BrightSpire Capital Sees $3.5B Portfolio Growth Amid Reduced Watch List Exposure.

BrightSpire Capital reported solid Q2 2025 earnings, with a covered dividend and unchanged undepreciated book value. The company made substantial progress in reducing exposure to its watch list, which was reduced by 50%. CEO Michael Joseph Mazzei expressed optimism about the firm's growth path, with a $3.5B portfolio growth goal.

BrightSpire Capital, Inc. (BRSP) reported solid earnings for the second quarter of 2025, with a covered dividend and unchanged undepreciated book value. The company made significant progress in reducing exposure to its watch list, which was reduced by 50%. CEO Michael Joseph Mazzei expressed optimism about the firm's growth path, with a $3.5 billion portfolio growth goal.

The company reported a second quarter GAAP net loss of $23.1 million, or $0.19 per share, but also generated adjusted distributable earnings of $22.9 million, or $0.18 per share. The company's current liquidity stands at $325 million, with $106 million in unrestricted cash. The company's GAAP net book value of $7.65 per share and undepreciated book value of $8.75 per share as of June 30, 2025, remained unchanged from the previous quarter.

The company's portfolio grew by approximately 3% or $70 million on a net basis, excluding the impact of the San Jose Hotel loan moving to REO. President Andrew Elmore Witt reported that the company's REO portfolio is comprised of 8 properties with an aggregate undepreciated gross book value of $379 million, with the San Jose Hotel representing $136 million of that. The company anticipates resolving most of the multifamily portion of its REO portfolio over the next year.

Mazzei highlighted that BrightSpire continues to trade at a roughly 40% discount to its undepreciated book value and asserted that the stock is significantly undervalued. The company repurchased 561,000 shares at an average price of $5.19 during the quarter.

The company's general CECL provision stands at $137 million, or 549 basis points on total loan commitments, which is approximately $20 million lower than the prior quarter. The company expects loan origination conditions to improve in the second half of the year, with an additional 6 loans for $114 million already closed or in execution.

The company's Q&A session highlighted the company's focus on asset management and portfolio growth. The company is actively addressing deferred maintenance and capital expenditure (CapEx) at its REO properties, with plans to improve the San Jose Hotel ahead of major Bay Area events in 2026. The company also anticipates increasing the value of its existing properties to provide fuel for loan portfolio growth over the next several quarters.

The company's outlook for the remainder of 2025 includes an uptick in repayment volume related to both loan payoffs and REO resolutions. The company is focused on maximizing the value of its existing properties to provide fuel for loan portfolio growth over the next several quarters. The company's portfolio has the opportunity to grow to about $3.5 billion given its existing capital base.

The company's second quarter was marked by a sharp reduction in watch list exposure, continued progress on REO resolutions, and stable undepreciated book value. Management signaled a pathway to growing the loan portfolio to $3.5 billion, backed by current liquidity and asset sales, with expectations for increased origination and asset resolution activity in the coming quarters. The company remains focused on maximizing shareholder value through disciplined portfolio management, targeted capital deployment, and active risk mitigation.

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[1] https://seekingalpha.com/news/4474566-brightspire-capital-outlines-3_5b-portfolio-growth-path-amid-50-percent-reduction-in-watch