS’ CONSENT IN LIEU OF MEETING		12

ARTICLE III DIRECTORS			12

Section 1.	GENERAL POWERS		12

Section 2.	NUMBER, TENURE AND RESIGNATION		12

Section 3.	ANNUAL AND REGULAR MEETINGS		13

Section 4.	SPECIAL MEETINGS		13

Section 5.	NOTICE		13

Section 6.	QUORUM		13

Section 7.	VOTING		14

Section 8.	ORGANIZATION		14


Section 9.	TELEPHONE MEETINGS	14

Section 10.	CONSENT BY DIRECTORS WITHOUT A MEETING	14

Section 11.	VACANCIES	14

Section 12.	COMPENSATION	15

Section 13.	LOSS OF DEPOSITS	15

Section 14.	SURETY BONDS	15

Section 15.	RELIANCE	15

Section 16.	RATIFICATION	15

Section 17.	CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS	16

Section 18.	EMERGENCY PROVISIONS	16

ARTICLE IV COMMITTEES		16

Section 1.	NUMBER, TENURE AND QUALIFICATIONS	16

Section 2.	POWERS	16

Section 3.	MEETINGS	16

Section 4.	TELEPHONE MEETINGS	17

Section 5.	CONSENT BY COMMITTEES WITHOUT A MEETING	17

Section 6.	VACANCIES	17

ARTICLE V OFFICERS		17

Section 1.	GENERAL PROVISIONS	17

Section 2.	REMOVAL AND RESIGNATION	17

Section 3.	VACANCIES	18

Section 4.	CHAIRMAN OF THE BOARD	18

Section 5.	EXECUTIVE CHAIRMAN	18

Section 6.	VICE CHAIRMAN	18

Section 7.	CHIEF EXECUTIVE OFFICER	18

Section 8.	CHIEF OPERATING OFFICER	18

Section 9.	CHIEF FINANCIAL OFFICER	19

Section 10.	HEAD OF CAPITAL MARKETS	19

Section 11.	PRESIDENT	19

Section 12.	MANAGING DIRECTORS	19

Section 13.	DIRECTORS	19


Section 14.	VICE PRESIDENTS	19

Section 15.	SECRETARY	19

Section 16.	TREASURER	19

Section 17.	ASSISTANT SECRETARIES AND ASSISTANT TREASURERS	20

Section 18.	COMPENSATION	20

iii


ARTICLE VI CONTRACTS, CHECKS AND DEPOSITS		20

Section 1.	CONTRACTS	20

Section 2.	CHECKS AND DRAFTS	20

Section 3.	DEPOSITS	20

ARTICLE VII STOCK		21

Section 1.	CERTIFICATES	21

Section 2.	TRANSFERS	21

Section 3.	REPLACEMENT CERTIFICATE	21

Section 4.	FIXING OF RECORD DATE	22

Section 5.	STOCK LEDGER	22

Section 6.	FRACTIONAL STOCK; ISSUANCE OF UNITS	22

ARTICLE VIII ACCOUNTING YEAR		22

ARTICLE IX DISTRIBUTIONS		23

Section 1.	AUTHORIZATION	23

Section 2.	CONTINGENCIES	23

ARTICLE X INVESTMENT POLICY		23

ARTICLE XI SEAL		23

Section 1.	SEAL	23

Section 2.	AFFIXING SEAL	23

ARTICLE XII INDEMNIFICATION AND ADVANCE OF EXPENSES		23

ARTICLE XIII WAIVER OF NOTICE		24

ARTICLE XIV AMENDMENT OF BYLAWS		24

BLACKSTONE MORTGAGE TRUST, INC.

BYLAWS

ARTICLE I

OFFICES

Section 1. PRINCIPAL OFFICE . The principal office of the Corporation in the State of Maryland shall be located at such place as the Board of Directors may designate.

Section 2. ADDITIONAL OFFICES . The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. PLACE . All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set in accordance with these Bylaws and stated in the notice of the meeting. Notwithstanding the foregoing, the Board of Directors may provide that any or all meetings of the stockholders shall not be held at a place, but instead shall be held solely by means of remote communication; provided, however, that the Board of Directors shall provide a place for a meeting of the stockholders if a stockholder makes a written request for the same.

Section 2. ANNUAL MEETING . An annual meeting of stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on the date and at the time and place set by the Board of Directors.

Section 3. SPECIAL MEETINGS .

(a) General . Each of the chairman of the board, chief executive officer, president, secretary and Board of Directors may call a special meeting of stockholders. Subject to subsection (b) of this Section 3, a special meeting of stockholders shall also be called by the secretary of the Corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting.

(b) Stockholder Requested Special Meetings . (1) Any stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice to the secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more stockholders of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date Request Notice), shall bear the date of signature of

each such stockholder (or such agent) and shall set forth all information relating to each such stockholder, each individual whom the stockholder proposes to nominate for election or reelection as a director and each matter proposed to be acted on at the meeting that would be required to be disclosed in connection with the solicitation of proxies for the election of directors or the election of each such individual, as applicable, in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) promulgated under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precede and shall not be more than 10 days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the 10th day after the first date on which a Record Date Request Notice is received by the secretary.

(2) In order for any stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders, one or more written requests for a special meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Date entitled to cast not less than a majority of all of the votes entitled to be cast on such matter at such meeting (the “Special Meeting Percentage”) shall be delivered to the secretary. In addition, the Special Meeting Request shall (a) set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the secretary), (b) bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (c) set forth (i) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (ii) the class, series and number of all shares of stock of the Corporation which are owned (beneficially or of record) by each such stockholder and (iii) the nominee holder for, and number of, shares of stock of the Corporation owned beneficially but not of record by such stockholder, (d) be sent to the secretary by registered mail, return receipt requested, and (e) be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation of the Special Meeting Request) may revoke his, her or its request for a special meeting at any time by written revocation delivered to the secretary.

(3) The secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and mailing or delivering the notice of the meeting (including the Corporation’s proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (2) of this Section 3(b), the secretary receives payment of such reasonably estimated cost prior to the preparation and mailing or delivery of such notice of the meeting.

(4) Except as provided in the next sentence, any special meeting shall be held on the date and at the time and place set by the chairman of the board, chief executive officer, president or Board of Directors, as applicable, who called such meeting. In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder Requested Meeting”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided , however, that the date of any Stockholder Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within 10 days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder Requested Meeting, then such meeting shall be held at 2:00 p.m., local time at the principal executive office of the Corporation, on the 90th day after the Meeting Record Date or, if such 90th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Stockholder Requested Meeting within 10 days after the Delivery Date, then such meeting shall be held at the principal executive office of the Corporation. In fixing a date for a Stockholder Requested Meeting, the Board of Directors may consider such factors as it deems relevant, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for any Stockholder Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (3) of this Section 3(b).

(5) If written revocations of the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting on the matter to the secretary: (i) if the notice of meeting has not already been delivered, the secretary shall refrain from delivering the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for a special meeting on the matter, or (ii) if the notice of meeting has been delivered and if the secretary first sends to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a request for the special meeting and written notice of the Corporation’s intention to revoke the notice of the meeting or for the chairman of the meeting to adjourn the meeting without action on the matter, (A) the secretary may revoke the notice of the meeting at any time before 10 days before the commencement of the meeting or (B) the chairman of the meeting may call the meeting to order and adjourn the meeting without acting on the matter. Any request for a special meeting received after a revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.

purpose of permitting the inspectors to perform such review, no such purported Special Meeting Request shall be deemed to have been received by the secretary until the earlier of (i) five Business Days after actual receipt by the secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary represent, as of the Request Record Date, stockholders of record entitled to cast not less than the Special Meeting Percentage. Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

(7) For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

Section 4. NOTICE . Not less than 10 nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business, by electronic transmission or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. The Corporation may give a single notice to all stockholders who share an address, which single notice shall be effective as to any stockholder at such address, unless a stockholder at such address objects to receiving such single notice or revokes a prior consent to receiving such single notice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II or the validity of any proceedings at any such meeting.

Section 5. SCOPE OF NOTICE . Subject to Section 12(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a public announcement (as defined in Section 12(c)(3) of this Article II) of such postponement or cancellation prior to the meeting. Notice of the date, time and place to which the meeting is postponed shall be given not less than 10 days prior to such date and otherwise in the manner set forth in this section.

Section 6. ORGANIZATION AND CONDUCT . Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment or appointed individual, by the chairman or the executive chairman of the board or, in the case of a vacancy in the office or absence of the chairman and the executive chairman of the board, by one of the following officers present at the meeting in the following order: the vice chairman of the board, if there is one, the chief executive officer, the president, the vice presidents in their order of rank and seniority, the secretary, or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary of the meeting shall be an individual appointed by the Board of Directors to act as secretary of the meeting or, in the absence of such appointment, a person appointed by the chairman of the meeting shall act as secretary or, in the absence of such appointment, the secretary of the Corporation or, in the secretary’s absence, an assistant secretary of the Corporation shall act as secretary of the meeting. In the event that the secretary presides at a meeting of stockholders, an assistant secretary, or, in the absence of all assistant secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairman and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation: (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and such other individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting, whether or not a quorum has been established, to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 7. QUORUM . At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum; but this section shall not affect any requirement under any statute or the charter of the Corporation (the “Charter”) for the vote necessary for the approval of any matter. If such quorum is not established at any meeting of the stockholders, the chairman of the meeting may adjourn the meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than would be required to establish a quorum.

Section 8. VOTING . A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum has been established shall be sufficient to elect a director. Each share entitles the holder thereof to vote for as many different individuals as there are directors to be elected and for whose election the holder is entitled to vote. For the avoidance of doubt, stockholders do not have cumulative voting rights in the election of directors generally. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum has been established shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the Charter. Unless otherwise provided by statute or by the Charter, each outstanding share, regardless of class, entitles the holder thereof to cast one vote on each matter submitted to a vote at a meeting of stockholders.

Section 9. PROXIES . A stockholder may cast the votes entitled to be cast by the shares of stock owned of record by the stockholder in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than 11 months after its date unless otherwise provided in the proxy.

Section 10. VOTING OF STOCK BY CERTAIN HOLDERS . Stock of the Corporation registered in the name of a corporation, limited liability company, partnership, joint venture, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, managing member, manager, general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any trustee or fiduciary, in such capacity, may vote stock registered in such trustee’s or fiduciary’s name, either in person or by proxy.

Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.

The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the

name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt by the Corporation of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification.

Notwithstanding any other provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the Corporations and Associations Article of the Annotated Code of Maryland (or any successor statute) shall not apply to: (a) any acquisition by Veqtor Finance Company, LLC, a Delaware limited liability company (“Veqtor”), or any affiliates thereof, of shares of stock of the Corporation, (b) any acquisition of shares of class A common stock, $0.01 par value per share, of the Corporation (the “Common Stock”), by W. R. Berkley Corporation, a Delaware corporation, or any of its controlled affiliates (collectively, “Berkley”), or (c) any acquisition of shares of Common Stock by Huskies Acquisition LLC, a Delaware limited liability company, or any person or entity that is an affiliate of Huskies Acquisition LLC as of September 27, 2012 (collectively, “Huskies”) or by The Blackstone Group L.P., a Delaware limited partnership, or any of its affiliates (collectively, “Blackstone”). This section may not be repealed, in whole or in part, with respect to any prior or subsequent control share acquisition of (i) Veqtor, or any affiliates thereof, without its prior written consent, (ii) Berkley, without its prior written consent or (iii) Huskies or Blackstone, without the prior written consent of Huskies or Blackstone, as applicable, unless the Purchase and Sale Agreement by and between the Corporation and Huskies Acquisition LLC, dated September 27, 2012, is terminated pursuant to Article 11 thereof.

Section 11. INSPECTORS . The Board of Directors or the chairman of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor to the inspector. Except as otherwise provided by the chairman of the meeting, the inspectors, if any, shall (i) determine the number of shares of stock represented at the meeting, in person or by proxy, and the validity and effect of proxies, (ii) receive and tabulate all votes, ballots or consents, (iii) report such tabulation to the chairman of the meeting, (iv) hear and determine all challenges and questions arising in connection with the right to vote, and (v) do such acts as are proper to fairly conduct the election or vote. Each such report shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

Section 12. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS .

(a) Annual Meetings of Stockholders . (1) Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the

stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 12(a) and at the time of the annual meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with this Section 12(a).

(2) For any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 12, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and any such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information required under this Section 12 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement (as defined in Section 12(c)(3) of this Article II) for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, in order for notice by the stockholder to be timely, such notice must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the 10th day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

(3) Such stockholder’s notice shall set forth:

(i) as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) promulgated under the Exchange Act;

(ii) as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom;

(iii) as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person,

(A) the class, series and number of all shares of stock or other securities of the Corporation or any affiliate thereof (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition, and any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,

(B) the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person,

(C) whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (I) manage risk or benefit of changes in the price of Company Securities for such stockholder, Proposed Nominee or Stockholder Associated Person or (II) increase or decrease the voting power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation or any affiliate thereof disproportionately to such person’s economic interest in the Company Securities, and

(D) any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the Corporation or any affiliate thereof, other than an interest arising from the ownership of Company Securities where such stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all other holders of the same class or series;

(iv) as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph (3) of this Section 12(a) and any Proposed Nominee,

(A) the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current name and business address, if different, of each such Stockholder Associated Person and any Proposed Nominee, and

(B) the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of the most recent prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person;

(v) the name and address of any person who contacted or was contacted by the stockholder giving the notice or any Stockholder Associated Person about the Proposed Nominee or other business proposal prior to the date of such stockholder’s notice; and

(vi) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.

(4) Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by a certificate executed by the Proposed Nominee (i) certifying that such Proposed Nominee (a) is not, and will not become, a party to any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation and (b) will serve as a director of the Corporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) promulgated under the Exchange Act and the rules thereunder, or would be required pursuant to the rules of any national securities exchange on which any securities of the Corporation are listed or over-the-counter market on which any securities of the Corporation are traded).

(5) Notwithstanding anything in this subsection (a) of this Section 12 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased, and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of the proxy statement (as defined in Section 12(c)(3) of this Article II) for the preceding year’s annual meeting, a stockholder’s notice required by this Section 12(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the 10th day following the day on which such public announcement is first made by the Corporation.

(6) For purposes of this Section 12, “Stockholder Associated Person” of any stockholder shall mean (i) any person acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person.

that a special meeting be called for the purpose of electing directors in compliance with Section 3 of this Article II and that has supplied the information required by Section 3 of this Article II about each individual whom the stockholder proposes to nominate for election of directors or (iii) provided that the special meeting has been called in accordance with Section 3(a) of this Article II for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 12 and at the time of the special meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 12. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice, containing the information required by paragraphs (a)(3) and (4) of this Section 12, is delivered to the secretary at the principal executive office of the Corporation not earlier than the 120th day prior to such special meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

(c) General . (1) If information submitted pursuant to this Section 12 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate in any material respect, such information may be deemed not to have been provided in accordance with this Section 12. Any such stockholder shall notify the Corporation of any inaccuracy or change (within two Business Days of becoming aware of such inaccuracy or change) in any such information. Upon written request by the secretary or the Board of Directors, any such stockholder shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), (A) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 12, and (B) a written update of any information (including, if requested by the Corporation, written confirmation by such stockholder that it continues to intend to bring such nomination or other business proposal before the meeting) submitted by the stockholder pursuant to this Section 12 as of an earlier date. If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 12.

(2) Only such individuals who are nominated in accordance with this Section 12 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 12. The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 12.

(3) For purposes of this Section 12, “the date of the proxy statement” shall have the same meaning as “the date of the company’s proxy statement released to shareholders” as used in Rule 14a-8(e) promulgated under the Exchange Act, as interpreted by the Securities and Exchange Commission from time to time. “Public announcement” shall mean disclosure (A) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (B) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.

(4) Notwithstanding the foregoing provisions of this Section 12, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 12. Nothing in this Section 12 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, or the right of the Corporation to omit a proposal from, any proxy statement filed by the Corporation with the Securities and Exchange Commission pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 12 shall require disclosure of revocable proxies received by the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A by such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act.

Section 13. VOTING BY BALLOT . Voting on any question or in any election may be viva voce unless the presiding officer shall order or any stockholder shall demand that voting be by ballot.

Section 14. TELEPHONE MEETINGS . The Board of Directors or chairman of the meeting may permit one or more stockholders or other persons to participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at the meeting.

Section 15. STOCKHOLDERS’ CONSENT IN LIEU OF MEETING . Any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting if a unanimous consent setting forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and filed with the minutes of proceedings of the stockholders.

ARTICLE III

DIRECTORS

Section 1. GENERAL POWERS . The business and affairs of the Corporation shall be managed under the direction of its Board of Directors.

Section 2. NUMBER, TENURE AND RESIGNATION . At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of

Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the Maryland General Corporation Law (the “MGCL”), nor more than 15, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Any director of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.

Section 3. ANNUAL AND REGULAR MEETINGS . An annual meeting of the Board of Directors shall be held each year and may be held on the date and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and place for the holding of regular meetings of the Board of Directors without other notice than such resolution.

Section 4. SPECIAL MEETINGS . Special meetings of the Board of Directors may be called by or at the request of the chairman or the executive chairman of the board, the chief executive officer, the president or a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the time and place of any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place of special meetings of the Board of Directors without other notice than such resolution.

Section 5. NOTICE . Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, United States mail or courier to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.

Section 6. QUORUM . A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that, if less than a

majority of such directors is present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the Charter or these Bylaws, the vote of a majority or other percentage of a particular group of directors is required for action, a quorum must also include a majority or such other percentage of such group.

The directors present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum.

Section 7. VOTING . The action of a majority of the directors then present at a meeting at which a quorum has been established shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws. If enough directors have withdrawn from a meeting to leave fewer than required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws.

Section 8. ORGANIZATION . At each meeting of the Board of Directors, the chairman of the board or, in the absence of the chairman, the executive chairman or the vice chairman of the board, if any, shall act as chairman of the meeting. In the absence of the chairman and any executive chairman or vice chairman of the board, the chief executive officer or, in the absence of the chief executive officer, the president or, in the absence of the president, a director chosen by a majority of the directors present, shall act as chairman of the meeting. The secretary or, in his or her absence, an assistant secretary of the Corporation, or, in the absence of the secretary and all assistant secretaries, an individual appointed by the chairman of the meeting, shall act as secretary of the meeting.

Section 9. TELEPHONE MEETINGS . Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 10. CONSENT BY DIRECTORS WITHOUT A MEETING . Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of proceedings of the Board of Directors. Any or all of the signatures on such consent may be a copy or other reproduction.

Section 11. VACANCIES . If for any reason any or all of the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Any vacancy on the Board of Directors for any cause other than an increase in the number of directors may be filled by a majority of the remaining directors, even if such majority is less than a quorum. Any vacancy in the number of directors

created by an increase in the number of directors may be filled by a majority vote of the entire Board of Directors. Any individual so elected as director shall serve until the next annual meeting of stockholders and until his or her successor is elected and qualifies.

Section 12. COMPENSATION . Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they perform or engage in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.

Section 13. LOSS OF DEPOSITS . No director shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association, or other institution with whom moneys or stock of the Corporation have been deposited.

Section 14. SURETY BONDS . Unless required by law, no director shall be obligated to give any bond or surety or other security for the performance of any of his or her duties.

Section 15. RELIANCE . Each director and officer of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or, with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.

Section 16. RATIFICATION . The Board of Directors or the stockholders may ratify any action or inaction by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the matter, and if so ratified, shall have the same force and effect as if originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders. Any action or inaction questioned in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting or otherwise, may be ratified, before or after judgment, by the Board of Directors or by the stockholders, and such ratification shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.

Section 17. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS . The directors shall have no responsibility to devote their full time to the affairs of the Corporation. Subject to Article X of the Charter, any director or officer, employee or agent of the Corporation, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to or in addition to or in competition with those of or relating to the Corporation.

Section 18. EMERGENCY PROVISIONS. Notwithstanding any other provision in the Charter or these Bylaws, this Section 18 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided by the Board of Directors, (i) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (ii) notice of any meeting of the Board of Directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio; and (iii) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.

ARTICLE IV

COMMITTEES

Section 1. NUMBER, TENURE AND QUALIFICATIONS . The Board of Directors may appoint from among its members an Audit Committee, a Compensation Committee, a Corporate Governance Committee and an Investment Risk Management Committee and one or more other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member.

Section 2. POWERS . The Board of Directors may delegate to committees appointed under Section 1 of this Article any of the powers of the Board of Directors, except as prohibited by law. Except as may be otherwise provided by the Board of Directors, any committee may delegate some or all of its power and authority to one or more subcommittees, composed of one or more directors, as the committee deems appropriate in its sole and absolute discretion.

Section 3. MEETINGS . Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of the committee (if there are at least two members of the committee) may fix the time and place of its meeting unless the Board shall otherwise provide. Each committee shall keep minutes of its proceedings.

Section 4. TELEPHONE MEETINGS . Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 5. CONSENT BY COMMITTEES WITHOUT A MEETING . Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of proceedings of such committee.

Section 6. VACANCIES . Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member or to dissolve any such committee.

ARTICLE V

OFFICERS

Section 1. GENERAL PROVISIONS . The officers of the Corporation shall include a president, a secretary and a treasurer and may include a chairman of the board, one or more vice chairmen, a chief executive officer, a chief operating officer, a chief financial officer, a head of capital markets, one or more managing directors, one or more employee directors, one or more vice presidents, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time elect such other officers with such powers and duties as it shall deem necessary or desirable. The officers of the Corporation, including any officers elected to fill a vacancy among the officers, shall be elected by the Board of Directors, except that the chief executive officer or the president may from time to time appoint one or more vice presidents, assistant secretaries and assistant treasurers or any other officers (other than the chief executive officer, president and chief financial officer). Each officer shall serve for the term specified by the Board of Directors or the appointing officer or, if no such term is specified, until his or her successor is elected and qualifies or until his or her death or his or her resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.

may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board, the chief executive officer, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.

Section 3. VACANCIES . A vacancy in any office may be filled by the Board of Directors for the balance of the term.

Section 4. CHAIRMAN OF THE BOARD . The Board of Directors shall designate from among its members a chairman of the board, who shall not, solely by reason of these s Bylaws, be an officer of the Corporation. The chairman of the board shall preside over the meetings of the Board of Directors and, unless otherwise determined by the Board of Directors, of the stockholders at which he shall be present. The Board of Directors may designate the chairman of the board as an executive or non-executive chairman. The chairman of the board shall perform such other duties as may be assigned to him or by these Bylaws or the Board of Directors.

Section 5. EXECUTIVE CHAIRMAN . The Board of Directors may designate from among its members an executive chairman of the board in addition to or in the place of a chairman of the board, who shall not, solely by reason of these s Bylaws, be an officer of the Corporation. The executive chairman shall perform such duties as may be assigned to him or by these Bylaws or the Board of Directors.

Section 6. VICE CHAIRMAN . Each Vice Chairman shall have the general responsibility for the implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation.

Section 7. CHIEF EXECUTIVE OFFICER . The Board of Directors may designate a chief executive officer. In the absence of such designation, the chairman of the board shall be the chief executive officer of the Corporation. Subject to the direction of the Board of Directors, the chief executive officer shall in general supervise and control all of the business and affairs of the Corporation and shall exercise chief executive powers and such specific powers and shall perform such duties as from time to time may be conferred upon or assigned to him by the Board of Directors or any committee thereof designated by it to so act. He may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed.

Section 8. CHIEF OPERATING OFFICER . The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer. In the absence of a president or in the event of a vacancy in such office, the chief operating officer shall perform the duties of president and when so acting shall have all the powers of and be subject to all the restrictions placed upon the president.

Section 9. CHIEF FINANCIAL OFFICER . The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer.

Section 10. HEAD OF CAPITAL MARKETS . The Board of Directors or the chief executive officer may designate a head of capital markets. The head of capital markets shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer.

Section 11. PRESIDENT . The president shall have general executive powers and shall have such specific powers and shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time. In the absence of a designation of a chief operating officer by the Board of Directors, the president shall be the chief operating officer.

Section 12. MANAGING DIRECTORS . The Board of Directors or the chief executive officer may designate one or more managing directors. A managing director shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer.

Section 13. DIRECTORS . The Board of Directors may designate one or more employee directors. An employee director shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer.

Section 14. VICE PRESIDENTS . The Board of Directors or the chief executive officer may designate one or more vice presidents. A vice president shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer. The Board of Directors may designate one or more vice presidents as executive vice president or as vice president for particular areas of responsibility.

Section 15. SECRETARY . The secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep, or direct that a transfer agent and registrar appointed pursuant to Article VII Section 5 keep, a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him or her by the Board of Directors or the chief executive officer.

Section 16. TREASURER . The treasurer shall have the custody of the funds and securities of the Corporation, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors , the chief executive officer, the president, the chief financial officer,

or any other officer designated by the Board of Directors may determine, and in general perform such other duties as from time to time may be assigned to him by the Board of Directors or the chief executive officer. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.

The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, whenever the Board of Directors may require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation.

Section 17. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS . The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the Board of Directors or the chief executive officer.

Section 18. COMPENSATION . The compensation of the officers shall be fixed from time to time by or under the authority of the Board of Directors and no officer shall be prevented from receiving such compensation by reason of the fact that he or she is also a director.

ARTICLE VI

CONTRACTS, CHECKS AND DEPOSITS

Section 1. CONTRACTS . The Board of Directors or any manager of the Corporation approved by the Board of Directors and acting within the scope of its authority pursuant to a management agreement with the Corporation may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when duly authorized or ratified by action of the Board of Directors or a manager acting within the scope of its authority pursuant to a management agreement and executed by the chief executive officer, the president, the chief financial officer, the head of capital markets or any other person designated by the Board of Directors, such a manager or any of the foregoing officers.

Section 2. CHECKS AND DRAFTS . All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors.

Section 3. DEPOSITS . All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the Board of Directors, the chief executive officer, the president, the chief financial officer, or any other officer designated by the Board of Directors may determine.

ARTICLE VII

STOCK

Section 1. CERTIFICATES . Except as may be otherwise provided by the Board of Directors, stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the Corporation in any manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.

Section 2. TRANSFERS . All transfers of shares of stock shall be made on the books of the Corporation, by the holder of the shares, in person or by his or her attorney, in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors that such shares shall be represented by certificates. Upon the transfer of any uncertificated shares, the Corporation shall, to the extent then required by the MGCL, provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.

The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by the laws of the State of Maryland.

Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the Charter and all of the terms and conditions contained therein.

Section 3. REPLACEMENT CERTIFICATE . Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors has determined that such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.

Section 4. FIXING OF RECORD DATE . The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than 10 days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if adjourned or postponed, except if the meeting is adjourned or postponed to a date more than 120 days after the record date originally fixed for the meeting, in which case a new record date for such meeting may be determined as set forth herein.

Section 5. STOCK LEDGER . The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issuance and registration of shares of stock, including the appointment from time to time of transfer agents and registrars. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.

Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS . The Board of Directors may authorize the Corporation to issue fractional shares of stock or authorize the issuance of scrip, all on such terms and under such conditions as it may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may authorize the issuance of units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.

ARTICLE VIII

ACCOUNTING YEAR

The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.

ARTICLE IX

DISTRIBUTIONS

Section 1. AUTHORIZATION . Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.

Section 2. CONTINGENCIES . Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish any such reserve.

ARTICLE X

INVESTMENT POLICY

Subject to the provisions of the Charter, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.

ARTICLE XI

SEAL

Section 1. SEAL . The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland,” or shall be in any other form authorized by the Board of Directors. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

Section 2. AFFIXING SEAL . Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.

ARTICLE XII

INDEMNIFICATION AND ADVANCE OF EXPENSES

officer of the Corporation and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, trustee, member, manager or partner of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity. The rights to indemnification and advance of expenses provided by the Charter and these Bylaws shall vest immediately upon election of a director or officer. The Corporation may, with the approval of its Board of Directors, provide such indemnification and advance for expenses to an individual who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. The indemnification and payment or reimbursement of expenses provided in these Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any bylaw, resolution, insurance, agreement or otherwise.

Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the Charter or these Bylaws inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

ARTICLE XIII

WAIVER OF NOTICE

Whenever any notice of a meeting is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing or by electronic transmission, given by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice of such meeting, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.

ARTICLE XIV

AMENDMENT OF BYLAWS

The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.

Exhibit 3.2

~~CAPITAL~~ BLACKSTONE MORTGAGE TRUST, INC.

~~THIRD~~ FOURTH AMENDED AND RESTATED

BYLAWS

Adopted as of ~~December 19, 2012~~ October 23, 2014

TABLE OF CONTENTS


			Page

	ARTICLE 1 OFFICES			1

Section 1.		PRINCIPAL OFFICE		1

Section 2.		ADDITIONAL OFFICES		1

	ARTICLE II MEETINGS OF STOCKHOLDERS			1

Section 1.		PLACE		1

Section 2.		ANNUAL MEETING		1

Section 3.		SPECIAL MEETINGS		1

Section 4.		NOTICE		4

Section 5.		SCOPE OF NOTICE		4

Section 6.		ORGANIZATION AND CONDUCT		4 5

Section 7.		QUORUM		5

Section 8.		VOTING		5 6

Section 9.		PROXIES		5 6

Section 10.		VOTING OF STOCK BY CERTAIN HOLDERS		6

Section 11.		INSPECTORS		7

Section 12.		~~NOMINATIONS AND~~ ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS ~~BY STOCKHOLDERS~~		7 8

Section 13.		VOTING BY BALLOT		10 13

Section 14.		TELEPHONE MEETINGS		10 13

Section 15.		STOCKHOLDERS’ CONSENT IN LIEU OF MEETING		13

	ARTICLE III DIRECTORS			10 13

Section 1.		GENERAL POWERS		10 13

Section 2.		NUMBER, TENURE AND ~~QUALIFICATIONS~~ RESIGNATION		10 13

Section 3.		ANNUAL AND REGULAR MEETINGS		10 13

Section 4.		SPECIAL MEETINGS		11 13

Section 5.		NOTICE		11 14

Section 6.		QUORUM		11 14

Section 7.		VOTING		11 14

Section 8.		ORGANIZATION		15

Section 8 9 .		TELEPHONE MEETINGS		12 15



Section 9 10 .		~~INFORMAL ACTION~~ CONSENT BY DIRECTORS WITHOUT A MEETING	12 15

Section 10 11 .		VACANCIES	12 15

Section 11 12 .		COMPENSATION	12 15

Section 12 13 .		LOSS OF DEPOSITS	12 16

Section 13 14 .		SURETY BONDS	12 16

Section 14 15 .		RELIANCE	12 16

Section 16.		RATIFICATION	16

Section 15 17 .		CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS	13 16

Section 18.		EMERGENCY PROVISIONS	16

	ARTICLE IV COMMITTEES		13 17

Section 1.		NUMBER, TENURE AND QUALIFICATIONS	13 17

Section 2.		POWERS	13 17

Section 3.		MEETINGS	13 17

Section 4.		TELEPHONE MEETINGS	13 17

Section 5.		~~INFORMAL ACTION~~ CONSENT BY COMMITTEES WITHOUT A MEETING	13 18

Section 6.		VACANCIES	14 18

	ARTICLE V OFFICERS		14 18

Section 1.		GENERAL PROVISIONS	14 18

Section 2.		REMOVAL AND RESIGNATION	14 18

Section 3.		VACANCIES	14 19

Section 4.		CHAIRMAN OF THE BOARD	15 19

Section 5.		EXECUTIVE CHAIRMAN	19

Section 5 6 .		VICE ~~CHAIRMEN~~ CHAIRMAN	15 19

Section 6.		CHIEF EXECUTIVE OFFICER	15 19

Section 7 8 .		CHIEF OPERATING OFFICER	15 19

Section 8 9 .		CHIEF FINANCIAL OFFICER	15 20

Section 9 10 .		~~CHIEF CREDIT OFFICER~~ HEAD OF CAPITAL MARKETS	15 20

Section 10 11 .		PRESIDENT	15 20

Section 11 12 .		MANAGING DIRECTORS	15 20

Section 12 13 .		DIRECTORS	16 20

Section 13 14 .		VICE PRESIDENTS	16 20



Section 14 15 .		SECRETARY	16 20

Section 15 16 .		TREASURER	16 20

Section 16 17 .		ASSISTANT SECRETARIES AND ASSISTANT TREASURERS	16 21

Section ~~17.~~ 18.		~~SALARIES~~ COMPENSATION	17 21

	ARTICLE VI CONTRACTS, ~~LOANS,~~ CHECKS AND DEPOSITS		17 21

Section 1.		CONTRACTS	17 21

Section 2.		CHECKS AND DRAFTS	17 22

Section 3.		DEPOSITS	17 22

	ARTICLE VII STOCK		17 22

Section 1.		CERTIFICATES	17 22

Section 2.		TRANSFERS	18 22

Section 3.		REPLACEMENT CERTIFICATE	18 23

Section 4.		~~CLOSING OF TRANSFER BOOKS OR~~ FIXING OF RECORD DATE	18 23

Section 5.		STOCK LEDGER	19 24

Section 6.		FRACTIONAL STOCK; ISSUANCE OF UNITS	19 24

	ARTICLE VIII ACCOUNTING YEAR		19 24

	ARTICLE IX DISTRIBUTIONS		20 24

Section 1.		AUTHORIZATION	20 24

Section 2.		CONTINGENCIES	20 25

	ARTICLE X INVESTMENT POLICY		20 25

	ARTICLE XI SEAL		20 25

Section 1.		SEAL	20 25

Section 2.		AFFIXING SEAL	20 25

	ARTICLE XII INDEMNIFICATION AND ADVANCE OF EXPENSES		20 25

	ARTICLE XIII WAIVER OF NOTICE		21 26

	ARTICLE XIV AMENDMENT OF BYLAWS		22 27

iii

~~CAPITAL~~ BLACKSTONE MORTGAGE TRUST, INC.

BYLAWS

ARTICLE I

OFFICES

Section 1. PRINCIPAL OFFICE . The principal office of the Corporation in the State of Maryland shall be located at such place ~~or places~~ as the Board of Directors may designate.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 2. ANNUAL MEETING . An annual meeting of ~~the~~ stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on a the date and at the time and place set by the Board of Directors.

Section 3. SPECIAL MEETINGS .

(a) General . Each of the chairman of the board, ~~president,~~ chief executive officer or , president, secretary and Board of Directors may call a special ~~meetings of the~~ meeting of stockholders. Subject to subsection (b) of this Section 3, a special meeting of stockholders shall also be called by the secretary of the Corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting.

in a writing accompanying the Record Date Request Notice), shall bear the date of signature of each such stockholder (or such agent) and shall set forth all information relating to each such stockholder ~~that must~~ , each individual whom the stockholder proposes to nominate for election or reelection as a director and each matter proposed to be acted on at the meeting that would be required to be disclosed in ~~solicitations~~ connection with the solicitation of proxies for the election of directors or the election of each such individual, as applicable, in an election contest (even if an election contest is not involved), or is would otherwise be required in connection with such a solicitation , in each case pursuant to Regulation 14A (or any successor provision) promulgated under the Securities Exchange Act of 1934, as amended , and the rules and regulations promulgated thereunder (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precede and shall not be more than ~~ten~~ 10 days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the ~~tenth~~ 10th day after the first date on which ~~the~~ a Record Date Request Notice is received by the secretary.

(2) In order for any stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders , one or more written requests for a special meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Date entitled to cast not less than a majority ~~(the “Special Meeting Percentage”)~~ of all of the votes entitled to be cast on such matter at such meeting (the “Special Meeting ~~Request~~ Percentage ”) shall be delivered to the secretary. In addition, the Special Meeting Request shall (a) ~~shall~~ set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the secretary), (b) ~~shall~~ bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (c) ~~shall~~ set forth (i) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (ii) the class, series and number of all shares of stock of the Corporation which are owned (beneficially or of record) by each such stockholder , and (iii) the nominee holder for, and number of, shares ~~owned by such stockholder~~ of stock of the Corporation owned beneficially but not of record by such stockholder , (d) ~~shall~~ be sent to the secretary by registered mail, return receipt requested, and (e) ~~shall~~ be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation or of the Special Meeting Request) may revoke his, her or its request for a special meeting at any time by written revocation delivered to the secretary.

(4) Except as provided in the next sentence, any special meeting shall be held ~~at such place,~~ on the date and at the time ~~as may be designated~~ and place set by the chairman of the board, chief executive officer, president or Board of Directors, ~~whoever has~~ as applicable, who called ~~the~~ such meeting. In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder Requested Meeting”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided , however, that the date of any Stockholder Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within ~~ten~~ 10 days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder Requested Meeting, then such meeting shall be held at 2:00 p.m. , local time at the principal executive office of the Corporation, on the 90th day after the Meeting Record Date or, if such 90th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Stockholder Requested Meeting within ~~ten~~ 10 days after the Delivery Date, then such meeting shall be held at the principal executive office of the Corporation. In fixing a date for ~~any special~~ a Stockholder Requested Meeting, the chairman of the board, chief executive officer, president or Board of Directors may consider such factors as ~~he, she or~~ it deems relevant ~~within the good faith exercise of business judgment~~ , including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for any Stockholder Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (3) of this Section 3(b).

(5) If written revocations of ~~requests for~~ the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting on the matter to the secretary ~~, the secretary shall~~ : (i) if the notice of meeting has not already been ~~mailed,~~ delivered, the secretary shall refrain from ~~mailing~~ delivering the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for ~~the~~ a special meeting on the matter , or (ii) if the notice of meeting has been ~~mailed~~ delivered and if the secretary first sends to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a request for the special meeting and written notice of the ~~secretary~~ Corporation ’s intention to revoke the notice of the meeting , or for the chairman of the meeting to adjourn the meeting without action on the matter, (A) the secretary may revoke the notice of the meeting at any time before ~~ten~~ 10 days before the commencement of the meeting or (B) the chairman of the meeting may call the meeting to order and adjourn the meeting without acting on the matter . Any request for a special meeting received after a revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.

(6) The chairman of the board, chief executive officer, president or Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the secretary. For the purpose of permitting the inspectors to perform such review, no such purported Special Meeting Request shall be deemed to have been ~~delivered to~~ received by the secretary until the earlier of (i) five Business Days after actual receipt by the secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary represent ~~at least a majority of the issued and outstanding shares of stock that would be~~ , as of the Request Record Date, stockholders of record entitled to ~~vote at such~~ cast not less than the Special Meeting Percentage . Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

Section 4. NOTICE . Not less than ~~ten~~ 10 nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting ~~written or printed notice~~ notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, ~~either~~ by mail or , by presenting it to such stockholder personally or , by leaving it at ~~his~~ the stockholder’s residence or usual place of business or , by electronic transmission or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at ~~his post office~~ the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. The Corporation may give a single notice to all stockholders who share an address, which single notice shall be effective as to any stockholder at such address, unless a stockholder at such address objects to receiving such single notice or revokes a prior consent to receiving such single notice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II or the validity of any proceedings at any such meeting.

by making a public announcement (as defined in Section 12(c)(3) of this Article II) of such postponement or cancellation prior to the meeting. Notice of the date, time and place to which the meeting is postponed shall be given not less than 10 days prior to such date and otherwise in the manner set forth in this section.

Section 6. ORGANIZATION AND CONDUCT . Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment or appointed individual , by the chairman or the executive chairman of the board or, in the case of a vacancy in the office or absence of the chairman and the executive chairman of the board, by one of the following officers present at the meeting in the following order : the vice chairman of the board, if there be is one , the chief executive officer , the president, the vice presidents in their order of rank and seniority , the secretary , or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary of the meeting shall be an individual appointed by the Board of Directors to act as secretary of the meeting or, in the absence of such appointment, a person appointed by the chairman of the meeting shall act as secretary or, in the absence of such appointment, the secretary of the Corporation or, in the secretary’s absence, an assistant secretary of the Corporation , shall act as secretary of the meeting. In the event that the secretary presides at a meeting of stockholders, an assistant secretary, or, in the absence of all assistant secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of ~~such~~ the chairman and without any action by the stockholders , are appropriate for the proper conduct of the meeting, including, without limitation , : (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and such other ~~such~~ individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments ~~by participants~~ ; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; ~~and~~ (h) concluding a meeting or recessing or adjourning the meeting , whether or not a quorum has been established, to a later date and time and at a place announced at the meeting ; and (i) complying with any state and local laws and regulations concerning safety and security . Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

necessary for the ~~adoption~~ approval of any ~~measure~~ matter . If ~~, however,~~ such quorum ~~shall~~ is not ~~be present~~ established at any meeting of the stockholders, the chairman of the meeting ~~shall have the power to~~ may adjourn the meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

The stockholders present either in person or by proxy, at a meeting which has been duly called and ~~convened~~ at which a quorum has been established , may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave ~~less~~ fewer than would be required to establish a quorum.

Section 8. VOTING . A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum ~~is present~~ has been established shall be sufficient to elect a director. Each share ~~may be voted~~ entitles the holder thereof to vote for as many different individuals as there are directors to be elected and for whose election the ~~share~~ holder is entitled to ~~be voted~~ vote. For the avoidance of doubt, stockholders do not have cumulative voting rights in the election of directors generally . A majority of the votes cast at a meeting of stockholders duly called and at which a quorum ~~is present~~ has been established shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the Charter ~~of the Corporation~~ . Unless otherwise provided in by statute or by the Charter, each outstanding share, regardless of class, ~~shall be entitled to~~ entitles the holder thereof to cast one vote on each matter submitted to a vote at a meeting of stockholders.

Section 9. PROXIES . A stockholder may cast the votes entitled to be cast by the shares of stock owned of record by the stockholder in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than ~~eleven~~ 11 months after its date unless otherwise provided in the proxy.

Section 10. VOTING OF STOCK BY CERTAIN HOLDERS . Stock of the Corporation registered in the name of a corporation, limited liability company, partnership , joint venture , trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a managing member, manager, general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any ~~director or other~~ trustee or fiduciary , in such capacity, may vote stock registered in ~~his name as~~ such trustee’s or fiduciary ’s name , either in person or by proxy.

The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date ~~or closing of the stock transfer books~~ , the time after the record date ~~or closing of the stock transfer books~~ within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt by the Corporation of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the ~~stockholder~~ holder of record of the specified stock in place of the stockholder who makes the certification.

Notwithstanding any other provision of the ~~chapter of the Corporation~~ Charter or these Bylaws, Title 3, Subtitle 7 of the Corporations and Associations Article of the Annotated Code of Maryland (or any successor statute) shall not apply to: (a) any acquisition by Veqtor Finance Company, LLC, a Delaware limited liability company (“Veqtor”), or any affiliates thereof, of shares of stock of the Corporation, (b) any acquisition of shares of class A common stock, $0.01 par value per share, of the Corporation (the “Common Stock”), by W. R. Berkley Corporation, a Delaware corporation, or any of its controlled affiliates (collectively, “Berkley”), or (c) any acquisition of shares of Common Stock by Huskies Acquisition LLC, a Delaware limited liability company, or any person or entity that is an affiliate of Huskies Acquisition LLC as of September 27, 2012 (collectively, “Huskies”) or by The Blackstone Group L.P., a Delaware limited partnership, or any of its affiliates (collectively, “Blackstone”). This section may not be repealed, in whole or in part, with respect to any prior or subsequent control share acquisition of (i) Veqtor, or any affiliates thereof, without its prior written consent, (ii) Berkley, without its prior written consent or (iii) Huskies or Blackstone, without the prior written consent of Huskies or Blackstone, as applicable, unless the Purchase and Sale Agreement by and between the Corporation and Huskies Acquisition LLC, dated September 27, 2012, is terminated pursuant to Article 11 thereof.

Section 11. INSPECTORS . ~~At any meeting of stockholders,~~ The Board of Directors or the chairman of the meeting may appoint , before or at the meeting, one or more ~~persons as~~ inspectors for ~~such~~ the meeting ~~. Such~~ and any successor to the inspector. Except as otherwise provided by the chairman of the meeting, the inspectors , if any, shall ~~ascertain and report~~ (i) determine the number of shares of stock represented at the meeting ~~based upon their determination of~~ , in person or by proxy, and the validity and effect of proxies, ~~count~~ (ii) receive and tabulate all votes, ~~report the results and perform such other~~ ballots or consents, (iii) report such tabulation to the chairman of the meeting, (iv) hear and determine all challenges and questions arising in connection with the right to vote, and (v) do such acts as are proper to fairly conduct the election ~~and voting with impartiality and fairness to all the stockholders.~~

or vote. Each such report ~~of an inspector~~ shall be in writing and signed by ~~him~~ the inspector or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

Section 12. ~~NOMINATIONS AND PROPOSALS BY STOCKHOLDERS~~ ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS .

(a) Annual Meetings of Stockholders . (1) Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 12(a) and at the time of the annual meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with this Section 12(a).

(2) For ~~nominations~~ any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 12, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and any such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information required under this Section 12 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of ~~mailing of the notice~~ the proxy statement (as defined in Section 12(c)(3) of this Article II) for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, in order for notice by the stockholder to be timely , such notice must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of such annual meeting , as originally convened, or the ~~tenth~~ 10th day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth

(3) Such stockholder’s notice shall set forth:

(i) as to each individual whom the stockholder proposes to nominate for election or reelection as a director , ( A) the name, age, business address and residence address of such individual, (B) the class, series and number of any shares of stock of the Corporation that are beneficially owned by such individual, (C) the date such shares were acquired and the investment intent of such acquisition and (D) all other each, a “Proposed Nominee”), all information relating to ~~such individual that is~~ the Proposed Nominee that would

be required to be disclosed in ~~solicitations~~ connection with the solicitation of proxies for the election of ~~directors~~ the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or is would otherwise be required in connection with such solicitation , in each case pursuant to Regulation 14A (or any successor provision) promulgated under the Exchange Act ~~and the rules thereunder (including such individual’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected)~~ ;

(ii) as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder ~~and~~ or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder ~~and~~ or the Stockholder Associated Person therefrom;

(iii) as to the stockholder giving the notice , any Proposed Nominee and any Stockholder Associated Person,

(A) the class, series and number of all shares of stock or other securities of the Corporation or any affiliate thereof (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder ~~and by such~~ , Proposed Nominee or Stockholder Associated Person, ~~if any, and~~ the date on which each such Company Security was acquired and the investment intent of such acquisition , and any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,

(B) the nominee holder for, and number of, ~~shares~~ any Company Securities owned beneficially but not of record by such stockholder ~~and by any such~~ , Proposed Nominee or Stockholder Associated Person ; ,

(iv) as to the stockholder giving the notice ~~and~~ , any Stockholder Associated Person ~~covered by~~ with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph ( 2 3 ) of this Section 12(a) and any Proposed Nominee ,

(A) the name and address of such stockholder, as they appear on the Corporation’s stock ledger , and the current name and business address, if different, ~~and~~ of each such Stockholder Associated Person ; and ~~(v) to~~ any Proposed Nominee, and

(4) Such stockholder’s notice shall , with respect to any Proposed Nominee, be accompanied by a certificate executed by the Proposed Nominee (i) certifying that such Proposed Nominee (a) is not, and will not become, a party to any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation and (b) will serve as a director of the Corporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) promulgated under the Exchange Act and the rules thereunder, or would be required pursuant to the rules of any national securities exchange on which any securities of the Corporation are listed or over-the-counter market on which any securities of the Corporation are traded).

( 3 5 ) Notwithstanding anything in this subsection (a) of this Section 12 to the contrary, in the event that the number of directors to be elected to the Board of Directors ~~increases or decreases the maximum or minimum number of directors in accordance with Article III, Section 2 of these Bylaws~~ is increased , and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of ~~mailing of the notice of~~ the proxy

statement (as defined in Section 12(c)(3) of this Article II) for the preceding year’s annual meeting, a stockholder’s notice required by this Section 12(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the ~~tenth~~ 10th day following the day on which such public announcement is first made by the Corporation.

( 4 6 ) For purposes of this Section 12, “Stockholder Associated Person” of any stockholder shall mean (i) any person ~~controlling, directly or indirectly, or~~ acting in concert with , such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person ~~controlling,~~ that directly, or indirectly through one or more intermediaries, controls, or is controlled by , or is under common control with , such stockholder or such Stockholder Associated Person.

(b) Special Meetings of Stockholders . Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected ~~(i) pursuant to the Corporation’s notice of meeting, (ii~~ only (i ) by or at the direction of the Board of Directors , (ii) by a stockholder that has requested that a special meeting be called for the purpose of electing directors in compliance with Section 3 of this Article II and that has supplied the information required by Section 3 of this Article II about each individual whom the stockholder proposes to nominate for election of directors or (iii) provided that the ~~Board of Directors has determined that directors shall be elected at such~~ special meeting has been called in accordance with Section 3(a) of this Article II for the purpose of electing directors , by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 12 and at the time of the special meeting, who is entitled to vote at the meeting ~~and who~~ in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 12. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any ~~such~~ stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice , containing the information required by ~~paragraph (2~~ paragraphs (a)(3) and (4 ) of this Section 12 ~~(a) shall be~~ , is delivered to the secretary at the principal executive office of the Corporation not earlier than the 120th day prior to such special meeting and not later than 5:00 p.m., Eastern Time , on the later of the 90th day prior to such special meeting or the ~~tenth~~ 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

stockholder shall notify the Corporation of any inaccuracy or change (within two Business Days of becoming aware of such inaccuracy or change) in any such information. Upon written request by the secretary or the Board of Directors ~~or any committee thereof~~ , any such stockholder ~~proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders~~ shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), (A) written verification, satisfactory, in the discretion of the Board of Directors ~~or any committee thereof~~ or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 12 , and (B) a written update of any information (including, if requested by the Corporation, written confirmation by such stockholder that it continues to intend to bring such nomination or other business proposal before the meeting) submitted by the stockholder pursuant to this Section 12 as of an earlier date . If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 12.

(3) For purposes of this Section 12, ~~(a) the “date of mailing of the notice” shall mean~~ “ the date of the proxy statement ~~for the solicitation of proxies for election of directors and (b)~~ ” shall have the same meaning as “the date of the company’s proxy statement released to shareholders” as used in Rule 14a-8(e) promulgated under the Exchange Act, as interpreted by the Securities and Exchange Commission from time to time. “Public announcement” shall mean disclosure ( i A ) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or ~~comparable~~ other widely circulated news or wire service or ( ii B ) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.

(4) Notwithstanding the foregoing provisions of this Section 12, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 12. Nothing in this Section 12 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, ~~nor~~ or the right of the Corporation to omit a proposal from, ~~the Corporation’s~~ any proxy statement filed by the Corporation with the Securities and Exchange Commission pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 12 shall require disclosure of revocable proxies received by the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A by such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act.

Section 13. VOTING BY BALLOT . Voting on any question or in any election may be viva voce unless the presiding officer shall order or any stockholder shall demand that voting be by ballot.

Section 14. TELEPHONE MEETINGS . The Board of Directors or chairman of the meeting may permit one or more stockholders or other persons to participate in ~~meetings of the stockholders~~ a meeting by means of a conference telephone or other communications equipment ~~by which~~ if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at the meeting.

Section 15. STOCKHOLDERS’ CONSENT IN LIEU OF MEETING. Any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting if a unanimous consent setting forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and filed with the minutes of proceedings of the stockholders.

ARTICLE III

DIRECTORS

Section 1. GENERAL POWERS . The business and affairs of the Corporation shall be managed under the direction of its Board of Directors.

Section 2. NUMBER, TENURE AND ~~QUALIFICATIONS~~ RESIGNATION . At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the Maryland General Corporation Law (the “MGCL”) , nor more than 8 15 , and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Any director of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.

Section 3. ANNUAL AND REGULAR MEETINGS . An annual meeting of the Board of Directors shall be held ~~immediately after~~ each year and may be held on the date and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and place ~~, either within or without the State of Maryland,~~ for the holding of regular meetings of the Board of Directors without other notice than such resolution.

Section 4. SPECIAL MEETINGS . Special meetings of the Board of Directors may be called by or at the request of the chairman or the executive chairman of the

board, the chief executive officer, the president or by a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix ~~any~~ the time and place ~~, either within or without the State of Maryland, as the place for holding~~ of any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place of special meetings of the Board of Directors without other notice than such resolution.

Section 5. NOTICE . Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, United States mail or courier to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least ~~five~~ three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.

Section 6. QUORUM . A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors ~~are~~ is present at ~~said~~ such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the Charter ~~of the Corporation~~ or these Bylaws, the vote of a majority or other percentage of a particular group of directors is required for action, a quorum must also include a majority or such other percentage of such group.

The directors present at a meeting which has been duly called and ~~convened~~ at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave ~~less~~ fewer than required to establish a quorum.

Section 7. VOTING . The action of ~~the~~ a majority of the directors then present at a meeting at which a quorum ~~is present~~ has been established shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws. If enough directors have withdrawn from a meeting to leave ~~less~~ fewer than required to establish a quorum , but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws.

Section 8. ORGANIZATION. At each meeting of the Board of Directors , the chairman of the board or, in the absence of the chairman, the executive chairman or the vice chairman of the board, if any, shall act as chairman of the meeting. In the absence of the chairman and any executive chairman or vice chairman of the board, the chief executive officer or, in the absence of the chief executive officer, the president or, in the absence of the president, a director chosen by a majority of the directors present, shall act as chairman of the meeting. The secretary or, in his or her absence, an assistant secretary of the Corporation, or, in the absence of the secretary and all assistant secretaries, an individual appointed by the chairman of the meeting, shall act as secretary of the meeting.

Section 8 9 . TELEPHONE MEETINGS . Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 9 10 . ~~INFORMAL ACTION BY DIRECTORS~~ CONSENT BY DIRECTORS WITHOUT A MEETING . Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of proceedings of the Board of Directors. Any or all of the signatures on such consent may be a copy or other reproduction.

Section 10 11 . VACANCIES . If for any reason any or all of the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder ~~(even if fewer than three directors remain)~~ . Any vacancy on the Board of Directors for any cause other than an increase in the number of directors ~~shall~~ may be filled by a majority of the remaining directors, even if such majority is less than a quorum. Any vacancy in the number of directors created by an increase in the number of directors may be filled by a majority vote of the entire Board of Directors. Any individual so elected as director shall ~~hold office~~ serve until the next annual meeting of stockholders and until his or her successor is elected and qualifies.

Section 11 12 . COMPENSATION . Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they ~~performed~~ perform or ~~engaged~~ engage in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.

Section 12 13 . LOSS OF DEPOSITS . No director shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association, or other institution with whom moneys or stock of the Corporation have been deposited.

Section 13 14 . SURETY BONDS . Unless required by law, no director shall be obligated to give any bond or surety or other security for the performance of any of his or her duties.

Section 14 15 . RELIANCE . Each director , and officer ~~, employee and agent~~ of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be ~~fully justified and protected with regard to any act or failure to act in reliance in good faith upon the books of account or other records~~ entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation ~~, upon an opinion of counsel or upon reports made to the Corporation by any of its officers or employees or by the advisers, accountants, appraisers or other experts or consultants selected by~~ whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or, with respect to a director, by a committee of the Board of Directors ~~or officers of the Corporation, regardless of whether such counsel or expert may also be a~~ on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence .

Section 16. RATIFICATION. The Board of Directors or the stockholders may ratify any action or inaction by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the matter, and if so ratified, shall have the same force and effect as if originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders. Any action or inaction questioned in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting or otherwise, may be ratified, before or after judgment, by the Board of Directors or by the stockholders, and such ratification shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.

Section 15 17 . CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS . The directors shall have no responsibility to devote their full time to the affairs of the Corporation. Subject to Article X of the Charter, any director or officer, employee or agent of the Corporation, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to or in addition to or in competition with those of or relating to the Corporation.

Section 18. EMERGENCY PROVISIONS. Notwithstanding any other provision in the Charter or these Bylaws, this Section 18 shall apply during the existence of any

catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided by the Board of Directors , (i) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (ii) notice of any meeting of the Board of Directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio; and (iii) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.

ARTICLE IV

COMMITTEES

Section 1. NUMBER, TENURE AND QUALIFICATIONS . The Board of Directors may appoint from among its members an ~~Executive Committee, an~~ Audit Committee, a Compensation Committee, a Corporate Governance Committee and an Investment Risk Management Committee and one or more other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member.

Section 3. MEETINGS . Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or , in the absence of a chairman, any two members of the committee (if there are ~~more than~~ at least two members ) of ~~any~~ the committee ) may fix the time and place of its meeting unless the Board shall otherwise provide. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member. Each committee shall keep minutes of its proceedings.

Section 5. ~~INFORMAL ACTION~~ CONSENT BY ~~COMMITTEES~~ COMMITTEES WITHOUT A MEETING . Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of proceedings of such committee.

Section 6. VACANCIES . Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill ~~all vacancies~~ any vacancy , to designate an alternate ~~members~~ member to replace any absent or disqualified member or to dissolve any such committee.

ARTICLE V

OFFICERS

Section 1. GENERAL PROVISIONS . The officers of the Corporation shall be include a president, a secretary and a treasurer and may include a chairman of the board, ~~two~~ one or more vice chairmen, a chief executive officer, a chief operating officer, a chief financial officer, a ~~chief credit officer~~ head of capital markets , one or more managing directors, one or more employee directors, one or more vice presidents, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time ~~appoint~~ elect such other officers with such powers and duties as ~~they~~ it shall deem necessary or desirable. The officers of the Corporation , including any officers elected to fill a vacancy among the officers, shall be elected ~~annually~~ by the Board of Directors ~~at the first meeting of the Board of Directors held after each annual meeting of stockholders~~ , except that the chief executive officer or the president may from time to time appoint one or more vice presidents, assistant secretaries and assistant treasurers ~~. If the election of~~ or any other officers ~~shall not be held at such meeting, such election shall be held as soon thereafter as may be convenient~~ (other than the chief executive officer, president and chief financial officer) . Each officer shall ~~hold office~~ serve for the term specified by the Board of Directors or the appointing officer or, if no such term is specified, until his or her successor is elected and qualifies or until his or her death , or his or her resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. ~~In its discretion, the Board of Directors may leave unfilled any office except that of president, treasurer and secretary.~~ Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.

Section 2. REMOVAL AND RESIGNATION . Any officer or agent of the Corporation may be removed , with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by ~~giving written notice of his~~ delivering his or her resignation to the Board of Directors, the chairman of the board, the chief executive officer, the president or the secretary. Any resignation shall take effect ~~at any time subsequent to the time specified therein or, if the time when it shall become effective is not specified therein,~~ immediately upon its receipt or at such later time specified in the resignation . The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.

Section 3. VACANCIES . A vacancy in any office may be filled by the Board of Directors for the balance of the term.

Section 4. CHAIRMAN OF THE BOARD . The Board of Directors shall designate from among its members a chairman of the board , who shall not, solely by reason of these s Bylaws, be an officer of the Corporation . The chairman of the board shall preside over the meetings of the Board of Directors and , unless otherwise determined by the Board of Directors, of the stockholders at which he shall be present . The Board of Directors may designate the chairman of the board as an executive or non-executive chairman . The chairman of the board shall perform such other duties as may be assigned to him or ~~them~~ by these Bylaws or the Board of Directors.

Section 5. EXECUTIVE CHAIRMAN. The Board of Directors may designate from among its members an executive chairman of the board in addition to or in the place of a chairman of the board, who shall not, solely by reason of these s Bylaws, be an officer of the Corporation. The executive chairman shall perform such duties as may be assigned to him or by these Bylaws or the Board of Directors.

Section 5 6 . VICE ~~CHAIRMEN~~ CHAIRMAN ~~. The~~ . Each Vice ~~Chairmen~~ Chairman shall have the general responsibility for the implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation.

Section 6 7 . CHIEF EXECUTIVE OFFICER . The Board of Directors may designate a chief executive officer. In the absence of such designation, the chairman of the board shall be the chief executive officer of the Corporation. Subject to the direction of the Board of Directors, the chief executive officer shall in general supervise and control all of the business and affairs of the Corporation and shall exercise chief executive powers and such specific powers and shall perform such duties as from time to time may be conferred upon or assigned to him by the Board of Directors or any committee thereof designated by it to so act. He may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed.

Section 7 8 . CHIEF OPERATING OFFICER . The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer. In the absence of a president or in the event of a vacancy in such office, the chief operating officer shall perform the duties of president and when so acting shall have all the powers of and be subject to all the restrictions placed upon the president.

Section 8 9 . CHIEF FINANCIAL OFFICER . The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer.

Section 9 10 . ~~CHIEF CREDIT OFFICER~~ HEAD OF CAPITAL MARKETS . The Board of Directors or the chief executive officer may designate a ~~chief credit officer. The chief credit officer~~ head of capital markets. The head of capital markets shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer.

Section 10 11 . PRESIDENT . The president shall have general executive powers and shall have such specific powers and shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time. In the absence of a designation of a chief operating officer by the Board of Directors, the president shall be the chief operating officer.

Section 11 12 . MANAGING DIRECTORS . The Board of Directors or the chief executive officer may designate one or more managing directors. A managing director shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer.

Section 12 13 . DIRECTORS . The Board of Directors may designate one or more employee directors. An employee director shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer.

Section 13 14 . VICE PRESIDENTS . The Board of Directors or the chief executive officer may designate one or more vice presidents. A vice president shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer. The Board of Directors may designate one or more vice presidents as executive vice president or as vice president for particular areas of responsibility.

Section 14 15 . SECRETARY . The secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep, or direct that a transfer agent and registrar appointed pursuant to Article VII Section 5 keep, a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the ~~share~~ stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him ~~by the chief executive officer, the president~~ or her by the Board of Directors or the chief executive officer .

Section 15 16 . TREASURER . The treasurer shall have the custody of the funds and securities of the Corporation ~~and~~ , shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation ~~and~~ , shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors , the chief executive officer, the president, the chief

financial officer, or any other officer designated by the Board of Directors may determine, and in general perform such other duties as from time to time may be assigned to him by the Board of Directors or the chief executive officer . In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.

The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, ~~at the regular meetings of~~ whenever the Board of Directors ~~or whenever it~~ may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation.

If required by the Board of Directors, the treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, moneys and other property of whatever kind in his possession or under his control belonging to the Corporation.

Section 16 17 . ASSISTANT SECRETARIES AND ASSISTANT TREASURERS . The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the ~~president or the~~ Board of Directors . The assistant treasurers shall, if required by the Board of Directors, give bonds for the faithful performance of their duties in such sums and with such surety or sureties as shall be satisfactory to the Board of Directors. or the chief executive officer.

Section ~~17.~~ ~~SALARIES~~ ~~. The salaries and other~~ 18. COMPENSATION. The compensation of the officers shall be fixed from time to time by or under the authority of the Board of Directors and no officer shall be prevented from receiving such ~~salary or other~~ compensation by reason of the fact that he or she is also a director.

ARTICLE VI

CONTRACTS ~~, LOANS~~ , CHECKS AND DEPOSITS

Section 1. CONTRACTS . The Board of Directors ~~, the Executive Committee or another committee of~~ or any manager of the Corporation approved by the Board of Directors and acting within the scope of its ~~delegated~~ authority pursuant to a management agreement with the Corporation may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document ~~executed by one or more of the directors or by an authorized person~~ shall be valid and binding upon the ~~Board of Directors and upon the~~ Corporation when duly authorized or ratified by action of the Board of Directors or ~~the Executive Committee or such other committee and executed by an authorized person.~~ a manager acting within the scope of its authority pursuant to a management agreement and executed by the chief executive officer, the president , the chief financial officer, the head of capital markets or any other person designated by the Board of Directors, such a manager or any of the foregoing officers.

Section 3. DEPOSITS . All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation ~~in such banks, trust companies or other depositories~~ as the Board of Directors ~~may designate~~ , the chief executive officer, the president, the chief financial officer, or any other officer designated by the Board of Directors may determine .

ARTICLE VII

STOCK

Section 1. CERTIFICATES . ~~The Corporation may issue some or all of the shares of any or all of the Corporation’s classes or series of stock without certificates if authorized~~ Except as may be otherwise provided by the Board of Directors , stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them . In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors ~~and~~ or a duly authorized officer, shall contain the statements and information ~~and be executed in the manner~~ required by the MGCL and shall be signed by the officers of the Corporation in any manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares ~~, for so long as the same is required by the MGCL,~~ a written statement of the information required by the MGCL to be included on stock certificates. There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates. If a class or series of stock is authorized by the Board of Directors to be issued without certificates, no stockholder shall be entitled to a certificate or certificates representing any shares of such class or series of stock held by such stockholder unless otherwise determined by the Board of Directors and then only upon written request by such stockholder to the secretary of the Corporation.

Section 2. TRANSFERS . All transfers of shares of stock shall be made on the books of the Corporation, by the holder of the shares, in person or by his or her attorney, in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. ~~Notwithstanding the foregoing, transfers of shares of any class of stock will be subject in all respects to the charter of the Corporation and all of the terms and conditions contained therein.~~ The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors that such shares shall be represented by certificates. Upon the transfer of any uncertificated shares, the Corporation shall, to the extent then required by the MGCL, provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.

Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the Charter ~~of the Corporation~~ and all of the terms and conditions contained therein.

Section 3. REPLACEMENT CERTIFICATE . Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate ~~of stock~~ to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors has determined that such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.

Section 4. ~~CLOSING OF TRANSFER BOOKS OR~~ FIXING OF RECORD DATE . The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ~~ten~~ 10 days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

In lieu of fixing a record date, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not longer than 20 days. If the stock transfer books are closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten days before the date of such meeting.

If no record date is fixed and the stock transfer books are not closed for the determination of stockholders, (a) the record date for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day on which the notice of meeting is mailed or the 30th day before the meeting, whichever is the closer

date to the meeting; and (b) the record date for the determination of stockholders entitled to receive payment of a dividend or an allotment of any other rights shall be the close of business on the day on which the resolution of the directors, declaring the dividend or allotment of rights, is adopted.

When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been ~~made~~ set as provided in this section, such ~~determination~~ record date shall continue to apply to ~~any adjournment thereof~~ the meeting if adjourned or postponed , except ~~when (i) the determination has been made through the closing of the transfer books and the stated period of closing has expired or (ii)~~ if the meeting is adjourned or postponed to a date more than 120 days after the record date originally fixed for the ~~original~~ meeting, in ~~either of~~ which case a new record date ~~shall~~ for such meeting may be determined as set forth herein.

Section 5. STOCK LEDGER . The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issuance and registration of shares of stock, ~~and certificates representing the same, if any,~~ including the appointment from time to time of transfer agents and registrars. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate ~~share~~ stock ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.

Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS . The Board of Directors may authorize the Corporation to issue fractional shares of stock or ~~provide for~~ authorize the issuance of scrip, all on such terms and under such conditions as ~~they~~ it may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may ~~issue~~ authorize the issuance of units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.

ARTICLE VIII

ACCOUNTING YEAR

The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.

ARTICLE IX

DISTRIBUTIONS

Section 1. AUTHORIZATION . Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Charter ~~of the Corporation~~ . Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.

Section 2. CONTINGENCIES . Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends ~~or other distributions~~ , for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine ~~to be in the best interest of the Corporation~~ , and the Board of Directors may modify or abolish any such reserve.

ARTICLE X

INVESTMENT POLICY

Subject to the provisions of the Charter ~~of the Corporation~~ , the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.

ARTICLE XI

SEAL

Section 1. SEAL . The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland . , ” or shall be in any other form authorized by the Board of Directors. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

ARTICLE XII

INDEMNIFICATION AND ADVANCE OF EXPENSES

To the maximum extent permitted by Maryland law in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made or threatened to be made a party to , or witness in, the proceeding by reason of his or her service in that capacity or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, trustee, member, manager or partner of another corporation, real estate investment trust, ~~partnership, joint venture, trust, employee benefit plan or any other enterprise~~

as a director, officer, partner or trustee of such corporation, real estate investment trust limited liability company , partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to , or witness in, the proceeding by reason of his or her service in that capacity . The rights to indemnification and advance of expenses provided by the Charter and these Bylaws shall vest immediately upon election of a director or officer . The Corporation may, with the approval of its Board of Directors ~~or any duly authorized committee thereof~~ , provide such indemnification and advance for expenses to ~~a person~~ an individual who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. The indemnification and payment or reimbursement of expenses provided in these Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any bylaw, ~~regulation~~ resolution , insurance, agreement or otherwise.

Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the ~~Bylaws or charter of the Corporation~~ Charter or these Bylaws inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

ARTICLE XIII

WAIVER OF NOTICE

Whenever any notice of a meeting is required to be given pursuant to the Charter ~~of the Corporation~~ or these Bylaws or pursuant to applicable law, a waiver thereof in writing ~~, signed~~ or by electronic transmission, given by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice of such meeting , unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is has not been lawfully called or convened.

ARTICLE XIV

AMENDMENT OF BYLAWS

The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.


~~CAPITAL TRUST, INC.~~

~~By:~~		~~/s/ Geoffrey G. Jervis~~
~~Name:~~		~~Geoffrey G. Jervis~~
~~Title:~~		~~Chief Financial Officer~~

Exhibit 10.1

SECOND AMENDED AND RESTATED

MANAGEMENT AGREEMENT

by and between

Blackstone Mortgage Trust, Inc.

and

BXMT Advisors L.L.C.

SECOND AMENDED AND RESTATED MANAGEMENT AGREEMENT, dated as of October 23, 2014, by and between Blackstone Mortgage Trust, Inc., a Maryland corporation, and BXMT Advisors L.L.C., a Delaware limited liability company (the “ Manager ”).

W I T N E S S E T H :

WHEREAS, the Company was formed as a corporation which has elected to be treated as a real estate investment trust for U.S. federal income tax purposes pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “ Code ”);

WHEREAS, the parties entered into the Management Agreement, dated as of December 19, 2012 (the “ Original Management Agreement ”) and Amended and Restated Management Agreement, dated as of March 26, 2013 (the “ Amended and Restated Management Agreement” ) and Amendment No. 1 to the Amended and Restated Management Agreement, dated as of July 30, 2013 (“ Amendment No. 1 ”); and

WHEREAS, the Company and the Manager desire to incorporate the terms of Amendment No. 1 and to further amend and restate the Amended and Restated Management Agreement on the terms set forth herein.

NOW THEREFORE, in consideration of the premises and agreements hereinafter set forth, the parties hereto hereby agree as follows:

Section 1. Definitions.

(a) The following terms shall have the meanings set forth in this Section 1(a):

“ Affiliate ” means with respect to a Person (i) any Person directly or indirectly controlling, controlled by, or under common control with such other Person, (ii) any executive officer, employee or general partner of such Person, (iii) any member of the board of directors or board of managers (or bodies performing similar functions) of such Person, and (iv) any legal entity for which such Person acts as an executive officer or general partner; provided , that , for greater certainty, it is acknowledged and agreed that portfolio entities of any Blackstone Accounts shall not be deemed Affiliates of the Manager.

“ Agreement ” means this Second Amended and Restated Management Agreement, as amended, restated, supplemented or otherwise modified from time to time.

“ Allocation Policy ” means the investment allocation policy and procedures of the Manager and/or its Affiliates with respect to the allocation of investment opportunities among the Company and one or more Blackstone Accounts (as the same may be amended, updated or revised from time to time).

“ Amended and Restated Management Agreement ” has the meaning set forth in the Recitals.

“ Amendment No. 1 ” has the meaning set forth in the Recitals.

“ Automatic Renewal Term ” has the meaning set forth in Section 10(a) hereof.

“ Blackstone ” means, collectively, The Blackstone Group L.P., a Delaware limited partnership, and any Affiliate thereof.

“ Blackstone Accounts ” means, collectively, any investment funds, vehicles, accounts, products and/or other similar arrangements sponsored, advised and/or managed by Blackstone, whether currently in existence or subsequently established, in each case, including any related successor funds, alternative vehicles, supplemental capital vehicles, co-investment vehicles and other entities formed in connection with Blackstone’s side-by-side or additional general partner investments with respect thereto.

“ Board ” means the board of directors of the Company.

“ Business Day ” means any day except a Saturday, a Sunday or a day on which banking institutions in New York, New York are not required to be open.

“ Cause Event ” means (i) a final judgment by any court or governmental body of competent jurisdiction not stayed or vacated within thirty (30) days that the Manager, its agents or its assignees has committed a felony or a material violation of applicable securities laws that has a material adverse effect on the business of the Company or the ability of the Manager to perform its duties under the terms of this Agreement, (ii) an order for relief in an involuntary bankruptcy case relating to the Manager or the Manager authorizing or filing a voluntary bankruptcy petition, (iii) the dissolution of the Manager, or (iv) a determination that the Manager has committed fraud against the Company, misappropriates or embezzles funds of the Company, or has acted, or failed to act, in a manner constituting bad faith, willful misconduct, gross negligence or reckless disregard in the performance of its duties under this Agreement; provided , however , that if any of the actions or omissions described in this clause (iv) are caused by an employee and/or officer of the Manager or one of its Affiliates and the Manager takes all necessary action against such person and cures the damage caused by such actions or omissions within thirty (30) days of such determination, then such event shall not constitute a Cause Event.

“ CEA ” means the U.S. Commodities Exchange Act, as amended.

“ Claim ” has the meaning set forth in Section 8(c) hereof.

“ Closing Date ” means December 19, 2012.

“ Code ” has the meaning set forth in the Recitals.

“ Common Stock ” means the common stock, par value $0.01, of the Company.

“ Company ” means Blackstone Mortgage Trust, Inc., a Maryland corporation, and, where the context requires, its Subsidiaries and Affiliates.

“ Company Indemnified Party ” has meaning set forth in Section 8(b) hereof.

“ Conduct Policies ” has the meaning set forth in Section 2(n) hereof.

“ Confidential Information ” has the meaning set forth in Section 5 hereof.

“ Core Earnings ” means the net income (loss) attributable to the stockholders of the Company, computed in accordance with GAAP, including realized gains and losses not otherwise included in GAAP net income (loss) and excluding (i) non-cash equity compensation expense, (ii) the Incentive Compensation, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other similar non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, (v) one-time events pursuant to changes in GAAP and certain material non-cash income or expense items, in each case after discussions between the Manager and the Independent Directors and approved by a majority of the Independent Directors, and (vi) net income (loss) related to the CT Legacy Interests.

For the avoidance of doubt, the exclusion of depreciation and amortization from the calculation of Core Earnings shall only apply to debt investments related to real estate to the extent that the Company forecloses upon the property or properties underlying such debt investments.

“ CT Legacy CDOs ” means Capital Trust RE CDO 2004-1 Ltd., a Cayman Islands company, Capital Trust RE CDO 2005-1 Ltd, a Cayman Islands company, and CT CDO IV Ltd., a Cayman Islands exempted company.

“ CT Legacy Interests ” means the Company’s interests in (i) CT Legacy Partners, net of the Unit Secured Notes and payments made by the Company pursuant to the CT Legacy Partners Award Agreements, (ii) the CTOPI Interest, net of the payments made by the Company pursuant to the CTOPI Award Agreements and (iii) the CT Legacy CDOs.

“ CT Legacy Partners ” means CT Legacy Partners, LLC, a Delaware corporation, and its successors and assigns.

“ CT Legacy Partners Award Agreements ” means those certain award agreements granted under the Company’s 2007 Long-Term Incentive Plan related to distributions made by CT Legacy Partners.

“ CTOPI ” means CT Opportunity Partners I, L.P., a Delaware limited partnership.

“ CTOPI Award Agreements ” means those certain award agreements related to carried interest distributions made by CTOPI.

“ CTOPI Interest ” means the Company’s interest in CT OPI GP, LLC, a Delaware limited liability company and general partner of CTOPI.

“ Effective Termination Date ” has the meaning set forth in Section 10(b) hereof.

“ Equity ” means (a) the sum of (1) the net proceeds received by the Company from all issuances of the Company’s Common Stock from and after the Closing Date, plus (2) the Company’s cumulative Core Earnings from and after the Closing Date to the end of the most recently completed calendar quarter, plus (3) cash retained on the Company’s balance sheet as of the Closing Date and cash retained upon realization of the CT Legacy Interests, (b) less (1) any distributions to the Company’s stockholders, (2) any amount that the Company or any of its Subsidiaries has paid to repurchase the Company’s Common Stock since the Closing Date and (3) any Incentive Compensation paid following the Closing Date. With respect to that portion of the period from and after the Closing Date that is used in any calculation of Incentive Compensation or the Management Fee, all items in the foregoing sentence (other than clause (a)(2)) shall be calculated on a daily weighted average basis.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ GAAP ” means generally accepted accounting principles in effect in the United States on the date such principles are applied.

“ Governing Agreements ” means, with regard to any entity, the articles of incorporation or certificate of incorporation and bylaws in the case of a corporation, the certificate of limited partnership (if applicable) and the partnership agreement in the case of a general or limited partnership, the certificate of formation and limited liability company agreement in the case of a limited liability company, the trust instrument in the case of a trust, or similar governing documents in each case as amended.

“ Incentive Compensation ” means the incentive fee calculated and payable with respect to each calendar quarter (or part thereof that this Agreement is in effect) in arrears in an amount, not less than zero, equal to the difference between (1) the product of (a) 20% and (b) the difference between (i) Core Earnings of the Company for the previous 12-month period, and (ii) the product of (A) the Company’s Equity in the previous 12-month period, and (B) 7% per annum, and (2) the sum of any Incentive Compensation paid to the Manager with respect to the first three calendar quarters of such previous 12-month period; provided , however , that no Incentive Compensation shall be payable with respect to any calendar quarter unless Core Earnings for the 12 most recently completed calendar quarters is greater than zero.

Incentive Compensation shall be pro rated for partial periods, to the extent necessary, based on the number of days elapsed or remaining in such period, as the case may be (including any calendar quarter during which the Closing Date occurs and any calendar quarter during which any Effective Termination Date occurs).

“ Indemnified Party ” has the meaning set forth in Section 8(b) hereof.

“ Independent Director ” means a member of the Board who is “independent” in accordance with the Company’s Governing Agreements and the rules of the NYSE or such other securities exchange on which the shares of Common Stock are listed.

“ Initial Term ” has the meaning set forth in Section 10(a) hereof.

“ Investment Company Act ” means the U.S. Investment Company Act of 1940, as amended.

“ Investment Guidelines ” means the investment guidelines of the Company approved by the Board, as may be amended, restated, modified, supplemented or waived pursuant to the approval of a majority of the Board (which must include a majority of the Independent Directors) from time to time. As of the date hereof, such investment guidelines are listed on Exhibit A .

“ Losses ” has the meaning set forth in Section 8(a) hereof.

“ Management Fee ” means the management fee, without duplication, payable quarterly in arrears with respect to each calendar quarter, in an amount equal to the greater of:

(i) $250,000 per annum ($62,500 per quarter); and

(ii) 1.50% per annum (0.375% per quarter) of the Company’s Equity.

The Management Fee shall be pro rated for partial periods, to the extent necessary, as described more fully elsewhere herein.

“ Manager ” has the meaning set forth in the Recitals.

“ Manager Expenses ” has the meaning set forth in Section 7(a) hereof.

“ Manager Indemnified Party ” has the meaning set forth in Section 8(a) hereof.

“ Manager Permitted Disclosure Parties ” has the meaning set forth in Section 5(a) hereof.

“ Notice of Proposal to Negotiate ” has the meaning set forth in Section 10(c) hereof.

“ NYSE ” means the New York Stock Exchange, Inc.

“ Original Management Agreement ” has the meaning set forth in the Recitals.

“ Person ” means any natural person, corporation, partnership, association, limited liability company, estate, trust, joint venture, any federal, state, county or municipal government or any bureau, department or agency thereof or any other legal entity and any fiduciary acting in such capacity on behalf of the foregoing.

“ Regulation FD ” means Regulation FD as promulgated by the SEC.

“ REIT ” means a “real estate investment trust” as defined under the Code.

“ SEC ” means the United States Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Subsidiary ” means a corporation, limited liability company, partnership, joint venture or other entity or organization of which: (a) the Company or any other subsidiary of the Company is a general partner or managing member, or (b) voting power to elect a majority of the board of directors, trustees or other Persons performing similar functions with respect to such entity or organization is held by the Company or by any one or more of the Company’s subsidiaries.

“ Termination Fee ” means a termination fee equal to three (3) times the sum of (i) the average annual Management Fee, and (ii) average annual Incentive Compensation, in each case earned by the Manager during the 24-month period immediately preceding the most recently completed calendar quarter prior to the Effective Termination Date.

“ Termination Notice ” has the meaning set forth in Section 10(b) hereof.

“ Termination Without Cause ” has the meaning set forth in Section 10(b) hereof.

“ Treasury Regulations ” means the Procedures and Administration Regulation promulgated by the U.S. Department of Treasury under the Code, as amended.

“ Unit Secured Notes ” means, collectively, the Series 1 Unit Secured Notes issued by CT Legacy Series 1 Note Issuer, LLC, a Delaware limited liability company, and the Series 2 Unit Secured Notes issued by CT Legacy Series 2 Note Issuer, LLC, a Delaware limited liability company, issued prior to the date hereof.

(b) As used herein, accounting terms relating to the Company and its Subsidiaries, if any, not defined in Section 1(a) and accounting terms partly defined in Section 1(a), to the extent not defined, shall have the respective meanings given to them under GAAP. As used herein, “calendar quarters” shall mean the period from January 1 to March 31, April 1 to June 30, July 1 to September 30 and October 1 to December 31 of the applicable year.

(c) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. The words include, includes and including shall be deemed to be followed by the phrase “without limitation.”

Section 2. Appointment and Duties of the Manager.

(a) The Company hereby appoints the Manager, as agent, to manage the investments and day-to-day business and affairs of the Company and its Subsidiaries, subject at all times to the further terms and conditions set forth in this Agreement and to the supervision of

the Board. Except as otherwise provided in this Agreement, the Manager hereby agrees to use its commercially reasonable efforts to perform each of the duties set forth herein, provided that the Company reimburses the Manager for costs and expenses in accordance with Section 7 hereof. The appointment of the Manager shall be exclusive to the Manager, except to the extent that the Manager elects, in its sole and absolute discretion, subject to the terms of this Agreement, to cause the duties of the Manager as set forth herein to be provided by third parties and/or its Affiliates.

(b) The Manager, in its capacity as manager of the investments and the operations of the Company, at all times will be subject to the supervision and direction of the Board and will have only such functions and authority as the Board may delegate to it, including, without limitation, managing the Company’s investment activities and other business affairs in conformity with the Investment Guidelines and other policies that are approved and monitored by the Board. The Company and the Manager hereby acknowledge the recommendation by the Manager and the approval by the Board of the Investment Guidelines.

(c) Subject to the oversight of the Board and the terms and conditions of this Agreement (including the Investment Guidelines), the Manager will have plenary authority with respect to the management of the business and affairs of the Company and will be responsible for the day-to-day management of the Company. The Manager will perform (or cause to be performed through one or more of its Affiliates or Subsidiaries) such services and activities relating to the investments and business and affairs of the Company as may be appropriate or otherwise mutually agreed from time to time, which may include, without limitation:

(i) serving as an advisor to the Company with respect to the establishment and periodic review of the Investment Guidelines for the Company’s investments, financing activities and operations, any modifications to which will be approved by a majority of the Board (which must include a majority of the Independent Directors);

(ii) identifying, investigating, analyzing, and selecting possible investment opportunities and originating, negotiating, acquiring, consummating, monitoring, financing, retaining, selling, negotiating for prepayment, restructuring, refinancing, hypothecating, pledging or otherwise disposing of investments consistent in all material respects with the Investment Guidelines;

(iii) with respect to prospective purchases, sales, exchanges or other dispositions of investments, conducting negotiations on the Company’s behalf with sellers, purchasers, and other counterparties and, if applicable, their respective agents, advisors and representatives;

(iv) negotiating and entering into, on the Company’s behalf, repurchase agreements, interest rate or currency swap agreements, hedging arrangements, financing arrangements (including one or more credit facilities), foreign exchange transactions, derivative transactions, and other agreements and instruments required or appropriate in connection with the Company’s activities;

(v) engaging and supervising, on the Company’s behalf and at the Company’s expense, independent contractors, advisors, consultants, attorneys, accountants, auditors, and other service providers (which may include Affiliates of the Manager) that provide various services with respect to the Company, including, without limitation, investment banking, securities brokerage, mortgage brokerage, credit analysis, risk management services, asset management services, loan servicing, other financial, legal or accounting services, due diligence services, underwriting review services, and all other services (including transfer agent and registrar services) as may be required relating to the Company’s activities or investments (or potential investments);

(vi) coordinating and managing operations of any joint venture or co-investment interests held by the Company and conducting all matters with the joint venture or co-investment partners;

(vii) providing executive and administrative personnel, office space and office services required in rendering services to the Company;

(viii) administering the day-to-day operations and performing and supervising the performance of such other administrative functions necessary to the Company’s management as may be agreed upon by the Manager and the Board, including, without limitation, the collection of revenues and the payment of the Company’s debts and obligations and maintenance of appropriate computer services to perform such administrative functions;

(ix) communicating on the Company’s behalf with the holders of any of the Company’s equity or debt securities as required to satisfy the reporting and other requirements of any governmental bodies or agencies or trading markets and to maintain effective relations with such holders;

(x) advising the Company in connection with policy decisions to be made by the Board;

(xi) engaging one or more subadvisors with respect to the management of the Company, including, where appropriate, Affiliates of the Manager;

(xii) evaluating and recommending to the Board hedging strategies and engaging in hedging activities on the Company’s behalf, consistent with the Company’s qualification as a REIT and with the Investment Guidelines;

(xiii) advising the Company regarding the maintenance of the Company’s qualification as a REIT and monitoring compliance with the various REIT qualification tests and other rules set out in the Code and Treasury Regulations thereunder and using commercially reasonable efforts to cause the Company to qualify for taxation as a REIT;

(xiv) advising the Company regarding the maintenance of the Company’s exemption from regulation as an investment company under the Investment Company Act, monitoring compliance with the requirements for maintaining such exemption and using commercially reasonable efforts to cause the Company to maintain such exemption from regulation as an investment company under the Investment Company Act;

(xv) furnishing reports to the Company regarding the Company’s activities and services performed for the Company by the Manager and its Affiliates;

(xvi) monitoring the operating performance of the Company’s investments and providing periodic reports with respect thereto to the Board, including comparative information with respect to such operating performance and budgeted or projected operating results;

(xvii) investing and reinvesting any moneys and securities of the Company (including investing in short-term investments pending investment in other investments, payment of fees, costs and expenses, or payments of dividends or distributions to the Company’s stockholders and partners) and advising the Company as to the Company’s capital structure and capital raising;

(xviii) causing the Company to retain a qualified independent public accounting firm and legal counsel, as applicable, to assist in developing appropriate accounting procedures and systems, internal controls and other compliance procedures and systems with respect to financial reporting obligations and compliance with the provisions of the Code applicable to REITs and to conduct periodic compliance reviews with respect thereto;

(xix) assisting the Company in qualifying to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses;

(xx) assisting the Company in complying with all regulatory requirements applicable to the Company in respect of the Company’s business activities, including (1) preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports and documents, if any, required under the Exchange Act or the Securities Act, or by the NYSE, and facilitating compliance with the Sarbanes-Oxley Act of 2002, the listing rules of the NYSE, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and (2) in the event that the Company is a commodity pool under the CEA, acting as the Company’s commodity pool operator for the period and on the terms and conditions set forth in this Agreement, including, for the avoidance of doubt, the authority to make any filings, submissions or registrations (including for exemptive or “no action” relief) to the extent required or desirable under the CEA (and the Company hereby appoints the Manager to act in such capacity and the Manager accepts such appointment and agrees to be responsible for such services);

(xxi) assisting the Company in taking all necessary actions to enable the Company to make required tax filings and reports, including soliciting stockholders for all information required to the extent provided by the provisions of the Code and Treasury Regulations applicable to REITs;

(xxii) placing, or arranging for the placement of, all orders pursuant to the Manager’s investment determinations for the Company either directly with the issuer or with a broker or dealer (including any affiliated broker or dealer);

(xxiii) handling and resolving all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Company may be involved or to which the Company may be subject arising out of the Company’s day-to-day activities (other than with the Manager or its Affiliates), subject to such reasonable limitations or parameters as may be imposed from time to time by the Board;

(xxiv) using commercially reasonable efforts to cause expenses incurred by the Company or on the Company’s behalf to be commercially reasonable or commercially customary and within any budgeted parameters or expense guidelines set by the Board from time to time;

(xxv) advising the Company with respect to and structuring long-term financing vehicles for the Company’s portfolio of assets, and offering and selling securities publicly or privately in connection with any such structured financing;

(xxvi) serving as the Company’s advisor with respect to decisions regarding any of the Company’s financings, hedging activities or borrowings undertaken by the Company, including (1) assisting the Company in developing criteria for debt and equity financing that is specifically tailored to the Company’s investment objectives, and (2) advising the Company with respect to obtaining appropriate financing for the Company’s investments (which, in accordance with applicable law and the terms and conditions of this Agreement and the Company’s Governing Agreements may include financing by the Manager or its Affiliates);

(xxvii) providing the Company with portfolio management and other related services;

(xxviii) arranging marketing materials and other related documentation, advertising, industry group activities (such as conference participations and industry organization memberships) and other promotional efforts designed to promote the Company’s business; and

(xxix) performing such other services from time to time in connection with the management of the business and affairs of the Company and its investment activities as the Board shall reasonably request and/or the Manager shall deem appropriate under the particular circumstances.

(d) For the period and on the terms and conditions set forth in this Agreement, the Company and each of its Subsidiaries hereby constitutes, appoints and authorizes the Manager, and any officer of the Manager acting on its behalf from time to time, as the Company’s true and lawful agent and attorney-in-fact, in its name, place and stead, to negotiate, execute, deliver and enter into any certificates, instruments, agreements, authorizations and other documentation in the name and on behalf of the Company as the Manager, in its sole discretion,

deems necessary or appropriate in connection with the performance of its services hereunder. This power of attorney is deemed to be coupled with an interest. In performing such services, as an agent of the Company, the Manager shall have the right to exercise all powers and authority which are reasonably necessary and customary to perform its obligations under this Agreement, including, the following powers, subject in each case to the terms and conditions of this Agreement, including, without limitation, the Investment Guidelines:

(i) to purchase, exchange or otherwise acquire and to sell, exchange or otherwise dispose of, any investment at public or private sale;

(ii) to borrow and, for the purpose of securing the repayment thereof, to pledge, mortgage or otherwise encumber investments and enter into agreements in connection therewith, including, without limitation, repurchase agreements, master repurchase agreements, International Swap Dealer Association swap, caps and other agreements and annexes thereto and other futures and forward agreements;

(iii) to purchase, take and hold investments subject to mortgages or other liens;

(iv) to extend the time of payment of any liens or encumbrances which may at any time be encumbrances upon any investment, irrespective of by whom the same were made;

(v) to foreclose, to reduce the rate of interest on, and to consent to the modification and extension of the maturity or other terms of any investments, or to accept a deed in lieu of foreclosure;

(vi) to join in a voluntary partition of any investment;

(vii) to cause to be demolished any structures on any real estate investment;

(viii) to cause renovations and capital improvements to be made to any real estate investment;

(ix) to abandon any real estate investment deemed to be worthless;

(x) to enter into joint ventures or otherwise participate in investment vehicles investing in investments;

(xi) to cause any real estate investment to be leased, operated, developed, constructed or exploited;

(xii) to obtain and maintain insurance in such amounts and against such risks as are prudent in accordance with customary and sound business practices in the appropriate geographic area;

(xiii) to cause any property to be maintained in good state of repair and upkeep; and to pay the taxes, upkeep, repairs, carrying charges, maintenance and premiums for insurance;

(xiv) to use the personnel and resources of its Affiliates in performing the services specified in this Agreement;

(xv) to designate and engage all professionals, consultants and other service providers subject to and in accordance with, as applicable, Section 2(e), to perform services (directly or indirectly) on behalf of the Company and its Subsidiaries, including, without limitation, accountants, legal counsel and engineers; and

(xvi) to take any and all other actions as are necessary or appropriate in connection with the Company’s investments.

The Manager shall be authorized to represent to third parties that it has the power to perform the actions which it is authorized to perform under this Agreement.

(e) The Manager may retain, for and on behalf, and at the sole cost and expense, of the Company, such services of the persons and firms referred to in Section 7(b) hereof as the Manager deems necessary or advisable in connection with the management and operations of the Company, which may include Affiliates of the Manager; provided, that any such services may only be provided by Affiliates to the extent (i) such services are on arm’s length terms and competitive market rates in relation to terms that are then customary for agreements regarding the provision of such services to companies that have assets similar in type, quality and value to the assets of the Company and its Subsidiaries, or (ii) such services are approved by a majority of the Independent Directors. In performing its duties under this Section 2, the Manager shall be entitled to rely reasonably on qualified experts and professionals (including, without limitation, accountants, legal counsel and other professional service providers) hired by the Manager at the Company’s sole cost and expense. The Manager shall keep the Board reasonably informed on a periodic basis as to any services provided by Affiliates of the Manager not approved by a majority of the Independent Directors.

(f) The Manager shall refrain from any action that, in its sole judgment made in good faith, (i) is not in compliance with the Investment Guidelines, (ii) would adversely and materially affect the qualification of the Company as a REIT under the Code or the Company’s and its Subsidiaries’ status as entities excluded from investment company status under the Investment Company Act, or (iii) would materially violate the Conduct Policies, any law, rule or regulation of any governmental body or agency having jurisdiction over the Company and its Subsidiaries or of any exchange on which the securities of the Company may be listed or that would otherwise not be permitted by the applicable Governing Agreements. If the Manager is ordered to take any action by the Board, the Manager shall seek to promptly notify the Board if it is the Manager’s reasonable judgment that such action would adversely and materially affect such status or violate any such law, rule or regulation or Governing Agreements. Notwithstanding the foregoing, neither the Manager nor any of its Affiliates shall be liable to the Company, the Board, or the Company’s stockholders for any act or omission by the Manager or any of its Affiliates, except as provided in Section 8 of this Agreement.

(g) The Company (including the Board) agrees to take all actions reasonably required to permit and enable the Manager to carry out its duties and obligations under this Agreement, including, without limitation, all steps reasonably necessary to allow the Manager to

make any filing required to be made under the Securities Act, Exchange Act, the NYSE’s Listed Company Manual, Code or other applicable law, rule or regulation on behalf of the Company in a timely manner. The Company further agrees to use commercially reasonable efforts to make available to the Manager all resources, information and materials reasonably requested by the Manager to enable the Manager to satisfy its obligations hereunder, including its obligations to deliver financial statements and any other information or reports with respect to the Company.

(h) As frequently as the Manager may deem reasonably necessary or advisable, or at the direction of the Board, the Manager shall prepare, or, at the sole cost and expense of the Company, cause to be prepared, (i) reports and other information on the Company’s operations and (ii) other information relating to any proposed or consummated investment as may be reasonably requested by the Company.

(i) The Manager shall prepare, or, at the sole cost and expense of the Company, cause to be prepared, all periodic reports and financial statements with respect to the Company reasonably required by the Board in order for the Company to comply with its Governing Agreements, or any other materials required to be filed with any governmental body or agency, including but not limited to the SEC, and shall prepare, or, at the sole cost and expense of the Company, cause to be prepared, all materials and data necessary to complete such reports and other materials, including, without limitation, an annual audit of the Company’s books of account by a nationally recognized independent accounting firm.

(j) The Manager shall prepare, or, at the sole cost and expense to the Company, cause to be prepared, regular reports for the Board to enable the Board to review the Company’s acquisitions, portfolio composition and characteristics, credit quality, performance, asset performance and compliance with the Investment Guidelines, and policies approved by the Board.

(k) Officers, employees and agents of the Manager and its Affiliates may serve as directors, officers, employees, agents, nominees or signatories for the Company or any of its Subsidiaries, to the extent permitted by their Governing Agreements, by any resolutions duly adopted by the Board. When executing documents or otherwise acting in such capacities for the Company or any of its Subsidiaries, such Persons shall indicate in what capacity they are executing on behalf of the Company or any of its Subsidiaries. Without limiting the foregoing, while this Agreement is in effect, the Manager will provide the Company with a management team, including a Chief Executive Officer and President, Chief Financial Officer or similar positions, along with appropriate support personnel, to provide the management services to be provided by the Manager to the Company hereunder, who shall devote such of their time to the management of the Company as necessary and appropriate, commensurate with the level of activity of the Company from time to time.

(l) At all times during the term of this Agreement, the Manager, at its sole cost and expense, shall maintain “errors and omissions” insurance coverage and other insurance coverage that is customarily carried by asset and investment managers performing functions similar to those of the Manager under this Agreement with respect to assets similar to the assets of the Company and the Subsidiaries.

(m) The Manager shall provide, or, at the sole cost and expense of the Company, cause to be provided, such internal audit, compliance and control services as may be required for the Company to comply with applicable law (including the Securities Act and Exchange Act), regulation (including SEC regulations) and the rules and requirements of the NYSE and as otherwise reasonably requested by the Company or its Board from time to time.

(n) The Manager agrees to be bound by the Company’s Code of Business Conduct and Ethics, Corporate Governance Guidelines and Policy on Insider Trading and other compliance and governance policies and procedures required under the Exchange Act, the Securities Act, or by the NYSE or other securities exchange, if any (collectively, the “ Conduct Policies ”), and to take, or cause to be taken, all actions reasonably required to cause its officers, directors, members, managers and employees, and any principals, officers or employees of its Affiliates (including Blackstone) who are involved in the business and affairs of the Company, to be bound by the Conduct Policies to the extent applicable to such Persons.

Section 3. Additional Activities of the Manager; Allocation of Investment Opportunities; Non-Solicitation; Restrictions.

(a) Nothing in this Agreement shall (i) prevent the Manager or any of its Affiliates, officers, directors or employees from engaging in other businesses or from rendering services of any kind to any other Person or entity, whether or not the investment objectives or policies of any such other Person or entity are similar to those of the Company, including, without limitation, the sponsoring, closing and/or managing of any Blackstone Accounts that employ investment objectives or strategies that overlap, in whole or in part, with the Investment Guidelines of the Company, (ii) in any way bind or restrict the Manager or any of its Affiliates, officers, directors or employees from buying, selling or trading any securities or commodities for their own accounts or for the account of others for whom the Manager or any of its Affiliates, officers, directors or employees may be acting, or (iii) prevent the Manager or any of its Affiliates from receiving fees or other compensation or profits from such activities described in this Section 3(a) which shall be for the Manager’s (and/or its Affiliates’) sole benefit. While information and recommendations supplied to the Company shall, in the Manager’s reasonable and good faith judgment, be appropriate under the circumstances and in light of the investment objectives and policies of the Company, such information and recommendations may be different in certain material respects from the information and recommendations supplied by the Manager or any Affiliate of the Manager to others (including, for greater certainty, the Blackstone Accounts and their investors, as described more fully in Section 3(b)). The Manager and the Company acknowledge and agree that, notwithstanding anything to the contrary contained herein, (i) Affiliates of the Manager sponsor, advise and/or manage one or more Blackstone Accounts and may in the future sponsor, advise and/or manage additional Blackstone Accounts, and (ii) the Manager will allocate investment opportunities that overlap with the Investment Guidelines of the Company and such Blackstone Accounts in accordance with the Allocation Policy.

(b) In connection with the services of the Manager hereunder, the Company and the Board acknowledge and/or agree that (i) as part of Blackstone’s regular businesses, personnel of the Manager and its Affiliates may from time-to-time work on other projects and matters (including with respect to one or more Blackstone Accounts), and that conflicts may

arise with respect to the allocation of personnel between the Company and one or more Blackstone Accounts and/or the Manager and such other Affiliates, (ii) there may be circumstances where investments that are consistent with the Company’s Investment Guidelines may be shared with or allocated to one or more Blackstone Accounts (in lieu of the Company) in accordance with the Allocation Policy, (iii) Blackstone Accounts may invest, from time-to-time, in investments in which the Company may also invest (including at a different level of an issuer’s capital structure ( e.g. , an investment by a Blackstone Account in an equity or mezzanine interest with respect to the same portfolio entity in which the Company owns a debt interest or vice versa ) or in a different tranche of debt or equity with respect to an issuer in which the Company has an interest) and while Blackstone will seek to resolve any such conflicts in a fair and equitable manner in accordance with the Allocation Policy and its prevailing policies and procedures with respect to conflicts resolution among the Blackstone Accounts generally, such transactions shall not be required to be presented to the Board for approval (unless otherwise required by the Investment Guidelines), and there can be no assurance that any such conflicts will be resolved in favor of the Company, (iv) the Manager and its Affiliates may from time-to-time receive fees from portfolio entities or other issuers for the arranging, underwriting, syndication or refinancing of investments or other additional fees, including acquisition fees, loan servicing fees, special servicing fees and administrative fees and fees or advisory or asset management fees, including with respect to Blackstone Accounts and related portfolio entities, and while such fees may give rise to conflicts of interest the Company will not receive the benefit of any such fees, and (v) the terms and conditions of the governing agreements of such Blackstone Accounts (including with respect to the economic, reporting, and other rights afforded to investors in such Blackstone Accounts) are materially different from the terms and conditions applicable to the Company and its stockholders, and neither the Company nor any such stockholders (in such capacity) shall have the right to receive the benefit of any such different terms applicable to investors in such Blackstone Accounts as a result of an investment in the Company or otherwise. The Manager shall keep the Board reasonably informed on a periodic basis in connection with the foregoing, including with respect to any transactions that present conflicts contemplated by clause (iii) of this Section 3(b) and shall provide the Board quarterly updates in respect of such matters.

(c) Subject to Section 3(b), the Board will periodically review the Investment Guidelines and the Company’s investment portfolio when and as determined in its discretion, but will not review each proposed investment; provided, that the Manager shall not consummate on behalf of the Company any transaction that involves (i) the sale of any investment to or (ii) the acquisition of any investment from, Blackstone, any Blackstone Account or any of their Affiliates unless such transaction (A) is on terms no less favorable to the Company than could have been obtained on an arm’s length basis from an unrelated third party and (B) has been approved in advance by a majority of the Independent Directors. In connection with the foregoing, it is understood and/or agreed for greater certainty that while conflicts of interests may arise from time-to-time in connection with the investment activities of the Company, Blackstone and the Blackstone Accounts (including as more fully described in Section 3(b) above) and the Manager will seek to resolve any such conflicts of interest in a fair and equitable manner in accordance with the Allocation Policy and its prevailing policies and procedures with respect to conflicts resolution among Blackstone Accounts generally, only those transactions set forth above shall be required to be presented for approval to the Independent Directors; provided, that the foregoing shall not limit the ability of the Manager, in its discretion, to present additional

matters involving the Company to the Independent Directors from time-to-time for review, advice and/or approval to the extent the Manager reasonably determines that doing so is appropriate under the circumstances (including, without limitation, as a result of a determination that such matters give rise to material conflicts of interest that are appropriate to be reviewed and/or approved by the Independent Directors).

(d) In the event of a Termination Without Cause of this Agreement by the Company pursuant to Section 10(b) hereof, for two (2) years after such termination of this Agreement, the Company shall not, without the consent of the Manager, employ or otherwise retain any employee of the Manager or any of its Affiliates or any person who has been employed by the Manager or any of its Affiliates at any time within the two (2) year period immediately preceding the date on which such person commences employment with or is otherwise retained by the Company. The Company acknowledges and agrees that, in addition to any damages, the Manager may be entitled to equitable relief for any violation of this Section 3(d) by the Company, including, without limitation, injunctive relief.

(e) At the reasonable request of the Board, the Manager shall review the Allocation Policy with the Board and respond to reasonable questions regarding the Allocation Policy as it relates to services under the Agreement. The Manager shall promptly provide the Board with a description of any material amendments, updates and revisions to the Allocation Policy.

Section 4. Bank Accounts. At the direction of the Board, the Manager may establish and maintain, as agent on behalf of the Company, one or more bank accounts in the name of the Company or any Subsidiary, and may collect and deposit into any such account or accounts, and disburse funds from any such account or accounts, under such terms and conditions as the Board may approve; and the Manager shall from time to time render appropriate accountings of such collections and payments to the Board and, upon request, to the auditors of the Company or any Subsidiary.

Section 5. Records; Confidentiality.

The Manager shall maintain appropriate books of account, records and files relating to services performed hereunder, and such books of account, records and files shall be accessible for inspection by representatives of the Company or any Subsidiary at any time during normal business hours upon advance written notice. The Manager shall have full responsibility for the maintenance, care and safekeeping of all such books of account, records and files (it being understood that services may be provided with respect to the Company by service providers ( e.g ., administrators, prime brokers and custodians) and so long as such service providers are monitored by the Manager with due care, the Manager shall be in compliance with the foregoing). The Manager shall keep confidential any and all non-public information, written or oral, obtained by it in connection with the services rendered hereunder (“ Confidential Information ”) and shall not use Confidential Information except in furtherance of its duties under this Agreement or disclose Confidential Information, in whole or in part, to any Person other than (i) to officers, directors, employees, agents, representatives, advisors of the Manager or its Affiliates who need to know such Confidential Information for the purpose of rendering services hereunder, (ii) to appraisers, lenders or other financing sources, co-originators, custodians,

administrators, brokers, commercial counterparties or any similar entity and others in the ordinary course of the Company’s business ((i) and (ii) collectively, “ Manager Permitted Disclosure Parties ”), (iii) in connection with any governmental or regulatory filings of the Company (including, if required by law, any filings made by Blackstone as a result of its status as a public company) or disclosure or presentations to Company investors (subject to compliance with Regulation FD), (iv) to governmental officials having jurisdiction over the Company, (v) as requested by law or legal process to which the Manager or any Person to whom disclosure is permitted hereunder is a party, (vi) to existing or prospective investors in Blackstone Accounts and their advisors to the extent such persons reasonably request such information, subject to an undertaking of confidentiality, non-disclosure and nonuse, or (vii) otherwise with the consent of the Company. The Manager agrees to inform each of its Manager Permitted Disclosure Parties of the non-public nature of the Confidential Information. Nothing herein shall prevent the Manager from disclosing Confidential Information (i) upon the order of any court or administrative agency, (ii) upon the request or demand of, or pursuant to any law or regulation to, any regulatory agency or authority, (iii) to the extent reasonably required in connection with the exercise of any remedy hereunder, or (iv) to its legal counsel or independent auditors; provided , however that with respect to clauses (i) and (ii), it is agreed that, so long as not legally prohibited, the Manager will provide the Company with written notice within a reasonable period of time of such order, request or demand so that the Company may seek, at its sole expense, an appropriate protective order and/or waive the Manager’s compliance with the provisions of this Agreement. If, failing the entry of a protective order or the receipt of a waiver hereunder, the Manager is required to disclose Confidential Information, the Manager may disclose only that portion of such information that is legally required without liability hereunder; provided , that the Manager agrees to exercise its reasonable best efforts to obtain reliable assurance that confidential treatment will be accorded such information. Notwithstanding anything herein to the contrary, each of the following shall be deemed to be excluded from provisions hereof: any Confidential Information that (A) is available to the public from a source other than the Manager, (B) is released by the Company to the public (except to the extent exempt under Regulation FD) or to persons who are not under similar obligation of confidentiality to the Company, or (C) is obtained by the Manager from a third-party which, to the best of the Manager’s knowledge, does not constitute a breach by such third-party of an obligation of confidence with respect to the Confidential Information disclosed. The provisions of this Section 5 shall survive the expiration or earlier termination of this Agreement for a period of one year.

Section 6. Compensation.

(a) For the services rendered under this Agreement, the Company shall pay the Management Fee and the Incentive Compensation to the Manager. The Manager will not receive any compensation for the period prior to the Closing Date.

(b) The parties acknowledge that the Management Fee is intended in part to compensate the Manager and its Affiliates for the costs and expenses they will incur hereunder and pursuant to any subadvisory agreement, as well as certain expenses not otherwise reimbursable under Section 7 below, in order for the Manager to provide the Company the investment advisory services and certain general management services rendered under this Agreement. The fee paid by the Manager under a subadvisory agreement (if any) shall not constitute an expense reimbursable by the Company under this Agreement or otherwise.

(c) The Management Fee shall be payable in arrears in cash, in quarterly installments commencing with the quarter in which the Original Management Agreement was executed. If applicable, the initial and final installments of the Management Fee shall be pro-rated based on the number of days during the initial and final quarter, respectively, that this Agreement is in effect. The Manager shall calculate each quarterly installment of the Management Fee, and deliver such calculation to the Company, within thirty (30) days following the last day of each calendar quarter. The Company shall pay the Manager each installment of the Management Fee within five (5) Business Days after the date of delivery to the Company of such computations.

(d) The Incentive Compensation shall be payable in arrears in cash, in quarterly installments commencing with the quarter in which the Original Management Agreement was executed. The Manager shall compute each quarterly installment of the Incentive Compensation within forty-five (45) days after the end of the calendar quarter with respect to which such installment is payable. A copy of the computations made by the Manager to calculate such installment shall thereafter promptly be delivered to the Audit Committee of the Board and, upon such delivery, payment of such installment of the Incentive Compensation shown therein shall be due and payable no later than the date which is five (5) Business Days after the date of delivery to the Audit Committee of the Board of such computations.

Section 7. Expenses of the Company.

(a) Subject to Sections 2(e) and 7(b), the Manager shall be responsible for the expenses related to any and all personnel of the Manager and its Affiliates who provide services to the Company pursuant to this Agreement or otherwise (including, without limitation, each of the officers of the Company and any directors of the Company who are also directors, officers or employees of the Manager or any of its Affiliates), including, without limitation, salaries, bonus and other wages, payroll taxes and the cost of employee benefit plans of such personnel, and costs of insurance with respect to such personnel (“ Manager Expenses ”).

(b) The Company shall pay all of its costs and expenses and shall reimburse the Manager or its Affiliates for documented costs and expenses of the Manager and its Affiliates incurred on behalf of the Company, other than Manager Expenses. Without limiting the generality of the foregoing, it is specifically agreed that the following costs and expenses of the Company or any Subsidiary shall be paid by the Company and shall not be paid by the Manager or Affiliates of the Manager:

(i) fees, costs and expenses in connection with the issuance and transaction costs incident to the acquisition, negotiation, structuring, trading, settling, disposition and financing of the investments of the Company and its Subsidiaries (whether or not consummated), including brokerage commissions, hedging costs, prime brokerage fees, custodial expenses, clearing and settlement charges, forfeited deposits, and other investment costs fees and expenses actually incurred in connection with the pursuit, making, holding, settling, monitoring or disposing of actual or potential investments;

(ii) fees, costs and expenses of legal, tax, accounting, consulting, auditing (including internal audit), finance, administrative, investment banking, capital market and

other similar services rendered to the Company (including, where the context requires, through one or more third parties and/or Affiliates of the Manager) or, if provided by the Manager’s personnel, in accordance with Section 2(e) hereof;

(iii) the compensation and expenses of the Company’s directors (excluding those directors who are officers of the Manager) and the cost of liability insurance to indemnify the Company’s directors and officers;

(iv) interest and fees and expenses arising out of borrowings made by the Company, including, but not limited to, costs associated with the establishment and maintenance of any of the Company’s credit facilities, other financing arrangements, or other indebtedness of the Company (including commitment fees, accounting fees, legal fees, closing and other similar costs) or any of the Company’s securities offerings;

(v) expenses connected with communications to holders of the Company’s securities or securities of the Subsidiaries and other bookkeeping and clerical work necessary in maintaining relations with holders of such securities and in complying with the continuous reporting and other requirements of governmental bodies or agencies, including, without limitation, all costs of preparing and filing required reports with the SEC, the costs payable by the Company to any transfer agent and registrar in connection with the listing and/or trading of the Company’s securities on any exchange, the fees payable by the Company to any such exchange in connection with its listing, costs of preparing, printing and mailing the Company’s annual report to the Company’s stockholders and proxy materials with respect to any meeting of the Company’s stockholders and any other reports or related statements;

(vi) the Company’s allocable share of costs associated with technology-related expenses, including without limitation, any computer software or hardware, electronic equipment or purchased information technology services from third-party vendors or Affiliates of the Manager, technology service providers and related software/hardware utilized in connection with the Company’s investment and operational activities;

(vii) the Company’s allocable share of expenses incurred by managers, officers, personnel and agents of the Manager for travel on the Company’s behalf and other out-of-pocket expenses incurred by them in connection with the purchase, financing, refinancing, sale or other disposition of an investment or the establishment and maintenance of any of the Company’s securitizations or any of the Company’s securities offerings;

(viii) the Company’s allocable share of costs and expenses incurred with respect to market information systems and publications, research publications and materials, including, without limitation, news research and quotation equipment and services;

(ix) the costs and expenses relating to ongoing regulatory compliance matters and regulatory reporting obligations relating to the Company’s activities;

(x) the costs of any litigation involving the Company or its assets and the amount of any judgments or settlements paid in connection therewith, directors and officers, liability or other insurance and indemnification or extraordinary expense or liability relating to the affairs of the Company;

(xi) all taxes and license fees;

(xii) all insurance costs incurred in connection with the operation of the Company’s business except for the costs attributable to the insurance that the Manager elects to carry for itself and its personnel;

(xiii) the Company’s allocable share of costs and expenses incurred in contracting with third parties, in whole or in part, on the Company’s behalf;

(xiv) all other costs and expenses relating to the Company’s business and investment operations, including, without limitation, the costs and expenses of acquiring, owning, protecting, maintaining, developing and disposing of investments, including appraisal, reporting, audit and legal fees;

(xv) expenses relating to any office(s) or office facilities, including, but not limited to, disaster backup recovery sites and facilities, maintained for the Company or the investments of the Company and its Subsidiaries separate from the office or offices of the Manager;

(xvi) expenses connected with the payments of interest, dividends or distributions in cash or any other form authorized or caused to be made by the Board to or on account of holders of the Company’s securities or of the Subsidiaries, including, without limitation, in connection with any dividend reinvestment plan;

(xvii) any judgment or settlement of pending or threatened proceedings (whether civil, criminal or otherwise) against the Company or any Subsidiary, or against any trustee, director, partner, member or officer of the Company or of any Subsidiary in his capacity as such for which the Company or any Subsidiary is required to indemnify such trustee, director, partner, member or officer by any court or governmental agency; and

(xviii) all other expenses actually incurred by the Manager (except as otherwise specifically excluded herein) which are reasonably necessary for the performance by the Manager of its duties and functions under this Agreement.

(c) The Manager may, at its option, elect not to seek reimbursement for certain expenses during a given quarterly period, which determination shall not be deemed to construe a waiver of reimbursement for similar expenses in future periods.

(d) The Manager shall prepare a written expense statement in reasonable detail documenting the costs and expenses of the Company incurred during each fiscal quarter to be reimbursed by the Company, and shall use commercially reasonable efforts to deliver the same to the Company within forty-five (45) days following the end of the applicable fiscal quarter (subject to reasonable delays resulting from delays in the receipt of information). The amounts payable for such cost and expense reimbursement shall be paid by the Company within ten (10) days following delivery of the expense statement by the Manager; provided, that such

payments may be offset by the Manager against amounts due to the Company from the Manager. Cost and expense reimbursement to the Manager shall be subject to adjustment at the end of each calendar year in connection with the annual audit of the Company.

(e) The provisions of this Section 7 shall survive the expiration or earlier termination of this Agreement to the extent such expenses have previously been incurred or are incurred in connection with such expiration or termination.

Section 8. Limits of the Manager’s Responsibility; Indemnification

(a) The Manager assumes no responsibility under this Agreement other than to render the services called for hereunder in good faith and shall not be responsible for any action of the Board in following or declining to follow any advice or recommendations of the Manager, including as set forth in the Investment Guidelines. To the fullest extent permitted by law, the Manager and its Affiliates, and the directors, officers, employees and stockholders of the Manager and its Affiliates, will not be liable to the Company, any Subsidiary, the Board, the Company’s stockholders or any Subsidiary’s stockholders or partners for any acts or omissions by the Manager or its officers, employees or Affiliates performed in accordance with and pursuant to this Agreement, except by reason of acts or omission constituting bad faith, willful misconduct, gross negligence or reckless disregard of their respective duties under this Agreement. The Company shall, to the full extent lawful, reimburse, indemnify and hold harmless the Manager, its Affiliates, and the directors, officers, employees and stockholders of the Manager and its Affiliates (each, a “ Manager Indemnified Party ”), of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including reasonable attorneys’ fees) (collectively “ Losses ”) in respect of or arising from any acts or omissions of such Manager Indemnified Party performed in good faith under this Agreement and not constituting bad faith, willful misconduct, gross negligence or reckless disregard of duties of such Manager Indemnified Party under this Agreement. In addition, the Manager will not be liable for trade errors that may result from ordinary negligence, including, without limitation, errors in the investment decision making process and/or in the trade process.

(b) The Manager shall, to the full extent lawful, reimburse, indemnify and hold harmless the Company, its Subsidiaries and the directors, officers, employees and stockholders of the Company and its Subsidiaries and each Person, if any, controlling the Company (each, a “ Company Indemnified Party ”; a Manager Indemnified Party and a Company Indemnified Party are each sometimes hereinafter referred to as an “ Indemnified Party ”) of and from any and all Losses in respect of or arising from (i) any acts or omissions of the Manager constituting bad faith, willful misconduct, gross negligence or reckless disregard of duties of the Manager under this Agreement or (ii) any claims by the Manager’s employees relating to the terms and conditions of their employment by the Manager.

(c) In case any such claim, suit, action or proceeding (a “ Claim ”) is brought against any Indemnified Party in respect of which indemnification may be sought by such Indemnified Party pursuant hereto, the Indemnified Party shall give prompt written notice thereof to the indemnifying party, which notice shall include all documents and information in the possession of or under the control of such Indemnified Party reasonably necessary for the evaluation and/or defense of such Claim and shall specifically state that indemnification for such

Claim is being sought under this Section; provided , however , that the failure of the Indemnified Party to so notify the indemnifying party shall not limit or affect such Indemnified Party’s rights other than pursuant to this Section unless the failure to provide such notice results in material prejudice to the indemnifying party. Subject to any applicable insurance policy’s terms and conditions, upon receipt of such notice of Claim (together with such documents and information from such Indemnified Party), the indemnifying party shall, at its sole cost and expense, in good faith defend any such Claim with counsel reasonably satisfactory to such Indemnified Party, which counsel may, without limiting the rights of such Indemnified Party pursuant to the next succeeding sentence of this Section, also represent the indemnifying party in such investigation, action or proceeding. In the alternative, such Indemnified Party may elect to conduct the defense of the Claim, if (i) such Indemnified Party reasonably determines that the conduct of its defense by the indemnifying party could be materially prejudicial to its interests, (ii) the indemnifying party refuses to assume such defense (or fails to give written notice to the Indemnified Party within ten (10) days of receipt of a notice of Claim that the indemnifying party assumes such defense), or (iii) the indemnifying party shall have failed, in such Indemnified Party’s reasonable judgment, to defend the Claim in good faith. The indemnifying party may settle any Claim against such Indemnified Party, provided (i) such settlement is without any Losses whatsoever to such Indemnified Party, (ii) the settlement does not include or require any admission of liability or culpability by such Indemnified Party and (iii) the indemnifying party obtains an effective written release of liability for such Indemnified Party from the party to the Claim with whom such settlement is being made, which release must be reasonably acceptable to such Indemnified Party, and a dismissal with prejudice with respect to all claims made by the party against such Indemnified Party in connection with such Claim. The applicable Indemnified Party shall reasonably cooperate with the indemnifying party, at the indemnifying party’s sole cost and expense, in connection with the defense or settlement of any Claim in accordance with the terms hereof. If such Indemnified Party is entitled pursuant to this Section 8 to elect to defend such Claim by counsel of its own choosing and so elects, then the indemnifying party shall be responsible for any good faith settlement of such Claim entered into by such Indemnified Party. Except as provided in the immediately preceding sentence, no Indemnified Party may pay or settle any Claim and seek reimbursement therefor under this Section.

(d) Any Indemnified Party entitled to indemnification hereunder shall first seek recovery from any other indemnity then available with respect to portfolio entities and/or any applicable insurance policies by which such Indemnified Party is indemnified or covered prior to seeking recovery hereunder and shall obtain the written consent of the Company or Manager (as applicable) prior to entering into any compromise or settlement which would result in an obligation of the Company or Manager (as applicable) to indemnify such Indemnified Party. If such Indemnified Party shall actually recover any amounts under any applicable insurance policies or other indemnity then available, it shall offset the net proceeds so received against any amounts owed by the Company or Manager (as applicable) by reason of the indemnity provided hereunder or, if all such amounts shall have been paid by the Company or Manager (as applicable) in full prior to the actual receipt of such net insurance proceeds, it shall pay over such proceeds (up to the amount of indemnification paid by the Company or Manager (as applicable) to such Indemnified Party) to the Company or Manager (as applicable). If the amounts in respect of which indemnification is sought arise out of the conduct of the business and affairs of the Company or Manager and also of any other Person or entity for which the Indemnified Party hereunder was then acting in a similar capacity, the amount of the

indemnification to be provided by the Company or Manager (as applicable) may be limited to the Company’s or Manager’s (as applicable) allocable share thereof if so determined by the Company or Manager (as applicable) in good faith. Notwithstanding anything to the contrary in this Section 8 and for greater certainty it is understood and/or agreed that, to the extent that an Indemnified Party is also entitled to be indemnified by one or more portfolio entities, it is intended that (i) such portfolio entities shall be the indemnitors of first resort, (ii) the Company’s or Manager’s (as applicable) obligation, if any, to indemnify any Indemnified Party shall be reduced by any amount that such Indemnified Party shall collect as indemnification from such entity and from any then available insurance policies, which the Indemnified Party shall have an obligation to seek payment from prior to seeking payment from the Company or Manager in respect of such Claims, and (iii) if the Company or Manager pays or causes to be paid any amounts that should have been paid by such portfolio entity or under such insurance policies, then (x) the Company or Manager (as applicable) shall be fully subrogated to all rights of the relevant Indemnified Party with respect to such payment, and (y) each relevant Indemnified Party shall assign to the Company or Manager (as applicable) all of the Indemnified Party’s rights to indemnification from or with respect to such entity’s indemnification.

(e) The provisions of this Section 8 shall survive the expiration or earlier termination of this Agreement.

Section 9. No Joint Venture. The Company and the Manager are not partners or joint venturers with each other and nothing herein shall be construed to make them such partners or joint venturers or impose any liability as such on either of them.

Section 10. Term; Renewal; Termination Without Cause.

(a) This Agreement became effective on the Closing Date and shall continue in operation, unless terminated in accordance with the terms hereof, until the third anniversary of the Closing Date (the “ Initial Term ”). After the Initial Term, this Agreement shall be deemed renewed automatically each year for an additional one-year period (an “ Automatic Renewal Term ”) unless the Company or the Manager elects not to renew this Agreement in accordance with Section 10(b) or Section 10(d), respectively.

(b) Notwithstanding any other provision of this Agreement to the contrary, upon the expiration of the Initial Term or any Automatic Renewal Term and upon one hundred eighty (180) days’ prior written notice to the Manager (the “ Termination Notice ”), the Company may, without cause, in connection with the expiration of the Initial Term or the then current Automatic Renewal Term, decline to renew this Agreement (any such nonrenewal, a “ Termination Without Cause ”) upon the affirmative vote of at least two-thirds (2/3) of the Independent Directors that (1) there has been unsatisfactory performance by the Manager that is materially detrimental to the Company and its Subsidiaries taken as a whole or (2) the Management Fee and Incentive Compensation payable to the Manager are not fair, subject to Section 10(c) below. In the event of a Termination Without Cause, the Company shall pay the Manager the Termination Fee before or on the last day of the Initial Term or such Automatic Renewal Term, as the case may be (the “ Effective Termination Date ”). The Company may terminate this Agreement for cause pursuant to Section 12 hereof even after a Termination Notice and, in such case, no Termination Fee shall be payable.

(c) Notwithstanding the provisions of subsection (b) above, if the reason for nonrenewal specified in the Company’s Termination Notice is that two-thirds (2/3) of the Independent Directors have determined that the Management Fee or the Incentive Compensation payable to the Manager is unfair, the Company shall not have the foregoing nonrenewal right in the event the Manager agrees that it will continue to perform its duties hereunder during the Automatic Renewal Term that would commence upon the expiration of the Initial Term or then current Automatic Renewal Term at a fee that at least two-thirds (2/3) of the Independent Directors determine to be fair; provided , however , the Manager shall have the right to renegotiate the Management Fee and/or the Incentive Compensation, by delivering to the Company, not less than one hundred twenty (120) days prior to the pending Effective Termination Date, written notice (a “ Notice of Proposal to Negotiate ”) of its intention to renegotiate the Management Fee and/or the Incentive Compensation. Thereupon, the Company and the Manager shall endeavor to negotiate the Management Fee and/or the Incentive Compensation in good faith. Provided that the Company and the Manager agree to a revised Management Fee, Incentive Compensation or other compensation structure within sixty (60) days following the Company’s receipt of the Notice of Proposal to Negotiate, the Termination Notice from the Company shall be deemed of no force and effect, and this Agreement shall continue in full force and effect on the terms stated herein, except that the Management Fee, the Incentive Compensation or other compensation structure shall be the revised Management Fee, Incentive Compensation or other compensation structure as then agreed upon by the Company and the Manager. The Company and the Manager agree to execute and deliver an amendment to this Agreement setting forth such revised Management Fee, Incentive Compensation, or other compensation structure promptly upon reaching an agreement regarding same. In the event that the Company and the Manager are unable to agree to a revised Management Fee, Incentive Compensation, or other compensation structure during such sixty (60) day period, this Agreement shall terminate on the Effective Termination Date and the Company shall be obligated to pay the Manager the Termination Fee upon the Effective Termination Date.

(d) No later than one hundred eighty (180) days prior to the expiration of the Initial Term or the then current Automatic Renewal Term, the Manager may deliver written notice to the Company informing it of the Manager’s intention to decline to renew this Agreement, whereupon this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary date of this Agreement next following the delivery of such notice. The Company is not required to pay to the Manager the Termination Fee if the Manager terminates this Agreement pursuant to this Section 10(d).

(e) Except as set forth in this Section 10, a nonrenewal of this Agreement pursuant to this Section 10 shall be without any further liability or obligation of either party to the other, except as provided in Section 3(b), Section 5, Section 7, Section 8 and Section 14 of this Agreement.

(f) The Manager shall cooperate, at the Company’s expense, with the Company in executing an orderly transition of the management of the Company’s consolidated assets to a new manager.

Section 11. Assignments.

(a) Assignments by the Manager . This Agreement shall terminate automatically without payment of the Termination Fee in the event of its assignment, in whole or in part, by the Manager, unless such assignment is consented to in writing by the Company with the consent of a majority of the Independent Directors. Any such permitted assignment shall bind the assignee under this Agreement in the same manner as the Manager is bound, and the Manager shall be liable to the Company for all acts or omissions of the assignee under any such assignment. In addition, the assignee shall execute and deliver to the Company a counterpart of this Agreement naming such assignee as the Manager. Notwithstanding the foregoing, the Manager may, without the approval of the Company’s Independent Directors, (i) assign this Agreement to one or more Affiliates of the Manager and (ii) delegate to one or more of its Affiliates, including subadvisors where applicable, the performance of any of its responsibilities hereunder so long as it remains liable for any such Affiliate’s performance, in each case so long as assignment or delegation does not require the Company’s approval under the Investment Company Act (but if such approval is required, the Company shall not unreasonably withhold, condition or delay its consent). Nothing contained in this Agreement shall preclude any pledge, hypothecation or other transfer of any amounts payable to the Manager under this Agreement.

(b) Assignments by the Company . This Agreement shall not be assigned by the Company without the prior written consent of the Manager, except in the case of assignment by the Company to another REIT or other organization which is a successor (by merger, consolidation, purchase of assets, or other transaction) to the Company, in which case such successor organization shall be bound under this Agreement and by the terms of such assignment in the same manner as the Company is bound under this Agreement.

Section 12. Termination for Cause.

(a) The Company may terminate this Agreement effective upon thirty (30) days’ prior written notice of termination from the Company to the Manager, without payment of any Termination Fee, upon the occurrence of a Cause Event.

(b) The Manager may terminate this Agreement effective upon sixty (60) days’ prior written notice of termination to the Company in the event that the Company shall default in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall continue for a period of thirty (30) days after written notice thereof specifying such default and requesting that the same be remedied in such thirty (30) day period. The Company is required to pay to the Manager the Termination Fee if the termination of this Agreement is made pursuant to this Section 12(b).

(c) The Manager may terminate this Agreement if the Company becomes required to register as an investment company under the Investment Company Act, with such termination deemed to occur immediately before such event, in which case the Company shall not be required to pay the Termination Fee.

Section 13. Action Upon Termination. From and after the effective date of termination of this Agreement pursuant to Sections 10, 11, or 12 of this Agreement, the Manager

shall not be entitled to compensation for further services hereunder, but shall be paid all compensation accruing to the date of termination and, if terminated pursuant to Section 12(b) hereof or not renewed pursuant to Section 10(b) hereof (subject to Section 10(c) hereof), the Termination Fee. Upon any such termination, the Manager shall forthwith:

(a) after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled, pay over to the Company or a Subsidiary all money collected and held for the account of the Company or a Subsidiary pursuant to this Agreement;

(b) deliver to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board with respect to the Company and any Subsidiaries; and

(c) deliver to the Board all property and documents of the Company and any Subsidiaries then in the custody of the Manager, provided that the Manager shall be permitted to retain copies of such documents for its records, and if so retained, the Manager shall continue to be bound by the confidentiality obligations and other obligations set forth in Section 5 hereof with respect to the retained documents.

Section 14. Release of Money or Other Property Upon Written Request.

The Manager agrees that any money or other property of the Company (which such term, for the purposes of this Section, shall be deemed to include any and all of its Subsidiaries, if any) held by the Manager shall be held by the Manager as custodian for the Company, and the Manager’s records shall be appropriately and clearly marked to reflect the ownership of such money or other property by the Company. Upon the receipt by the Manager of a written request signed by a duly authorized officer of the Company requesting the Manager to release to the Company any money or other property then held by the Manager for the account of the Company under this Agreement, the Manager shall release such money or other property to the Company within a reasonable period of time, but in no event later than thirty (30) days following such request. Upon delivery of such money or other property to the Company, the Manager shall not be liable to the Company, the Board, or the Company’s stockholders or partners for any acts or omissions by the Company in connection with the money or other property released to the Company in accordance with this Section. The Company shall indemnify the Manager, its directors, officers, stockholders, employees and agents against any and all Losses which arise in connection with the Manager’s proper release of such money or other property to the Company in accordance with the terms of this Section 14. Indemnification pursuant to this provision shall be in addition to any right of the Manager to indemnification under Section 8 of this Agreement.

Section 15. Representations and Warranties.

(a) The Company hereby represents and warrants to the Manager as follows:

(i) The Company is duly organized, validly existing and in good standing under the laws of the State of Maryland, has the corporate power and authority and the legal right to own and operate its assets, to lease any property it may operate as lessee and

to conduct the business in which it is now engaged and is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of the Company and its Subsidiaries, if any, taken as a whole.

(ii) The Company has the corporate power and authority and the legal right to make, deliver and perform this Agreement and all obligations required hereunder and has taken all necessary corporate action to authorize this Agreement on the terms and conditions hereof and the execution, delivery and performance of this Agreement and all obligations required hereunder. No consent of any other Person that has not already been obtained, including stockholders and creditors of the Company, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by the Company in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required hereunder. This Agreement has been, and each instrument or document required hereunder will be, executed and delivered by a duly authorized officer of the Company, and this Agreement constitutes, and each instrument or document required hereunder when executed and delivered hereunder will constitute, the legally valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

(iii) The execution, delivery and performance of this Agreement and the documents or instruments required hereunder will not violate any provision of any existing law or regulation binding on the Company, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Company, or the Governing Agreements of, or any securities issued by the Company or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Company is a party or by which the Company or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets or financial condition of the Company and its Subsidiaries, if any, taken as a whole, and will not result in, or require, the creation or imposition of any lien or any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.

(b) The Manager hereby represents and warrants to the Company as follows:

(i) The Manager is duly organized, validly existing and in good standing under the laws of the State of Delaware, has the limited liability company power and authority and the legal right to conduct the business in which it is now engaged and is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of the Manager.

(ii) The Manager has the limited liability company power and authority and the legal right to make, deliver and perform this Agreement and all obligations required hereunder and has taken all necessary corporate action to authorize this Agreement on the terms and conditions hereof and the execution, delivery and performance of this Agreement and all obligations required hereunder. No consent of any other Person, including members and creditors of the Manager, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by the Manager in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required hereunder. This Agreement has been, and each instrument or document required hereunder will be, executed and delivered by a duly authorized officer of the Manager, and this Agreement constitutes, and each instrument or document required hereunder when executed and delivered hereunder will constitute, the legally valid and binding obligation of the Manager enforceable against the Manager in accordance with its terms.

(iii) The execution, delivery and performance of this Agreement and the documents or instruments required hereunder will not violate any provision of any existing law or regulation binding on the Manager, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Manager, or the Governing Agreements of, or any securities issued by the Manager or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Manager is a party or by which the Manager or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets or financial condition of the Manager, and will not result in, or require, the creation or imposition of any lien or any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.

Section 16. Miscellaneous.

(a) Notices . Any notices that may or are required to be given hereunder by any party to another shall be deemed to have been duly given if (i) personally delivered or delivered by facsimile, when received, (ii) sent by U.S. Express Mail or recognized overnight courier, on the second following Business Day (or third following Business Day if mailed outside the United States), (iii) delivered by electronic mail, when received or (iv) posted on a password protected website maintained by the Manager and for which the Company has received access instructions by electronic mail, when posted:


The Company:		Blackstone Mortgage Trust, Inc.
		345 Park Avenue, 42nd Floor
		New York, New York 10154
		Attention: Chief Financial Officer
		Fax: (646) 253-8782
		Email: paul.quinlan@blackstone.com


with a copy to:		Simpson Thacher & Bartlett LLP
		425 Lexington Avenue
		New York, New York 10017
		Attention: Andrew R. Keller; Edgar J. Lewandowski
		Fax: (212) 455-2502
		Email: akeller@stblaw.com; elewandowski@stblaw.com

The Manager:		BXMT Advisors L.L.C. c/o The Blackstone Group L.P. 345 Park Avenue
		New York, New York 10154
		Attention: Michael Nash; Randall Rothschild
		Email: nash@blackstone.com; Rothschild@blackstone.com

with a required copy to:		Simpson Thacher & Bartlett LLP 425 Lexington Avenue
		New York, New York 10017
		Attention: Michael Wolitzer
		Email: mwolitzer@stblaw.com

(b) Binding Nature of Agreement; Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns as provided herein.

(c) Integration . This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements (including, without limitation, any prior agreements between the Company and CT Investment Management Co., LLC), understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

(d) Amendments . Neither this Agreement, nor any terms hereof, may be amended, supplemented or modified except in an instrument in writing executed by the parties hereto.

(e) GOVERNING LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN SUCH COURT.

(f) WAIVER OF JURY TRIAL . EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

(g) Survival of Representations and Warranties . All representations and warranties made hereunder, and in any document, certificate or statement delivered pursuant hereto or in connection herewith, shall survive the execution and delivery of this Agreement.

(h) No Waiver; Cumulative Remedies . No failure to exercise and no delay in exercising, on the part of a party hereto, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

(i) Costs and Expenses . Each party hereto shall bear its own costs and expenses (including the fees and disbursements of counsel and accountants) incurred in connection with the negotiations and preparation of and the closing under this Agreement, and all matters incident thereto.

(j) Section Headings . The section and subsection headings in this Agreement are for convenience in reference only and shall not be deemed to alter or affect the interpretation of any provisions hereof.

(k) Counterparts . This Agreement may be executed by the parties to this Agreement on any number of separate counterparts (including by facsimile), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

(l) Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, each of the parties hereto has executed this Second Amended and Restated Management Agreement as of the date first written above.


BLACKSTONE MORTGAGE TRUST, INC.

By:	/s/ Paul D. Quinlan
	Name:	Paul D. Quinlan
	Title:	Chief Financial Officer

BXMT ADVISORS L.L.C.

By:	/s/ Randall S. Rothschild
	Name:	Randall S. Rothschild
	Title:	Authorized Signatory

Exhibit A

Investment Guidelines

1. No investment shall be made that would cause the Company to fail to qualify as a REIT under the Code.

2. No investment shall be made that would cause the Company or any of its Subsidiaries to be regulated as an investment company under the Investment Company Act.

3. The Manager shall seek to invest the capital of the Company in a broad range of investments in or relating to public and/or private debt, non-controlling equity, loans and/or other interests (including “mezzanine” interests and/or options or derivatives related thereto) relating to real estate assets (including pools thereof), real estate companies and/or real estate-related holdings.

4. Prior to the deployment of capital into investments, the Manager may cause the capital of the Company to be invested in any short-term investments in money market funds, bank accounts, overnight repurchase agreements with primary federal reserve bank dealers collateralized by direct U.S. government obligations and other instruments or investments reasonably determined by the Manager to be of high quality.

5. Not more than 25% of Equity will be invested in any individual investment without the approval of a majority of the investment risk management committee of the Board (it being understood, however, that for purposes of the foregoing concentration limit, in the case of any investment that is comprised (whether through a structured investment vehicle or other arrangement) of securities, instruments or assets of multiple portfolio issuers, such investment for purposes of the foregoing limitation shall be deemed to be multiple investments in such underlying securities, instruments and assets and not such particular vehicle, product or other arrangement in which they are aggregated).

6. Any investment in excess of $250 million shall require the approval of a majority of the investment risk management committee of the Board.

These Investment Guidelines may be amended, restated, modified, supplemented or waived by the Board (which must include a majority of the Independent Directors) without the approval of the Company’s stockholders.

Exhibit 10.2

GUARANTY

GUARANTY, dated as of June 27, 2014 (as amended, restated, supplemented, or otherwise modified from time to time, this “ Guaranty ”), made by BLACKSTONE MORTGAGE TRUST, INC., a Maryland corporation (the “ Guarantor ), in favor of METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation (“ Buyer ”).

RECITALS

Pursuant to that certain Master Repurchase Agreement, dated as of June 27, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Repurchase Agreement ”), by and among Buyer and Parlex 7 Finco, LLC, a Delaware limited liability company (“ Seller ”), Seller has agreed to sell, from time to time, to Buyer certain Eligible Assets, as defined in the Repurchase Agreement (collectively, the “ Purchased Assets ”), upon the terms and subject to the conditions as set forth therein and the other Transaction Documents.

It is a condition precedent to Buyer purchasing the Purchased Assets pursuant to the Repurchase Agreement that Guarantor shall have executed and delivered this Guaranty with respect to the due and punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all of the following: (a) all payment obligations owing by Seller to Buyer under or in connection with the Repurchase Agreement and any other Transaction Documents; (b) all expenses, including, without limitation, reasonable attorneys’ fees and disbursements, that are incurred by Buyer in the enforcement of any of the foregoing or any obligation of Guarantor under this Guaranty; and (c) any other Repurchase Obligations of Seller (collectively, the “ Obligations ”).

NOW, THEREFORE, in consideration of the foregoing premises, to induce Buyer to enter into the Repurchase Agreement and the other Transaction Documents and to enter into the transactions contemplated thereunder, Guarantor hereby agrees with Buyer, as follows:

1. Defined Terms . Unless otherwise defined herein, terms which are defined in the Repurchase Agreement and used herein are so used as so defined.

“ Available Borrowing Capacity ”: With respect to any Person, on any date of determination, the total unrestricted borrowing capacity which may be drawn (taking into account required reserves and discounts) upon by such Person or its Subsidiaries, at such Person’s or its Subsidiaries’ sole discretion, under committed credit facilities or repurchase agreements which provide financing to such Person or its Subsidiaries.

“ Cash Equivalents ”: As of any date of determination, marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States.

“ Cash Liquidity ”: With respect to any Person, on any date of determination, the sum of (i) unrestricted cash, plus (ii) Available Borrowing Capacity, plus (iii) Cash Equivalents.

“ Consolidated Net Income ”: With respect to any Person, for any period, the amount of consolidated net income (or loss) of such Person and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.

“ EBITDA ”: With respect to any Person, for any period, such Person’s Consolidated Net Income, excluding the effects of such Person’s and its Subsidiaries’ interest expense with respect to Indebtedness, taxes, depreciation, amortization, asset write-ups or impairment charges, provisions for loan losses, and changes in mark-to-market value(s) (both gains and losses) of financial instruments and noncash compensation expenses, all determined on a consolidated basis in accordance with GAAP.

“ Fixed Charges ”: With respect to any Person, for any period, the amount of interest paid in cash with respect to Indebtedness as shown on such Person’s consolidated statement of cash flow in accordance with GAAP as offset by the amount of receipts pursuant to net receive interest rate swap agreements of such Person and its consolidated Subsidiaries during the applicable period.

“ Recharacterization Event ”: The occurrence of either of the following events (a) any court determines that any Transfer was not a “true sale” or “true contribution” of such Purchased Asset or that any Purchased Asset is the property of Originator or (b) Originator or any Affiliate of Originator asserts or claims that any Transfer was not a “true sale” or “true contribution” of such Purchased Asset or that any Purchased Asset is the property of Originator.

“ Recourse Indebtedness ”: With respect to any Person, on any date of determination, the amount of Indebtedness for which such Person has recourse liability (such as through a guarantee agreement), exclusive of any such Indebtedness for which such recourse liability is limited to obligations with respect to customary nonrecourse carve-outs.

“ Tangible Net Worth ”: With respect to any Person, on any date of determination, all amounts which would be included under capital or shareholder’s equity (or any like caption) on a balance sheet of such Person pursuant to GAAP, minus (a) amounts owing to such Person from any Affiliate thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or any Affiliate thereof, (b) intangible assets, and (c) prepaid taxes and/or expenses, all on or as of such date.

“ Total Assets ”: With respect to any Person, on any date of determination, an amount equal to the aggregate book value of all assets owned by such Person and the proportionate share of such Person of all assets owned by Affiliates of such Person as consolidated in accordance with GAAP, less (a) amounts owing to such Person from any Affiliate thereof, or from officers, employees, partners, members, directors, shareholders or other Persons similarly affiliated with such Person or any Affiliate thereof, (b) intangible assets, and (c) prepaid taxes and expenses, all on or as of such date, and (d) the amount of nonrecourse Indebtedness owing pursuant to securitization transactions such as a REMIC securitization, a collateralized loan obligation transactions or other similar securitizations.

“ Transfer ”: Any transfer of Purchased Assets from an Originator to Seller.

2. Guaranty . (a) Subject to clause (b) of this Section 2 Guarantor hereby, unconditionally and irrevocably, guarantees to Buyer the prompt and complete payment and performance of the Obligations by Seller when due (whether at the stated maturity, by acceleration or otherwise), as the case may be.

(b) Notwithstanding anything in this Guaranty or in any other Transaction Document to the contrary and subject to clauses (c), (d), (e) and (g) below, the maximum liability of Guarantor under this Guaranty shall in no event exceed fifty percent (50%) of the then-current aggregate outstanding Repurchase Price of all Purchased Assets.

(c) Notwithstanding the foregoing, the limitation on recourse liability as set forth in clause (b) above SHALL BECOME NULL AND VOID and shall be of no further force and effect and the Obligations immediately shall become full recourse to Guarantor in the event of any of the following:

(i) a voluntary bankruptcy or insolvency proceeding is commenced by Seller or Guarantor under the Bankruptcy Code or any similar federal or state law; or

(ii) an involuntary bankruptcy or insolvency proceeding is commenced against Seller or Guarantor in connection with which Seller, Guarantor, or any Affiliate of any of the foregoing has or have colluded in any way with the creditors commencing or filing such proceeding.

(d) In addition to the foregoing and notwithstanding the limitation on recourse liability set forth in clause (b) above, Guarantor shall be liable for any and all actual out-of-pocket losses, costs, claims, expenses or other liabilities incurred by Buyer arising out of or attributable to the following items:

(i) fraud or intentional misrepresentation by Seller, Guarantor or any Affiliate of Seller or Guarantor in connection with the execution and the delivery of any Transaction Document, or any certificate, report, financial statement or other instrument or document furnished to Buyer at the time of the closing of the Repurchase Agreement or during the term of the Repurchase Agreement;

(ii) a Recharacterization Event;

(iii) any material breach of the separateness covenants set forth in Section 13 of the Repurchase Agreement;

(iv) any Change of Control;

(v) any material breach of any representations and warranties made by Seller, Pledgor, Guarantor or any Affiliate of Seller contained in any Transaction Document, including but not limited to any representations and warranties relating to Environmental Laws, or any indemnity for costs incurred in connection with the violation of any Environmental Law, the correction of any

environmental condition, or the removal of any substances, materials, wastes, pollutants or contaminants defined as hazardous or toxic or regulated under any applicable Environmental Law, in each case in any way affecting Seller’s or any of its Affiliate’s properties or any of the Purchased Assets; provided , that Guarantor shall have no liability under this clause (d)(v) with respect to breaches of representations or warranties relating to any Environmental Laws, violations of Environmental Laws or environmental conditions relating to conditions on any Mortgaged Property first arising on or after the date upon which Buyer enforces its remedies with respect to the related Purchased Asset pursuant to Section 14(b)(iii) or 14(b)(iv) of the Repurchase Agreement following an Event of Default; or

(vi) any failure of Seller to perform the Assumed Obligations relating to any Purchased Asset during the period that such Assumed Obligations are the obligations of Seller pursuant to Section 6(e) of the Repurchase Agreement (including, without limitation, any cost of defense, including reasonable attorneys’ fees of outside counsel, incurred by Buyer in connection with any claim, action, litigation or other proceeding brought against Buyer by a Mortgagor as a result of such failure of Seller to perform the Assumed Obligations).

(e) Notwithstanding the limitation on recourse liability set forth in clause (b) above, Guarantor agrees to pay all actual out-of-pocket costs and expenses that Buyer incurs defending itself or asserting any rights in any litigation commenced by or against a Mortgagor, guarantor, participant or other obligor or lender under a Purchased Asset and arising out of or relating to any event of default by such Mortgagor, guarantor, participant or other obligor or lender under the related Purchased Asset Documents prior to Buyer enforcing its remedies with respect to the related Purchased Asset pursuant to Section 14(b)(iii) or 14(b)(iv) of the Repurchase Agreement.

(f) Nothing herein shall be deemed to be a waiver of any right which Buyer may have under Section 506(a), 506(b), 1111(b) or any other provision of the Bankruptcy Code to file a claim for the full amount of the indebtedness secured by the Repurchase Agreement or to require that all collateral shall continue to secure all of the indebtedness owing to Buyer in accordance with the Repurchase Agreement or any other Transaction Documents.

(g) Notwithstanding the limitation on recourse liability set forth in clause (b) above, Guarantor further agrees to pay all reasonable and documented out-of-pocket expenses (including, without limitation, all reasonable out-of-pocket fees and disbursements of outside counsel) which are actually incurred by Buyer in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty.

(h) No payment or payments made by Seller or any other Person or received or collected by Buyer from Seller or any other Person by virtue of any action or proceeding or any set-off or appropriation or application, at any time or from time to time, in

reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of Guarantor under this Guaranty which shall, notwithstanding any such payment or payments, remain liable for the amount of the Obligations (subject to the limitations set forth in Section 2(b) hereof) until the Obligations are paid in full; provided, that this provision is not intended to allow Buyer to recover an amount greater than the amount of the Obligations (subject to the limitations set forth in Section 2(b) hereof).

(i) Guarantor agrees that whenever, at any time, or from time to time, Guarantor shall make any payment to Buyer on account of Guarantor’s liability under this Guaranty, Guarantor will notify Buyer in writing that such payment is made under this Guaranty for such purpose.

3. Subrogation . Upon making any payment under this Guaranty, Guarantor shall be subrogated to the rights of Buyer against Seller and any collateral for any Obligations with respect to such payment; provided , that Guarantor shall not seek to enforce any right or receive any payment by way of subrogation until all amounts due and payable by Seller to Buyer under the Transaction Documents or any related documents have been paid in full; and provided , further, that such subrogation rights shall be subordinate in all respects to all amounts owing to Buyer under the Transaction Documents.

4. Amendments, etc. with Respect to the Obligations . Until the Obligations have been satisfied or paid in full, Guarantor shall remain obligated under this Guaranty notwithstanding that, without any reservation of rights against Guarantor, and without notice to or further assent by Guarantor, any demand for payment of any of the Obligations made by Buyer may be rescinded by Buyer and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by Buyer, and any Transaction Document and any other document delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as Buyer may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by Buyer for the payment of the Obligations may be sold, exchanged, waived, surrendered or released in accordance with the Transaction Documents. Buyer shall have no obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Obligations or for this Guaranty or any property subject thereto. When making any demand under this Guaranty against Guarantor, Buyer may, but shall be under no obligation to, make a similar demand on Seller or any other guarantor, and any failure by Buyer to make any such demand or to collect any payments from Seller or any such other guarantor or any release of Seller or such other guarantor shall not relieve Guarantor of its Obligations or liabilities under this Guaranty, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of Buyer against Guarantor. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

5. Guaranty Absolute and Unconditional . (a) Guarantor hereby agrees that its obligations under this Guaranty constitute a guarantee of payment when due and not of collection. Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by Buyer upon this Guaranty or

acceptance of this Guaranty; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guaranty; and all dealings between Seller or Guarantor, on the one hand, and Buyer, on the other hand, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guaranty. Guarantor waives promptness, diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon Seller or Guarantor with respect to the Obligations. This Guaranty shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the validity, regularity or enforceability of any Transaction Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by Buyer, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by Seller against Buyer, (iii) any requirement that Buyer exhaust any right to take any action against Seller or any other Person prior to or contemporaneously with proceeding to exercise any right against Guarantor under this Guaranty or (iv) any other circumstance whatsoever (with or without notice to or knowledge of Seller or Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of Seller for the Obligations or of Guarantor under this Guaranty, in bankruptcy or in any other instance (other than a defense of payment or performance). When pursuing its rights and remedies under this Guaranty against Guarantor, Buyer may, but shall be under no obligation, to pursue such rights and remedies that Buyer may have against Seller or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by Buyer to pursue such other rights or remedies or to collect any payments from Seller or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any Seller or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve Guarantor of any liability under this Guaranty, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of Buyer against Guarantor. This Guaranty shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon Guarantor and its successors and assigns, and shall inure to the benefit of Buyer, and its successors and assigns, until all the Obligations and the obligations of Guarantor under this Guaranty shall have been satisfied by payment in full, notwithstanding that from time to time during the term of the Transaction Documents Seller may be free from any Obligations.

(b) Without limiting the generality of the foregoing, Guarantor hereby agrees, acknowledges, and represents and warrants to Buyer as follows:

(i) Guarantor hereby unconditionally and irrevocably waives any defense arising by reason of, and any and all right to assert against Buyer any claim or defense based upon, an election of remedies by Buyer which in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor’s subrogation rights, rights to proceed against Seller, or any other guarantor for reimbursement or contribution, and/or any other rights of Guarantor to proceed against Seller or against any other guarantor, or against any other person or security.

(ii) Guarantor is presently informed of the financial condition of Seller and of all other circumstances which diligent inquiry would reveal and which bear

upon the risk of nonpayment of the Obligations. Guarantor hereby covenants that it will make its own investigation and will continue to keep itself informed about Seller’s financial condition, the status of other guarantors, if any, of circumstances which bear upon the risk of nonpayment and that it will continue to rely upon sources other than Buyer for such information and will not rely upon Buyer for any such information. Absent a written request for such information by Guarantor to Buyer, Guarantor hereby waives the right, if any, to require Buyer to disclose to Guarantor any information which Buyer may now or hereafter acquire concerning such condition or circumstances including, but not limited to, the release of or revocation by any other guarantor.

(iii) Guarantor has independently reviewed the Transaction Documents and related agreements and has made an independent determination as to the validity and enforceability thereof, and in executing and delivering this Guaranty to Buyer, Guarantor is not in any manner relying upon any other Person’s determination of the validity, and/or enforceability, and/or attachment, and/or perfection of any liens or security interests of any kind or nature granted by Seller or any other guarantor to Buyer, now or at any time and from time to time in the future.

6. Reinstatement . This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by Buyer upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Seller or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for Seller or any substantial part of Seller’s property, or otherwise, all as though such payments had not been made.

7. Payments . Guarantor hereby agrees that the Obligations will be paid to Buyer without set-off or counterclaim in U.S. Dollars at the address specified in writing by Buyer.

8. Representations and Warranties . Guarantor represents and warrants that:

(a) Guarantor has the legal capacity and the legal right to execute and deliver this Guaranty and to perform Guarantor’s obligations under this Guaranty;

(b) except those that have already been obtained, no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other Person (including, without limitation, any creditor of Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guaranty;

(c) this Guaranty has been duly authorized, executed and delivered by Guarantor and constitutes a legal, valid and binding obligation of Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (whether enforcement is sought in proceedings in equity or at law);

(d) the execution, delivery and performance of this Guaranty by Guarantor will not violate any law, treaty, rule or regulation or determination of an arbitrator, a court or other governmental authority, applicable to or binding upon Guarantor or any of its property or to which Guarantor or any of its property is subject (“ Requirement of Law ”), or any provision of any security issued by Guarantor or of any agreement, instrument or other undertaking to which Guarantor is a party or by which it or any of its property is bound (“ Contractual Obligation ”), and will not result in or require the creation or imposition of any lien on any of the properties or revenues of Guarantor pursuant to any Requirement of Law or Contractual Obligation of Guarantor;

(e) except as disclosed in writing to Buyer, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to Guarantor’s Knowledge, threatened by or against Guarantor or against any of Guarantor’s properties or revenues with respect to this Guaranty or any of the transactions contemplated hereby, which litigation, investigation or proceeding could be reasonably likely to result in a Material Adverse Change with respect to Guarantor;

(f) except as disclosed in writing to Buyer, Guarantor has filed or caused to be filed all tax returns which are required to be filed and has paid all taxes shown to be due and payable on such returns or on any assessments made against Guarantor or any of Guarantor’s property and all other taxes, fees or other charges imposed on Guarantor or any of Guarantor’s property by any Governmental Authority (other than any such taxes, fees or charges the amount or validity of which are currently being contested in good faith by appropriate proceedings); no tax lien has been filed, and, to Guarantor’s Knowledge, no claim is being asserted, with respect to any such tax, fee or other charge; and

(g) all financial data concerning Guarantor that has been delivered by or on behalf of Guarantor to Buyer present fairly the financial condition of Guarantor and has been prepared in accordance with GAAP to the extent applicable. Since the delivery of such data, except as otherwise disclosed in writing to Buyer, there has been no change in the financial position of Guarantor or in the results of operations of Guarantor, which change is reasonably likely to result in a Material Adverse Change with respect to Guarantor.

Guarantor agrees that the foregoing representations and warranties shall be deemed to have been made by Guarantor on the date hereof and on the date of each Transaction under the Repurchase Agreement, on and as of such date of the Transaction, as though made under this Guaranty on and as of such date.

9. Covenants . Guarantor shall maintain the following covenants at all times following the date hereof until the Obligations have been paid in full:

(a) Minimum Fixed Charge Coverage Ratio . The ratio of (i) Guarantor’s EBITDA during the previous four (4) fiscal quarters to (ii) Guarantor’s Fixed Charges during the same such previous four (4) fiscal quarters shall not be less than 1.40 to 1.00 as determined as soon as practicable after the end of each fiscal quarter, but in no event later than forty-five (45) days after the last day of the applicable fiscal quarter.

(b) Minimum Tangible Net Worth . Guarantor’s Tangible Net Worth shall not fall below the sum of (i) Nine Hundred Eight Million One Hundred Forty-Three Thousand Seven Hundred Fifty-Four Dollars and Two Cents ($908,143,754.02) plus (ii) seventy-five percent (75%) of the net cash proceeds of any equity issuance by Guarantor that occurs on or after the date hereof.

(c) Minimum Cash Liquidity . Guarantor’s Cash Liquidity shall not fall below the greater of (i) ten million dollars ($10,000,000) and (ii) five percent (5%) of Guarantor’s Recourse Indebtedness.

(d) Maximum Indebtedness . The ratio, expressed as a percentage, the numerator of which shall equal Guarantor’s and its Subsidiaries’ Indebtedness and the denominator of which shall equal Guarantor’s and its Subsidiaries Total Assets, shall not be greater than eighty-three and one-third percent (83.3333%).

10. Severability . Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

11. Paragraph Headings . The paragraph headings used in this Guaranty are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

12. No Waiver; Cumulative Remedies . Buyer shall not by any act (except by a written instrument pursuant to Section 14 ), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy under this Guaranty or to have acquiesced in any default or event of default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of Buyer, any right, power or privilege under this Guaranty shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege under this Guaranty shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by Buyer of any right or remedy under this Guaranty on any one occasion shall not be construed as a bar to any right or remedy which Buyer would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.

13. Waivers and Amendments; Successors and Assigns; Governing Law . None of the terms or provisions of this Guaranty may be waived, amended, supplemented or otherwise modified except by a written instrument executed by Guarantor and Buyer; provided , that, subject to any limitations set forth in the Repurchase Agreement, any provision of this Guaranty may be waived by Buyer in a letter or agreement executed by Buyer or by facsimile or e-mail transmission from Buyer. This Guaranty shall be binding upon the heirs, personal

representatives, successors and assigns of Guarantor and shall inure to the benefit of Buyer and its successors and assigns. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF EXCEPT FOR SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK .

14. Notices . Unless otherwise provided in this Guaranty, all notices, consents, approvals and requests required or permitted to be given to Guarantor under this Guaranty shall be given in writing and shall be effective for all purposes if hand delivered or sent by (a) hand delivery, with proof of attempted delivery, (b) certified or registered United States mail, postage prepaid, (c) expedited prepaid delivery service, either commercial or United States Postal Service, with proof of attempted delivery, or (d) by telecopier (with answerback acknowledged); provided, that such telecopied notice must also be delivered by one of the means set forth in (a), (b) or (c) above, to the address specified under its signature below or at such other address and person as shall be designated from time to time by Guarantor, in a written notice to Buyer in the manner provided for in Section 17 of the Repurchase Agreement. A notice shall be deemed to have been given: (a) in the case of hand delivery, at the time of delivery, (b) in the case of registered or certified mail, when delivered or first attempted delivery on a Business Day, (c) in the case of expedited prepaid delivery upon the first attempted delivery on a Business Day, or (d) in the case of telecopier, upon receipt of answerback confirmation; provided , that such telecopied notice was also delivered as required in this Section 14 . A party receiving a notice which does not comply with the technical requirements for notice under this Section 14 may elect to waive any deficiencies and treat the notice as having been properly given.

15. SUBMISSION TO JURISDICTION; WAIVERS . GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY AND THE OTHER TRANSACTION DOCUMENTS TO WHICH GUARANTOR IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT GUARANTOR MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO GUARANTOR AT GUARANTOR’S ADDRESS SET FORTH UNDER GUARANTOR’S SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH BUYER SHALL HAVE BEEN NOTIFIED; AND

(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

16. Integration . This Guaranty represents the agreement of Guarantor with respect to the subject matter hereof and there are no promises or representations by Buyer relative to the subject matter hereof not reflected herein.

17. Acknowledgments . Guarantor hereby acknowledges that:

(a) Guarantor has been advised by counsel in the negotiation, execution and delivery of this Guaranty and the related documents;

(b) Buyer has no fiduciary relationship to Guarantor, and the relationship between Buyer and Guarantor is solely that of surety and creditor;

(d) (i) Guarantor is entering into this Guaranty to induce Buyer to enter into the Repurchase Agreement and (ii) this Guaranty relates to the Repurchase Agreement and the Transactions thereunder as part of an integrated, simultaneously-closing suite of secured financial contracts.

18. WAIVERS OF JURY TRIAL . GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY RELATED DOCUMENT AND FOR ANY COUNTERCLAIM HEREIN OR THEREIN.

[SIGNATURES COMMENCE ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be duly executed and delivered as of the date first above written.


BLACKSTONE MORTGAGE TRUST, INC., a Maryland corporation, as Guarantor

By:		/s/ Douglas Armer
Name:		Douglas Armer
Title:		Managing Director, Head of Capital Markets and Treasurer

Address for Notices :

Blackstone Mortgage Trust, Inc.
345 Park Avenue
New York, New York 10154
Attention:		Douglas Armer
Telephone:		(212) 583-5000
Email:		BXMTMetLifeRepo@blackstone.com

With copies to:

ROPES & GRAY LLP
1211 Avenue of the Americas
New York, NY 10036-8704
Attention:		David C. Djaha
Telephone:		(212) 841-0489
Telecopy:		(646) 728-2936
Email:		david.djaha@ropesgray.com

Exhibit 10.3

RESTRICTED STOCK AWARD AGREEMENT

(2013 Stock Incentive Plan)

THIS RESTRICTED STOCK AGREEMENT (the “ Agreement ”), is made effective as of the date set forth on the signature page (the “ Signature Page ”) attached hereto (the “ Date of Grant ”), between Blackstone Mortgage Trust, Inc., a Maryland corporation (the “ Company ”) and the participant identified on the Signature Page attached hereto (the “ Participant ”).

R E C I T A L S :

WHEREAS, the Company has adopted the Blackstone Mortgage Trust, Inc. 2013 Stock Incentive Plan (the “ Plan ”), the terms of which Plan are incorporated herein by reference and made a part of this Agreement, and capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and

WHEREAS, the Company has determined that it would be in the best interests of the Company and its stockholders to grant the restricted stock award provided for herein to the Participant pursuant to the Plan and the terms set forth herein;

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:

1. Grant of Restricted Stock . Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Agreement, the Company hereby grants to the Participant the number of shares of Restricted Stock appearing on the signature page attached hereto (the “ Award ”).

2. Vesting of Restricted Stock .

(a) Vesting Schedule . The Award shall initially be unvested and shall vest in accordance with the following vesting schedule:

(i) Provided that the Participant has not undergone a Termination, the Award shall vest in substantially equal quarterly installments over the three (3) year period following the Date of Grant, with the sole exception of the first installment which shall vest simultaneously with the second installment at the close of the second quarter; provided that the exact amounts and dates of vesting installments shall be determined by the Company; and

(ii) Provided that the Participant has not undergone a Termination prior to a Change in Control, any portion of the Award that has not vested in accordance with clause (i) above shall vest in full as of the date of such Change in Control.

(b) Termination . If the Participant undergoes a Termination, the Award (or any portion thereof), to the extent not then vested or previously forfeited, shall immediately be forfeited without any further action by the Company or the Participant, and without any payment of consideration therefor; provided , however , that:

(i) Upon the occurrence of a Qualifying Event on account of the death or Disability of the Participant, 100% of the Award shall vest (to the extent not previously vested) upon the date of such event; and

(ii) Upon the occurrence of a Qualifying Event on account of the Retirement of the Participant, (A) 50% of the then unvested shares of Restricted Stock subject to the Award shall vest upon the date of such event, and (B) all other unvested shares of Restricted Stock shall immediately be forfeited without any further action by the Company or the Participant, and without any payment of consideration therefor.

(i) “ Qualifying Event ” shall mean a Termination as a result of the Participant’s death, Disability or Retirement.

(ii) “ Retirement ” shall mean the voluntary Termination of a Participant after (i) such Participant has reached age 65 and has at least five full years of service with the Company and its Affiliates (including Manager and its Affiliates) or (ii) (x) the Participant’s age plus years of service with the Company and its Affiliates totals at least 65, (y) the Participant has reached age 55, and (z) the Participant has had a minimum of five years of service.

3. Book Entry; Certificates . The Company shall recognize the Participant’s ownership through uncertificated book entry. If elected by the Company, certificates evidencing the Common Stock granted hereunder may be issued by the Company and any such certificates shall be registered in the Participant’s name on the stock transfer books of the Company promptly after the date hereof, but shall remain in the physical custody of the Company or its designee at all times prior to the later of (x) the vesting of the Award pursuant to this Agreement and (y) the expiration of any transfer restrictions set forth in this Agreement or otherwise applicable to the Common Stock subject to the Award. As soon as practicable following such time, any certificates for the Common Stock subject to the Award shall be issued to the Participant or to the Participant’s legal guardian or representative along with the stock powers relating thereto. No certificates shall be issued for fractional shares. To the extent required by the Company, the Participant shall deliver to the Company a stock power, duly endorsed in blank, relating to any portion of the Award that has not previously vested. However, the Company shall not be liable to the Participant for damages relating to any delays in issuing the certificates (if any) to the Participant, any loss by the Participant of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves.

4. Rights as a Stockholder . The Participant shall be the record owner of the shares of Restricted Stock until or unless such shares are forfeited pursuant to the terms of this Agreement, and as record owner shall be entitled to all rights of a common stockholder of the Company, including, without limitation, participating in gains and losses of the Company, voting rights and rights to dividends with respect to shares of Restricted Stock; provided that shares of Restricted Stock shall be subject to the limitations on transfer and encumbrance set forth in Section 7.

5. Restrictions . Any Common Stock issued to the Participant pursuant to the Award shall be subject to such stop transfer orders and other restrictions as the Committee (or its designee) may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Common Stock are listed and any applicable U.S. or non-U.S. federal, state or local laws, and the Committee (or its designee) may cause a notation or notations to be entered into the books and records of the Company to make appropriate reference to such restrictions.

6. No Right to Continued Employment or Service. Neither the Plan nor this Agreement nor the granting of the Award hereunder shall impose any obligation on the Company or any Affiliate to continue the employment or engagement of the Participant. Further, the Company or any Affiliate (as applicable) may at any time terminate the Participant, free from any liability or claim under the Plan or this Agreement, except as otherwise expressly provided herein.

7. Transferability .

(a) Shares of Restricted Stock may not, at any time prior to becoming vested pursuant to the terms of this Agreement, be Transferred and any such purported Transfer shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

(b) “ Transfer ” shall mean (in either the noun or the verb form, including with respect to the verb form, all conjugations thereof within their correlative meanings) with respect to any security, the gift, sale, assignment, transfer, pledge, hypothecation or other disposition (whether for or without consideration, whether directly or indirectly, and whether voluntary, involuntary or by operation of law) of such security or any interest therein.

8. Securities Laws; Cooperation . Upon the vesting of the Award (or any portion thereof), the Participant will make or enter into such written representations, warranties and agreements as the Committee may request in order to comply with applicable securities laws, the Plan or with this Agreement.

9. Notices . Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for such Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

10. Choice of Law . This Grant shall be governed by and construed in accordance with the laws of the state of Maryland without regard to conflicts of laws.

11. Restricted Stock Subject to Plan . By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. Shares of Restricted Stock granted hereunder is subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

12. Signature in Counterparts . This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

[ Signatures on next page. ]

IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the date set forth on the Company’s signature page.


Participant


Name:

Blackstone Mortgage Trust, Inc.


Name:
Title:

Dated:


Number of Shares of Restricted Stock		[ — ]

Exhibit 10.4

RESTRICTED STOCK AWARD AGREEMENT

(2013 Manager Incentive Plan)

R E C I T A L S :

WHEREAS, the Company has adopted the Blackstone Mortgage Trust, Inc. 2013 Manager Incentive Plan (the “ Plan ”), the terms of which Plan are incorporated herein by reference and made a part of this Agreement, and capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:

1. Grant of Restricted Stock . Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Agreement, the Company hereby grants to the Participant the number of shares of Restricted Stock appearing on the Signature Page attached hereto (the “ Award ”).

2. Vesting of Restricted Stock .

(a) Vesting Schedule . The Award shall initially be unvested and shall vest in accordance with the following vesting schedule:

(i) Provided that a Termination has not occurred, the Award shall vest in substantially equal quarterly installments over the three (3) year period following the Date of Grant, with the sole exception of the first installment which shall vest simultaneously with the second installment at the close of the second quarter; provided that the exact amounts and dates of vesting installments shall be determined by the Company.

(b) Termination . If a Termination occurs, the Award (or any portion thereof), to the extent not then vested or previously forfeited, shall immediately be forfeited without any further action by the Company or the Participant, and without any payment of consideration therefor.

6. No Right to Continued Service. Neither the Plan nor this Agreement nor the granting of the Award hereunder shall impose any obligation on the Company or any Affiliate to continue the engagement of the Participant.

7. Transferability .

9. Notices . Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to the Participant at the address as set forth on the Signature Page or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

10. Choice of Law . This Grant shall be governed by and construed in accordance with the laws of the state of Maryland without regard to conflicts of laws.

[ Signatures on next page. ]

IN WITNESS WHEREOF, the parties have caused this Agreement to be effective as of the date set forth on the Company’s signature page.


Participant

BXMT Advisors L.L.C.

By:


Name:
Title:

Blackstone Mortgage Trust, Inc.


Name:
Title:

Dated:

Participant Address:


Number of Shares of Restricted Stock		[ — ]

Exhibit 31.1

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen D. Plavin, certify that:

I have reviewed this quarterly report on Form 10-Q of Blackstone Mortgage Trust, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 28, 2014

/s/ Stephen D. Plavin

Stephen D. Plavin

Chief Executive Officer

Exhibit 31.2

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul D. Quinlan, certify that:

I have reviewed this quarterly report on Form 10-Q of Blackstone Mortgage Trust, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 28, 2014

/s/ Paul D. Quinlan

Paul D. Quinlan

Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Blackstone Mortgage Trust, Inc. (the “ Company ”) on Form 10-Q for the period ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “ Report ”), I, Stephen D. Plavin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stephen D. Plavin

Stephen D. Plavin

Chief Executive Officer

October 28, 2014

This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Blackstone Mortgage Trust, Inc. (the “ Company ”) on Form 10-Q for the period ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “ Report ”), I, Paul D. Quinlan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Paul D. Quinlan

Paul D. Quinlan

Chief Financial Officer

October 28, 2014

Exhibit 99.1

SECTION 13(r) DISCLOSURE

After Blackstone Mortgage Trust, Inc. (“BXMT”) and The Blackstone Group L.P. (“Blackstone”), each filed their respective Form 10-Qs for the fiscal quarter ended March 31, 2014 with the Securities and Exchange Commission (the “SEC”), Travelport Limited, which may be considered an affiliate of Blackstone, and therefore an affiliate of BXMT, filed the disclosure reproduced below with respect to such period. In addition, after BXMT filed its Form 10-Q for the fiscal quarter ended June 30, 2014 with the SEC, Blackstone filed the disclosure reproduced below regarding Travelport Limited. BXMT did not independently verify or participate in the preparation of these disclosures.

Travelport Limited included the following disclosure in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 :

Trade Sanctions Disclosure

The following activities are disclosed as required by Section 13(r)(1)(D)(iii) of the Exchange Act.

As part of our global business in the travel industry, we provide certain passenger travel-related GDS and Technology Services to Iran Air. We also provide certain Technology Services to Iran Air Tours. All of these services are either exempt from applicable sanctions prohibitions pursuant to a statutory exemption permitting transactions ordinarily incident to travel or, to the extent not otherwise exempt, specifically licensed by the U.S. Office of Foreign Assets Control. Subject to any changes in the exempt/licensed status of such activities, we intend to continue these business activities, which are directly related to and promote the arrangement of travel for individuals.

The gross revenue and net profit attributable to these activities in the quarter ended March 31, 2014 were approximately $181,000 and $125,000, respectively.

Blackstone included the following disclosure in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014 :

Travelport Limited, which may be considered our affiliate, included the disclosure reproduced below in its Form 10-Q for the fiscal quarter ended June 30, 2014. We have not independently verified or participated in the preparation of this disclosure.

“As part of our global business in the travel industry, we provide certain passenger travel-related GDS and Technology Services to Iran Air. We also provide certain airline Technology Services to Iran Air Tours. All of these services are either exempt from applicable sanctions prohibitions pursuant to a statutory exemption permitting transactions ordinarily incident to travel or, to the extent not otherwise exempt, specifically licensed by the U.S. Office of Foreign Assets Control. Subject to any changes in the exempt/licensed status of such activities, we intend to continue these business activities, which are directly related to and promote the arrangement of travel for individuals.

The gross revenue and net profit attributable to these activities in the quarter ended June 30, 2014 were approximately $161,000 and $117,000, respectively.”