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BrightSpire Capital, Inc. (BRSP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 headline metrics: GAAP net loss of ($19.7) million, or ($0.16) per share; Distributable Earnings (DE) of $13.7 million ($0.11/share); Adjusted DE (ADE) of $23.7 million ($0.18/share); GAAP BVPS $8.08; undepreciated BVPS $8.89 .
  • Balance sheet/liquidity remained solid with $418 million of available liquidity ($253 million cash; $165 million revolver), 2.2x debt-to-equity, and $1.2 billion of master repurchase availability, positioning BRSP to restart originations and pursue a fourth CLO in 2H 2025 .
  • Asset quality trending better: watch-list reduced to 7 loans totaling $411 million (16% of portfolio) from 9 loans/$456 million (18%) in Q3; general CECL reserve increased modestly to $166.1 million (634 bps) reflecting updated loan inputs; no specific CECL on balance sheet at Q4 .
  • Management aims to net-originated ~$1 billion in 2025 to grow the loan book “well in excess of $3 billion,” target portfolio near ~$3.5 billion, and execute another CLO; dividend ($0.16) intended to be maintained with a plan to sustain positive coverage as redeployment progresses .
  • Wall Street (S&P Global) consensus estimates for Q4 2024 were not available via our data source at time of analysis; therefore, we cannot assess beat/miss versus consensus (see Estimates Context).

What Went Well and What Went Wrong

  • What Went Well
    • Watch-list and REO resolutions progressed: watch-list loans fell to 7 ($411m, 16% of portfolio) from 9 ($456m, 18%) in Q3; subsequent events included $100m of repayments across six loans and sale of Oakland, CA office REO .
    • Origination engine restarted with momentum: committed $66m across three new loans in Q4 and a further $53m across two loans post quarter; all new originations to date are multifamily with active quoting across most property types (ex-office) .
    • Liquidity and capital access remain ample to support growth: $418m total liquidity, fully undrawn corporate revolver ($165m), $1.2b of repo capacity; plan to execute a fourth CLO in 2H 2025 for incremental ROE lift .
  • What Went Wrong
    • Earnings pressure from reserves/impairments: Q4 GAAP net loss ($0.16/share) driven by higher general CECL ($10m q/q increase to $166.1m) and REO impairments; ADE declined to $0.18 from $0.21 in Q3 on lower rates, repayments/foreclosure partially offset by lower borrowing costs/new originations .
    • Portfolio yield compression vs Q3: W.A. unlevered all-in portfolio yield fell to 7.6% (from 8.2%) amid rate backdrop and mix; all senior loans remain floating-rate, leaving earnings sensitive to rate moves .
    • San Jose Hotel (risk rank 5) remains a key overhang (~one-third of watch-list); despite favorable legal progress, resolution is still pending and remains a management focus area .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Interest income ($m)$59.6 $59.6 $54.3
Net interest income ($m)$20.7 $20.7 $17.5
Property & other income ($m)$27.1 $28.6 $29.2
GAAP EPS ($)($0.53) $0.10 ($0.16)
Distributable Earnings/share ($)$0.13 $0.14 $0.11
Adjusted DE/share ($)$0.22 $0.21 $0.18
Dividend/share ($)$0.16 (declared for Q3) $0.16 $0.16

Q4 YoY comparison (Q4 2024 vs Q4 2023):

  • Interest income: $54.3m vs $73.1m
  • Net interest income: $17.5m vs $30.2m
  • Property & other income: $29.2m vs $29.6m
  • GAAP EPS: ($0.16) vs ($0.13)

Segment results (Q4 2024):

SegmentQ4 2024 Net Income (Loss) ($m)
Loans & Preferred Equity($3.1)
Net Leased & Other Real Estate($8.6)
Corporate & Other($8.0)
Total($19.7)

Key KPIs and capital metrics

KPIQ2 2024Q3 2024Q4 2024
Loan portfolio (gross carrying value, $b)$2.8 $2.6 $2.5
Watch-list (count / $m / % of portfolio)12 / $543 / 20% 9 / $456 / 18% 7 / $411 / 16%
General CECL reserve ($m / bps)$172 / 597 bps $156 / 578 bps $166.1 / 634 bps
Liquidity ($m)$317 $416 $418
GAAP BVPS ($)$8.41 $8.39 $8.08
Undepreciated BVPS ($)$9.08 $9.11 $8.89
Repayments in quarter ($m)$85 $127 $93
W.A. unlevered all-in yield (%)—8.2% 7.6%
Debt-to-equity (x)—2.2x 2.2x

Guidance Changes

MetricPeriodPrevious Guidance/CommentaryCurrent Guidance/CommentaryChange
Dividend per share2025 run-rate$0.16/share declared in 2H24, dividend rightsized in Q3 2024 “No intention of moving that dividend”; plan to cover and maintain as book rebuilds Maintained
Gross/net originations target2025Not specifiedNeed ~$1B net new loans to grow portfolio >$3B toward ~$3.5B and sustain dividend New target
CLO execution2025Closed $675m CLO in Q3’24 Intend to execute fourth CLO in 2H 2025, subject to ramp New event timing
G&A expense2025—2025 cash G&A expected flat to down vs 2024 (~$35m in 2024) New commentary

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q3)Current Period (Q4)Trend
Originations & portfolio growthReengaged originations; pipeline forming; CLO considered for 2025 Target ~$1B net; aim portfolio “well in excess of $3B,” toward ~$3.5B; actively quoting all types ex-office Accelerating
CLO market & spreadsCLO as ROE lever; banks supportive on warehouse; CLO contemplated 2025 Plan a fourth CLO in 2H 2025; AAA/CLO spread tightening continues Constructive
Watch-list and REOForeclosure commenced on San Jose Hotel; watch-list 12 ($543m, 20%) Watch-list down to 7 ($411m, 16%); summary judgment dismissal of borrower’s bankruptcy on San Jose; sold Oakland REO; Phoenix MF nearing sale Improving
CECL reservesGeneral CECL $172m (597 bps); “on the high side” General CECL $166.1m (634 bps) with updated inputs; includes ~$10m specific reserves recorded/charged off on resolutions Stable to slightly higher bps
Dividend policyCut to $0.16 to preserve equity; aim for coverage over time Maintain $0.16; ADE covered dividend in Q4 ($0.18); plan sustained positive coverage via redeployment and REO sales Stabilizing
Office exposureExpect shrinkage; focus on resolutions Reduced office loans by ~$100m since last report; not quoting new office loans near term De-risking

Management Commentary

  • Strategy: “We went on offense during the quarter... To-date, we have funded 5 new loans totaling $119 million... our primary focus has now pivoted to rebuilding our loan book and ultimately executing our fourth CLO.”
  • On targets: “We need to originate $1 billion of loans... get that portfolio well in excess of $3 billion... We want to get that portfolio as close to $3.5 billion as possible.”
  • On CLO timing: “I don't know if we'll get one off in the first half... it is the goal for the second half [of 2025].”
  • On San Jose Hotel: “We are pleased that we are out of the bankruptcy court... it is 1/3 of our watch-list... very focused.”
  • On dividend: “We covered our dividend with an adjusted DE of $0.18... Our plan is to reach sustained positive dividend coverage by turning over under-earning assets and executing on REO sales.”
  • On drivers of q/q ADE change: “Primarily driven by lower interest rates, loan repayments and foreclosure and offset by lower borrowing costs and new originations.”
  • On CECL: “General CECL... $166.1 million or 634 bps... increase... primarily driven by updated inputs on certain loans.”

Q&A Highlights

  • CLO and leverage: CLO adds “another couple of hundred basis points” of ROE; goal is to execute in 2H 2025 after ~$600–$700m of additional originations beyond ~$188m closed/in closing .
  • Growth ambition: Need ~$1B net originations to sustain dividend and grow portfolio above $3B toward ~$3.5B; market remains competitive; seeing bridge-to-bridge and construction take-outs; lender-driven sales likely to increase .
  • CECL nuance: Increase in general CECL reflects activity in risk rank 4–5 loans; not specific to West Coast rent trends .
  • REO disposition focus: Sold Oakland office; Phoenix MF nearing sale; willing to “fish or cut bait” on Long Island City offices to redeploy capital into loans .
  • Dividend stance: “No intention of moving that dividend,” focus on coverage as book rebuilds .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 (EPS/Revenue/EBITDA) were not retrievable due to data access limits at the time of request, so we cannot quantify beats/misses versus consensus. We attempted to fetch: Primary EPS Consensus Mean, Revenue Consensus Mean, EBITDA Consensus Mean for Q2–Q4 2024, but the request failed due to provider rate limits. As a result, estimate comparisons are unavailable in this recap (Values were intended to be retrieved from S&P Global) [GetEstimates error].

Key Takeaways for Investors

  • De-risking but inflecting toward growth: watch-list and office exposures are moving lower, with legal/asset resolution progress; focus shifts to net ~$1B originations in 2025 and a 2H 2025 CLO to expand ROE .
  • Earnings cadence: ADE fell to $0.18 (from $0.21) on lower rates/repayments; as originations ramp and CLO executes, earnings power should improve; near-term quarterly volatility remains possible given asset resolution timing .
  • Dividend sustainability: $0.16 quarterly dividend currently supported by ADE; management intends to maintain and improve coverage via redeployment and REO sales—monitor ADE trajectory and coverage ratio through 2025 .
  • Rate/spread dynamics: CLO and warehouse spreads tightened, but higher base rates pressure borrower math; BRSP’s 98% floating senior loan book keeps earnings sensitive to rate moves; watch the Fed path and credit spreads .
  • Liquidity/financing flexibility: $418m liquidity, undrawn revolver, $1.2b repo capacity, and 2.2x D/E provide capacity to ramp origination without equity; financing mix remains largely non-recourse .
  • Near-term catalysts: Additional loan repayments/REO sales, Phoenix MF sale, potential San Jose Hotel resolution steps, and originations pace updates; CLO progress signals in 1H vs 2H 2025 could be stock catalysts .
  • Risk monitor: CECL at 634 bps signals ongoing conservatism, but specific asset outcomes (e.g., San Jose Hotel) and office valuations remain key risks to BVPS and earnings trajectory .

References:

  • Q4 2024 8-K press release and supplemental (financials, portfolio, liquidity, CECL, KPIs):
  • Q4 2024 earnings call transcript:
  • Q3 2024 8-K press release and supplemental (trend):
  • Q2 2024 8-K press release and call (trend):
  • Additional Q4 press release: dividend declaration and results notice: