BrightSpire Capital (NYSE:BRSP) reported a fourth-quarter GAAP net loss attributable to common stockholders of $14.4 million, or $0.12 per share, as management emphasized continued progress rotating the portfolio away from challenged assets while accelerating new loan originations.
During the company’s Feb. 18 earnings call, executives said they have reduced watchlist loans and real estate owned (REO) exposure through sales and resolutions, even as loan originations gained momentum late in 2025 and into early 2026. Management also reiterated priorities for 2026, including expanding the loan portfolio, monetizing REO—particularly the San Jose Hotel—and executing another commercial real estate collateralized loan obligation (CRE CLO) later in the year.
Quarterly results and book value
Chief Financial Officer Frank Saracino said DE for the quarter included specific reserves of approximately $54.9 million. The GAAP net loss also included an approximately $8 million impairment charge related to the sale of Long Island City office properties.
BrightSpire’s GAAP net book value was $7.30 per share at Dec. 31, down from $7.53 per share in the third quarter, while undepreciated book value was $8.44 per share, down from $8.68 per share. Saracino said the company made a strategic decision to “pull forward” resolutions of certain watchlist and REO assets, taking what he characterized as a limited reduction in book value to monetize assets and reinvest proceeds.
During the quarter, BrightSpire repurchased about 1.1 million shares at an average price of $5.39, which Saracino said resulted in approximately $0.03 of book value accretion. He also said management continues to believe the stock is “significantly undervalued.”
Originations drove loan portfolio growth
CEO Mike Mazzei said the fourth quarter was one of BrightSpire’s most active periods in several years. Since restarting originations near the end of 2024, the company has closed 32 new loans totaling $941 million in commitments, including 13 loans totaling $416 million closed in the fourth quarter.
President and COO Andy Witt said fourth-quarter commitments included 12 multifamily loans and one mixed-use loan, while repayments were minimal and largely tied to two payoffs. As of quarter-end, the loan book grew to about $2.7 billion from $2.4 billion in the prior quarter and consisted of 98 loans with an average balance of $27 million and a risk ranking of 3.1, consistent with the previous quarter.
Witt said BrightSpire closed an additional three loans totaling $118 million after quarter-end and expects the loan book to expand to nearly $3 billion by about halfway through the year, with a target of at least $3.5 billion by year-end.
In the Q&A, Witt said the company is modeling quarterly originations of roughly $300 million to $400 million going forward. He noted that some fourth-quarter activity was pulled forward from the first quarter as borrowers sought to close transactions before year-end.
Watchlist and REO: accelerated resolutions and capital recycling
Mazzei and Witt said BrightSpire accelerated the resolution of watchlist loans and REO assets to generate capital for redeployment into new loans. Mazzei said the company prioritized certainty from monetizations over “prospective upside” from holding certain assets longer.
Witt said two loans were added to the watchlist in the fourth quarter—both tied to the same borrower—bringing the watchlist to $220 million, or 8% of the loan portfolio. He said the company moved to accelerate resolution of the borrower relationship, taking ownership of one property through foreclosure and working with the borrower to market two other properties. Two watchlist loans were resolved via sales processes after quarter-end, and two more properties tied to watchlist loans were described as being in the process of being sold. One watchlist property moved to REO through foreclosure.
Pro forma for those anticipated sales, Witt said the watchlist would be reduced to two loans—a Dallas office loan and an Austin multifamily loan—totaling about $66 million. Mazzei also said the company’s goal over the coming months is to reduce as-is watchlist exposure to two loans totaling roughly $66 million.
On REO, Witt said BrightSpire sold one of two Long Island City, New York office properties and an Oregon office property during the quarter. REO exposure stood at $315 million across six properties at year-end, but increased after quarter-end when a Dallas multifamily property moved into REO, bringing the total to seven properties with an aggregate balance of about $360 million.
Witt said the remaining Long Island City property is under contract and expected to close in the first quarter. Two multifamily properties (Fort Worth, Texas and Mesa, Arizona) are listed for sale. Pro forma for those sales, remaining REO would be four assets totaling $266 million, with the San Jose Hotel representing half of the balance. Witt said the company expects to market the majority, if not all, remaining REO for sale in the back half of 2026.
In the Q&A, Mazzei said more than $200 million of equity is tied up in REO assets, describing it as a drag on the portfolio. He said the San Jose Hotel is the only REO asset currently producing meaningful income, with net operating income (NOI) “just shy of $9 million.” He said BrightSpire expects a “full game” toward the end of the year as REO is unwound and proceeds are deployed into leveraged assets producing higher returns on equity.
Capital markets activity, dividend coverage, and 2026 priorities
Mazzei described commercial real estate debt capital markets as “wide open,” citing strong investor demand for CRE CLOs. He said BrightSpire closed its fourth managed CLO, a $955 million transaction with a $98 million ramp and a 2.5-year reinvestment period. Mazzei said 19 investors participated across offered tranches, including the lowest-rated investment-grade tranche.
Saracino said liquidity totaled about $168 million as of the call date, including $98 million of cash, with $64 million expected the next day related to the CLO execution and unwind of the 2021 FL1 CLO. The company also had $70 million available under its credit facility. He said BrightSpire’s debt-to-assets ratio was 66% and debt-to-equity was 2.3 times.
On dividends, Mazzei said adjusted DE of $0.15 per share in the fourth quarter was “just $0.01 shy of breakeven” relative to the $0.16 dividend. Saracino said adjusted DE for full-year 2025 totaled $83.6 million, or $0.64 per share, which fully covered the annual dividend of $0.64 per share.
Management outlined 2026 priorities that included growing the loan book to about $3.5 billion, continuing to resolve remaining watchlist and REO assets (including monetizing the San Jose Hotel), executing a fifth CLO in the second half of the year, and reestablishing positive dividend coverage by year-end.
During the Q&A, Mazzei provided additional color on the San Jose Hotel, saying the Super Bowl was positive for operations and that BrightSpire is completing upgrades such as the lobby and elevators, with additional work planned. He said the company is budgeting roughly $9 million of NOI for accrual purposes and hopes to increase cash flow into “double-digit” NOI by year-end before considering a sale, adding that the asset is being held “well below replacement cost.”
Asked about other real estate holdings, Mazzei said BrightSpire’s net lease portfolio includes triple-net leased properties to Labcorp in Indianapolis and Northrop Grumman in Colorado, as well as the Albertsons portfolio. He said the company is not looking to grow that portfolio and would consider selling assets if it becomes possible, but said “there’s really nothing going on” there currently.
About BrightSpire Capital (NYSE:BRSP)
BrightSpire Capital Inc (NYSE: BRSP) is a real estate investment trust (REIT) specializing in commercial real estate debt. The company primarily originates, acquires and manages a diversified portfolio of mortgage loans, mezzanine loans and preferred equity investments secured by office, retail, industrial, multifamily and hospitality assets across the United States. By focusing on income-producing credit instruments, BrightSpire seeks to deliver attractive risk-adjusted returns to its shareholders through regular dividend distributions.
BrightSpire’s investment strategy spans the capital structure of commercial real estate, with an emphasis on senior mortgages that offer more stable cash flows and downside protection.
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