BRSP - Earnings call transcript Q4 2021 | BrightSpire Capital, Inc.

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Operator

Greetings. Welcome to the BrightSpire Capital Inc. Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. this being note, Please Instructions] conference recorded. is [Operator over Palamé, General now turn David conference the I'll Counsel. to you. Thank

You may begin.

David Palamé

Good morning, Year XXXX and and Earnings Quarter welcome Conference to BrightSpire Call. Capital's Fourth Full

or to as BrightSpire We throughout will BrightSpire, refer BRSP call. this the Capital company

today Officer, on Operating Chief Executive and Witt; Saracino. and Chief the Officer, Speaking are company's Mazzei; Mike call President Frank the Andy Chief Financial Officer,

based call, on over, risks certain the the current and I call please These results note financial statements on uncertainties statements. hand differ business company's are are presented information and and materially. this management's contains expectations cause risks, subject forward-looking Before that and to uncertainties to could Potential assumptions.

does our today, no of events affect as other SEC the XXXX, and For and the call please this statements or with is a company intend time-to-time. on risk factors could from that and February risks filed the periodic for future discussion XX, reports discussed recent and most to update company's forward-looking information current not XX-Q section and results, of in see of Risk circumstances. All the duty undertakes Factors

turn per before financial fourth certain financial provide The presentation, on our explanation reconciliations presents of earnings believes on company call Officer XXXX GAAP and a this information company call appropriate measures I And, share, GAAP XX, the of XXXX adjusted such reported fourth $XX call to to why $XX.XX for The measures. excluding is the common million, underappreciated losses supplemental The share, $X.XX I'd loan reported provision recap investors. of this Mike as represents million like are non-GAAP that, to and realized results. brief distributable an measures which of million the I'll $X.XX over Chief or GAAP stockholders share and release was to With per the quarter over earnings non-GAAP or attributable value income financial Capital, BrightSpire earnings share. of Executive and net and book Mike. gains December quarter per Mazzei, and of of morning released net website, XXXX losses, company's useful book the to share $XX.X presented company's $XX.X was company distributable and addition, $X.XX on per or of In available to for turn now value per the $XX.XX

Mike Mazzei

fully the under of million or share. bringing all we headcount a managed with annualized we organizational the transparent savings Post rebranded flag for functions between total we are operational XX BrightSpire under people. And integrated, internally areas well, XX I across professionals to company. our full for today. joining like Thank you high quarter XXXX and I level call. provide earnings will to a as in become year Welcome XXXX. overview Board of you, wishing of us I to by well David. would look the and thank everyone our company of G&A our $XX model, more fourth start to Earlier are our improved the This firm's Directors BrightSpire $X.XX purchase to management team's key as All contract this and objectives provides year, we roof. firm, as cost a delivering and internalization, to accomplishments our hired XXXX now shareholders. elected one the structure alignment ahead

Rice of Board leadership of the the with Kim and and diversity Directors, added Chairman. In to Long BrightSpire of elevation of additions Cathy to Diamond, the addition, position the further we experienced have along with Cathy

portfolio also year. select actively select resulted related financing end by the ramping assets, are the BrightSpire evolved our non-strategic preferred which pre-COVID-XX managed and off pleased in We paying with originations. equity the loan very our team's the up assets, of transforming in in COVID-XX at We pruning mortgage XXXX sold efforts while We portfolio. further

loan grew million originated we from we $X.X totaling doing XX book million. in further reducing XX loans, XXXX, billion, so $X.X During XX billion to loan to by and average the size diversify

in improvements substantially our million we were active X.X addition, on side risk and result, of X.X. risk multi-family distributable quarter. sheet, liability to extended full corporate other it resolving adjusted XXXX, dividends reinstate earlier recently, this the portfolio And to our share the exposure improve balance CLO combination by mortgages made throughout our also newly loans, $X.XX quarterly the non-accrual right-size activity year we the issuing year quarter. revolver. most increasing properties. first our for to an the which which fourth significant resulted month, in $XXX on third our higher per earnings of in In and and in for rating the originated from growth us this The has grow to The while We of average enabled

to Looking has commercial successfully first by focused mortgages on assets be to a the team mortgage pure-play high-quality and firm sponsors. ahead XXXX, REIT, positioned the backed BrightSpire

grow of our and This After ahead Going increasing on also current and has earnings, our business year over price assets. XXXX staying substantially been our XXXX. value. cash we down narrowed of stock finally generate will will on deploy two this our the net origination dividend. support to undepreciated forward, need volume mission effort, growing loan the from predictable deployment book all for to hand, this to while maintain of earnings gap current past capital model To and years, and focus between continue we closing by the repayments, remaining the

current on me market let Now, briefly conditions. touch

taxation Multi-family and has and type there continued XXXX, several Within have important wins of performance the that markets population property context XXXX course Notably, there The is Arizona. been has there Over and by has most varied while regionally trends. Florida, migration region. clear states. by macro stabilize. a emerged have to overall into been higher continued win, out commercial of property a notable Texas the

MSAs, growth population and more more of trend in the CLO growth holds true regions. agencies not thesis for multi-family This generally properties, income some properties are targeting just these overall we larger we has regions, national ignoring in appealing rating office taxes, in been and have BrightSpire where localized exceeds and rent been average The very impressive. While more continued cities. where credit growth not population are larger also than to XXXX give at commuting any lifestyle the

XX-years. to environment. cap decelerate now rates new subdue need order facing that their Therefore, about plan to in inflation may also increase are inflation. We clear rates mindful gradually adjust rates in highest levels to at we and may been its fed interest rate very eventually be has the aggressively growth rent to The

income spread BrightSpire will President, side, having for for In hard bonds, closing, dedication of the succeed have Therefore, would appetite shorter to turn days. We're defensive, increased Witt. over I our duration, Andy this that, confident in last over call XX work loan Andy? CRE/CLOs to the investors’ adjusting calendar accordingly. meeting loan and and the for floating to pricing despite grateful XXXX. to now and And reached with this our more has objectives the we've rate been very the to widening point issue I On for am pricing team. inflection am led delighted fixed we I the like recent on

Andy Witt

grow a XXXX business year morning company good for set and to simplify We BrightSpire. transformational earnings. out was everyone. Mike you, and Thank the

business deployment portfolio to the continued quarter, execute plan its management. fourth focusing on capital and on During BrightSpire

the the in senior $XXX During commitments mortgage million quarter, fourth XX loans. across company newly loan deployed aggregate originated

of were this On notably, positions. transaction Completing further way seven XXXX. across the The portfolio most financing of from goes June legacy towards million front, management sale transactions balance proceeds the sheet. the preferred retire a simplifying $XXX used our completed BrightSpire five-pack five into these co-investments entered long to

geographies. in middle continued Our focus growth originations with platform high active remains a on market

team in billion. XX amount of an During originated the loans XXXX, commitment aggregate $X.X

All often of of on these first floating majority with relationships. borrower the acquisition assets, are which flowing investments repeat financing, are mortgages cash rate

$XXX that executions first quarter, XXXX. in million. amount in in loans Subsequent aggregate execution fourth for with closed investments amount so million, pre-payments across approximately $XXX of quarter, an in one commitments far we are commitment $XXX $XXX either and an or subordinate XX received totaling two aggregate an the aggregate have have of during additional of loans XX of partial quarter seven million Currently, loans resulting down. closed pay there million During fourth the commitment senior to we

deployment As net with on Mike ahead of is stated predictable noted in cash goal sheet simplify his place current in and staying and senior XXXX of prepared mortgages remarks, the cash primary has to focus focusing flow, the our XXXX, on Throughout in our earnings. portfolio by generating been balance prepayments.

of a the couple points data Following portfolio transformation. highlighting are

the [ph] reduced a and ago X% XX% X% portfolio, a reducing increased multi-family loan reduced During risk the XXXX, up office million from quick from while XX% up to loans loan $X.X XX% from reduced exposure loan from and The portfolio and $XX of reducing XX% X.X%. million $XX and XX% XX% to We constitute loan year loans from we to XX% to year new grew X%, billion from billion, rating $X.X to XX%, our now are average our X%. by to from non-performing of size our from to year fiscal exposure portfolio, X.X% exposure Multi-family X%, development overall ago.

estate investment equity; debt other loans one, and and estate two, presented real preferred distinct segments: mezzanine is lease portfolio CRE real Our and net at securities. three junior and three;

and senior cash loans and and book on assets preferred of mezzanine of comprised excluding XX billion $X.X equity XXXX XX, net the of December XX% value of in an of billion, portfolio. book value investments $X balance sheet, or net is the aggregate gross with As a

this securities, gross quarter-over-quarter, of one industrial June retention as CMBS XX the of result paying net ultimately estate and a flat, positions, all real of interest, to value net a or segment other our primarily XX Although, of Net gross paying financing, provisions investments the subject portfolio of XXXX this the to portfolio. X% portfolio book book with and million a million, portfolio. book lease year-end. of real triple-net to equity aggregate net remaining sub segment risk as of the remained gross $XXX grew of a comprised for two debt $XXX positions book which XX% increased private is value and debt the positive value at CRE was remaining This value in of result an million deployments segment XXX% value as the estate through includes preferred of Brightspire’s ownership at-share off. off position relatively four

the which five of through sources, billion our continue and outstanding totaling balance relationships, totaling side a $X.XX two combination CLOs, of liability across We sheet financing include facilities banking warehouse to manage $X.X billion. primary

availability second with its the CRE, successfully on in stands mortgages, at rate CLO million initial quarter of XXXX, L $XXX of floating $XXX executed weighted transaction a today, an collateralized warehouse approximately reinvestment company currently of in third CLO plus average by at interest As featuring million. period, a the issuance coupon and Early lines advance under costs. is of before rate two-year the XX XX.XX% X.XX%

CLO managed billion $X advance executed in first had October XX.X%. Our of an XXXX, rate initial

like reinvestment and SOFR pay-off loan the and each with go XXX. plus it window which closed, resulting that the advance in in Now the will of a currently increasing the stands static rate CLO, CLO funds, forward reduction for XX.X% is cost function a at

focused are we a our pipeline on continue mid-XXXX and plan. our to investments the we to building now third expect good timeframe. executing make CLO of summary, execute new that business We progress In in

will dividend focus payments. results. sheet in on to and grow our over to on quarter to the Chief Officer, balance Looking elaborate With ahead, turn Saracino simple, deploy Financial increasing Frank the fourth I and is earnings excess order that, year the support liquidity full call

Frank Saracino

Thank good everyone. Andy, and you, morning,

we and expect fourth results, our full our quarter mention form today. to discussing that I want year XX-K Before file later to

to which addition, shareholder I as attention the to details website. does Form supplemental draw report, of in provide financial our your supplement XX-K. like The continues section is our would available In asset-by-asset our to

As quarter remarkable metric. a previously strong key mentioned, across year results this concludes our with

$X.XX and quarter, of we For earnings, per company total million, $XX.X gains realized excludes or the losses reported share. which fourth adjusted distributable

distributable reported full per year share. also of adjusted $X.XX We earnings

of mainly reflects on the offset investment to gains. combination the tax mortgage company a to This recording million and $X.XX earnings total net common reported $XX.X sale. gain per by $X.XX Portfolio for income recorded associated share. million realization payments unrealized the and related a shareholders net fourth of net associated GAAP share in sale these the Additionally, per The securitization Co-Invest loss loans or hedge impact earnings, $XX.X we includes Co-Invest gain on gain and a sale. previously Portfolio and $XX.X the the related million $XX the obligations positions, trust Distributable held with million excludes attributable reflects with GAAP a quarter, income of the of or of distributable

recording back a to $XX.XX from to Portfolio share. net result per total book of gains value sale During undepreciated is from share preferred $XX.XX increased our the BrightSpire our reverting fourth distribution the combination and portfolio and $XX net due $XX.XX increased to ownership book triple-net GAAP increase per quarter the the repaying primarily as of Co-Invest to industrial five-pack XXX% value from This financing.

Looking in of the distributable more continued company's primarily earnings, first reflect vital detail adjustable the quarter and at the cash. the following: fourth results deployment foremost,

we new [Technical million $XXX XX originated totaling During the Difficulty]. loans fourth quarter,

portion an to and typically a equity the kicker In borrower sale income participation a addition, concurrent the profit with recorded a equity generated Profit This income the our company respectfully. or kicker reflects repayment and related preferred from of receiving investment occurs from the non-recurring loan mezzanine collateral. of gain, underlying a repayment. equity the of participation

Additionally, of into December repayments, the both recognize quarterly heading related associated these rate these adjusted full is close our of to last resulting unlevered Adjusting in share. per XXXX late ability occurred for the December, during run one-time items repayments interest earnings distributable to they're week and to a $X.XX investments. quarter our income

As Andy with on senior rates. to dropped focuses rate LIBOR LIBOR with positions first entered at with from the floating loan This earnings declined remarks, interest correlated our our loans. generally year floor with it our portfolio turnover XXX the interest investment of loan We XXXX XXXX, mentioned his of positively average because benefited to strategy weighted and associated rising book When a XXXX be throughout bps mortgages. XX in rates in our income floors bps predominantly in-place end.

the income share [indiscernible]. on such, increase earnings per to material XX As reduced with by floor place $X.XX benchmark An become annually illustrate in rate has substantially of today. the our in approximately bps portfolio based less

experience incremental related LIBOR continued money we turnover, within floors. to to expect portfolio with the However, pay-offs loans particularly

interest As to rising those floors the is rate positioned portfolio environment. a roll-off, from benefit

a share dividend, Turning dividend paying our to we business distributable performance times the given outlook, XXXX, and with year. out our well increased during four earnings, our operational in covered growth per adjusted for along our improved $X.XX

quarter. fourth versus a the the dividend of For per $X.XX we share in quarter, per third $X.XX paid share

with approximately to peers, in prior declare with we expected our XXXX Going forward, our dividend mortgage our quarter first commercial REIT mid-March. announcement consistent weeks will dividend two quarter end

Moving to XX, sheet, underappreciated at-share our at $X our balance total assets XXXX. stood approximately December billion as of

times the new Our ratio was X.X X.X ratio end at up quarter, third increase the debt-to-assets XX% originations. as was the debt-to-equity driven end senior This of of quarter. fourth was primarily by the and from at times loan

and today as availability revolving Our bank approximately million stands of cash $XXX our liquidity credit under between on hand facility. at

accordion million, The to terms bank to noted, extend Mike the with the $XXX a year, syndicate. the our terms As an earlier we million. facility revolver this $XXX of enabling feature include rightsizing amended of with new it our

suited is as this us Overall, improved as strategy our limits our to we new foreseeable current and the to secure favorable we're certain for future. flexibility advance grow manage need business borrowing able the on facility and base arrangement rates we on for concentration asset. better new Importantly, provide will the the believe liquidity investment

fourth the well portfolio compared of the risk end during end and X.X loan rankings quarter portfolio Looking change the our third reserves, at at of the quarter quarter-over-quarter the at reflects the of the sell, as ranking X.X to depth X.X to resolution. as and overall risk impact co-invest – CECL improved the

X.XX% approximately from XXXX. loans, of loans of $X.X XX million from which assets. in XX, CECL resolved. our quarter in XX, two December from Only finally, X.X% outlook downgraded since December quarter, and loans against million from reduction has $XX.X down in XXXX. the And quarter resulted improved a been prior the third ranking a provision This $X.X and approximately which our X.X% represents an were million, in risks other was one is reserved third Additionally,

plan In improvement continuing other and metrics. our repayments their borrowers our resolutions, prepared reserve remarks. and business collateral to lower in addition CECL our execute to asset That the certain reflects concludes performance

open with for Operator? that, let's the up calls question. So

Operator

with you. is proceed. Hayes from [Operator Tim Thank Instructions] question BTIG. first Our Please

Tim Hayes

Hey morning good guys.

continue is $X.XX portfolio I board growth. dividend different forward adjusted know to First you're declaring Look, of that around quarter a $X.XX grow I kind versus dividend. with now EPS the know decision, the question, but it. going to run on rate the of the some it. press with you expecting know start release about just it's to made off schedule a quarterly some I Mike comments that in in first nice about

So, level dividend trajectory of into context, how think put maybe certainly the about would be management just can the you you if at helpful? the

Mike Mazzei

follow on I could Let me Frank have And then that. touch through.

Frank Saracino

we of earnings, originations, for the we're look And internalization. factor rate Tim, -- at Sure. we in fully what from getting savings distributable increase and the the increase volume coverage -- our potential to run adjustable realized and our set net cash from SG&A us continues run Origination allow our recommend to increase prepayments earnings dividend for to obviously flow. assess earnings rate Board. our an our new

Mike Mazzei

and will where Tim, where really now are its in coming at stall What now, that prepayments. we point we expectations and we're had is dividend experienced originations in our was COVID right are XXXX. that So some inflection increase prepayments we right But the -- a do in. during effectively net we have deployment

really that starting off now. during I what growth robust a we're were what expected in given, experiencing And is, to are pay in the had that prepared so also as made And assets pay comments, you're now to off rents. seeing are we've the impressive timeframe

are they initiate programs. actually before of value-add growth borrowers some rent actually fact, the our In experiencing

potentially -- loans off. some to And so loans see we post-COVID are pay the in starting

our doing are loan on to if COVID combat now that staying gauge during any asset close they every to and borrower are modifications right are so loans paying away managers the trying And really did off. those from hand-to-hand very of

And see they're were The plans. put in at balancing we so that is of if of that's place business act right are that ahead to ahead stay that's economy well. to the And their paying really any it, the loans we're of way now. very need because doing post-COVID where off

off aren't three for And actually paying so of earlier. as to years. initial out going term They're loans the two

need that loan average what in, in and So to accelerating. loan than did do in billion, come more did we year I grow depending size, we on probably think is we last to to year. $X.X do these originations fast little need business XX% we that need of And and dividend terms a originations growing maintaining We we do XX did are plans about fast higher. to than last to the we loans. how more XX% prepays need year, Last how

Tim Hayes

helpful loans you you increasing And but job to asset a and maintaining but I portfolio the feel wondering, a just the want you're good guys the you targeting? it. you to? to think can couple growing it's loan helps That's if bit, quality competition, through there. credit have out done I while up you going the I that do amount platform's out more appreciate confident know mean, guys. maintain there's grow in the originate still But that. to competitive questions also XX% you size, in a XX% Maybe around probably that ability parameters a

Mike Mazzei

did a that. seamlessly do could we think pretty arrival with as XX ago. We years starting two this off yes. organization my ways loans in and many new year, We Yes

capacity we to think actually do we the have that. So

I solid. to Our pipeline think try loan to looking larger quarter we first do is some pretty have for the And sizes. do

I as balance MSAs. path for said, to preference larger agency rating trying are of growth, We

get So larger we balances. those loan to

XXX. competitive gets benefit they and CLO. I not it CLO plus can that, Sometimes LIBOR at say spread, will plus your all we [ph] much below did more but do or

rates. ROE some in that that XXX the see spreads substantial the some amount this did quarter, threshold, loans XXs may first with and advanced their had below because you did way -- despite And of were less our widening, of the loans competition CLOs than they getting they

in we're making beyond that sure what providing get of so are on to ROE. terms trying that And an CLO keep eye lines we do us really additional lift we our if warehouse

to So, that, balance what trying we're we that's do. but

Tim Hayes

repo target, is achieve mean higher put you bit it CLO takeout, still that's a I but bit, a going you for tighter it. on you're ROEs have going can spread for? today, little you that originate do -- I when think that to the Got assuming loan are balance, you looking a loan on you if guess, the that

Mike Mazzei

Yes.

both We warehouse when an ROE with not we the line the a We're that an on it's that We're line, the execution originate adequate at we're and current anticipation looking spreads us the looking at first ROE is to time ROEs at the all spreads CLO will -- executions. and our line, warehouse looking loan, we warehouse substantially make are sure, are CLO line giving through tighten. looking on targets adequate at on warehouse foremost. and doing

Tim Hayes

right hop back Okay, Arlington, And -- you're loans could as last loans and to those I for repayment? I'll be repaid, tough from also this then think it. if well? getting you saw City queue, nice a one one kind just loans, And around one we but in And that that repayments. of expect to Jersey Are signs predict, some they're having got Multi-family upgraded of in I couple Texas, you the a benefit those question year in newer prepayment income then vintage might X. know some just

Mike Mazzei

about of be there you and want to do now. a some Andy, there correlation may talk upgrades, these

and Let if address pick Andy anything that up it to there's left I'll let say. me

Andy Witt

Thank Yes. you, Mike.

of million for And really tracking result each is. and expecting asset this repayments, at the plan million underwriting borrower's underlying as that's plans, between to the of they're of looking quarter. business a $XXX $XXX how we're terms what In repayments the year, somewhere and

an yes, when the evidence of plan repayments. ahead assets up bit, dissipate to could it performing, you and of be something looking risk borrowers a rankings do that's being tighten at. so do business increase our we that that going So, little It's forward. prepayments indicator we're of And see constantly

Tim Hayes

Well, I this morning. the All comments right. appreciate

Andy Witt

Thank Tim you,

Mike Mazzei

Tim. Thanks

Operator

Delaney next Our question is JMP proceed. with from Please Securities. Steve

Steve Delaney

morning everyone. Andy your deserved President. congratulations Good And on promotion, Thanks. well the

Andy Witt

you. Thank

Steve Delaney

Sure.

of So, loan early generally Is past acquisition, play pretty across is of Fed has in just I'm this XXX you. you demand play what's strong meaningful. this over a this really or basis and XX type rates year. most to and basis of and going on Mike, up obviously, these points, borrower, as just the in been based and markets here, psychological could whether months? in bridge be Fed the the XXXX XXX we throughout and lot get we on experience buyers Board the aggressively -- said, the property buyers, impact to curious, Thank get taking bottom-line XX something next points

Mike Mazzei

you, thank as you've flattening such a Hey, you've well. dynamic here, got is curve terms your yield that question. it's for a in Steve question, got if and Well, of – –

in my prepared you into some affect you'd On prices deceleration rates inflation, inflationary every rates, factored side, the some rates. production remarks, it see increase that of going is have up, I may said the chain, potentially see you everything a demand – as energy slowdown, lack economic number our It factors supply And do rents. with interest nothing some you've with that of its to – single cap has for energy, rates. and the a is to generally do like got in touch that so pressures of we Fed And gasoline speaking, some of to day. would may going

fixed the Some borrowers to if the sector in. value add rate, may they decide sector. that's can, We're we're not but go playing playing in

and probably and states it, said that, areas were – generally mentioned economy, may all the other units properties value. appreciation, under and of Multi-family, Multi-family doubled, are there or is reading leaders, seeing for be no even fact except is I they housing the more Arizona I But they lack a that, some is almost swaths are of single-family we're of that the a Arizona, of there house. have Texas like where has in that are state, We certain been where seeing we've just price the matter sections of winners. think the other Having Arizona Florida. whether market seen

appreciation, sky, we're properties, there B So and new not is with Trees focused the make on deal that. in doubled. moderately a high the We it. of comp mindful just But values property housing the we're that some serious We're to very are in market. on as appreciation C workforce properties. and going being But necessarily We're and in in five, A we that be set more that Arizona, quality terms in But we're priced of quality loan are very where has have seeing several yield that the most last upgrade concerned could debt an a in quoted rents yields a the about it. we're seeing don't property seeing seeing grow in years alone. debt property in property we of those, significant. the

frankly, growth, deceleration around, NOI So having generally based growth, to but them and deceleration months. of two having welcome would little because on a benefit without in question, maybe a to on opposed on rent balance speaking, enjoy and the – sheet Quite assets a of a XX bit – for would said deceleration two we'd years half we for sheet stick my there balance longer adjustment as a cap them the – in and of growth, in bit answer as rent comments, Tim's I my rates. still some in a little

look I'll let that's comment So from that that, we I'll to. something Andy on doing would more, Away this. forward we and also are mention that,

mention make if In late can – don’t – in Multi-family. and done terms non-Multi-family we've of of you Andy, you why how of much versus office

Andy Witt

Sure, sure.

office. at quarter, the And Multi-family activity latest So, our XX% course actually of if of was was you the throughout look XX% in our XXXX, sector.

asset are looking and set we're to out starting well, that moving. classes in sector forward seeing pipeline. some as – classes, the and opportunity the seeing so generally our do it So look the industrial asset broadening where office we we and more of focused on other is as QX We're we're and into

that that is so – moving. So, is

Steve Delaney

one Thank that iStar source net book the you. just very And Obviously, of for consistent, a you. Appreciate its noticed me, may you color. stable, large sold for guys lease it's final have thing that, predictable revenue for Carlyle $X billion. to

value asset so you unlike saw you portfolio. much where your calculation. add a you it depreciated to could five confirm to there that thinking unrecognized value? that not that, back is carried core things there, I is the portfolio the at do to I'm marking comment, investment are and at just you basis? So what in You're rightly that your as But market, it but that, Do and want exceeds you you know trading there see think looking value didn't value depreciation you not book a that depreciated expect, is, that book

Mike Mazzei

CMBS huge asset five early that, loan best years got excess to it industrial So value. given need at this a the we've that Having -- and lease, long-term its had, tendency, Albertsons, short core the different assets there. one XXXX. a until the given is length answer you really, very anchored are I that an trade is I before And are to got lose it's its deal defeasance, almost little think earnings of two There mentioned We've U.S. a we is now, is, said a for which an for the that And that And where X% is the industrial, think, left, NOI its we're there. it's food a XX. really financing different of I've asset, recurring spoken us. throwing based, off the its benefit about excess Right yes. at its it's Albertsons in the facilities. two

couple is that when now on And that consider a just years a asset, didn't value that would as the from lot so, we something potential in heavily in But of it. we that based up transaction. defeasance own there locked where on weigh yeah, of is

He's We've another it's is AA for said, asset. a Equinor in The nodding. the is expiration other He the a I headquarters rated lease. years. [ph], about a XXXX the asset Norway, based believe, Alex non-U.S. yes. It on It's currency hedge, got two tenant. Stavanger,

today. And So XXX hedge that’s And out yes. a of roughly it's US$X kronor. got we've around that

we we So at one to we XXXX. see can maturity, is debt get something We're mid-Xs And would XXXX. when this at those the such less and about in think and we ROE proceeds that revisit have we would better there tenant the if get that game and well. on closer in is can extend be hedged the at refinancing point more maturity a dilution with I the place, shot it where out debt to in with the where a matures that getting that hedge

value look get frankly, of sold but that where non-USA Fortress, we to can So to to get we really might look maturity, and we And we XXXX that its that And get have lease sell, be asset those shareholders refinancing ask I may if tremendous we'll in, that we be as can if to we assets given listen, both to extend is last other, non-U.S. place. we lease value we of would one see at have that in there quite an amount closer the dilution, assets and bookends. based. extended One, can have. our Equinor the and

Steve Delaney

any comments. that on they’re you. sleeping you night you've got your have certainly, not books. certainly when Well, I appreciate at assets Yes. Thank those trouble everybody's

Mike Mazzei

Thank you.

Operator

Raymond Stephen Our James. next question proceed. Laws with Please is from

Stephen Laws

Hi. Good morning.

we’re has thinking is office multi-family little of supplement I touched the looks kind CLOs? in and the most you're is other from this largely the volume? on Is like on that expense talked answer focus things or transaction types. you've a seeing but that Are assets bit think volumes, of quarters? unchanged, question. that simply Andy grown you retail really other Is much Mike you you in the property all of the hotel few the I what saw property I at at Delaney's multi-family know, types other about -- you into past think, of done mix, significantly or it the haven't Steve But multi there and kind to your away of portfolio pushing to and the the financing put CLO you're looking those where about, getting office

Mike Mazzei

follow balance don’t – some wants. why give don’t a through? bit the execution, things. We why to CLO market Andy, It's try both I'll more you and you CLO of there context what those little of

Andy Witt

Yes.

tune really been is know, to and about the to you think, our offerings. I to of exposure CLO seen function to touch on A know, of the Multi-family Multi-family asset a in XX% that's you the you things. get couple class; So majority been strategic where initiative is the market. very the of a more of lot and most what skewed, you've investment there did underlying happening have portfolio more One, of sales exposure of the been what's a it's two, and and

more we're that seems opportunity. be the where in some QX, being you to saw So office the activity on seeing said, front. That

the hospitality attractive post-COVID. starting of asset to more are some become like as classes more there's visibility And other

So, a been. opportunity to been one the wanting get where it's of and function two exposure has

Stephen Laws

is the And Andy. know, balance up for where metric? see Kind you you're year. mentioned where I Where the portfolio going? now. comfortable you of That's operating thinking you I one that like kind Thanks, kind Great. for believe, think operating that last of, about Andy, you at ex-securitizations leverage flat of are X.X, do the sheet of end X.Xx

Mike Mazzei

Yes.

do ahead, I see. Frank. So Go

Frank Saracino

to You Andy? take it want

Andy Witt

No, Frank.

Frank Saracino

Steve. hey So –

in the side to. a kind where where but us that of line clear, know, -- trading, of is we're know, of put with you increasing you today we kind would us over get that see year, and ratio going the high times. X.X know, know, of kind as projections So, comps That to our X.X are that course see -- could are very and you on the that you we high is we based

Stephen Laws

it. That’s Frank. helpful. Thanks much, very Appreciate

Operator

Riley. with Please Our next B. question proceed. from is Howlett Matthew

Matthew Howlett

for question. Good taking morning, everybody. Thanks my

closing how for you buybacks source a First are be you runoff significant I'll stock discount excess Mike. and want it? if but to again, as of price you, undepreciated over -- capital I one go or that looked why at have is wouldn't at considered the know ask book Andy is and On look to nation, there you you do the why repurchasers this or -- here?

Andy Witt

all, for the of welcome question, to call. thank First and your you

Matthew Howlett

Hello. Glad to be here.

Andy Witt

bought DBRG, stepped shareholder. -- speak shares They'll up largest price. I at in -- their well its back, when team stock now, really -- call. this and of secondary to move needle. buying the is think roughly X.X going The a for $X -- are you million -- management the and a we billion think they don't the offering, I Right is management collectively holding and share address quarter can't we when executed team DBRG don't the know, our

I to Whenever big we overhang think where a sure. -- With yield is on seem well a potential X.X share XX scenario, back. that seller. is as to which that going pull or part. a the somebody a it's be an that of million price, dividend who we already, get very level They've for year. to to XX driver our million past unique working have is regard we're on DBRG, the shares you this Obviously, sold

to day and here supportive may back them we as market this team So would of you our I now, our appreciate from look shareholder. DBRG again. BrightSpire, expectation is earn that and incredibly they at come the support tell every Right been largest has that to

our dividend in times increased We XXXX. three have

the of DBRG. out we've speaking, hold objectively for of the taken So element opportunity cost factor less

speak so. but chose to thinking I can't So they more that deliberate more perhaps, would do be them, again, be their when of for they execute they they if so in can about perhaps could secondary,

sheet buyback cash what we opportunity does come secondary. And and what there another do pricing. or is chose we much so and we not sheet? have of can they for participate terms million to do would And to liquidity at or number most selling then think balance participate? shares as they that the to a at be there, I How X.X of look look another us amount we here again secondary? would potential with would balance Do they to if event market DBRG enough would left importantly, factors, on ourselves the have be should be the one, our away rather is and we in would whether is than And with right to then occur?

would a So right cash plan to one hand deploy said, say, sheet going I focus. Balancing loans. as into we on now, add the deployment is that's balance balance to business sheet number And move the we're amounts that if raises shares when something think and time, that could back than point their in just to of a quarter. small whether contemplate we would I larger do we during secondary, do at DBRG any buying

would happen. that of the reassess it depending the we to end opportunity the we stock toward is. wait think for If price were doesn't, on can So year I

Matthew Howlett

that to would like subject of pleased I I'm the the on something that all, of first Well, company hear consider mean, pricing…

Mike Mazzei

these supportive I sold outside sorry for we just are Again, my We you. and dividend. want very have no a team have interrupt I'm in we this do I are the supportive to emphasize, emphasize. and own saying XXXX. the of company. want been are to information. management They've What paying not speak to I'm looking thoughts in. here, from They

they decide any the don't of them he taken but opportunities as is so what a with cost holding some as -- the to have now dividend, to may paying to do. information we've if balls it, We So, not staying of out that.

Matthew Howlett

pricings on given those that, but Just know it near accretive they I I not in significantly $XX.X, wouldn't your did, the saw anywhere issue, hypothetically, mean, shares these any -- to follow deal term be last they repurchase to of you of if $XX? to

Mike Mazzei

if our really call consider at can't that the arises. was until on It situation had and it. we But we make in look But pricing. would opportunity place, liquidity that that balance and depends sheet we there, math, the would

Matthew Howlett

and comments. the glad Well, I it, you addressed Great. appreciate I'm

the On being capacity look that you are company that terms one -- do that two of that things mentioned good market? of last so know, would peers And capital that quarter won't so on first, there We've at then to perpetual I -- but And you every are in preferred your things but with they we seen we day, you're the if that. note, some speculate, last could at needed look capacity. where hear BrightSpire guidance. capital? certainly is to operating about expense out come

us the on any to Thanks where up here it real expense given get shine what terms to to in XX potential you ratio you lot. that XXXX? can you the a guys guidance people, there's guidance just of think for internalization a for tell I to run

Mike Mazzei

again, not the how the now cash venture we And of the expense I'll take question that if be on would to will Frank can. do off pref on that. the early rising I don't we to pref do start pref. QX factor a value on with a the I market during but looked and to in the have the given did think especially could net earnings, We've of right but affect capital, have hand, then the that He year, have balance that what Okay. much sheet say, would at or add course driving doesn't to for DBRG I’ll and we all until does accretive We Frank is with be rates acknowledge the would just could repayments. cash QX. consider pref, wants the diminish interest something let expectation rates given and its another holdings. doing or in that the fact we add pref

or say, factor the year-end of beginning equation. do pref another year. not the would be as we course would But the all-in, potentially, from us the something That I look expect said, that's of would during in So, I XXXX. at

Matthew Howlett

Mike. Thanks Great.

Mike Mazzei

And Frank?

Frank Saracino

year through pay rate. run million D&O will and $XX $X on going the quarter, quarter during we basis $X we million into we that the insurance million, we're run achieved year stay which expense around rate little had bit then $X.X per a go spoken the that the million else, cash or to to tweak and side, go but And per a increases on everything and as up

Matthew Howlett

hiring significant in no other achieve to words, expectations. So, origination

Mike Mazzei

move that would materially I anything that number. don’t think

Matthew Howlett

Great. Thank you.

Operator

Our Bank with of America. is Derek next Hewett proceed. question from Please

Derek Hewett

provide January already on color additional But carrying Good resolved quarter. of addressed. at you value? end and congrats loan morning some the could everyone was specifically year Houston that questions Multi-family on in and that were it resolved the my was Most

Mike Mazzei

loss one-off book. where result factor of that does housing CECL asset. three was $X liquidating part assets plus and included remaining in student collateralized CECL there versus pack that was a was That a reversible property was was loan, net It The on -- Okay. fact and And that the last that. deal. in three was the borrower million the

that loss. So, $X million a was

Frank Saracino

correct. That's

Derek Hewett

Great. Thank you.

Mike Mazzei

team the the you. joining for way. you by Thank Thank

Operator

now reached back We over the to our turn end have question-and-answer session. management like for closing to of it would I comments.

Mike Mazzei

we Well, look today for a joining day. in forward May to speaking thank and for great everyone first us again you Have earnings. our quarter

Operator

does today's Thank conclude This you. conference.

time this may lines You and at thank disconnect your for you participation. your

BrightSpire Capital (BRSP) 22 Feb 222021 Q4 Earnings call transcript