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BrightSpire Capital, Inc. (BRSP)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered stable book value and dividend coverage by Adjusted Distributable Earnings (ADE): GAAP net income was $1.0M ($0.01/share), DE was $3.3M ($0.03/share), and ADE was $21.2M ($0.16/share) . GAAP net book value was $7.53/share and undepreciated book value was $8.68/share at 9/30/25 .
  • Operations showed progress: net positive loan originations for a second straight quarter, watchlist reduced to $182M (8% of portfolio), and REO sale executed; loan portfolio at $2.4B across 85 loans with average risk rank 3.1 .
  • Liquidity remained solid at ~$280M (incl. $87M cash), with debt-to-assets 63% and debt-to-equity 1.9x; management is preparing the next CRE CLO and targets a ~$3.5B loan book to reach ~20¢/share earnings power in 2026 .
  • Versus S&P Global consensus: Q3 EPS (normalized) of $0.16 was slightly below the $0.172 estimate*, while revenue of ~$83.9M was modestly below the ~$84.4M estimate*; GAAP EPS of $0.01 was below the ~$0.02 consensus* .
  • Potential stock catalysts over the next 6–12 months: accelerating originations (~$300M/quarter run-rate), execution of a new CLO, continued watchlist/REO resolutions (notably San Jose hotel), and further dividend coverage improvement .

What Went Well and What Went Wrong

What Went Well

  • Net positive loan originations for a second straight quarter and growing pipeline; 10 loans totaling $224M originated in Q3 and seven loans for ~$242M in execution through mid-October; management signaled a supportive market backdrop as spreads tightened and CMBS/CLO markets remained active .
  • Watchlist and REO progress: watchlist reduced to $182M (8% of portfolio), aided by borrower-led sale processes; one Oregon office loan moved to REO; REO sale of a Phoenix multifamily was completed roughly at carrying value .
  • Dividend coverage by ADE and preparation for next CLO: ADE of $0.16/share covered the $0.16 dividend; management is preparing a new CLO to optimize financing as the portfolio scales .
  • Quote (CEO): “We expect to continue growing the portfolio and earnings through new loan originations and de-risking the portfolio through watchlist and REO asset resolutions.” .

What Went Wrong

  • Slight ADE step-down vs Q2 ($0.16 vs $0.18/share) driven by a net lease asset foreclosure in Q2 and deconsolidation of a multi-tenant office equity property, partially offset by positive originations .
  • GAAP metrics reflect headwinds: GAAP net income was only $1.0M ($0.01/share), and the general CECL provision remains sizable at $127M (517 bps of total loan commitments), though down from $137M in Q2 .
  • Portfolio growth still battling REO headwinds: management acknowledged REO dispositions will be both a liquidity source and a near-term headwind as assets are prepared for sale; office loan portfolio, while reduced to $653M, remains an overhang until further de-risked .

Financial Results

Headline GAAP and Non-GAAP

MetricQ3 2024Q2 2025Q3 2025
GAAP Net Income ($M)$12.73*($23.10) $0.98
GAAP Diluted EPS ($)$0.09*($0.19) $0.01
Distributable Earnings ($M)—$3.4 $3.3
DE per Share ($)—$0.03 $0.03
Adjusted Distributable Earnings ($M)—$22.9 $21.2
ADE per Share ($)—$0.18 $0.16
GAAP Net Book Value/Share ($)—$7.65 $7.53
Undepreciated Book Value/Share ($)—$8.75 $8.68

Notes: “—” indicates not disclosed in the cited materials for that period. Starred “*” indicates S&P Global data where company documents were not cited. Values retrieved from S&P Global.

Revenues and Margins (GAAP)

MetricQ3 2024Q2 2025Q3 2025
Revenues ($M)$26.05*$35.67*$32.54*
Net Income Margin (%)14.44%*(26.91%)*1.17%*
EBITDA Margin (%)75.64%*65.58%*52.43%*

Starred “*” indicates values retrieved from S&P Global.

Estimates vs Actuals (S&P Global)

MetricQ3 2025 EstimateQ3 2025 ActualDelta
EPS (GAAP, Primary) ($)$0.02*$0.01 ($0.01)
EPS (Normalized) ($)$0.172*$0.160*($0.012)
Revenue ($M)$84.43*$83.94*($0.49)

Starred “*” indicates values retrieved from S&P Global.

KPIs and Balance Sheet

KPIQ1 2025Q2 2025Q3 2025
Loan Portfolio Size ($B)2.4 2.4 2.4
Loans (#) / Avg Loan ($M)74 / $33 —85 / $28
Net Originations ($M)+$182 commits; +$8 future fundings +$70 net excl. San Jose transfer Deploy $157 vs repay $97 → +$60
Watchlist (Gross)$396M (16% of portfolio) Nearly 50% decline QoQ (not stated $) $182M (8%, 5 loans)
REO (Undeprec. Gross)—Phoenix MF sale imminent $364M; MF $147M (40%), Office $81M (22%), Hotel $137M (38%)
Liquidity$310M; cash $145M $325M; cash $106M ~$280M; cash $87M
Debt/Assets64% —63%
Debt/Equity2.0x —1.9x
Dividend/Share ($)$0.16 (paid Apr 15) $0.16 (paid Jul 14) $0.16 (paid Oct 15)

Notes: “—” denotes not explicitly provided in cited Q2/Q1 sources for that item.

Guidance Changes

Metric/ItemPeriodPrevious GuidanceCurrent GuidanceChange
DividendQ3 2025$0.16/share (Q2 2025) $0.16/share declared, paid Oct 15 Maintained
Loan Book TargetThrough 2026Target discussed priorTarget ~$3.5B to support ~20¢ EPS run-rate Reiterated
Originations Run-Rate2025–2026Not specifiedNeeds ~$300M/quarter gross to reach target New framing
CLO IssuanceNear-termIntention for H2’25 Preparing next CLO; timing not specified due to proximity Reaffirmed (timing cautious)
San Jose Hotel (REO)Hold/SellMarket & sell in 2026 Hold through H1’26; sub-$10M NOI expected in 2026 Clarified timing/NOI

No formal quantitative revenue/margin/tax rate guidance was issued in Q3; management focused on strategic targets, originations cadence, funding plans (CLO), and asset resolution timelines .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Market backdrop/ratesQ1: volatile tariffs; lenders still active; lower rates helpful . Q2: spreads stabilizing; CMBS normalized; banks supportive .“Goldilocks” backdrop: dovish Fed; sub-4% 10yr; cap prices falling; increased acquisition financing requests .Improving demand and financing conditions
Loan originationsQ1: $182M commits; targeting 12% levered ROE . Q2: stronger H2 expected; 6 loans ~$114M closed/in execution .Q3/Oct: 10 loans $224M; 7 loans $242M in execution; need ~$300M per quarter to hit 2026 target .Accelerating
Watchlist reductionQ1: $396M (16%); focus on borrower-driven resolutions . Q2: ~50% decline; de-risking .$182M (8%), sales processes underway for several; one Oregon office moved to REO .Continued de-risking
REO dispositionsQ1: Phoenix MF sale near selection; MF value-add plans; San Jose to be marketed 2026 .Phoenix MF sold ~carrying value; two office REOs for sale incl. Oregon; San Jose held through H1’26 .Execution progressing
CLO financingQ1: aim for Q4 2025 CLO . Q2: plan unchanged .Preparing next CLO; cannot disclose specifics due to proximity .Imminent, details withheld
Office exposureQ1: LIC leasing momentum; some office paydowns expected .Office loan portfolio down to $653M; CMBS more receptive; one LIC office for sale .Gradual reduction

Management Commentary

  • Strategy and progress: “Adjusted DE continued to cover our dividend… net positive loan originations for the second consecutive quarter… preparing for our next CLO securitization… [and] a steady increase in loan inquiry.” – CEO, Michael J. Mazzei .
  • Portfolio targets: “We need to get to a loan book of about $3.5 billion… probably like $300 million a quarter [in originations]” – CEO .
  • Risk management: “Watchlist… stands at 8%… $182 million… borrowers are in the process of actively marketing the underlying properties for sale.” – President/COO, Andrew E. Witt .
  • Liquidity and leverage: “Our debt-to-assets ratio is 63%, debt-to-equity 1.9x… liquidity… approximately $280 million… $87 million cash” – CFO, Frank V. Saracino .
  • San Jose hotel outlook: “NOI… sub-$10 million… 2026… deferred maintenance capex… hold through the first half of 2026” – CEO .

Q&A Highlights

  • Originations pace: Management expects similarly active originations into Q4 given pipeline momentum; ~$300M gross per quarter is the implied cadence needed to reach the 2026 loan book target .
  • CLO timing: Company is preparing a new CLO but declined specifics due to proximity; expects size consistent with market context .
  • Net lease strategy: Content to hold existing assets; no push into triple-net acquisitions absent a clear competitive advantage .
  • Office/REO sales: Two office REOs are being marketed (Oregon and a Long Island City property), aiming to recycle equity into new loans .
  • Liquidity funding: Many future originations are expected to be funded by REO resolutions and equity repatriation from unencumbered assets .

Estimates Context

  • EPS (GAAP, Primary): Q3 2025 GAAP EPS of $0.01 missed the ~$0.02 S&P consensus by ~$0.01; ADE/share of $0.16 covered the dividend but was below Q2’s $0.18 .
  • EPS (Normalized): Q3 2025 normalized EPS of $0.160 was slightly below the $0.172 S&P consensus*, implying modest downside vs Street on adjusted run-rate.
  • Revenue: Q3 2025 revenue of ~$83.94M was slightly below the ~$84.43M consensus*, a negligible shortfall relative to mREIT earnings drivers.

Starred “*” indicates values retrieved from S&P Global.

Key Takeaways for Investors

  • Adjusted earnings covered the dividend again; sustaining $0.16/share will hinge on execution of originations, CLO financing, and continued de-risking .
  • The originations engine is revving: ~$224M closed and ~$242M in execution through mid-October; the team targets ~$300M gross per quarter to reach a ~$3.5B loan book by 2026, a critical driver for returning to ~20¢/share earnings power .
  • De-risking is on track: Watchlist cut to 8% ($182M) with multiple borrower-led sales underway; REO program is creating liquidity (e.g., Phoenix MF sale) and shrinking office exposure, which should improve risk-adjusted returns over time .
  • Near-term catalysts: a new CRE CLO, additional REO dispositions (including office assets), and potential San Jose hotel NOI ramp into 2026 ahead of major events .
  • Estimate revisions: Minor trims to normalized EPS may follow the Q3 miss; however, Street models could lift outer-period estimates if origination cadence and CLO timing firm up and if watchlist resolutions accelerate .
  • Risk watch: Office remains a headline risk (though shrinking), and CECL reserve levels remain meaningful; macro tailwinds (lower rates, tighter spreads) support execution, but a weakening labor market would be a key downside risk .

Citations:

  • Q3 2025 press release and 8-K exhibits .
  • Q3 2025 earnings call transcript .
  • Prior quarters: Q2 2025 press release and call ; Q1 2025 press release and call .

S&P Global estimates and certain financials:

  • Primary EPS consensus mean (Q3 2025) = $0.018*; EPS (Normalized) consensus mean (Q3 2025) = $0.1717*; Revenue consensus (Q3 2025) = $84.43M*; EPS (Normalized) actual (Q3 2025) = $0.160*; Revenue actual (Q3 2025) = $83.94M*.
  • Additional GAAP financial line items marked with “*” (e.g., Revenues, margins) are retrieved from S&P Global.
  • Values retrieved from S&P Global.