- Earnings call transcript Q3 2022

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Operator

Greetings, and welcome to the BrightSpire Capital's Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Palame, General Counsel. ahead. go Please

David Palame

welcome conference and Capital's quarter third Good to earnings call. XXXX morning, BrightSpire

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

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

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

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

an to on share website, of certain $XX.XX the which like also reported call morning results. undepreciated I of the information is this per measures Mike. book XX, was over presented the supplemental and The of this to share release to company addition, $X.XX per $X.XX $XX.X value call of In measures. net would recap released share, to September distributable I represents XXXX. of non-GAAP $XX.X XXXX are measures per Mike, million presentation, earnings before or GAAP net brief on explanation available and presents of or now believes $XX.XX distributable company's company share. and turn earnings reconciliation financial attributable company's financial company that, our call the turn over per financial GAAP $XX.X and provide of loss useful appropriate why book common quarter The And reported stockholders such adjusted non-GAAP the I With as to investors. The to third will loss million, and of GAAP million, value a

Mike Mazzei

Welcome David. you our earnings today. joining thank call, for us and you, Thank quarter to third

not past calls, the to the Fed's alarms to followed three rate been pricing stance result current increase XX say, Fed's markets we experiencing by has sounded seen inflation. epic we increases today, it self-inflicted The misses Currently, are forecasts. a and situation During levels increase inflation XX earnings XX as market in due later on a of basis interest interest Fed on aggressive substantially point are the rate years. December. point inflation Suffice in basis a in

at and We rates Fed X% has a a single-family Fed increases bias consequences hitting expect to end XXXX. of to others rate concerned recently the the of mortgage quarter the like dealing the we With with later. pause mark first and over high XX-year are the interest overshooting the

million, To throttling of this higher maintaining $XXX of our point, current originations today been end, balances. To is cash the this presently, XXXX, first impact has been risk-off investment of to the environment. over backdrop, expects half XXXX for BrightSpire liquidity we back million our is have rates course loan of cash. unrestricted this current and of More preparing as remain Given the BrightSpire rising and $XXX the challenging. which

loan been commitments a fact evidenced our were that has Our commitments few views for Since pause mode. new our that on loan early back in market by conditions in time, pipeline the last cautious wait-and-see are issued May.

for of balance as For has lending quarters, our past as a said demand sheet and bank estate been two commercial management, now, credit focus there liquidity our Furthermore, as liability lenders. has the significantly the consistently real contracted. on is maintaining asset have scarcity the we and during opportunities well as protecting

the On now X%. all-in to bonds In new come mid-XXs with virtual wide experience yields very issuance the prices dollar the spreads at standstill. attractive and to trading side, with the CLO has AAA-rated continues recently a are issued credit in market CLO capital markets secondary markets, over

later secondary has in in loan risk the transparency. radar assets been one first However, Fed of XXXX, with the ensuing of until order adjustments just Long who loans our would in carry Despite about specific credit Along the until focus address We allow City public in of been mezzanine is to City CECL have is various now narratives last risk-on loan of City loans downgraded we five we, the pocket on Island same as loan $XX cross-collateralized. on and The both are We effects Frank among philosophy first for loans our our have an more of but to a rating XX loans has Island disclosed loans. lines, This the is four this to with Island these loans mortgage position. disclosure bond therefore, of since the our first quarter. quarter an and a expect And carried investor first has quarter recently and becomes loan supplement. cover Both now This of provided investors. come address I October. activity weighting not risk of office to loans reversal to defaulted number management, do million like XXXX. general trading specific his screens invest meaningful along high to reserve borrowers that levels improvement narratives of Long to borrower a in Both third a extremely detailed in opportunity our not see lot negative a thin, the of there our certain not reasons. dovish provided those spreads comments costs, a of also Long continuously have quarter sponsorship capital. provide out with X to consist for attitude to constituents our the filings. associated in will It X reserves. investors our

sales payment which engaged recent want the City adviser provided to an value out today. number and Island asset opinion of we still this is both performing investor to second an I Long led reserves. default, loan point loan; of Given specific XX current as these that loans, supplement two for our who in

loan While we months. the of cannot outcome second speak the specific the coming potential similar reserve that on in behalf the borrower, of on a reflects

with months. are resolve to borrower effort in loan XX in coordinating We coming closely an the our number

we consider resolution said course process. Given here, current in our have all will of I market decision conditions

possible vehicle have of ownership providing quarter financing updated filings, today's or itself. this narratives in include underlying October where taking is reflected Also, removed provided loans. on these property both Please already third to ruled of note not that has outcomes from out liquidity have numbers. and financing in loan could been we our his the We please refer

Finally, that market great will and Andy would With and liquidity the new over buybacks. turn that be this dislocation. loan will few originations in stock be to is bias over undoubtedly will past all take our the lending these quarters precedent like arise call very But opportunities clear, things equal, Witt. that future, now from immediate to President, I to generally that, over Andy? our

Andy Witt

highlighted. liquidity of you, organization the the management toward Thank everyone. Starting reasons and Mike the morning, began and in portfolio to for Mike, good early focus shift QX,

universe previously noted, changed, of originations As and the followed. anticipated opportunities continues our and velocity as new actionable priorities decline, the to of have has

are present, of During there million. commitment closed total no three new execution. quarter, amount the third And $XX we loans at in a loans for

$X.X at repayments. the the a loan currently and of decline During assets billion. portfolio in loan originations quarter, third slightly stands $X.X our new has billion been and total in grew Offsetting slowdown

we million partial in of two quarter in $XXX we repayments received partial During the five paydowns. paydown for and loans and combined to loans end, across two have a have third million. full, one paid Subsequent $XX quarter, additional total off received

macroeconomic environment, sponsors markets certain anticipation the point, longer quarters. expect environment, created. anticipate the has repayment remain couple value of of to hold even At a next low where we elect Given in cases loan will capital a better relatively been over in volume will we meaningful properties

also aggregate $XXX modifications subsequently were forward and for We of million extensions $XXX loan and there during the UPB. more an right million balance four moving of incremental an principal anticipate extensions by modifications for unpaid three quarter and

interest since portfolio As the attractive. rates financing alternative within continue extensions to anticipate will we more loan options less be rise,

duration and rate in Fewer across a expectations earnings to slow in interest Our our and in loan is repayments duration that short-term. will elect rising increases borrowers well increase an the expected for bodes environment repayments portfolio as extend.

there recognize absorbed without from borrowers. amount we be that rate-related to can of the limit downs loan pay partial increases a However, is

comprised is or gross of portfolio. is quarter. of on and book loan excluding our is cash an XXXX from As $XX a balance loan rating of X.X, with and unchanged of September billion XX% XXX sheet, the average book assets portfolio and the million last size The $XXX risk net million value aggregate investments value $X.X net the XX, of

backdrop, of represent home interest our Multifamily volatility, are portfolio, loans XXX% portfolio, and estate single-family is development slowed. rate of have had constitute loan new rate it loans mortgage and XX% rate the real which surprise of inflation which First floating sales the all given dramatically XX% caps. no that of of

to multifamily expect occupancy costs rates remain replacement continue high. and We to

with balance of loan Island has and granular of the the The located construction our portfolio growth collateral ranging XX% growing loan or and Long portfolio sizes weighted at from above XX%. the minimis the is markets loan to have the million. the risk exposure $XX across average portfolio, occupancy office. to is million, national rentals making up the XX% our office rate. the comprised addition, loans portfolio $XXX In industrial The rest. remainder is composition and of properties collateral hospitality in Most The loan $XX of properties with underlying are de includes that of mixed-use City average million is excluding XX% average

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

issues. borrowers portfolio cases, in delevering. actively certain upcoming remain loan and lenders and source tests is pending regarding extension with While in this for financing loan-specific of asset and result We modifications dialogue mark-to-market, active our which manage in not performance, may we the maturities, credit

which aggregate As rate. under lines availability a of approximately represents million XX% warehouse utilization today, $XXX stand our at

billion. liquidity solid and market unencumbered. loan XX% present, is our sheet we $X.X quarter remain CLOs. totaling management produced portfolio, our In warehouse CLOs has At uncertain the outstanding two approximately is have given on and third summary, collateral to on and balance of the XX% been environment. results, we contributed X% Additionally, line focused

Chief third results. the Saracino elaborate to over quarter will I the Officer, Financial Frank our Now, turn to call on

Frank Saracino

Shareholders the morning, your I'd on to provide The good supplemental quarter report, details to section everyone. third our and Andy, website. like of does is continues our you, which XX-Q. asset-by-asset our draw Thank supplement to attention as financial available Form

per For adjusted or quarter, the distributable our were earnings million share. third $X.XX $XX.X

includes million share. Island Third was or Long quarter loss, reserves $X.XX on the of which specific $XX.X loan distributable per City million $XX.X loans

Additionally, per for attributable or the million specific the third $XX.X Island of GAAP stockholders million also net net quarter, GAAP company the City $XX.X loss to loans. includes reported loss Long reserves total we common on $X.XX share.

from and During bridge decreased to value Norway I from value discussed interest in $XX.X. offset the in would quarter. is to primarily the a our office The per share earnings reserve. third the third rate. reserves CECL increase assets, quarter quarter, undepreciated second versus decreased book while the the lease per primarily specific benchmark previously adjustable total is $X.XX $X.XX FX rise $XX.XX the related company decline partially net quickly recorded driven $XX.XX share, our by translation decrease by GAAP like to distributable book net The the loan by to in of driven $XX.XX general

run received we distributable a these fee. share. adjusted XQ, $X.XX is one-time for participation per profit loan quarterly closer items, and to rate during Additionally, Adjusting our extension non-recurring earnings

our the an continuing with XXX in earnings for the add from report earnings remainder deployment first Furthermore, due annual share. of XX are repayments, rates slowdown that in we while into our rates. the combined reduce that increased is our the or It to million to worth base quarterly benchmark data to things dividend. place higher loan $X.X rates quarter As and financial XXXX, point of to be to $X.XX pace cash, earnings points. spot XXXX support to the in rapid equal third year, basis per noting the $X.XX recent in in month the to benefit September XXth basis share of being one level well-positioned adjusted have about quarter, levels by also continue already all rates per directly more the We rising from with interest illustrative correlated increase would roughly maintain provide distributable of supplemental approximately and

However, a are we as the making absorb is our can repayments. Andy to amount remarks, rate-related without loan there in limit mentioned increases mindful very his borrowers that that of partial

to our third of share, dividend the given for the earnings performance, declared prior now distributable unchanged Turning a dividend, our quarter, adjustable quarter. from $X.XX we per

our assets as September stood XXXX. to share billion XXth, of undepreciated sheet, total at Moving $X.X approximately balance our at

Our was at debt-to-equity debt-to-asset ratio quarter. the end third second at up from X.X ratio the our and of times was XX%, the X.X end times the of quarter,

fall respect Long In With share the facility. is on at cash between approximately of quarter. of stands financing addition, today availability to shares the City of our did liquidity we million net on bank any down $XXX repurchase credit million repurchases, loan. our under Island not and $XXX the under hand paid Cash hand during

have approximately million $X.XX. $XX of However, at X.X shares weighted totaling a average repurchased we year-to-date, price million

Going may to given levels, forward, buying and over environment a said, we at takes the That excess liquidity, extent and purchase and current to the the evaluate while is have stock. our we value attractive it shares and be precedent relative focal overall mentioned, back point of liquidity, have these both will key buyback. Andy Mike

his two reserves we mentioned Long of comments, non-accrual Mike and in ranking, on stat. City the loans the quarter, as at third Island placed Looking risk during one

loan XXX% exception book Island this the of Long of City With performing. is one our loan,

Long took on asset-specific Island the million. earlier, loans City $XX.X totaling two reserves we noted As

Long million general general In from addition, the increase $XX.X lower reserves $XX.X CECL the million of provision quarter. primarily associated asset an million, million, quarter. was CECL the City $XX The loans. quarter our the end CECL The is reserve Island general combination a approximately general from specific the at with by driven of reserve $XX was of prior elimination reduction CECL prior and of the

loan the remarks. Long call Island the changed at risk to from thereby questions. ranking of That sale let's of was Altogether, credit ranking the loan office investment. the rankings. ranking Turning third upgraded assets, a with of underlying average quarter five, affordable of from a that, was ranking to due the improving risk Both risk levels. quality concludes four a City end our quarter one to three one loans the the a four to of our risk risk the unchanged X.X, from the Operator? prepared And second for portfolio open of up

Operator

Thank you.

comes be Please, now question session. Your Eric question-and-answer a BTIG. We will conducting [Operator Instructions] ahead. of first go Hagen from

Ethan Saghi

This Hey, everyone. is on morning. Eric for Ethan this Saghi

can performing the how new San brand the reopening question, about is Jose Signia you Hotel under spring? talk after First in in

Mike Mazzei

pretty for and is joining XX starting us. The Hotel Occupancy opening They're up. well. Hi. thanks Signia do per to about rooms month. Thank is you,

rooms. There to on moving of they're towers hotel. opening the at terms think tower I are the second in two

loan soon. couple coming some said, been trending think months. on higher past that has that And over flow of occupancy, as positive I expecting the I I cash we're So think

pretty fourth and So solid the quarter. performance a we're in occupancy expecting

Ethan Saghi

And That's great CECL question, reserve City two the then, you going the you know down, forward? general thinking just but how specific up went I to Island hear. loans. went are because last of Long the said, about

would give there, If that just you more could be appreciated. color

Mike Mazzei

as said I remarks, on in are had done result loan we ahead. Long think, the them, the months loan Well, opinion of in Island that we the first of value an potentially has the I with loans, the as anticipating second the to as City regard prepared same both

rates, that time and market. very the up lease realistic in in I terms of given were rates think, softness rental particular, of there we

that stack It's square at was now, $XXX so, a of the originally foot. effectively loan a of the was loan basis under almost And one-third when is capital that there done.

in the I million, excess $XXX about stack think slightly the the equity was in entire with deal, of $XX million. capital

realistic just to want with we're now down markdown. that. of And a-third So we be the to regard to about

The some antenna than number about and as XX. more XX% that occupancy signage has has second loan It's number loan loan, income income well. loan occupied, XX,

breakeven. almost expenses, operating covers loan that So

loan less less. per It's foot in. on square So was the that also going markdown dollars

the I the in loan, on square with think foot. a reserve like basis specific $XXX new the that $XXXs, is low

we the comments York realistic So given the those be CECL? I current conditions any market. to want very on anything note leasing loans, in on remaining Frank, think there's of further New there don't in the else CECL.

Ethan Saghi

right. Got Appreciate it. All it.

Mike Mazzei

loan Signia I you point on XX% alone, that loan want the levered mentioned, also out only to its that today. that the borrowing just is hotel

Ethan Saghi

Great. Thanks.

Operator

Next Raymond ahead. Please Laws with go question, Stephen James.

Stephen Laws

your guys what appreciate asset details at in it How group, off, I Hi, color your rating? over remarks. big of Is be? asset liquidity maybe you you involved a management additional will good a talk how first the morning. little on that. Is it you involved? really prepared team you six some focus it? point that? focused At Maybe Mike, months? before management on X do Can about get management is on next asset

Mike Mazzei

daily often Capital speak previous information what's the keep able Signia updates Markets, where correspond question basis. properties what's on banks on we the When about a with flows the banks directly borrower on going directly at into a would I get substantially of country. very hands-on of our to that abreast with to close Markets, Head in-house, relationships management, a is along borrowers the We I works talking which our We're around Head that with banking number of people who with servicing, in our involved cities have and Capital to located financing CLO day say every in and going had every he's the to we stay asset. special to on loan, of our asset there.

REIT not always when And you're and taking of advantage external. the in at ask you're active to quickly business asset any of we've side every XX% asset that them do and assets mortgage our on to very the -- they and management in that the expect to management. information looked in-house We active banks at outsource want has been So questions. leverage, come of running whenever and updates asset be every

prepared have and be time and to getting you're so stay And the them when you real giving of ahead that you're it. information banks sure make

Stephen Laws

that appreciate I color the on Mike. Thanks, process.

talk many in know Moving average increase whether that -- higher what maybe in peers the color than how maybe about by in or mentioned absorbed payments from stress weighted have as some of more And continuing just the caps caps? kind this at in rates loans, the Can around borrower much How that money they're once, to the of some higher provided with prepared strike? to loans borrowers see you do versus curious remarks, some them? the of the caps? other I'm of I from some that. here, have increases of And point counterparty payments.

Mike Mazzei

working don't of closely to very President, over we loan that today. Andy a Why turn extensions modifications he's that are going with Witt, and our on lot Andy?

Andy Witt

mortgages answer acquiring Thank caps, question condition and our caps you. extension And to is rate XXX% have rate cap. another senior your for on of

very something on that's onset a on go-forward we're then and focused the that So basis.

cases, In then modifications plan expect largely in acquiring terms coming recent meeting to with recent also about another exit one positive we loan. result modifications the that working as that extension quarter, is obviously, And a keeping in with bit number seen those not resolution of to effectuate It's a quarter. in exchange associated have paydowns to loans, business Those cap. noting a And extend a get the fair loan of in of been the a hurdles. the that, we've on to the borrower with the XX% for or the worth and we've for -- release the that of provided of quarter.

Stephen Laws

any asking that Thanks, the that potential that modifying XXX-plus think there about on floor that do what modifications? these in you Andy. a the out mean, terms you can And you XX to a move you're you're you on willing that was – some follow-up gives mods, return to on when and you're improve? look maybe I and LIBOR or to mean, the these, years? basis points I modify up do as X are terms how guys give

Andy Witt

a really It's approach. Yeah. holistic

when borrower, we're acceptable us, looking banking for So for modification, the what at we're sense looking what a what's counterparties. makes sense at for makes our

may include rate. So in an that increase

table the So really we're potential modification. everything discussing is and on a

Stephen Laws

this comments, the Appreciate Great. morning.

Mike Mazzei

to Let asset the to just management me add question. back connect this

working we We we're the are, borrowers, in as quarters on call, said advance. with

intention are to is We pay we're that their despite anticipating off loan, anticipating potentially that likelihood the getting less.

preparing those as reserves, it are an things of cap, the down Andy would they with borrowers pay replenishing so to And the what extension rate for mentioned, loan, be whether us like exercise partial that. we need

of So those advance we with are working these dates. well in borrowers

Operator

Chris Next Muller Please ahead. JMP with question Securities. go from comes

Chris Muller

for Thanks Hey, for guys. on I'm taking my today. questions. Steve

can at in fine-tuning the at about you near-term talk going So environment? obviously, looking to be your XXXX you're the structure CLOs in So thinking how XXXX about least. this to liability priorities, aren't that

So just helpful. be the type of things Thanks. you're looking at would

Mike Mazzei

I just think market. of some stabilization to see what is the like we'd

in So much as anticipation assets move to around. to what possible now, needing we cash is, are trying of warehouse right do as

the Island that financing unencumbered. now asset instance, removed number Long XX from is asset For We vehicles. its City

in try may right they So down the should look to next anticipate maneuver may we're to few loans what to or needed some pay out capital go that asset be cases, to and sideways. do quarters partially loans now, assets unencumbered what over trying

opportunities game us. high to we're And into to begins of probably to more right I more So deal with get much capital there few right loans. asset But next on deploy the for on to now, bar of plan say, now, would start right much where enough in dust the couple quarters, new a get are next the and we mode. We pretty need management more there's adequate is, months think we on from as confidently how market handle get then capital based the try is can if an capital come that do capital we of up, trying But that to this the settle, to that. now, we our visibility a more than have to over planning. all it

as with So the all sure forward said, the is liability I working more portfolio management, stabilized. banks, next few closely make to going months, asset borrowers

Chris Muller

Got are going it. market on better then there in on loan those business waiting characterize more That's delays extensions, to the into, there? sell borrowers you for as still a helpful. would And spend or

Mike Mazzei

you that? would take Andy,

Andy Witt

a It's of both. combination really Sure.

behind on plans are capital their we markets Some of additional and business various certain result borrowers or refinancing delay think a loans as as factors forward, may move any And time. we the their that for of looking execution.

So we see a combination of both.

Chris Muller

Got it. the That’s helpful. taking Thanks for questions.

Operator

Matthew question comes Next Please go from Erdner with ahead. JonesTrading.

Matthew Erdner

for What are your quarter? Hey of guys. upon of loans guys' they rates cap some from expectations where On these exit Jason. move and if for last

Mike Mazzei

speaking, are XXX points. I and office probably up assets, uncertain depends market really think in basis is rates a squishy. finance to on in very terms place pretty how assets. of market asset. The generally In office XXX become It and that's to cap value

of portfolio roughly that or be really your where office over So with as we're out you're loans extend. it's going It's are office in of assets. really balance than forward, and you is the about think with there's one our markets point roughly The XX-plus of year next multifamily how pre-COVID office are is less half you pre-COVID, I how things XX office and maybe loans are to this the I'd of two the that -- billion grow think loans, $XXX for dealing I loans nature like million. leases short-term it's loans, of consequence. And deal in those growth, can going the half assets, that the of our loans $X.X the with of out --

the there under million. the is loans So for size average post-COVID $XX loan

Island sector really is away same million, other there. City block total in size a new us. million. loan from are the The one $XXX amounts million concentration, $XX for large what for are That's borrower. assets average for loan a were The Our concentration loans Long office $XXX each

That going those rolls in a So to those granular And of office going and be market is finance difficult think of rate we it's the I to of the assets. terms question, be or work-from-home have market. and coming so to a your rent valuation in in really, cap impact the very portfolio. year terms very ability

Matthew Erdner

And you. like? What high in originations. to helpful. Got that? like look Is That's areas that it mentioned multifamily on does bar then new growing or you stuff committing a

Mike Mazzei

that can It less yes, that the before, we growth multifamily do get other plausible It and require same we will leverage. returns lot and that be MO is assets areas. a had we

sheet We that are market really that up I roughly deploy eight, might don't million, you equity. note of the with million be $XXX of making have where we bonds on the the is as bonds, to to have a seven, buy opportunity XX to right fact securities on behind you what buy -- AAA balance the of you $XX of said XXX trading prepared remarks, discount ability But X% each are in loans to $XX might end out your huge put buy there, the CLO watching as bonds because now. these million, to yielding one view them consisting could roughly loans, XX of

We in terms punch two of quarters. the CLO for way above I falling the less to leverage. don't we right look opportunity. next making market an buying said, we at XX%. And loans get need preserving we returns, But think with there as capital really back is now, secondary as new behind So stock the and can

Matthew Erdner

Got you. you. Thank

Operator

ahead. B. comes Next from question go Matthew Riley. Please Howlett with

Matthew Howlett

taking Thanks question. for my

we about guidance, is where dividend provide EPS. how nicely. important covering but know dividend Just dividend on it that How on the outlook to and just the think don't core continuing you're you, is keep payment I to it the and rate it? you the cover to Mike,

Mike Mazzei

why is very to the despite we had which we it's coverage and dividend think raised that important We haven't date. the

a going sustain -- was of that Our originating money our which year And on that now help new to prepayment have the have expectations unheard our loans. our ago. would while prepayment the The there. for thought slowdown also X% slowdown despite is are cash, dividend a earning we're given we fact not we're we

some have in near So term I stability earnings think quarters. expectations we that the in coming are in the our

overall, can't pointed put a reserves, underlying dividend are interest expect going think deterioration issue anticipate maintain if we require but want interest the say to rates borrowers moving make in sure That's that in at the with they the is, XXX you they the sure portfolio. kept past why right new important rates sort better But out, asset as a quarters the and a into loan of of portfolio up quarters. if Andy stability the we some rates work rate is that over conservative cap and we perspective, not advance XXX, don't I make just it's refunding to very that up. of coverage now, we level these it as I up

we move that early said they about I going it do rate what were sure backwards. were that talking Fed have rises. and was to it to where And with make QX the we knowing the As in to on, we wouldn't kept dividend

Matthew Howlett

are securities of to cash up I appreciate levers and continue net sort may you cash that. assets portfolio, a delever? sell create have and mean would any liquidity, or portfolio a And then securities up, that sense some just can there you high-priced something to off free free real be estate coming to on pull to I you lease where of

Mike Mazzei

Okay.

we have of now, So right cash. $XXX million

have an facility. We undrawn credit

that terms we emphasized loans not that feel I we here shareholder anything balance. equity which of -- there like the pre-COVID, the on So liquidity around we moving our a we focus is was that done have to we're to of do earlier to size, we've sure especially loans relative high do have loans, with why making in out ample

shareholder we were billion of loans with portfolio around. where loans made relative $XXX we enough that doing and We a our $X.X So at everyone equity. sure can we of million, move to deal the Albertsons The was that cap. $XXX own X granular equity, not million them knows,

investment no happens credit that a Kroger said, the with perhaps rating idea the out be But what I in as year the happen, way that have half were to merger to could We will now, from If XXXX. yeah. on and grade. with that's go

XXXX lease, very long-term It's the at could that triple financeable. minimal in So -- this pay lease defeasance We we point. a off interest have CMBS there's with asset. net

need tap something think can have that is to we right now, do. it. that So we if not that's for But capital something we we

Matthew Howlett

the – one last City. And Long just just then the Great. the Island

written foreclose? there You you've to I a preferred, Is mean, would said the any value. in of, you want one you're to is position. fall, the sort senior once mean down I

or Just best is the curious like what look a from what here? on here could workout exit

Mike Mazzei

the the So XX paying. current out borrower, to of number is loan respect and

Matthew Howlett

Right.

Mike Mazzei

the loan, loans just With all component. a anything, with loan the that's on perspective. how we say under exit a of we property the we if quickly that possible. have said But are mezz. more is I'm can say behalf there. that. and from in not see sell we we of time are remedies and the regard our instrument, financial why a similar we allow depends because move of our the pursue potential remarks. to it What to we are at working number do. speaking to ideal outcome the thereafter mezz That's that property LC we the to on so joint that us of That prepared a And not that's possible. But not We're yet, aware there's possibility Right see not point that UCC foreclosure. an now, the ruling now, mezz potentially is the did defaulted I Right the have do any we out market. XX, small I'll with borrower. on borrower are we anticipating loan both would that but That's

market that may not our something out. we're and rolling us That's the We asset. entail decision-making, owning in ultimately will conditions consider

Matthew Howlett

more Thanks I Got lot. appreciate it. a for wait disclosures. you. We'll

Operator

Jade from Please with KBW. ahead. Rahmani go comes question Next

Jade Rahmani

the taking a the reflects analysts office. getting think Thank you that playing deals sure of market, you for are your in thoughts longer-term partly remote do lack driven are maturity, primarily on questions on And the office specific you We're liquidity, in issues I'm work the question. an get and by to impact avalanche out believe space? liquidity do also right it of that coming office on seeing of wanted now. reflects or in what's reserves the spike CECL other to I call the

Mike Mazzei

very, that. more regard liquidity large maturities to certainly it very require are you portfolio. reflects with some think the institutional assets speak both issue. have And I I an if can are to immediately, concerns there some only that our capital,

pretty generally portfolio is Our granular.

there $X.X the As for the million coming loans I we XX the with have about XX positive that of average in we two I the said there is post-COVID, earlier pre-COVID that Island loans. Long Jade, now, have some some the XX%. loan result we to billion portfolio. And that may to regard have segment regard number in includes exact what bigger And City and with assets. did assets office size have we quarter things $XXX

for Those leased is leased. work markets, exposure We some office up loan. and look business some loans have was whole very still Francisco. has it's leasing. which small York is markets is less of San in for mixed two rent the It's and the we for to leased. with where Williamsburg. impact. were from do apartment, rolls open diversified do office, New they in loans which is got still retail, an have having building Our some in one LOI That's and struggling It's use in We pre-COVID Scott drive partially is a $XX add one to and full mostly only home million. loans One which really

portfolio is had, moves and assets we the loan We in Long ability we And we given see I that a work CECL. of the We in But those said, exposure don't loans granular really was office. office So think very have City, major we get borrowers that down. the two as size the combined. loans city-by-city, with loan-by-loan. have think it the to Island to any biggest that pay

we think forward. So you'll have the CECL that's adjustment biggest going

Jade Rahmani

would for asset to office we're cascading, classes do estate, see and office the you commercial multi-family, and tip think right that primarily visibility you loan iceberg it's the right think going coming of issue or is now? And do trends the playing in to real now out other like an be, the follow-up defaults and

Mike Mazzei

issue office major in having office the office low rates. I primarily very that some think think I attendance CBDs an of it's an primarily still it's And are issue.

during York attendance subway Office is is the New still City, during ridership the week, XX% week. XX% worse. about San still Francisco is

issue, lease-ups frankly, really office L.A. this think smaller our in York, we CBDs. Francisco is which well New major but So going Quite portfolio post-COVID, some did in exposure are very we primarily L.A. San We in do have some

million. San for leased. a Those buildings substantially We that office two Jose, are in going lot on market. have in there some and There's $XXX expansion exposure with growth

roll to New from going places. rent the going the around what sublet I on you or to So do tremendous we a There's this lot about office large really be tenants leasing it's predict are kind can't those is concerned been comes at And but San market the banks that, I York those land other amount think the New lot think of effect -- substantial. Francisco market issue. going that there's on. at a But on of And having in is primarily is as look contract. to do York of tenant is moving chilling a in you office that a how when are really that City, and do

beginning in what's half lot more going I think I the about is to market. is So trend often happening this of in the be of going first at we're that And a talked a think XXXX. just to the office be

Jade Rahmani

much. Thank you very

Mike Mazzei

other is with housing market rates development duration shortages. interest is slowing think single-family markets, at have slowing We still X%, down. short down and housing I

granular. think you absolutely. we City portfolio, as anything watching and our closely, have market at to is the really is buy to that well, our said, office And can it short very building, largest. leases to but will the some who's with things duration There Long who's the we're buy I very, shrink. is But going concern issues, that I Island is spotty. office continue office My $XXX million to going do million are $XXX look when building some very start

Jade Rahmani

much. very you Appreciate Thank it.

Operator

I the Mike for would remarks. like closing to over turn Mazzei floor to

Mike Mazzei

you holiday. February. a Have thank support, your joining all Well, for the today fourth see great you and you in we for call quarter and thank will on us

Operator

This concludes teleconference. today's

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

BrightSpire Capital (BRSP) 2 Nov 222022 Q3 Earnings call transcript