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What changed in BrightSpire Capital, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BrightSpire Capital, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+309 added−382 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-21)

Top changes in BrightSpire Capital, Inc.'s 2024 10-K

309 paragraphs added · 382 removed · 242 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

9 edited+0 added−0 removed95 unchanged
Biggest changeFederal regulators have modified restrictions on the activity of banks and other deposit-taking institutions that previously prohibited such entities from competing for certain investment opportunities.
Biggest changeFederal bank regulators have modified certain restrictions, under the regulatory scheme commonly referred to as the Volker Rule, on the activity of banks and other deposit-taking institutions that previously prohibited such entities from competing for certain investment opportunities.
We are a large publicly-traded CRE credit/mortgage REIT. Our portfolio is composed of a diverse set of CRE assets across the capital stack, including senior loans as well as select mezzanine loans and preferred equity. We will also occasionally invest in single tenant net leased properties.
We are a large publicly-traded CRE credit/mortgage REIT. Our portfolio is composed of a diverse set of CRE assets across the capital stack, including senior loans as well as select mezzanine loans and preferred equity. We may also occasionally invest in single-tenant net leased properties.
We believe that our in-depth understanding of CRE and real estate-related investments, in-house underwriting, asset management and resolution capabilities, provides an extensive platform to regularly evaluate our investments and determine primary, secondary or alternative disposition strategies.
We believe that our in-depth understanding of CRE and real estate-related investments, in-house underwriting, asset management, special servicing and resolution capabilities, provides an extensive platform to regularly evaluate our investments and determine primary, secondary or alternative disposition strategies.
We believe that events in the financial markets from time to time, including the impact of the COVID-19 pandemic, have created and will continue to create dislocation between price and intrinsic value in certain asset classes as well as a supply and demand imbalance of available credit to finance these assets.
We believe that events in the financial markets from time to time have created and will continue to create dislocation between price and intrinsic value in certain asset classes as well as a supply and demand imbalance of available credit to finance these assets.
Net leased properties consist of CRE properties with long-term leases to tenants on a net-lease basis, where such tenants generally will be responsible for property operating expenses such as insurance, utilities, maintenance capital expenditures and real estate taxes. We continue to target net leased equity investments on a selective basis.
Net leased properties consist of CRE properties with long-term leases to tenants on a net-lease basis, where such tenants generally will be responsible for property operating expenses such as insurance, utilities, maintenance capital expenditures and real estate taxes.
Our Financing Strategy We have a multi-pronged financing strategy that included an up to $165 million secured revolving credit facility as of December 31, 2023, up to approximately $2.0 billion in secured revolving repurchase facilities, $913.9 million in non-recourse securitization financing, $617.4 million in commercial mortgages and $34.5 million in other asset-level financing structures.
Our Financing Strategy We have a multi-pronged financing strategy that included an up to $165 million secured revolving credit facility as of December 31, 2024, up to approximately $2.0 billion in secured revolving repurchase facilities, $1.1 billion in non-recourse securitization financing, $587.2 million in commercial mortgages and $34.5 million in other asset-level financing structures.
Our 55 employees are located throughout the United States as follows: 32 in New York, New York at our Headquarters, 19 in Los Angeles, California, one in Florida, one in Texas, one in Georgia and one in New Hampshire. 10 Table of Contents Employee Matters and Culture We are committed to maintaining a positive work environment in which employee accountability, growth, advancement, diversity, inclusion and equal employment opportunity are very important.
Our 49 employees are located throughout the United States as follows: 29 in New York, New York at our Headquarters, 17 in Los Angeles, California, one in Florida, one in Texas and one in Georgia. 10 Table of Contents Employee Matters and Culture We are committed to maintaining a positive work environment in which employee accountability, growth, advancement and equal employment opportunity are very important.
Human Capital Management Experienced Management and Employees On December 31, 2023, we had 54 full-time employees and one part-time employee.
Human Capital Management Experienced Management and Employees On December 31, 2024, we had 48 full-time employees and one part-time employee.
The changes to this regulatory scheme, commonly referred to as the Volcker Rule, became effective on October 1, 2020 and may allow these financial institutions to compete with us for investment opportunities that were not previously available to them, thus increasing competition with our business.
The changes to the Volker Rule, became effective on October 1, 2020 and may allow these financial institutions to compete with us for certain investment opportunities that were not previously available to them, thus increasing competition with our business.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur investment strategy may not be successful, or there may be delays, in locating or allocating suitable investments, which could limit our ability to make distributions and lower the overall return on stockholders’ investment. Our investment strategy may not be successful in locating suitable investments on financially attractive terms.
Biggest changeOur borrowers may be similarly impacted at the properties they own, which may negatively impact their ability to make timely payments to us, and we may experience a reduction in net income and be required to reduce or eliminate cash distributions to stockholders. 19 Table of Contents Our investment strategy may not be successful, or there may be delays, in locating or allocating suitable investments, which could limit our ability to make distributions and lower the overall return on stockholders’ investment.
Such investments may involve risks not otherwise present with other methods of investment, including, for instance, the following risks: • our joint venture partner in an investment could become insolvent or bankrupt; • fraud or other misconduct by our joint venture partners; • we may share decision-making authority with our joint venture partners regarding certain major decisions affecting the ownership of the joint venture and the joint venture investment, such as the management of the CRE debt, sale of the property or the making of additional capital contributions for the benefit of the loan or property, which may prevent us from taking actions that are opposed by our joint venture partner; • such joint venture partner may at any time have economic or business interests or goals that are or that become in conflict with our business interests or goals, including for example the management of the CRE debt or operation of the properties; 20 Table of Contents • such joint venture partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; • our joint venture partners may be structured differently than us for tax purposes and this could create conflicts of interest and risk to our REIT status; • we may rely upon our joint venture partners to manage the day-to-day operations of the joint venture and underlying loans or assets, as well as to prepare financial information for the joint venture and any failure to perform these obligations may have a negative impact our performance and results of operations; • our joint venture partner may experience a change of control, which could result in new management of our joint venture partner with less experience or conflicting interests to ours and be disruptive to our business; • the terms of our joint ventures could restrict our ability to sell or transfer our interest to a third party when we desire on advantageous terms, which could result in reduced liquidity; and • our joint venture partners may not have sufficient personnel or appropriate levels of expertise to adequately support our initiatives.
Such investments may involve risks not otherwise present with other methods of investment, including, for instance, the following risks: • our joint venture partner in an investment could become insolvent or bankrupt; • fraud or other misconduct by our joint venture partners; 20 Table of Contents • we may share decision-making authority with our joint venture partners regarding certain major decisions affecting the ownership of the joint venture and the joint venture investment, such as the management of the CRE debt, sale of the property or the making of additional capital contributions for the benefit of the loan or property, which may prevent us from taking actions that are opposed by our joint venture partner; • such joint venture partner may at any time have economic or business interests or goals that are or that become in conflict with our business interests or goals, including for example the management of the CRE debt or operation of the properties; • such joint venture partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; • our joint venture partners may be structured differently than us for tax purposes and this could create conflicts of interest and risk to our REIT status; • we may rely upon our joint venture partners to manage the day-to-day operations of the joint venture and underlying loans or assets, as well as to prepare financial information for the joint venture and any failure to perform these obligations may have a negative impact our performance and results of operations; • our joint venture partner may experience a change of control, which could result in new management of our joint venture partner with less experience or conflicting interests to ours and be disruptive to our business; • the terms of our joint ventures could restrict our ability to sell or transfer our interest to a third party when we desire on advantageous terms, which could result in reduced liquidity; and • our joint venture partners may not have sufficient personnel or appropriate levels of expertise to adequately support our initiatives.
We generally must distribute annually at least 90% of our REIT taxable income (subject to certain adjustments and excluding any net capital gain), in order to qualify as a REIT, and any REIT taxable income that we do not distribute will be subject to U.S. corporate income tax at regular rates.
We generally must distribute annually at least 90% of our REIT taxable income (subject to certain adjustments and excluding any net capital gain), in order to qualify as a REIT, and any REIT taxable income that we do not distribute will be subject to U.S. corporate income tax at regular rates.
Our CRE debt, select equity and securities investments are subject to the risks typically associated with real estate, including: • tenant mix; • real estate conditions, such as an oversupply of or a reduction in demand for real estate space in an area; • lack of liquidity inherent in the nature of the assets; • borrower/tenant/operator mix and the success of the borrower/tenant/operator business; • success of tenant businesses; • ability to collect interest/loan obligation/principal, including income recognition and recovery of payment-in-kind interest on applicable loan investments; • property management decisions; • property location, condition and design; • competition from comparable types of properties; 12 Table of Contents • changes in laws that increase operating expenses or limit rents that may be charged; • changes in national, regional or local economic conditions and/or specific industry segments, including the credit and securitization markets; • declines in regional or local real estate values; • declines in regional or local rental or occupancy rates; • fluctuations (including increases) in interest rates, real estate tax rates and other operating expenses; • compliance with environmental laws; • costs of remediation and liabilities associated with environmental conditions; • the potential for uninsured or underinsured property losses; • changes in governmental laws and regulations, including fiscal policies, zoning ordinances and environmental legislation and the related costs of compliance; and • acts of God, terrorist attacks, social unrest and civil disturbances.
Our CRE debt, select equity and securities investments are subject to the risks typically associated with real estate, including: • tenant mix; • real estate conditions, such as an oversupply of or a reduction in demand for real estate space in an area; • lack of liquidity inherent in the nature of the assets; • borrower/tenant/operator mix and the success of the borrower/tenant/operator business; • success of tenant businesses; • ability to collect interest/loan obligation/principal, including income recognition and recovery of payment-in-kind interest on applicable loan investments; • property management decisions; • property location, condition and design; • competition from comparable types of properties; 12 Table of Contents • changes in laws that increase operating expenses or limit rents that may be charged; • changes in national, regional or local economic conditions and/or specific industry segments, including the credit and securitization markets; • declines in regional or local real estate values; • declines in regional or local rental or occupancy rates; • fluctuations (including increases) in interest rates, real estate tax rates and other operating expenses; • compliance with environmental laws; • costs of remediation and liabilities associated with environmental conditions; • the potential for uninsured or underinsured property losses; • changes in governmental laws and regulations, including fiscal policies, zoning ordinances and environmental legislation and the related costs of compliance; • acts of God, terrorist attacks, social unrest and civil disturbances; and • such other risks associated with owning real estate.
Some of the factors that could negatively affect the market price of our common stock include: • our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects; • equity issuances by us, or resales of our shares by our stockholders, or the perception that such issuances or resales may occur; • loss of a major funding source; • actual or anticipated accounting problems; • publication of research reports about us or the real estate industry; • changes in market valuations of similar companies; • adverse market reaction to the level of leverage we employ; 38 Table of Contents • additions to or departures of our key personnel or adverse effects on the business or operations of DigitalBridge; • speculation in the press or investment community; • our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts; • increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock and would result in increased interest expenses on our debt; • a compression of the yield on our investments and an increase in the cost of our liabilities; • failure to operate in a manner consistent with our intention to qualify as a REIT or exclusion from registration under the Investment Company Act; • price and volume fluctuations in the overall stock market from time to time; • general market and economic conditions and trends including inflationary concerns, and the current state of the credit and capital markets; • significant volatility in the market price and trading volume of securities of publicly traded REITs or other companies in our sector, which is not necessarily related to the operating performance of these companies; • changes in law, regulatory policies or tax guidelines, or interpretations thereof, particularly with respect to REITs; • changes in the value of our portfolio; • any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts; • operating performance of companies comparable to us; • short-selling pressure with respect to shares of our common stock or REITs generally; and • uncertainty surrounding the strength of the U.S. economic recovery, particularly in light of the recent debt ceiling and budget deficit concerns, and other U.S. and international political and economic affairs.
Some of the factors that could negatively affect the market price of our common stock include: • our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects; • equity issuances by us, or resales of our shares by our stockholders, or the perception that such issuances or resales may occur; • loss of a major funding source; • actual or anticipated accounting problems; • publication of research reports about us or the real estate industry; • changes in market valuations of similar companies; • adverse market reaction to the level of leverage we employ; • additions to or departures of our key personnel or adverse effects on the business or operations of DigitalBridge; • speculation in the press or investment community; • our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts; • increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock and would result in increased interest expenses on our debt; • a compression of the yield on our investments and an increase in the cost of our liabilities; • failure to operate in a manner consistent with our intention to qualify as a REIT or exclusion from registration under the Investment Company Act; • price and volume fluctuations in the overall stock market from time to time; • general market and economic conditions and trends including inflationary concerns, and the current state of the credit and capital markets; • significant volatility in the market price and trading volume of securities of publicly traded REITs or other companies in our sector, which is not necessarily related to the operating performance of these companies; • changes in law, regulatory policies or tax guidelines, or interpretations thereof, particularly with respect to REITs; • changes in the value of our portfolio; • any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts; • operating performance of companies comparable to us; • short-selling pressure with respect to shares of our common stock or REITs generally; and • uncertainty surrounding the strength of the U.S. economic recovery, particularly in light of the recent debt ceiling and budget deficit concerns, and other U.S. and international political and economic affairs.
These matters may also subject us to regulator and reporting obligations that could impact the price of our common stock, cause us to incur added costs or expose us to new risks, such as the risk of scrutiny and criticism by ESG detractors for the scope or nature of any ESG-related initiatives or goals we may establish, which could have a material adverse effect on our reputation.
These matters may subject us to regulator and reporting obligations that could impact the price of our common stock, cause us to incur added costs or expose us to new risks, such as the risk of scrutiny and criticism by ESG detractors for the scope or nature of any ESG-related initiatives or goals we may establish, which could have a material adverse effect on our reputation.
As haircuts are increased, we will be required to post additional collateral. We may also be forced to sell assets at significantly depressed prices to meet such margin calls and to maintain adequate liquidity. As a result of the ongoing COVID-19 pandemic, we experienced and may in the future experience margins calls well beyond historical norms.
As haircuts are increased, we will be required to post additional collateral. We may also be forced to sell assets at significantly depressed prices to meet such margin calls and to maintain adequate liquidity. As a result of the COVID-19 pandemic, we experienced and may in the future experience margins calls well beyond historical norms.
If, notwithstanding these opinions, NorthStar I’s or NorthStar II’s REIT status for periods prior to the Mergers were successfully challenged, we would face serious adverse tax consequences that would substantially reduce our core funds from operations, and cash available for distribution, including cash available to pay dividends to our stockholders, because: • NorthStar I or NorthStar II, as applicable, would be subject to U.S. federal, state and local income tax on its net income at regular corporate rates for the years it did not qualify as a REIT (and, for such years, would not be allowed a deduction for dividends paid to stockholders in computing its taxable income) and we would succeed to the liability for such taxes; • if we were considered to be a “successor” of such entity, we would not be eligible to elect REIT status until the fifth taxable year following the year during which such entity was disqualified, unless it were entitled to relief under applicable statutory provisions; • even if we were eligible to elect REIT status, we would be subject to tax (at the highest corporate rate in effect at the date of the sale) on the built-in gain on each asset of NorthStar I or NorthStar II, as applicable, existing at the time of the Mergers if we were to dispose of such asset for up to five years following the Mergers; and • we would succeed to any earnings and profits accumulated by NorthStar I or NorthStar II, as applicable, for tax periods that such entity did not qualify as a REIT and we would have to pay a special dividend and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate such earnings and profits to maintain our REIT qualification.
If, notwithstanding these opinions, NorthStar I’s or NorthStar II’s REIT status for periods prior to the Mergers were successfully challenged, we would face serious adverse tax consequences that would substantially reduce our core funds from operations, and cash available for distribution, including cash available to pay dividends to our stockholders, because: 30 Table of Contents • NorthStar I or NorthStar II, as applicable, would be subject to U.S. federal, state and local income tax on its net income at regular corporate rates for the years it did not qualify as a REIT (and, for such years, would not be allowed a deduction for dividends paid to stockholders in computing its taxable income) and we would succeed to the liability for such taxes; • if we were considered to be a “successor” of such entity, we would not be eligible to elect REIT status until the fifth taxable year following the year during which such entity was disqualified, unless it were entitled to relief under applicable statutory provisions; • even if we were eligible to elect REIT status, we would be subject to tax (at the highest corporate rate in effect at the date of the sale) on the built-in gain on each asset of NorthStar I or NorthStar II, as applicable, existing at the time of the Mergers if we were to dispose of such asset for up to five years following the Mergers; and • we would succeed to any earnings and profits accumulated by NorthStar I or NorthStar II, as applicable, for tax periods that such entity did not qualify as a REIT and we would have to pay a special dividend and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate such earnings and profits to maintain our REIT qualification.
Interest rate and/or currency hedging may fail to protect or could adversely affect us because, among other things: • interest rate and/or currency hedging can be expensive, particularly during periods of rising and volatile interest rates; • available interest rate and/or currency hedging may not correspond directly with the interest rate risk for which protection is sought; 26 Table of Contents • the duration of the hedge may not match the duration of the related liability or asset; • our hedging opportunities may be limited by the treatment of income from hedging transactions under the rules determining REIT qualification; • the credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction; • the counterparties with which we trade may cease making markets and quoting prices in such instruments, which may render us unable to enter into an offsetting transaction with respect to an open position; • the party owing money in the hedging transaction may default on its obligation to pay; • we may purchase a hedge that turns out not to be necessary (i.e., a hedge that is out of the money); and • we may enter into hedging arrangements that would require us to fund cash payments in certain circumstances (such as the early termination of the hedging instrument caused by an event of default or other early termination event, or the decision by a counterparty to request margin securities it is contractually owed under the terms of the hedging instrument).
Interest rate and/or currency hedging may fail to protect or could adversely affect us because, among other things: • interest rate and/or currency hedging can be expensive, particularly during periods of rising and volatile interest rates; • available interest rate and/or currency hedging may not correspond directly with the interest rate risk for which protection is sought; • the duration of the hedge may not match the duration of the related liability or asset; • our hedging opportunities may be limited by the treatment of income from hedging transactions under the rules determining REIT qualification; • the credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction; • the counterparties with which we trade may cease making markets and quoting prices in such instruments, which may render us unable to enter into an offsetting transaction with respect to an open position; • the party owing money in the hedging transaction may default on its obligation to pay; • we may purchase a hedge that turns out not to be necessary (i.e., a hedge that is out of the money); and • we may enter into hedging arrangements that would require us to fund cash payments in certain circumstances (such as the early termination of the hedging instrument caused by an event of default or other early termination event, or the decision by a counterparty to request margin securities it is contractually owed under the terms of the hedging instrument).
Conducting business abroad carries significant risks, including: • our REIT tax status not being respected under foreign laws, in which case any income or gains from foreign sources could be subject to foreign taxes and withholding taxes; • changes in real estate and other tax rates, the tax treatment of transaction structures and other changes in operating expenses in a particular country where we have an investment; • restrictions and limitations relating to the repatriation of profits; • complexity and costs of staffing and managing international operations; • the burden of complying with multiple and potentially conflicting laws; • changes in relative interest rates; • translation and transaction risks related to fluctuations in foreign currency and exchange rates; • lack of uniform accounting standards (including availability of information in accordance with accounting principles generally accepted in the United States (“U.S.
Conducting business abroad carries significant risks, including: • our REIT tax status not being respected under foreign laws, in which case any income or gains from foreign sources could be subject to foreign taxes and withholding taxes; • changes in real estate and other tax rates, the tax treatment of transaction structures and other changes in operating expenses in a particular country where we have an investment; • restrictions and limitations relating to the repatriation of profits; 21 Table of Contents • complexity and costs of staffing and managing international operations; • the burden of complying with multiple and potentially conflicting laws; • changes in relative interest rates; • translation and transaction risks related to fluctuations in foreign currency and exchange rates; • lack of uniform accounting standards (including availability of information in accordance with accounting principles generally accepted in the United States (“U.S.
GAAP”)); 21 Table of Contents • unexpected changes in regulatory requirements; • the impact of different business cycles and economic instability; • inflation and governmental measures to control inflation; • political instability and civil unrest; • legal and logistical barriers to enforcing our contractual rights, including in perfecting our security interests, collecting accounts receivable, foreclosing on secured assets and protecting our interests as a creditor in bankruptcies in certain geographic regions; • share ownership restrictions on foreign operations; • compliance with U.S. laws affecting operations outside of the United States, including sanctions laws, or anti-bribery laws such as the Foreign Corrupt Practices Act (“FCPA”); and • geographic, time zone, language and cultural differences between personnel in different areas of the world.
GAAP”)); • unexpected changes in regulatory requirements; • the impact of different business cycles and economic instability; • inflation and governmental measures to control inflation; • political instability and civil unrest; • legal and logistical barriers to enforcing our contractual rights, including in perfecting our security interests, collecting accounts receivable, foreclosing on secured assets and protecting our interests as a creditor in bankruptcies in certain geographic regions; • share ownership restrictions on foreign operations; • compliance with U.S. laws affecting operations outside of the United States, including sanctions laws, or anti-bribery laws such as the Foreign Corrupt Practices Act (“FCPA”); and • geographic, time zone, language and cultural differences between personnel in different areas of the world.
To the extent that our stock owned by “disqualified organizations” is held in street name by a broker-dealer or other nominee, the broker-dealer or nominee would be liable for a tax at the highest 32 Table of Contents corporate rate on the portion of our excess inclusion income allocable to the stock held on behalf of the “disqualified organizations.” A regulated investment company or other pass-through entity owning our stock may also be subject to tax at the highest corporate tax rate on any excess inclusion income allocated to their record name owners that are “disqualified organizations.” Excess inclusion income could result if a REIT held a residual interest in a real estate mortgage investment conduit (“REMIC”).
To the extent that our stock owned by “disqualified organizations” is held in street name by a broker-dealer or other nominee, the broker-dealer or nominee would be liable for a tax at the highest corporate rate on the portion of our excess inclusion income allocable to the stock held on behalf of the “disqualified organizations.” A regulated investment company or other pass-through entity owning our stock may also be subject to tax at the highest corporate tax rate on any excess inclusion income allocated to their record name owners that are “disqualified organizations.” Excess inclusion income could result if a REIT held a residual interest in a real estate mortgage investment conduit (“REMIC”).
There can be no assurance that the value of the assets securing our commercial mortgage loans will not deteriorate over time due to factors beyond our control, as was the case during the credit crisis and the economic recession that began in 2008 or in asset volatility experienced during and continuing from the COVID-19 pandemic.
There can be no assurance that the value of the assets securing our commercial mortgage loans will not deteriorate over time due to factors beyond our control, as was the case during the credit crisis and the economic recession that began in 2008 or in asset volatility experienced during the COVID-19 pandemic.
In addition, our TRSs may be treated as a “dealer” for U.S. federal income tax purposes, in which case the TRS would be required to mark-to-market its assets at the end of each taxable year and recognize taxable gain or loss on those assets even though there has been no actual sale of those assets; • we may deduct our capital losses only to the extent of our capital gains and not against our ordinary income, in computing our REIT taxable income for a given taxable year; • certain of our assets and liabilities are marked-to-market for U.S.
In addition, our TRSs may be treated as a “dealer” for U.S. 31 Table of Contents federal income tax purposes, in which case the TRS would be required to mark-to-market its assets at the end of each taxable year and recognize taxable gain or loss on those assets even though there has been no actual sale of those assets; • we may deduct our capital losses only to the extent of our capital gains and not against our ordinary income, in computing our REIT taxable income for a given taxable year; • certain of our assets and liabilities are marked-to-market for U.S.
If the IRS challenged our treatment of these assets as real estate 29 Table of Contents assets for purposes of the REIT asset tests, and if such a challenge were sustained, we could fail to meet the asset tests applicable to REITs and thus fail to qualify as a REIT. • The fact that we own direct or indirect interests in a number of entities that have elected to be taxed as REITs under the U.S. federal income tax laws (each, a “Subsidiary REIT”), further complicates the application of the REIT requirements for us.
If the IRS challenged our treatment of these assets as real estate assets for purposes of the REIT asset tests, and if such a challenge were sustained, we could fail to meet the asset tests applicable to REITs and thus fail to qualify as a REIT. • The fact that we own direct or indirect interests in a number of entities that have elected to be taxed as REITs under the U.S. federal income tax laws (each, a “Subsidiary REIT”), further complicates the application of the REIT requirements for us.
We believe that a change in any one of the following factors could adversely affect our results of operations and cash flows and impair our ability to make distributions to our stockholders: • our ability to make attractive investments; • margin calls or other expenses that reduce our cash flows; • defaults or prepayments in our investment portfolio or decreases in the value of our investment portfolio; and • the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.
We believe that a change in any one of the following factors could adversely affect our results of operations and cash flows and impair our ability to make distributions to our stockholders: • our ability to make attractive investments; • margin calls or other expenses that reduce our cash flows; • defaults or prepayments in our investment portfolio or decreases in the value of our investment portfolio; and 22 Table of Contents • the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.
However, a portion of our distributions may be designated by us as (i) “capital gain 22 Table of Contents dividends” to the extent that they are attributable to capital gain income recognized by us, (ii) “qualified dividend income,” or (iii) may constitute a return of capital to the extent that they exceed our current earnings and profits as determined for U.S. federal income tax purposes.
However, a portion of our distributions may be designated by us as (i) “capital gain dividends” to the extent that they are attributable to capital gain income recognized by us, (ii) “qualified dividend income,” or (iii) may constitute a return of capital to the extent that they exceed our current earnings and profits as determined for U.S. federal income tax purposes.
Indoor air quality issues also can stem from inadequate ventilation, chemical contamination from indoor or outdoor sources and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants 36 Table of Contents above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.
Indoor air quality issues also can stem from inadequate ventilation, chemical contamination from indoor or outdoor sources and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.
These alternatives could increase our costs, reduce our equity, and/or result in stockholders being taxed on 31 Table of Contents distributions of shares of stock without receiving cash sufficient to pay the resulting taxes. Thus, compliance with the REIT distribution requirements may hinder our ability to grow, which could adversely affect the value of our common stock.
These alternatives could increase our costs, reduce our equity, and/or result in stockholders being taxed on distributions of shares of stock without receiving cash sufficient to pay the resulting taxes. Thus, compliance with the REIT distribution requirements may hinder our ability to grow, which could adversely affect the value of our common stock.
If general interest rates or credit spreads decline at the same time, the proceeds of such prepayments received during such periods are likely to be reinvested by us in assets yielding less than the 14 Table of Contents yields on the assets that were prepaid. Conversely, prepayment rates generally decrease in periods of increasing or high interest rates.
If general interest rates or credit spreads decline at the same time, the proceeds of such prepayments received during such periods are likely to be reinvested by us in assets yielding less than the yields on the assets that were prepaid. Conversely, prepayment rates generally decrease in periods of increasing or high interest rates.
A period of lower interest rates may result in generating less income on our loans and may impact our ability to redeploy funds in a timely manner, or to supplement earnings loss. Our operating results depend in large part on differences between the income from our assets, net of credit losses, and our financing costs.
A period of lower interest rates may result in generating 26 Table of Contents less income on our loans and may impact our ability to redeploy funds in a timely manner, or to supplement earnings loss. Our operating results depend in large part on differences between the income from our assets, net of credit losses, and our financing costs.
Further, we cannot assure stockholders that any such tenant or borrower would be able to fulfill its indemnification obligations. If we were deemed liable for any such environmental liabilities and were unable to seek recovery against our tenant or borrower, our business, financial condition and results of operations could be materially and adversely affected.
Further, we cannot assure 35 Table of Contents stockholders that any such tenant or borrower would be able to fulfill its indemnification obligations. If we were deemed liable for any such environmental liabilities and were unable to seek recovery against our tenant or borrower, our business, financial condition and results of operations could be materially and adversely affected.
Adverse changes in general economic conditions may also disrupt the debt and equity capital markets and lack of access to capital or prohibitively high costs of obtaining or replacing capital may materially and adversely affect our business. We have only a limited ability to change our portfolio promptly in response to economic or other conditions.
Adverse changes in general economic conditions may also disrupt the debt and equity capital markets and lack of access to capital or prohibitively high costs of obtaining or replacing capital may materially and adversely affect our business. 16 Table of Contents We have only a limited ability to change our portfolio promptly in response to economic or other conditions.
Consequently, we may be unable to restructure an investment in a manner that we believe would maximize value. We have invested in, and may continue to invest in, certain assets with lower credit quality, which will increase our risk of losses and may reduce distributions to stockholders and may adversely affect the value of our common stock.
Consequently, we may be unable to restructure an investment in a manner that we believe would maximize value. We have invested in, and may continue to invest in, certain assets with variable credit quality, which may increase our risk of losses and may reduce distributions to stockholders and may adversely affect the value of our common stock.
While we maintain cybersecurity specific insurance for both first-party losses (breach response, ransomware, data loss, business interruption, contingent business interruption, social engineering coverage, system failure and hardware replacement) and third-party losses (breach demands, regulatory penalties, media liability), such insurance may not be sufficient to address any such losses.
While we maintain cybersecurity-specific insurance for both first-party losses (e.g., cybersecurity incident response, ransomware, data loss, business interruption, contingent business interruption, social engineering coverage, system failure and hardware replacement) and third-party losses (e.g., breach demands, regulatory penalties, media liability), such insurance may not be sufficient to address any such losses.
Subject to market conditions and availability, we may incur a significant amount of debt through bank credit facilities (including term loans and revolving 24 Table of Contents facilities), warehouse facilities and structured financing arrangements, public and private debt issuances and derivative instruments, in addition to transaction or asset-specific funding arrangements and additional repurchase agreements.
Subject to market conditions and availability, we may incur a significant amount of debt through bank credit facilities (including term loans and revolving facilities), warehouse facilities and structured financing arrangements, public and private debt issuances and derivative instruments, in addition to transaction or asset-specific funding arrangements and additional repurchase agreements.
As a result, we may be required to liquidate from our portfolio, or contribute to a TRS, otherwise attractive investments in order to maintain our qualification as a REIT. These actions could have the effect of reducing our income, increasing our income tax liability, and reducing amounts available for distribution to our stockholders.
As a result, we may be required to liquidate from our portfolio, or contribute to a TRS, otherwise attractive 32 Table of Contents investments in order to maintain our qualification as a REIT. These actions could have the effect of reducing our income, increasing our income tax liability, and reducing amounts available for distribution to our stockholders.
However, in situations where there are multiple creditors in large capital structures, it can be particularly difficult to assess the most likely course of action that a lender group or the borrower may take and it may also be 18 Table of Contents difficult to achieve consensus among the lender group as to major decisions.
However, in situations where there are multiple creditors in large capital structures, it can be particularly difficult to assess the most likely course of action that a lender group or the borrower may take and it may also be difficult to achieve consensus among the lender group as to major decisions.
If a U.S. stockholder sells the common stock that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale.
If a U.S. stockholder sells the common stock that it 29 Table of Contents receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale.
If we do obtain additional debt or financing, the substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operations may be insufficient to make required payments of principal of and interest on our debt or we may fail to comply with covenants contained in our debt agreements, which is likely to result in (1) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision), which we then may be unable to repay from internal funds or to refinance on favorable terms, or at all, (2) our inability to borrow undrawn amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements, which would result in a decrease in our liquidity, and/or (3) the loss of some or all of our collateral assets to foreclosure or sale; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase in an amount sufficient to offset the higher financing costs; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; • we may not be able to refinance any debt that matures prior to the maturity (or realization) of an underlying investment it was used to finance on favorable terms or at all; and • we will have increased exposure to risks if the counterparties of our debt obligations are impacted by credit market turmoil or exposure to financial or other pressures.
If we do obtain additional debt or financing, the substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operations may be insufficient to make required payments of principal of and interest on our debt or we may fail to comply with covenants contained in our debt agreements, which is likely to result in (1) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision), which we then may be unable to repay from internal funds or to refinance on favorable terms, or at all, (2) our inability to borrow undrawn amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements, which would result in a decrease in our liquidity, and/or (3) the loss of some or all of our collateral assets to foreclosure or sale; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase in an amount sufficient to offset the higher financing costs; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; • we may not be able to refinance any debt that matures prior to the maturity (or realization) of an underlying investment it was used to finance on favorable terms or at all; and • we will have increased exposure to risks if the counterparties of our debt obligations are impacted by credit market turmoil or exposure to financial or other pressures. 25 Table of Contents There can be no assurance that a leveraging strategy will be successful and may subject us to increased risk of loss, harm our liquidity and could adversely affect our results of operations and financial condition.
However, we cannot assure 15 Table of Contents you that the Internal Revenue Service (the “IRS”) will not challenge such characterization. In the event that any such sale-leaseback transaction is challenged and recharacterized as a financing transaction or loan for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed.
However, we cannot assure you that the Internal Revenue Service (the “IRS”) will not challenge such characterization. In the event that any such sale-leaseback transaction is challenged and recharacterized as a financing transaction or loan for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed.
In a challenging economic environment, we may experience an increase in provisions for loan losses and asset impairment charges, as borrowers may be unable to remain current in payments on loans and declining property values weaken our collateral.
In a challenging economic environment, we have experienced and may continue to experience an increase in provisions for loan losses and asset impairment charges, as borrowers may be unable to remain current in payments on loans and declining property values weaken our collateral.
Competition for participating interests is dependent to a large degree upon market conditions. Participating interests are more difficult to obtain when real estate financing is available at relatively low interest rates. Participating interests are not insured or guaranteed by any governmental entity and are therefore subject to the general risks inherent in real estate investments.
Competition for participating interests is dependent to a large degree upon market conditions. Participating interests are more difficult to obtain when real estate financing is available at relatively low 13 Table of Contents interest rates. Participating interests are not insured or guaranteed by any governmental entity and are therefore subject to the general risks inherent in real estate investments.
Our Board of Directors, with the approval of a majority of our entire Board of Directors and without stockholder approval, may amend our charter to increase or decrease the aggregate number of authorized shares of capital stock or the number of shares of capital stock of any class or series that we are authorized to issue.
Our Board of Directors, with the approval of a majority of our entire Board of Directors and without stockholder approval, may amend our charter to increase or decrease the aggregate number of authorized shares of 37 Table of Contents capital stock or the number of shares of capital stock of any class or series that we are authorized to issue.
If we issue and sell additional shares of our common stock, the ownership interests of our existing stockholders will be diluted to the extent they do not participate in the offering. Item 1B. Unresolved Staff Comments None. 39 Table of Contents
If we issue and sell additional shares of our common stock, the ownership interests of our existing stockholders will be diluted to the extent they do not participate in the offering. Item 1B. Unresolved Staff Comments None.
Therefore, even if we are successful in making investments that provide for participating interests, there can be no assurance that such interests will result in additional payments to us. 13 Table of Contents Any distressed loans or investments we make, or loans and investments that later become distressed, may subject us to losses and other risks relating to bankruptcy proceedings.
Therefore, even if we are successful in making investments that provide for participating interests, there can be no assurance that such interests will result in additional payments to us. Any distressed loans or investments we make, or loans and investments that later become distressed, may subject us to losses and other risks relating to bankruptcy proceedings.
Our operations in Europe and elsewhere expose our business to risks inherent in conducting business in foreign markets. A portion of our revenues are sourced from our foreign operations in Europe and elsewhere or other foreign markets. Accordingly, our firm-wide results of operations depend in part on our foreign operations.
Our operations in Europe and in the future, other foreign countries expose our business to risks inherent in conducting business in foreign markets. A portion of our revenues are sourced from our foreign operations in Europe and elsewhere or other foreign markets. Accordingly, our firm-wide results of operations depend in part on our foreign operations.
Our master repurchase agreements also grant certain consent rights to the lenders thereunder, which give them the right to consent to 25 Table of Contents certain modifications to the pledged collateral. This could limit our ability to manage a pledged investment in a way that we think would provide the best outcome for our stockholders.
Our master repurchase agreements also grant certain consent rights to the lenders thereunder, which give them the right to consent to certain modifications to the pledged collateral. This could limit our ability to manage a pledged investment in a way that we think would provide the best outcome for our stockholders.
If we are required to increase our level of allowance for loan losses for any reason, such increase may affect our business, financial condition and results of operations.
If 34 Table of Contents we are required to increase our level of allowance for loan losses for any reason, such increase may affect our business, financial condition and results of operations.
That deficiency dividend procedure could require us to make significant distributions to our stockholders and to pay significant interest to the IRS. 30 Table of Contents Dividends payable by REITs do not qualify for the preferential tax rates available for some dividends.
That deficiency dividend procedure could require us to make significant distributions to our stockholders and to pay significant interest to the IRS. Dividends payable by REITs do not qualify for the preferential tax rates available for some dividends.
If we are able to identify suitable 19 Table of Contents investments, it may not be successful in consummating the investment, resulting in increased costs and diversion in the investment professionals’ time, or if consummated, the returns on the investments may be below expectations.
If we are able to identify suitable investments, it may not be successful in consummating the investment, resulting in increased costs and diversion in the investment professionals’ time, or if consummated, the returns on the investments may be below expectations.
We could also become subject to investigations by the stock 35 Table of Contents exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
We could also become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
We are subject to risks associated with obtaining mortgage financing on our real estate, which could materially adversely affect our business, financial condition and results of operations and our ability to make distributions to stockholders. As of December 31, 2023, our portfolio had $617.4 million of total mortgage financing.
We are subject to risks associated with obtaining mortgage financing on our real estate, which could materially adversely affect our business, financial condition and results of operations and our ability to make distributions to stockholders. As of December 31, 2024, our portfolio had $587.2 million of total mortgage financing.
If we, are unable to find and allocate suitable investments promptly, we may hold the funds available for investment in an interest-bearing account or invest the proceeds in short-term assets. We expect that the income we earn on these temporary investments will not be substantial.
Our investment strategy may not be successful in locating suitable investments on financially attractive terms. If we, are unable to find and allocate suitable investments promptly, we may hold the funds available for investment in an interest-bearing account or invest the proceeds in short-term assets. We expect that the income we earn on these temporary investments will not be substantial.
As a result, our economic performance, the value of our CRE debt and debt-like investments, real estate and real estate-related investments, and our ability to implement our business strategies may be significantly and adversely affected by changes in economic conditions in the United States where a substantial number of our investments are located and in international geographic areas, as applicable.
As a result, our economic performance, the value of our CRE debt and debt-like investments, real estate and real estate-related investments, and our ability to implement our business strategies may be significantly and adversely affected by changes in economic conditions in the United States where all but one of our investments is located and in international geographic areas, as applicable.
Subsequent valuations and estimates, in light of factors then prevailing, may result in decreases in the values of our assets resulting in impairment charges or increases in loan loss provisions and therefore our results of operations, financial condition and our ability to make distributions to stockholders could be materially and adversely impacted.
Subsequent valuations and estimates, in light of factors then prevailing, may result in decreases in the values of our assets resulting in impairment charges or increases in loan loss provisions and therefore our results of operations, financial condition and our ability to make distributions to stockholders could be materially and adversely impacted. 14 Table of Contents Prepayment rates may adversely affect the value of our portfolio of assets.
Prepayment rates may adversely affect the value of our portfolio of assets. Generally, our borrowers may repay their loans prior to their stated final maturities. In periods of declining interest rates and/or credit spreads, prepayment rates on loans generally increase.
Generally, our borrowers may repay their loans prior to their stated final maturities. In periods of declining interest rates and/or credit spreads, prepayment rates on loans generally increase.
If we, our borrowers or other companies with which we do business, particularly utilities that provide our facilities with electricity, become subject to laws or regulations related to climate change, it could have a material adverse effect on us.
If we, our borrowers or other companies with which we do business, particularly utilities that provide our facilities with electricity, become subject to laws or regulations related to climate change, it could have a material adverse effect on us. The United States may enact new laws, regulations and interpretations relating to climate change.
In recent periods, sales by online retailers have increased, and many retailers operating brick and mortar stores have made online sales a vital piece of their businesses, which have been influenced by consumer habits associated with COVID-19. Some of our debt and equity investments involve exposure to the ongoing operations of brick and mortar retailers.
In recent periods, sales by online retailers have increased, and many retailers operating brick and mortar stores have made online sales a vital piece of their businesses. Some of our debt and equity investments involve exposure to the ongoing operations of brick and mortar retailers.
Conversely, we may decide from time to time to close out, or terminate a portion of, our outstanding hedges upon the determination that they are no longer effective, which may result in incurring realized losses and increased exposure to interest rate and currency risks, which may have an adverse effect on the value of our loans, securities, long-term debt obligations and other assets we own that are sensitive to changes in benchmark interest and currency rates.
Conversely, we may decide from time to time to close out, or terminate a portion of, our outstanding hedges upon the determination that they are no longer effective, which may result in incurring realized losses and increased exposure to interest rate and currency risks, which may have an adverse effect on the value of our loans, securities, long-term debt obligations and other assets we own that are sensitive to changes in benchmark interest and currency rates. 27 Table of Contents We use short-term borrowings to finance our investments, and we may need to use such borrowings for extended periods of time to the extent we are unable to access long-term financing.
Although REITs generally receive certain tax advantages compared to entities taxed as C corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be treated for U.S. federal income tax purposes as a C corporation.
Although REITs generally receive certain tax advantages compared to entities taxed as C corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be treated for U.S. federal income tax purposes as a C corporation. 33 Table of Contents Our ownership of assets and conduct of operations through our TRSs is limited and involves certain risks for us.
However, these ownership limits might also delay, defer or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders or result in the transfer of shares acquired in excess of the ownership limits to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares. 23 Table of Contents Our charter contains provisions that make removal of our directors difficult, which makes it more difficult for our stockholders to effect changes to our management and may prevent a change in control of our Company that is otherwise in the best interests of our stockholders.
However, these ownership limits 23 Table of Contents might also delay, defer or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders or result in the transfer of shares acquired in excess of the ownership limits to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares.
The introduction of governmental policies to curb inflation can have an adverse effect on our business. High inflation in the United States and other countries in which we conduct our investment activities and hold our investments could increase our expenses and we may not be able to pass these increased costs on to our borrowers.
High inflation in the United States and other countries in which we conduct our investment activities and hold our investments could increase our expenses and we may not be able to pass these increased costs on to our borrowers.
Further, future funding obligations may require us to maintain higher liquidity than we might otherwise maintain and this could reduce the overall return on our investments. We could also find ourselves in a position with insufficient liquidity to fund future obligations.
Further, future funding obligations may require us to maintain higher liquidity than we might otherwise maintain and this could reduce the overall return on our investments.
If we are required to register as an investment company under the Investment Company Act, we would become subject to substantial regulation with respect to our capital structure (including our ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), portfolio composition, including restrictions with respect to diversification and industry concentration and other matters. 28 Table of Contents We, through our subsidiary, are subject to extensive regulation, including as an investment adviser in the United States, which could adversely affect our ability to manage our business.
If we are required to register as an investment company under the Investment Company Act, we would become subject to substantial regulation with respect to our capital structure (including our ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), portfolio composition, including restrictions with respect to diversification and industry concentration and other matters.
The market price and liquidity of the market for shares of our common stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance.
The capital and credit markets have from time to time experienced periods of extreme volatility and disruption. The market price and liquidity of the market for shares of our common stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance.
An externally caused information security incident or an internally caused issue, such as failure to control access to sensitive systems, could materially interrupt business operations, interfere with our ability to comply with financial reporting requirements or cause disclosure or modification of sensitive or confidential information and could result in material financial loss, loss of competitive position, regulatory actions, breach of contracts, reputational harm or legal liability.
An accidental or intentionally malicious cybersecurity incident, whether caused internally or externally, could materially interrupt business operations, interfere with our ability to comply with financial reporting requirements or cause unauthorized access to, disclosure of, or modification to sensitive or confidential information and could result in material financial loss, loss of competitive position, regulatory scrutiny or enforcement, litigation, breach of contracts, reputational harm or legal liability.
Other countries have enacted climate change laws and regulations, and the United States has been involved in discussions and agreements regarding international climate change treaties. The federal government and some of the states and localities in which we operate have enacted certain climate change laws and regulations and/or have begun regulating carbon footprints and greenhouse gas emissions.
The federal government and some of the states and localities in which we operate have enacted certain climate change laws and regulations and/or have begun regulating carbon footprints and greenhouse gas emissions.
In a weakening economic environment, we would generally expect credit quality and the value of the investment that serves as collateral for our financing arrangements to decline, and in such a scenario, it is likely that the terms of our financing arrangements would require partial repayment from us, which could be substantial. 27 Table of Contents These facilities may also be restricted to financing certain types of assets, such as first mortgage loans, which could impact our asset allocation.
In a weakening economic environment, we would generally expect credit quality and the value of the investment that serves as collateral for our financing arrangements to decline, and in such a scenario, it is likely that the terms of our financing arrangements would require partial repayment from us, which could be substantial.
For example, the equity interests of CDOs are illiquid and often must be held by a REIT. CRE securities such as CMBS may be subject to particular risks, including lack of standardized terms and payment of all or substantially all of the principal only at maturity rather than regular amortization of principal.
CRE securities such as CMBS may be subject to particular risks, including lack of standardized terms and payment of all or substantially all of the principal only at maturity rather than regular amortization of principal.
Even with appropriate security measures and procedures in place, not every breach can be prevented or detected. There is no assurance that we, or the third parties that facilitate our business activities, have not or will not experience a breach.
We employ a variety of measures to prevent, detect, respond to, and recover from cybersecurity threats; however, even with appropriate security measures and procedures in place, not every cybersecurity incident can be prevented or detected. There is no assurance that we, or the third parties that facilitate our business activities, have not or will not experience a significant cybersecurity incident.
The United States and other countries have in the past experienced extremely high rates of inflation. Inflation, along with governmental measures to control inflation, coupled with public speculation about possible future governmental measures to be adopted, has had significant negative effects on national, regional and local economies in the past and this could occur again in the future.
Inflation, along with governmental measures to control inflation, coupled with public speculation about possible future governmental measures to be adopted, has had significant negative effects on national, regional and local economies in the past and this could occur again in the future. The introduction of governmental policies to curb inflation can have an adverse effect on our business.
Our ownership of assets and conduct of operations through our TRSs is limited and involves certain risks for us. We use our TRSs to hold assets and earn income that would not be qualifying assets or income if held or earned directly by us.
We use our TRSs to hold assets and earn income that would not be qualifying assets or income if held or earned directly by us.
Risks Related to Regulatory Matters The loss of our Investment Company Act exclusion could require us to register as an investment company or substantially change the way we conduct our business, either of which may have an adverse effect on us and the value of our common stock.
Currently, we have no warehouse facilities in place, and no assurance can be given that we will be able to obtain one or more. 28 Table of Contents Risks Related to Regulatory Matters The loss of our Investment Company Act exclusion could require us to register as an investment company or substantially change the way we conduct our business, either of which may have an adverse effect on us and the value of our common stock.
We invest in CRE securities, including CMBS and CDOs, which entail certain heightened risks and are subject to losses. We have invested and may invest in a variety of CRE securities, including CMBS, CDOs and other subordinate securities. The market for CRE securities is dependent upon liquidity for refinancing and may be negatively impacted by a slowdown in new issuance.
We may invest in CRE securities, including CMBS and CDOs, which entail certain heightened risks and are subject to losses. We have invested and may invest in a variety of CRE securities, including CMBS, CDOs and other subordinate securities.
In the United States, the Dodd-Frank Act established the Financial Stability Oversight Council (the “FSOC”), which is comprised of representatives of all the major U.S. financial regulators, to act as the financial system’s systemic risk regulator.
In the United States, the Dodd-Frank Act established the Financial Stability Oversight Council (the “FSOC”), which is comprised of the Secretary of the Treasury and representatives of all the major U.S. financial regulators, to collaborate among financial regulators and address potential risks to the stability of the U.S. financial system.
Risks Related to Our Financing Strategy Our indebtedness may subject us to increased risk of loss and could adversely affect our results of operations and financial condition. We use a variety of structures to finance the origination and acquisition of our investments, including our credit facilities, securitization financing transactions and other term borrowings, including repurchase agreements.
We use a variety of structures to finance the origination and acquisition of our investments, including our credit facilities, securitization financing transactions and other term borrowings, including repurchase agreements.
In addition, regardless of whether the securitization is consummated, if any of the warehoused collateral is sold before the consummation, we would have to bear any resulting loss on the sale. Currently, we have no warehouse facilities in place, and no assurance can be given that we will be able to obtain one or more.
In addition, regardless of whether the securitization is consummated, if any of the warehoused collateral is sold before the consummation, we would have to bear any resulting loss on the sale.
In addition, net leases typically have longer lease terms and, thus, there is an increased risk that contractual rental increases or renewal rights and associated rates in future years will fail to result in fair market rental rates during those years.
In addition, net leases typically have longer lease terms and, thus, there is an increased risk that contractual rental increases or renewal rights and associated rates in future years will fail to result in fair market rental rates during those years. 15 Table of Contents We may acquire these investments through sale-leaseback transactions, which involve the purchase of a property and the leasing of such property back to the seller thereof.
We may not have control over certain of our loans and investments. Our ability to manage our portfolio of loans and investments may be limited by the form in which they are made.
We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. We may not have control over certain of our loans and investments. Our ability to manage our portfolio of loans and investments may be limited by the form in which they are made.
We may be unable to restructure our investments in a manner that we believe maximizes value, particularly if we are one of multiple creditors in a large capital structure. In order to maximize value, we may be more likely to extend and work out an investment rather than pursue other remedies such as taking title to collateral.
In order to maximize value, we may be more likely to extend and work out an investment rather than pursue other remedies such as taking title to collateral.
If the IRS successfully challenged that tax treatment, it would reduce the amount that those foreign TRSs would have available to pay to their creditors and to distribute to us. 33 Table of Contents We are mindful of all of these limitations and analyze and structure the income and operations of our TRSs to mitigate these costs and risks to us to the extent practicable, but we may not always be successful in all cases.
We are mindful of all of these limitations and analyze and structure the income and operations of our TRSs to mitigate these costs and risks to us to the extent practicable, but we may not always be successful in all cases.
We use short-term borrowings to finance our investments, and we may need to use such borrowings for extended periods of time to the extent we are unable to access long-term financing. This may expose us to increased risks associated with decreases in the fair value of the underlying collateral, which could have an adverse impact on our results of operations.
This may expose us to increased risks associated with decreases in the fair value of the underlying collateral, which could have an adverse impact on our results of operations.
Although the FSOC has raised the “systemically important financial institution” asset threshold to $250 billion in total consolidated assets, compliance with any increased regulation of non-bank credit extension could require changes to certain of our business practices, negatively impact our operations, cash flows or financial condition or impose additional costs on us.
Compliance with any increased regulation of non-bank credit extension could require changes to 36 Table of Contents certain of our business practices, negatively impact our operations, cash flows or financial condition or impose additional costs on us. The market price of our common stock may fluctuate significantly.
Computer malware, viruses, computer hacking and phishing attacks have become more prevalent in our industry and we may be subject to such attempted attacks from time to time. We rely heavily on financial, accounting and other data processing systems maintained by us and by third parties with whom we contract for information technology, network, data storage and other related services.
We rely heavily on financial, accounting and other data processing systems maintained by us and by third parties with whom we contract for information technology, network, data storage and other related services, including to process such confidential information.
As a result of this competition, desirable loans and investments in our target assets may be limited in the future, and we may not be able to take advantage of attractive lending and investment opportunities from time to time. In addition, reduced CRE transaction volume could increase competition for available investment opportunities.
In addition, further changes in the financial regulatory regime could decrease the current restrictions on banks and other financial institutions and allow them to compete with us for investment opportunities that were previously not available to them. 17 Table of Contents As a result of this competition, desirable loans and investments in our target assets may be limited in the future, and we may not be able to take advantage of attractive lending and investment opportunities from time to time.
Our subsidiary, BrightSpire Capital Advisors, LLC (“BrightSpire Advisors”) is subject to regulation as an investment adviser by various regulatory authorities.
We, through our subsidiary, are subject to extensive regulation, including as an investment adviser in the United States, which could adversely affect our ability to manage our business. Our subsidiary, BrightSpire Capital Advisors, LLC (“BrightSpire Advisors”), is subject to regulation as an investment adviser by various regulatory authorities.
The FSOC has the authority to review the activities of non-bank financial companies predominantly engaged in financial activities and designate those companies as “systemically important” for supervision by the Federal Reserve.
The FSOC has the authority to review the activities of non-bank financial companies predominantly engaged in financial activities and designate those companies as “systemically important” for supervision by the Federal Reserve when the nature, scope, size, scale, concentration, interconnectedness or mix of the Company’s activities, or material financial distress at the Company, could pose a threat to the financial stability of the U.S.
Thus holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings in us. We may issue additional equity securities, which may dilute your interest in us. Stockholders do not have preemptive rights to any shares we issue in the future.
Any of the foregoing factors could negatively affect our stock price or result in fluctuations in the price or trading volume of our common stock. We may issue additional equity securities, which may dilute your interest in us. Stockholders do not have preemptive rights to any shares we issue in the future.
In addition, such short-term borrowing facilities may limit the length of time that any given asset may be used as eligible collateral. As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on assets.
These facilities may also be restricted to financing certain types of assets, such as first mortgage loans, which could impact our asset allocation. In addition, such short-term borrowing facilities may limit the length of time that any given asset may be used as eligible collateral.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOther members of management and team leaders assist in incident response efforts as well. • Cybersecurity Risk Management (“CRM”) Program : The CRM program includes: (i) implementation of hardware and software infrastructure, primarily cloud based; (ii) “security first” approach to policies, processes and procedures (including general IT and security, information security, business continuity and incident response policies and plans); (iii) employee education, training and periodic testing and patching, including four to six sessions each calendar year (addressing spam, phishing, information security protocols, use of social media); and (iv) assessments of internal resources and diligence of external vendors and systems.
Biggest changeOther members of management and team leaders assist in incident response efforts as well. • Cybersecurity Risk Management (“CRM”) Program : The CRM program includes: (i) implementation of hardware and software infrastructure, primarily cloud based; (ii) “security first” approach to policies, processes and procedures (including general IT and security, information security, business continuity and incident response policies and plans); (iii) employee education, training and periodic testing and patching; and (iv) assessments of internal resources and diligence of external vendors and systems.
We regularly review our cybersecurity systems, policies and procedures through a series of channels, including but not limited to our Audit Committee and Board of Directors, the BrightSpire IT Partner, our internal Information Security Group, our independent financial auditor, and outside counsel. • Our Audit Committee and Board of Directors play an active role in reviewing our cybersecurity initiatives.
We regularly review our cybersecurity systems, policies and procedures through a series of channels, including but not limited to our Audit Committee and Board of Directors, the BrightSpire IT Partner, our internal Information Security Group, our internal financial auditor and outside counsel. • Our Audit Committee and Board of Directors play an active role in reviewing our cybersecurity initiatives.
The BrightSpire IT Partner also performs annual due diligence of key vendors on a rotating basis (including System and Organization Controls (SOC) report reviews, or alternatively solicit detailed questionnaires to evaluate such vendors cybersecurity preparedness and protections). • Our Head of IT has over two decades of experience in IT and cybersecurity work and developed and implemented our cybersecurity program with the BrightSpire IT Partner.
The BrightSpire IT Partner also performs annual due diligence of key vendors on a rotating basis (including System and Organization Controls (SOC) report reviews, or alternatively solicits detailed questionnaires to evaluate such vendors cybersecurity preparedness and protections). • Our Head of IT has over two decades of experience in IT and cybersecurity work and developed and implemented our cybersecurity program with the BrightSpire IT Partner.
Business continuity, disaster recovery and incident response procedures prioritize constant communication and follow a multi-step program including identification, preparation, implementation and resolution. • Cloud Services : We migrated and maintain our company data and communication services to a leading cloud-based service provider, security systems and protected environment.
Business continuity, disaster recovery and incident response procedures prioritize constant communication and follow a multi-step program including identification, preparation, implementation and resolution. • Cloud Services : We maintain our company data and communication services with a leading cloud-based service provider, security systems and protected environment.
Through consultant driven data, analytics and peer benchmarking, we secured and maintain specific coverage to mitigate losses associated with cyber-attacks and other information security incidents, addressing both first-party and third-party losses from incident response, cyber extortion, data loss, business interruption, contingent business interruption, regulatory penalties, media liability, social engineering coverage, system failures and bricking/hardware replacement.
Through consultant driven data, analytics and peer benchmarking, we secured and maintain specific coverage to mitigate certain losses associated with cyber-attacks and other information security incidents, addressing both first-party and third-party losses from incident response, including for example, cyber extortion, data loss, business interruption, contingent business interruption, regulatory penalties, media liability, social engineering coverage, system failures and bricking/hardware replacement.
Employees working from home may only connect and conduct business activities through a virtual private network (VPN). • Security First Approach : Our cloud-based systems take a security first approach, including: (i) Perimeter Security (firewalls, antivirus, malware); (ii) Network Security (secure remote access, network patch management); (iii) Application Security (patch management, multi-factor authentication); (iv) Endpoint Security (email security/encryption, web filtering & URL defense, mobile device management); and (v) Data Security.
Employees working from home may only connect and conduct business activities through a virtual private network (VPN). • Security First Approach : Our cloud-based systems take a security first approach, including: (i) Perimeter Security (firewalls, antivirus, malware); (ii) Network Security (secure remote access, network patch management); (iii) Application Security (patch management, multi-factor authentication); (iv) Endpoint Security (email security/encryption, web filtering & URL defense, mobile device management); and (v) Data Security. 38 Table of Contents Cybersecurity Systems Review.
In coordination with the Information Security Group, the General Counsel provides reports of material cybersecurity incidents and cybersecurity threats (if any) at each quarterly meeting of the Audit Committee and Board. 40 Table of Contents • The BrightSpire IT Partner has established itself as a provider of managed services and technology solutions for over two decades, providing 24/7 oversight and services, including continuous testing and vulnerability scanning.
In coordination with the Information Security Group, the General Counsel provides reports of significant cybersecurity incidents and cybersecurity threats (if any) at each quarterly meeting of the Audit Committee and Board or ad hoc as appropriate. • The BrightSpire IT Partner has established itself as a provider of managed services and technology solutions for over two decades, providing 24/7 oversight and services, including continuous testing and vulnerability scanning.
The results of our ERM layers of management control, risk control and compliance oversight and independent assurances in any given quarter are reviewed with senior management, our Audit Committee (independent directors, primarily responsible for oversight of our overall risk profile and risk management policies) and Board of Directors.
The results of our ERM layers of management control, risk control and compliance oversight and independent assurances are reviewed with senior management, our Audit Committee (independent directors, primarily responsible for oversight of our overall risk profile and risk management policies) and Board of Directors quarterly.
Benefits provided by the Head of IT and BrightSpire IT Partner include a significant reduction in critical vulnerabilities, cost effective governance and risk services, current expertise/awareness to model, adaptation to and mitigation of new threats, leverage of internal team resources to focus on business priorities, and effectively meeting and managing evolving regulatory requirements in real time.
Benefits provided by the Head of IT and BrightSpire IT Partner include a significant reduction in critical vulnerabilities, cost effective governance and risk services, current expertise/awareness to model, adapt and mitigate new threats, leverage of internal team resources to focus on business priorities, and addressing evolving regulatory requirements.
The Information Security Group undertakes table-top business disruption, disaster recovery and related response strategies and plans on a periodic basis and seeks to review and update applicable policies and procedures at least annually. No Material Incidents . Since inception in January 2018, we have not experienced any material cybersecurity or information security incidents.
The Information Security Group undertakes table-top business disruption, disaster recovery and related response strategies and plans on a periodic basis and seeks to review and update applicable policies and procedures at least annually. No Material Incidents .
The BrightSpire IT Partner provides our Board an annual review of our cybersecurity governance and risk management program, security metrics relevant to the period in review (including findings on phishing campaigns and vulnerability patchwork initiatives) and provides the Audit Committee and Board updates regarding the cybersecurity threat landscape (for example, the impact of artificial intelligence).
The BrightSpire IT Partner provides our Board an annual review of our cybersecurity governance and risk management program, security metrics relevant to the period in review and provides the Audit Committee and Board updates regarding the cybersecurity threat landscape.
Our cybersecurity program is designed with the BrightSpire IT Partner’s attention to and integration of certain information security standards issued by the SEC, the National Institute of Standards and Technology, and the International Organization for Standardization.
Our cybersecurity program is designed to leverage certain information security standards, such as those issued by the National Institute of Standards and Technology, and the International Organization for Standardization.
Removed
We have not incurred any expenses due to material information security incident penalties or settlements. Cyber Liability Insurance .
Added
Our response plans require prompt notification to the Information Security Group in the event of a significant cybersecurity incident and prompt briefings on further developments as appropriate.
Added
As of December 31, 2024, we have not experienced any material risks from cybersecurity threats, including as a result of any previous cybersecurity incidents or threats, that have materially affected the business strategy, results of operations or financial condition of the Company or are reasonably likely to have such a material effect.
Added
Since inception in January 2018, we are not aware of any cybersecurity or information security incidents that have materially affected us to date. We have not incurred any expenses due to material information security incident penalties or settlements. However, evolving cybersecurity threats make it increasingly challenging to anticipate, detect, and defend against cybersecurity threats and incidents.
Added
Refer to the risk factor “We are highly dependent on information systems and third-parties, and system failures or cybersecurity incidents incurred by us or the third-parties that we rely on could significantly disrupt our ability to operate our business.” in the section entitled “Risk Factors—Risks Related to Our Company and Our Structure” for more information regarding our cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 2. Properties Information regarding our investment properties at December 31, 2023 are included in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations —Net Leased and Other Real Estate” and “Item 15. Exhibits and Financial Statement Schedules—Schedule III. Real Estate and Accumulated Depreciation” of this Annual Report.
Biggest changeItem 2. Properties Information regarding our investment properties at December 31, 2024 are included in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations —Net Leased and Other Real Estate” and “Item 15. Exhibits and Financial Statement Schedules—Schedule III. Real Estate and Accumulated Depreciation” of this Annual Report.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed8 unchanged
Biggest changeThe cumulative total return on our class A common stock as presented is not necessarily indicative of future performance of our class A common stock. Item 6. Reserved. 43 Table of Contents
Biggest changeThe cumulative total return on our Class A common stock as presented is not necessarily indicative of future performance of our Class A common stock. Prior to 2024, we utilized the Bloomberg REIT Mortgage Index (the “BBREMTG Index”) as our published industry index. The BBREMTG Index ceased publishing in 2024, requiring us to switch to the FNMRC Index. Item 6.
Unregistered Sales of Equity Securities and Use of Proceeds There were no sales of unregistered securities of our Company during the year ended December 31, 2023. 42 Table of Contents Purchases of Equity Securities by Issuer The Company did not repurchase any of its Class A common stock during the three months ended December 31, 2023.
Unregistered Sales of Equity Securities and Use of Proceeds There were no sales of unregistered securities of our Company during the year ended December 31, 2024. 40 Table of Contents Purchases of Equity Securities by Issuer The Company did not repurchase any of its Class A common stock during the three months ended December 31, 2024.
Common Stock 2023 Ordinary income $ — Return of capital 0.80 Total $ 0.80 2022 Ordinary income $ 0.64 Return of capital 0.13 Total $ 0.77 2021 Ordinary income $ 0.29 Return of capital 0.11 Total $ 0.40 For the year ended December 31, 2023, we paid aggregate dividends of $104.0 million to our Class A common stockholders.
Common Stock 2024 Ordinary income $ 0.25 Return of capital 0.51 Total $ 0.76 2023 Ordinary income $ — Return of capital 0.80 Total $ 0.80 2022 Ordinary income $ 0.64 Return of capital 0.13 Total $ 0.77 For the year ended December 31, 2024, we paid aggregate dividends of $99.1 million to our Class A common stockholders.
Stock Performance Graph The following graph compares the cumulative total return on our class A common stock with the cumulative total returns on the Russell 2000 Index (the “Russell 2000”) and the Bloomberg REIT Mortgage Index (the “BBREMTG Index”), a published industry index from January 1, 2019 to December 31, 2023.
Stock Performance Graph The following graph compares the cumulative total return on our Class A common stock with the cumulative total returns on the Russell 2000 Index (the “Russell 2000”) and the FTSE NAREIT All Mortgage Capped Index (the “FNMRC Index”), a published industry index from January 1, 2020 to December 31, 2024.
As of February 20, 2024, the closing price of our Class A common stock was $6.63 and we had approximately 130.0 million shares of Class A common stock outstanding held by a total of 2,932 holders of record. This figure does not reflect the beneficial ownership of shares held in nominee name.
As of February 18, 2025, the closing price of our Class A common stock was $5.97 and we had approximately 129.7 million shares of Class A common stock outstanding held by a total of 2,715 holders of record. This figure does not reflect the beneficial ownership of shares held in nominee name.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

111 edited+45 added−91 removed109 unchanged
Biggest changeCarrying value (at BRSP share) Region Count Senior loans Mezzanine loans Total % of Total US West 35 $ 1,184,293 $ 59,855 $ 1,244,148 42.4 % US Southwest 34 1,059,000 4,425 1,063,425 36.2 % US Northeast 10 398,894 16,452 415,346 14.1 % US Southeast 8 213,587 — 213,587 7.3 % Total 87 $ 2,855,774 $ 80,732 $ 2,936,506 100.0 % 48 Table of Contents The following table provides asset level detail for our senior and mezzanine loans as of December 31, 2023 (dollars in thousands): Loan Type Origination Date City, State Carrying value (1) Principal balance Coupon type Cash Coupon (2) Unlevered all-in yield (3) Extended maturity date Loan-to-value (4) Q4 Risk ranking (5) Multifamily Loan 1 (6) Senior 6/18/2019 Santa Clara, CA $ 57,244 $ 57,443 Floating 5.5% 10.9% 6/18/2024 69% 3 Loan 2 Senior 5/17/2022 Las Vegas, NV 53,871 53,966 Floating 3.6% 9.4% 6/9/2027 74% 4 Loan 3 Senior 3/8/2022 Austin, TX 50,381 50,323 Floating 3.3% 9.2% 3/9/2027 75% 3 Loan 4 Senior 7/19/2021 Dallas, TX 50,333 50,200 Floating 3.4% 8.7% 8/9/2026 74% 3 Loan 5 Senior 5/26/2021 Las Vegas, NV 46,944 46,798 Floating 3.5% 9.2% 6/9/2026 70% 4 Loan 6 Senior 2/3/2021 Arlington, TX 44,418 44,207 Floating 3.7% 9.6% 2/9/2026 81% 4 Loan 7 Senior 3/1/2021 Richardson, TX 43,387 43,411 Floating 3.5% 9.2% 3/9/2026 75% 3 Loan 8 Senior 7/15/2021 Jersey City, NJ 43,025 43,000 Floating 3.1% 8.8% 8/9/2026 66% 3 Loan 9 Senior 12/21/2020 Austin, TX 42,840 42,850 Floating 3.8% 9.5% 1/9/2026 54% 3 Loan 10 Senior 3/31/2022 Louisville, KY 42,208 42,176 Floating 3.7% 9.6% 4/9/2027 72% 3 Subtotal top 10 multifamily $ 474,651 $ 474,374 16% of total loans Loan 11 Senior 3/22/2021 Fort Worth, TX $ 42,109 $ 42,046 Floating 3.6% 9.3% 4/9/2026 83% 3 Loan 12 Senior 7/15/2021 Dallas, TX 40,011 40,011 Floating 3.2% 8.6% 8/9/2026 77% 3 Loan 13 Senior 12/7/2021 Denver, CO 39,598 39,598 Floating 3.3% 9.0% 12/9/2026 74% 3 Loan 14 Senior 3/31/2022 Long Beach, CA 38,848 38,900 Floating 3.4% 9.3% 4/9/2027 74% 3 Loan 15 Senior 7/12/2022 Irving, TX 37,848 37,946 Floating 3.6% 9.5% 8/9/2027 73% 3 Loan 16 Senior 1/18/2022 Dallas, TX 36,584 36,460 Floating 3.5% 9.4% 2/9/2027 75% 3 Loan 17 Senior 9/28/2021 Carrollton, TX 36,190 36,282 Floating 3.2% 8.9% 10/9/2025 73% 3 Loan 18 Senior 1/12/2022 Los Angeles, CA 36,017 36,159 Floating 3.4% 9.0% 2/9/2027 65% 3 Loan 19 Senior 7/29/2021 Phoenix, AZ 33,044 33,117 Floating 3.4% 9.0% 8/9/2026 74% 3 Loan 20 (6) Mezzanine 12/9/2019 Milpitas, CA 32,643 32,643 Fixed n/a 10.2% 3/3/2026 58% - 79% 3 Subtotal top 20 multifamily $ 847,543 $ 847,536 29% of total loans Loan 21 Senior 3/31/2021 Mesa, AZ $ 31,482 $ 31,434 Floating 3.8% 9.6% 4/9/2026 83% 3 Loan 22 Senior 4/29/2021 Las Vegas, NV 30,114 30,079 Floating 3.2% 8.9% 5/9/2026 76% 3 Loan 23 Senior 4/15/2022 Mesa, AZ 29,917 30,049 Floating 3.4% 9.0% 5/9/2027 75% 3 49 Table of Contents Loan Type Origination Date City, State Carrying value (1) Principal balance Coupon type Cash Coupon (2) Unlevered all-in yield (3) Extended maturity date Loan-to-value (4) Q4 Risk ranking (5) Loan 24 Senior 7/13/2021 Plano, TX 29,154 29,142 Floating 3.2% 8.9% 2/9/2025 77% 3 Loan 25 Senior 2/17/2022 Long Beach, CA 29,077 29,120 Floating 3.4% 9.2% 3/9/2027 67% 3 Loan 26 (7) Senior 5/19/2022 Denver, CO 28,809 28,809 n/a (7) n/a (7) n/a (7) 6/9/2027 73% 5 Loan 27 Senior 8/31/2021 Glendale, AZ 28,191 28,262 Floating 3.3% 8.9% 9/9/2026 75% 3 Loan 28 Senior 5/27/2021 Houston, TX 28,000 28,000 Floating 3.1% 8.5% 6/9/2026 67% 3 Loan 29 Senior 12/16/2021 Fort Mill, SC 27,347 27,366 Floating 3.3% 8.9% 1/9/2027 71% 3 Loan 30 (6) Mezzanine 2/8/2022 Las Vegas, NV 27,211 27,263 Fixed 7.0% 12.3% 2/8/2027 56% - 79% 3 Loan 31 Senior 12/21/2021 Phoenix, AZ 25,350 25,442 Floating 3.6% 9.3% 1/9/2027 75% 3 Loan 32 Senior 7/12/2022 Irving, TX 25,097 25,165 Floating 3.6% 9.5% 8/9/2027 72% 3 Loan 33 Senior 3/8/2022 Glendale, AZ 24,797 24,900 Floating 3.5% 9.1% 3/9/2027 73% 3 Loan 34 Senior 7/1/2021 Aurora, CO 23,956 24,002 Floating 3.2% 8.9% 7/9/2026 73% 3 Loan 35 Senior 3/31/2022 Phoenix, AZ 23,586 23,691 Floating 3.7% 9.3% 4/9/2027 75% 3 Loan 36 Senior 11/4/2021 Austin, TX 23,207 23,279 Floating 3.4% 9.0% 11/9/2026 71% 3 Loan 37 Senior 6/22/2021 Phoenix, AZ 22,093 22,136 Floating 3.3% 8.9% 7/9/2026 75% 3 Loan 38 Senior 7/13/2021 Oregon City, OR 21,774 21,764 Floating 3.4% 9.1% 8/9/2026 73% 3 Loan 39 Senior 1/12/2022 Austin, TX 20,178 20,187 Floating 3.4% 9.2% 2/9/2027 75% 3 Loan 40 Senior 9/22/2021 Denton, TX 19,758 19,761 Floating 3.3% 9.0% 10/9/2025 70% 3 Loan 41 Senior 8/6/2021 La Mesa, CA 19,752 19,752 Floating 3.0% 8.3% 8/9/2025 70% 3 Loan 42 Senior 12/21/2021 Gresham, OR 19,447 19,455 Floating 3.6% 9.5% 1/9/2027 74% 3 Loan 43 Senior 9/1/2021 Bellevue, WA 19,308 19,308 Floating 3.0% 8.4% 9/9/2025 64% 3 Loan 44 Senior 6/24/2021 Phoenix, AZ 19,236 19,236 Floating 3.5% 8.8% 7/9/2026 63% 4 Loan 45 Senior 5/5/2022 Charlotte, NC 18,474 18,500 Floating 3.5% 9.4% 5/9/2027 61% 3 Loan 46 Senior 7/14/2021 Salt Lake City, UT 18,323 18,315 Floating 3.4% 9.1% 8/9/2026 73% 3 Loan 47 Senior 4/29/2022 Tacoma, WA 18,077 18,110 Floating 3.3% 9.2% 5/9/2027 72% 3 Loan 48 Senior 6/25/2021 Phoenix, AZ 17,488 17,518 Floating 3.2% 8.9% 7/9/2026 75% 3 Loan 49 Senior 7/21/2021 Durham, NC 15,199 15,228 Floating 3.4% 9.1% 8/9/2026 58% 3 Loan 50 Senior 3/8/2022 Glendale, AZ 11,434 11,482 Floating 3.5% 9.1% 3/9/2027 73% 3 Loan 51 Mezzanine 7/30/2014 Various - TX 4,425 4,425 Fixed 9.5% 9.5% 8/11/2024 71% - 83% 3 Total/Weighted average multifamily loans $ 1,547,804 $ 1,548,716 53% of total loans 3.4% 9.1% 2.6 years 3.1 50 Table of Contents Loan Type Origination Date City, State Carrying value (1) Principal balance Coupon type Cash Coupon (2) Unlevered all-in yield (3) Extended maturity date Loan-to-value (4) Q4 Risk ranking (5) Office Loan 52 Senior 2/17/2022 Boston, MA $ 87,450 $ 87,533 Floating 3.8% 9.7% 3/9/2027 54% 3 Loan 53 Senior 12/7/2018 Carlsbad, CA 75,604 75,581 Floating 3.9% 9.7% 12/9/2024 75% 3 Loan 54 Senior 8/28/2018 San Jose, CA 74,071 74,071 Floating 2.6% 7.9% 8/28/2025 75% 3 Loan 55 Senior 1/19/2021 Phoenix, AZ 73,574 73,616 Floating 3.7% 9.3% 2/9/2026 70% 3 Loan 56 Senior 2/13/2019 Baltimore, MD 59,154 59,154 Floating 3.6% 9.0% 2/9/2025 74% 3 Loan 57 Senior 5/23/2022 Plano, TX 40,491 40,494 Floating 4.3% 10.0% 6/9/2027 64% 3 Loan 58 Senior 4/27/2022 Plano, TX 39,852 39,825 Floating 4.1% 9.8% 5/9/2027 70% 3 Loan 59 Senior 11/23/2021 Tualatin, OR 39,432 39,372 Floating 4.0% 12.1% 12/9/2026 66% 4 Loan 60 Senior 9/28/2021 Reston, VA 38,165 38,165 Floating 4.1% 9.5% 10/9/2026 71% 4 Loan 61 Senior 11/17/2021 Dallas, TX 36,967 36,967 Floating 4.0% 9.3% 12/9/2025 61% 4 Subtotal top 10 office loans $ 564,760 $ 564,778 19% of total loans Loan 62 Senior 6/2/2021 South Pasadena, CA $ 33,893 $ 33,808 Floating 5.0% 10.4% 6/9/2026 69% 3 Loan 63 Senior 4/7/2022 San Jose, CA 33,861 33,906 Floating 4.2% 10.0% 4/9/2027 70% 3 Loan 64 Senior 4/30/2021 San Diego, CA 33,109 33,148 Floating 3.6% 9.3% 5/9/2026 55% 3 Loan 65 Senior 6/16/2017 Miami, FL 30,348 30,008 Floating 5.8% 11.1% 4/9/2024 73% 3 Loan 66 Senior 3/31/2022 Blue Bell, PA 28,555 28,555 Floating 4.2% 9.5% 4/9/2025 59% 3 Loan 67 Senior 10/21/2021 Blue Bell, PA 28,210 28,210 Floating 3.8% 9.1% 4/9/2025 78% 3 Loan 68 Senior 2/26/2019 Charlotte, NC 26,441 26,490 Floating 3.3% 8.7% 7/9/2025 51% 3 Loan 69 Senior 12/7/2021 Hillsboro, OR 25,953 25,953 Floating 4.0% 9.6% 12/9/2024 71% 3 Loan 70 Senior 7/30/2021 Denver, CO 23,873 23,931 Floating 4.4% 10.1% 8/9/2026 66% 3 Loan 71 Senior 9/16/2019 San Francisco, CA 23,543 23,543 Floating 3.3% 8.6% 10/9/2024 77% 3 Subtotal top 20 office loans $ 852,546 $ 852,330 29% of total loans Loan 72 Senior 8/27/2019 San Francisco, CA $ 22,121 $ 22,121 Floating 2.9% 8.3% 9/9/2024 79% 3 Loan 73 Senior 10/29/2020 Denver, CO 19,937 19,937 Floating 3.7% 9.1% 11/9/2025 64% 3 Loan 74 Senior 10/13/2021 Burbank, CA 16,584 16,639 Floating 4.0% 9.7% 11/9/2026 57% 3 Loan 75 Senior 8/31/2021 Los Angeles, CA 15,888 15,888 Floating 4.1% 9.5% 9/9/2026 58% 3 Loan 76 Senior 11/16/2021 Charlotte, NC 15,407 15,466 Floating 4.5% 10.2% 12/9/2026 67% 3 Loan 77 Senior 11/10/2021 Richardson, TX 13,679 13,648 Floating 4.1% 9.8% 12/9/2026 71% 4 Loan 78 Mezzanine 2/13/2023 Baltimore, MD 4,002 4,002 Fixed n/a (8) 13.0% 2/7/2025 74% - 75% 3 Total/Weighted average office loans $ 960,164 $ 960,031 33% of total loans 3.8% 9.6% 2.1 years 3.1 51 Table of Contents Loan Type Origination Date City, State Carrying value (1) Principal balance Coupon type Cash Coupon (2) Unlevered all-in yield (3) Extended maturity date Loan-to-value (4) Q4 Risk ranking (5) Hotel Loan 79 Senior 1/2/2018 San Jose, CA $ 135,979 $ 135,979 Floating 4.8% 10.1% 11/9/2026 73% 4 Loan 80 Senior 6/25/2018 Englewood, CO 73,000 73,000 Floating 3.5% 8.9% 2/9/2025 62% 3 Loan 81 Mezzanine 1/9/2017 New York, NY 12,450 12,330 Floating 11.0% 16.4% 4/9/2024 67% - 80% 3 Total/Weighted average hotel loans $ 221,429 $ 221,309 4.7% 10.0% 2.1 years 3.6 Other (Mixed-use) Loan 82 Senior 10/24/2019 Brooklyn, NY $ 77,802 $ 77,802 Floating 4.2% 9.5% 11/9/2024 70% 3 Loan 83 Senior 1/13/2022 New York, NY 46,071 46,090 Floating 3.5% 9.4% 2/9/2027 67% 3 Loan 84 Senior 5/3/2022 Brooklyn, NY 28,627 28,665 Floating 4.4% 10.2% 5/9/2027 68% 3 Total/Weighted average other (mixed-use) loans $ 152,500 $ 152,557 4.0% 9.6% 2.0 years 3.0 Industrial Loan 85 Senior 7/13/2022 Ontario, CA $ 23,556 $ 23,680 Floating 3.3% 9.0% 8/9/2027 66% 3 Loan 86 Senior 3/25/2022 City of Industry, CA 19,693 19,719 Floating 3.4% 9.2% 4/9/2027 67% 3 Loan 87 Senior 3/21/2022 Commerce, CA 11,360 11,374 Floating 3.3% 9.1% 4/9/2027 71% 3 Total/Weighted average industrial loans $ 54,609 $ 54,773 3.3% 9.1% 3.4 years 3.0 Total/Weighted average senior and mezzanine loans - Our Portfolio $ 2,936,506 $ 2,937,386 3.7% 9.3% 2.4 years 3.2 _________________________________________ (1) Represents carrying values at our share as of December 31, 2023.
Biggest changeCarrying value (at BRSP share) Region Count Senior loans Mezzanine loans Total % of Total US West 34 $ 1,125,762 $ 30,777 $ 1,156,539 45.9 % US Southwest 28 862,078 — 862,078 34.2 % US Northeast 8 313,255 14,355 327,610 13.0 % US Southeast 6 172,698 — 172,698 6.9 % Total 76 $ 2,473,793 $ 45,132 $ 2,518,925 100.0 % 47 Table of Contents The following table provides asset level detail for our senior and mezzanine loans as of December 31, 2024 (dollars in thousands): Loan Type Origination Date City, State Carrying value (1) Principal balance Coupon type Cash Coupon (2) Unlevered all-in yield (3) Extended maturity date Loan-to-value (4) Q4 Risk ranking (5) Multifamily Loan 1 (6) Senior 6/18/2019 Santa Clara, CA $ 57,442 $ 57,442 Floating 5.5% 9.8% 2/19/2025 69% 5 Loan 2 Senior 5/17/2022 Las Vegas, NV 55,350 54,866 Floating 2.0% 7.9% 6/9/2027 74% 4 Loan 3 Senior 3/8/2022 Austin, TX 50,424 50,324 Floating 3.3% 7.6% 3/9/2027 75% 3 Loan 4 Senior 7/19/2021 Dallas, TX 50,333 50,200 Floating 3.4% 7.7% 8/9/2026 74% 3 Loan 5 Senior 5/26/2021 Las Vegas, NV 47,476 47,235 Floating 3.5% 7.8% 6/9/2026 70% 3 Loan 6 Senior 3/31/2022 Louisville, KY 43,468 43,371 Floating 3.7% 8.0% 4/9/2027 72% 3 Loan 7 Senior 7/15/2021 Jersey City, NJ 43,108 43,000 Floating 3.1% 7.4% 8/9/2026 66% 3 Loan 8 Senior 7/15/2021 Dallas, TX 40,338 40,338 Floating 3.2% 7.5% 8/9/2026 77% 3 Loan 9 Senior 12/7/2021 Denver, CO 40,050 40,050 Floating 3.3% 7.6% 12/9/2026 74% 4 Loan 10 Senior 3/31/2022 Long Beach, CA 39,536 39,536 Floating 3.4% 7.7% 4/9/2027 80% 3 Subtotal top 10 multifamily $ 467,525 $ 466,362 19% of total loans Loan 11 Senior 7/12/2022 Irving, TX $ 38,378 $ 38,379 Floating 3.6% 7.9% 8/9/2027 75% 3 Loan 12 Senior 12/21/2020 Austin, TX 37,000 37,000 Floating 3.2% 7.5% 1/9/2026 54% 3 Loan 13 Senior 1/18/2022 Dallas, TX 36,704 36,564 Floating 3.5% 7.8% 2/9/2027 75% 3 Loan 14 Senior 1/12/2022 Los Angeles, CA 36,341 36,361 Floating 3.4% 8.0% 2/9/2027 76% 3 Loan 15 Senior 7/29/2021 Phoenix, AZ 33,325 33,325 Floating 3.4% 7.7% 8/9/2026 73% 3 Loan 16 Senior 3/31/2021 Mesa, AZ 32,610 32,131 Floating 3.8% 11.4% 4/9/2026 71% 3 Loan 17 Senior 4/29/2021 Las Vegas, NV 30,794 30,792 Floating 3.2% 7.5% 5/9/2026 76% 3 Loan 18 Mezzanine 2/8/2022 Las Vegas, NV 30,777 30,782 Fixed 7.0% 12.3% 2/8/2027 56%-79% 3 Loan 19 Senior 2/17/2022 Long Beach, CA 30,137 30,137 Floating 3.4% 7.7% 3/9/2027 71% 3 Loan 20 Senior 4/15/2022 Mesa, AZ 30,134 30,160 Floating 3.4% 8.0% 5/9/2027 75% 3 Subtotal top 20 multifamily $ 803,725 $ 801,993 32% of total loans 48 Table of Contents Loan Type Origination Date City, State Carrying value (1) Principal balance Coupon type Cash Coupon (2) Unlevered all-in yield (3) Extended maturity date Loan-to-value (4) Q4 Risk ranking (5) Loan 21 Senior 8/31/2021 Glendale, AZ $ 28,820 $ 28,802 Floating 3.3% 7.6% 9/9/2026 75% 3 Loan 22 Senior 5/27/2021 Houston, TX 27,600 27,600 Floating 3.1% 7.4% 6/9/2026 67% 3 Loan 23 Senior 12/16/2021 Fort Mill, SC 27,365 27,366 Floating 3.3% 7.9% 1/9/2027 71% 3 Loan 24 Senior 12/21/2021 Phoenix, AZ 25,589 25,596 Floating 3.6% 8.3% 1/9/2027 75% 3 Loan 25 Senior 7/12/2022 Irving, TX 25,433 25,433 Floating 3.6% 7.9% 8/9/2027 72% 3 Loan 26 Senior 3/8/2022 Glendale, AZ 25,018 25,046 Floating 3.5% 8.1% 3/9/2027 73% 3 Loan 27 Senior 3/31/2022 Phoenix, AZ 23,841 23,847 Floating 3.7% 8.3% 4/9/2027 74% 3 Loan 28 Senior 11/4/2021 Austin, TX 23,353 23,353 Floating 3.4% 7.9% 11/9/2026 78% 3 Loan 29 Senior 6/22/2021 Phoenix, AZ 22,292 22,292 Floating 3.3% 7.6% 7/9/2026 71% 3 Loan 30 Senior 7/13/2021 Oregon City, OR 22,154 22,096 Floating 3.4% 7.7% 8/9/2026 73% 3 Loan 31 Senior 7/1/2021 Aurora, CO 21,273 21,261 Floating 3.2% 7.6% 7/9/2026 73% 3 Loan 32 Senior 12/10/2024 Seattle, WA 20,760 21,000 Floating 2.8% 7.6% 1/9/2030 65% 3 Loan 33 Senior 1/12/2022 Austin, TX 20,187 20,187 Floating 3.4% 7.7% 2/9/2027 76% 3 Loan 34 Senior 8/6/2021 La Mesa, CA 19,752 19,752 Floating 3.0% 7.3% 8/9/2025 72% 3 Loan 35 Senior 10/18/2024 Garland, TX 19,655 19,920 Floating 3.7% 8.3% 11/9/2029 70% 3 Loan 36 Senior 12/21/2021 Gresham, OR 19,455 19,455 Floating 3.6% 7.9% 1/9/2027 76% 3 Loan 37 Senior 9/1/2021 Bellevue, WA 19,308 19,308 Floating 3.0% 7.3% 9/9/2025 71% 3 Loan 38 Senior 5/5/2022 Charlotte, NC 18,500 18,500 Floating 3.5% 7.8% 5/9/2027 70% 3 Loan 39 Senior 7/14/2021 Salt Lake City, UT 18,362 18,315 Floating 3.4% 7.7% 8/9/2026 73% 3 Loan 40 Senior 4/29/2022 Tacoma, WA 18,331 18,331 Floating 3.0% 7.3% 5/9/2027 64% 3 Loan 41 Senior 6/25/2021 Phoenix, AZ 17,650 17,650 Floating 3.2% 7.6% 7/9/2026 75% 3 Loan 42 Senior 11/22/2024 Garland, TX 12,242 12,399 Floating 3.5% 8.1% 12/9/2029 63% 3 Loan 43 Senior 3/8/2022 Glendale, AZ $ 11,651 $ 11,664 Floating 3.5% 8.1% 3/9/2027 73% 3 Total/Weighted average multifamily loans $ 1,292,316 $ 1,291,166 51% of total loans 3.5% 8.1% 1.9 years 3.2 49 Table of Contents Loan Type Origination Date City, State Carrying value (1) Principal balance Coupon type Cash Coupon (2) Unlevered all-in yield (3) Extended maturity date Loan-to-value (4) Q4 Risk ranking (5) Office Loan 44 Senior 1/19/2021 Phoenix, AZ $ 76,325 $ 76,325 Floating 3.7% 8.0% 2/9/2026 70% 3 Loan 45 Senior 8/28/2018 San Jose, CA 74,070 74,071 Floating 2.6% 6.9% 8/28/2025 81% 3 Loan 46 Senior 2/13/2019 Baltimore, MD 58,606 58,606 Floating 3.6% 7.9% 2/9/2025 74% 3 Loan 47 Senior 11/23/2021 Tualatin, OR 42,104 40,961 Floating 1.5% 5.8% 12/9/2026 66% 4 Loan 48 Senior 4/27/2022 Plano, TX 41,179 41,101 Floating 4.1% 8.4% 5/9/2027 70% 3 Loan 49 Senior 5/23/2022 Plano, TX 40,802 40,720 Floating 4.3% 8.6% 6/9/2027 64% 3 Loan 50 Senior 9/28/2021 Reston, VA 40,251 39,682 Floating 2.1% 8.4% 10/9/2026 71% 4 Loan 51 Senior 11/17/2021 Dallas, TX 39,869 39,869 Floating 4.0% 8.3% 12/9/2025 61% 4 Loan 52 Senior 4/7/2022 San Jose, CA 33,906 33,906 Floating 4.2% 8.5% 4/9/2027 70% 3 Loan 53 Senior 4/30/2021 San Diego, CA 33,663 33,663 Floating 3.6% 8.0% 5/9/2026 55% 3 Subtotal top 10 office loans $ 480,775 $ 478,904 19% of total loans Loan 54 Senior 3/31/2022 Blue Bell, PA $ 28,854 $ 28,854 Floating 4.2% 8.5% 4/9/2025 80% 3 Loan 55 Senior 10/21/2021 Blue Bell, PA 28,623 28,624 Floating 3.8% 8.1% 4/9/2025 78% 3 Loan 56 Senior 2/26/2019 Charlotte, NC 27,653 27,653 Floating 3.3% 7.7% 7/9/2025 72% 3 Loan 57 Senior 12/7/2018 Carlsbad, CA 26,912 26,500 Floating 3.9% 8.2% 12/9/2025 73% 3 Loan 58 Senior 12/7/2021 Hillsboro, OR 25,738 25,738 Floating 4.0% 8.3% 2/9/2025 77% 3 Loan 59 Senior 7/30/2021 Denver, CO 24,413 24,413 Floating 4.4% 8.7% 8/9/2026 66% 3 Loan 60 Senior 9/16/2019 San Francisco, CA 24,001 24,001 Floating 3.3% 7.6% 1/9/2025 54% 3 Loan 61 Senior 8/27/2019 San Francisco, CA 22,716 22,716 Floating 2.9% 7.3% 3/9/2025 84% 3 Loan 62 Senior 10/13/2021 Burbank, CA 18,216 18,216 Floating 4.0% 8.3% 11/9/2026 51% 3 Loan 63 Senior 10/29/2020 Denver, CO 17,937 17,937 Floating 3.7% 8.0% 11/9/2025 64% 3 Subtotal top 20 office loans $ 725,838 $ 723,556 29% of total loans Loan 64 Senior 11/16/2021 Charlotte, NC $ 15,460 $ 15,466 Floating 4.5% 8.8% 12/9/2026 67% 3 Loan 65 (7) Mezzanine 2/13/2023 Baltimore, MD 14,355 14,355 n/a (7) n/a (7) n/a (7) 2/7/2025 74%-75% 3 Loan 66 Senior 11/10/2021 Richardson, TX 12,964 12,932 Floating 4.1% 8.4% 12/9/2026 68% 3 Total/Weighted average office loans $ 768,617 $ 766,309 31% of total loans 3.4% 7.8% 1.1 years 3.2 50 Table of Contents Loan Type Origination Date City, State Carrying value (1) Principal balance Coupon type Cash Coupon (2) Unlevered all-in yield (3) Extended maturity date Loan-to-value (4) Q4 Risk ranking (5) Hotel Loan 67 (8) Senior 1/2/2018 San Jose, CA $ 135,979 $ 135,979 n/a (8) n/a (8) n/a (8) 11/9/2026 76% 5 Loan 68 Senior 6/25/2018 Englewood, CO 72,152 72,000 Floating 3.5% 8.1% 5/9/2025 68% 3 Total/Weighted average hotel loans $ 208,131 $ 207,979 1.2% 2.8% 1.3 years 4.3 Other (Mixed-use) Loan 69 Senior 10/24/2019 Brooklyn, NY $ 79,308 $ 79,308 Floating 4.2% 8.5% 11/9/2025 79% 3 Loan 70 Senior 1/13/2022 New York, NY 46,090 46,090 Floating 3.5% 7.8% 2/9/2027 76% 3 Loan 71 Senior 6/2/2021 South Pasadena, CA 33,893 33,808 Floating 5.0% 9.5% 6/9/2026 71% 3 Loan 72 Senior 5/3/2022 Brooklyn, NY 28,665 28,665 Floating 4.4% 8.7% 5/9/2027 68% 3 Loan 73 Senior 8/31/2021 Los Angeles, CA 15,888 15,888 Floating 4.6% 8.9% 9/9/2026 58% 3 Loan 74 Senior 4/3/2024 South Pasadena, CA $ 10,340 $ 10,340 Floating 9.8% 15.1% 1/9/2025 84% 3 Total/Weighted average other (mixed-use) loans $ 214,184 $ 214,099 4.5% 8.9% 1.4 years 3.0 Industrial Loan 75 Senior 7/13/2022 Ontario, CA $ 24,083 $ 24,131 Floating 3.3% 8.0% 8/9/2027 66% 3 Loan 76 Senior 3/21/2022 Commerce, CA 11,594 11,594 Floating 3.3% 7.6% 4/9/2027 60% 3 Total/Weighted average industrial loans $ 35,677 $ 35,725 3.3% 7.8% 2.5 years 3.0 Total/Weighted average senior and mezzanine loans - Our Portfolio $ 2,518,925 $ 2,515,278 3.4% 7.6% 1.6 years 3.2 _________________________________________ (1) Represents carrying values at our share as of December 31, 2024 and excludes general CECL reserves.
Financing activities used net cash of $161.5 million for the year ended December 31, 2022, which resulted primarily from borrowings from credit facilities of $771.5 million partially offset by repayment of securitization bonds of $337.7 million, repayment of credit facilities of $336.8 million, distributions paid on common stock of $100.5 million, repayment of mortgage notes of $85.2 million, redemption of OP units of $25.4 million, repayment of mortgage obligations issued by securitization trusts of $18.7 million and repurchase of common stock of $18.3 million.
Financing activities used net cash of $161.5 million for the year ended December 31, 2022, which resulted primarily from repayment of securitization bonds of $337.7 million, repayment of credit facilities of $336.8 million, distributions paid on common stock of $100.5 million, repayment of mortgage notes of $85.2 million, redemption of OP units of $25.4 million, repayment of mortgage obligations issued by securitization trusts of $18.7 million and repurchase of common stock of $18.3 million partially offset by borrowings from credit facilities of $771.5 million.
As a result, we present our business as one portfolio through the following business segments: • Senior and Mezzanine Loans and Preferred Equity—CRE debt investments including senior loans, mezzanine loans, and preferred equity interests as well as participations in such loans. • Net Leased and Other Real Estate—direct investments in commercial real estate with long-term leases to tenants on a net lease basis, where such tenants generally will be responsible for property operating expenses such as insurance, utilities, maintenance, capital expenditures and real estate taxes.
Our Business Segments We present our business as one portfolio through the following business segments: • Senior and Mezzanine Loans and Preferred Equity—CRE debt investments including senior and mezzanine loans, and preferred equity interests as well as participations in such loans. • Net Leased and Other Real Estate—direct investments in commercial real estate with long-term leases to tenants on a net lease basis, where such tenants generally will be responsible for property operating expenses such as insurance, utilities, maintenance, capital expenditures and real estate taxes.
Potential Sources of Liquidity As discussed in greater detail above under “Trends Affecting our Business,” and “Factors Impacting Our Operating Results” overall market uncertainty coupled with rising inflation and interest rates have tempered the loan financing markets recently.
Potential Sources of Liquidity As discussed in greater detail above under “Trends Affecting our Business,” and “Factors Impacting Our Operating Results” overall market uncertainty coupled with rising inflation and high interest rates have tempered the loan financing markets recently.
Our model principally utilizes historical loss rates derived from a commercial mortgage-backed securities database with historical losses from 1998 through December 2023 provided by a third party, Trepp LLC, forecasting the loss parameters using a scenario-based statistical approach over a reasonable and supportable forecast period of twelve months, followed by a straight-line reversion period of twelve-months back to average historical losses.
Our model principally utilizes historical loss rates derived from a commercial mortgage-backed securities database with historical losses from 1998 through December 2024 provided by a third party, Trepp LLC, forecasting the loss parameters using a scenario-based statistical approach over a reasonable and supportable forecast period of twelve months, followed by a straight-line reversion period of twelve-months back to average historical losses.
The ability to borrow new amounts under the Credit Agreement terminates on January 31, 2026, at which time the OP may, at its election and by written notice to the Administrative Agent, extend the termination date for two (2) additional terms of six (6) months each, subject to the terms and conditions in the Credit Agreement, resulting in a latest termination date of January 31, 2027.
The ability to borrow new amounts under the Credit Agreement terminates on January 31, 2026, at which time the OP may, at its election and by written notice to the Administrative Agent, extend the termination date for two additional terms of six months each, subject to the terms and conditions in the Credit Agreement, resulting in a latest termination date of January 31, 2027.
Conversely, decreases in interest rates, in general, may over time cause: • the value of the fixed-rate assets in our portfolio to increase; • prepayments on certain assets in our portfolio to increase, thereby accelerating the amortization of our purchase premiums and the accretion of our purchase discounts; • to the extent we enter into interest rate swap agreements as part of our hedging strategy, the value of these agreements to decrease; • coupons on our floating and adjustable-rate mortgage loans to reset, although on a delayed basis, to lower interest rates; and • to the extent we use leverage to finance our assets, the interest expense associated with our borrowings to decrease.
Conversely, decreases in interest rates, in general, may over time cause: • the value of the fixed-rate assets in our portfolio to increase; • prepayments on certain assets in our portfolio to increase, thereby accelerating the amortization of our purchase premiums and the accretion of our purchase discounts; • to the extent we enter into interest rate swap agreements as part of our hedging strategy, the value of these agreements to decrease; 44 Table of Contents • coupons on our floating and adjustable-rate mortgage loans to reset, although on a delayed basis, to lower interest rates; and • to the extent we use leverage to finance our assets, the interest expense associated with our borrowings to decrease.
A rising interest rate environment will result in increased interest expense on our variable rate debt that is not hedged and may result in disruptions to our borrowers’ and tenants’ ability to finance their activities, which would similarly adversely impact their ability to make their monthly mortgage payments and meet their loan obligations.
A high interest rate environment will result in increased interest expense on our variable rate debt that is not hedged and may result in disruptions to our borrowers’ and tenants’ ability to finance their activities, which would similarly adversely impact their ability to make their monthly mortgage payments and meet their loan obligations.
Share Repurchases In April 2023, our board of directors authorized a stock repurchase program (“Stock Repurchase Program”) under which we may repurchase up to $50.0 million of our outstanding Class A common stock until April 30, 2024. The Stock Repurchase Program replaces the prior stock repurchase program authorization which expired on April 30, 2023.
Share Repurchases In April 2024, our board of directors authorized a stock repurchase program (“Stock Repurchase Program”) under which we may repurchase up to $50.0 million of our outstanding Class A common stock until April 30, 2025. The Stock Repurchase Program replaces the prior stock repurchase program authorization which expired on April 30, 2024.
Beginning in 2021, our investment and portfolio management and risk assessment practices diligence the environmental, social and governance (“ESG”) standards of our business counterparties, including borrowers, sponsors and that of our investment assets and underlying collateral, which may include sustainability 71 Table of Contents initiatives, recycling, energy efficiency and water management, volunteer and charitable efforts, anti-money laundering and know-your-client policies, and diversity, equity and inclusion practices in workforce leadership, composition and hiring practices.
Beginning in 2021, our investment and portfolio management and risk assessment practices diligence the environmental, social and governance (“ESG”) standards of our business counterparties, including borrowers, sponsors and that of our investment assets and underlying collateral, which may include sustainability initiatives, recycling, energy efficiency and water management, volunteer and charitable efforts, anti-money laundering and know-your-client policies, and diversity, equity and inclusion practices in workforce leadership, composition and hiring practices.
(2) Represents the percent leased as of December 31, 2023. Weighted average calculation based on carrying value at our share as of December 31, 2023. (3) Based on in-place leases (defined as occupied and paying leases) as of December 31, 2023, and assumes that no renewal options are exercised.
(2) Represents the percent leased as of December 31, 2024. Weighted average calculation based on carrying value at our share as of December 31, 2024. (3) Based on in-place leases (defined as occupied and paying leases) as of December 31, 2024, and assumes that no renewal options are exercised.
The obligations of the Borrowers under the Credit Agreement are guaranteed pursuant to a Guarantee and Collateral Agreement by substantially all material wholly owned subsidiaries of the OP (the “Guarantors”) in favor of the Administrative Agent (the “Guarantee and Collateral Agreement”) and, subject to certain exceptions, secured by a pledge of substantially all equity interests owned by the Borrowers and the Guarantors, as well as by a security interest in deposit accounts of the Borrowers and the Guarantors in which the proceeds of investment asset distributions are maintained.
The obligations of the Borrowers under the Credit Agreement are guaranteed pursuant to a Guarantee and Collateral Agreement by substantially all material wholly owned subsidiaries of the OP (the “Guarantors”) in favor of the Administrative Agent (the “Guarantee and Collateral Agreement”) and, subject to certain exceptions, secured by a pledge of substantially all equity 62 Table of Contents interests owned by the Borrowers and the Guarantors, as well as by a security interest in deposit accounts of the Borrowers and the Guarantors in which the proceeds of investment asset distributions are maintained.
Additionally, we define Adjusted Distributable Earnings as Distributable Earnings excluding (i) realized gains and losses on asset sales, (ii) fair value adjustments, which represent mark-to-market adjustments to investments in unconsolidated ventures based on an exit price, defined as the estimated price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants, (iii) unrealized gains or losses, (iv) realized specific CECL reserves and (v) one-time gains or losses that in the judgement of management should not be included in Adjusted Distributable Earnings.
Distributable Earnings include specific CECL reserves. 58 Table of Contents Additionally, we define Adjusted Distributable Earnings as Distributable Earnings excluding (i) realized gains and losses on asset sales, (ii) fair value adjustments, which represent mark-to-market adjustments to investments in unconsolidated ventures based on an exit price, defined as the estimated price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants, (iii) unrealized gains or losses, (iv) specific CECL reserves and (v) one-time gains or losses that in the judgement of management should not be included in Adjusted Distributable Earnings.
Factors considered by us when 72 Table of Contents determining the CECL reserve include loan-specific characteristics such as loan-to-value (“LTV”) ratio, vintage year, loan term, property type, occupancy and geographic location, financial performance of the borrower, expected payments of principal and interest, as well as internal or external information relating to past events, current conditions and reasonable and supportable forecasts.
Factors considered by us when determining the CECL reserve include loan-specific characteristics such as loan-to-value (“LTV”) ratio, vintage year, loan term, property type, occupancy and geographic location, financial performance of the borrower, expected payments of principal and interest, as well as internal or external information relating to past events, current conditions and reasonable and supportable forecasts.
Such strategies may vary depending on the type of asset, the availability of refinancing options, recourse and maturity, but may include, among others, the restructuring of non-performing or sub-performing loans, the negotiation of discounted pay-offs or other modification of the terms governing a loan, and the foreclosure and management of assets underlying non-performing loans in order to reposition them for profitable disposition.
Such strategies may vary depending on the type of asset, the availability of refinancing options, recourse and maturity, but may include, among others, the restructuring of non-performing or sub-performing loans, the negotiation of discounted payoffs or other modification of the terms governing a loan, and the foreclosure and management of assets underlying non-performing loans in order to reposition them for profitable disposition.
Additionally, by excluding corporate level expenses or benefits such as interest expense, any gain or loss on early extinguishment of debt and income taxes, which are incurred by the parent entity and are not directly linked to the operating performance of the Company’s properties, NOI provides a measure of operating 64 Table of Contents performance independent of the Company’s capital structure and indebtedness.
Additionally, by excluding corporate level expenses or benefits such as interest expense, any gain or loss on early extinguishment of debt and income taxes, which are incurred by the parent entity and are not directly linked to the operating performance of the Company’s properties, NOI provides a measure of operating performance independent of the Company’s capital structure and indebtedness.
Our net property operating income depends on our ability to maintain the historical occupancy rates of our real estate equity investments, lease currently available space and continue to attract new tenants. 45 Table of Contents Changes in fair value of our assets We consider and treat our assets as long-term investments.
Our net property operating income depends on our ability to maintain the historical occupancy rates of our real estate equity investments, lease currently available space and continue to attract new tenants. Changes in fair value of our assets We consider and treat our assets as long-term investments.
Distributable Earnings and Adjusted Distributable Earnings do not represent net income or cash generated from operating activities and should not be considered as an alternative to GAAP net income or an indication of our cash flows from operating activities determined in accordance with GAAP, a measure of our liquidity, or an indication of funds available to fund our cash 63 Table of Contents needs.
Distributable Earnings and Adjusted Distributable Earnings do not represent net income or cash generated from operating activities and should not be considered as an alternative to GAAP net income or an indication of our cash flows from operating activities determined in accordance with GAAP, a measure of our liquidity, or an indication of funds available to fund our cash needs.
(2) Carrying value at our share represents the proportionate carrying value based on ownership by asset as of December 31, 2023. (3) Net carrying value represents carrying value less any associated financing as of December 31, 2023.
(2) Carrying value at our share represents the proportionate carrying value based on ownership by asset as of December 31, 2024. (3) Net carrying value represents carrying value less any associated financing as of December 31, 2024.
(2) Represents carrying values at our share as of December 31, 2023; includes real estate tangible assets, deferred leasing costs and other intangible assets less intangible liabilities.
(2) Represents carrying values at our share as of December 31, 2024; includes real estate tangible assets, deferred leasing costs and other intangible assets less intangible liabilities.
Detachment loan-to-value reflects the cumulative initial funding of our loan and the loans senior to our position divided by the as-is value as of the date the loan was originated, or the cumulative principal amount divided by the appraised value for the in place collateral as of the date of the most recent appraisal.
Detachment loan-to-value reflects the cumulative initial funding of our loan and the loans senior to our position divided by the as-is 51 Table of Contents value as of the date the loan was originated, or the cumulative principal amount divided by the appraised value for the in place collateral as of the date of the most recent appraisal.
The Stock Repurchase Program will be utilized at our discretion and in accordance with the requirements of the SEC. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate requirements and other conditions.
The Stock Repurchase Program will be 65 Table of Contents utilized at our discretion and in accordance with the requirements of the SEC. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate requirements and other conditions.
Current Expected Credit Loss (“CECL” reserve) The CECL reserve for our financial instruments carried at amortized cost and off-balance sheet credit exposures, such as loans, loan commitments and trade receivables, represents a lifetime estimate of expected credit losses.
CECL Reserve The CECL reserve for our financial instruments carried at amortized cost and off-balance sheet credit exposures, such as loans, loan commitments and trade receivables, represents a lifetime estimate of expected credit losses.
Unlevered all-in yield for the loan portfolio assumes the applicable floating benchmark rate as of December 31, 2023, for weighted average calculations.
Unlevered all-in yield for the loan portfolio assumes the applicable floating benchmark rate as of December 31, 2024 for weighted average calculations.
Under the Stock Repurchase Program, we may repurchase shares in open market purchases, in privately negotiated transactions or otherwise. We have a written trading plan as part of the Share Repurchase Program that provides for share repurchases in open market transactions that is intended to comply with Rule 10b-18 under the “Exchange Act”.
Under the Stock Repurchase Program, we may repurchase shares in open market purchases, in privately negotiated transactions or otherwise. We have a written trading plan as part of the Share Repurchase Program that provides for share repurchases in open market transactions that is intended to comply with Rule 10b-18 under the Exchange Act.
Impairment of operating real estate We recorded impairment of $7.6 million on one office property following a reduction in the estimated holding period during the year ended December 31, 2023.
Impairment of operating real estate We recorded impairment of $7.6 million on one office property following a reduction in the estimated holding period during the year ended December 31, 2023. We recorded no impairment for the year ended December 31, 2022.
Repurchase agreements effectively allow us to borrow against loans that we own in an amount generally equal to (i) the market value of such loans multiplied by (ii) the applicable advance rate.
The Master Repurchase Facilities, effectively allow us to borrow against loans that we own in an amount generally equal to (i) the market value of such loans multiplied by (ii) the applicable advance rate.
The increase was primarily due to $72.6 million related to higher interest rates and $31.3 million due to 2022 loan originations partially offset by $36.8 million due to loan repayments. 58 Table of Contents Interest expense Interest expense increased by $61.5 million to $173.3 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
The increase was primarily due to $72.6 million related to higher interest rates and $31.3 million due to 2022 loan originations partially offset by $36.8 million due to loan repayments. Interest expense Interest expense increased by $61.5 million to $173.3 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
We define Distributable Earnings as GAAP net income (loss) attributable to our common stockholders (or, without duplication, the owners of the common equity of our direct subsidiaries, such as our OP) and excluding (i) non-cash equity compensation expense, (ii) the expenses incurred in connection with our formation or other strategic transactions, (iii) the incentive fee, (iv) acquisition costs from successful acquisitions, (v) gains or losses from sales of real estate property and impairment write-downs of depreciable real estate, including unconsolidated joint ventures and preferred equity investments, (vi) general CECL reserves determined by probability of default/loss given default (“PD/LGD”) model, (vii) depreciation and amortization, (viii) any unrealized gains or losses or other similar non-cash items that are included in net income for the current quarter, regardless of whether such items are included in other comprehensive income or loss, or in net income, (ix) one-time events pursuant to changes in GAAP and (x) certain material non-cash income or expense items that in the judgment of management should not be included in Distributable Earnings.
We define Distributable Earnings as GAAP net income (loss) attributable to our common stockholders (or, without duplication, the owners of the common equity of our direct subsidiaries, such as our OP) and excluding (i) non-cash equity compensation expense, (ii) the expenses incurred in connection with our formation or other strategic transactions, (iii) acquisition costs from successful acquisitions, (iv) gains or losses from sales of real estate property and impairment write-downs of depreciable real estate, including unconsolidated joint ventures and preferred equity investments, (v) general CECL reserves, (vi) depreciation and amortization, (vii) any unrealized gains or losses or other similar non-cash items that are included in net income for the current quarter, regardless of whether such items are included in other comprehensive income or loss, or in net income, (viii) one-time events pursuant to changes in GAAP and (ix) certain material non-cash income or expense items that in the judgment of management should not be included in Distributable Earnings.
It also includes other real estate, currently consisting of two investments with direct ownership in commercial real estate, with an emphasis on properties with stable cash flow and five additional properties that we acquired through foreclosure or deed-in-lieu of foreclosure. • Corporate and Other—includes corporate-level asset management and other fees including expenses related to our secured revolving credit facility (the “Bank Credit Facility”) and compensation and benefits.
It also includes other real estate, currently consisting of two investments with direct ownership in commercial real estate, with an emphasis on properties with stable cash flow, five additional properties that we acquired through foreclosure or deed-in-lieu of foreclosure and one property that we consolidate as the primary beneficiary. • Corporate and Other—includes corporate-level asset management and other fees including expenses related to our secured revolving credit facility (the “Bank Credit Facility”) and compensation and benefits.
We did not fail any note protection tests during the years ended December 31, 2023 and 2022. We will continue to closely monitor all loan investments contributed to BRSP 2021-FL1, as a deterioration in the performance of an underlying loan could negatively impact our liquidity position.
We did not fail any note protection tests during the years ended December 31, 2024 and December 31, 2023. While we continue to closely monitor all loan investments contributed to BRSP 2021-FL1, a deterioration in the performance of an underlying loan could negatively impact our liquidity position.
Determining fair value of the collateral, including utilization of a practical expedient, may take into account a number of assumptions including, but not limited to, rents and cash flow projections, capitalization rates and discount rates. Such assumptions are generally based on current market conditions and are subject to economic and market uncertainties.
Determining fair value of the collateral, including utilization of a practical expedient, may take into account a 68 Table of Contents number of assumptions including, but not limited to, rents and cash flow projections, market capitalization rates, discount rates and sales comps. Such assumptions are generally based on current market conditions and are subject to economic and market uncertainties.
Additionally, CLNC 2019-FL1 contains note protection tests that can be triggered as a result of contributed loan defaults, losses, and certain other events outlined in the indenture, beyond established thresholds. A note protection test failure that is not remedied can result in the redirection of interest proceeds from the below investment grade tranches to amortize the most senior outstanding tranche.
Additionally, BRSP 2024-FL2 contains note protection tests that can be triggered as a result of contributed loan defaults, losses, and certain other events outlined in the indenture, beyond established thresholds. A note protection test failure that is not remedied can result in the redirection of interest proceeds from the below investment grade tranches to amortize the most senior outstanding tranche.
(2) Represents the stated coupon rate for loans; for floating rate loans, does not include Secured Overnight Financing Rate (“SOFR”), which was 5.35% as of December 31, 2023. (3) In addition to the stated cash coupon rate, unlevered all-in yield includes non-cash payment-in-kind interest income and the accrual of origination and exit fees.
(2) Represents the stated coupon rate for loans; for floating rate loans, does not include Secured Overnight Financing Rate (“SOFR”), which was 4.33% as of December 31, 2024. (3) In addition to the stated cash coupon rate, unlevered all-in yield includes non-cash payment-in-kind interest income and the accrual of origination and exit fees.
Detachment loan-to-value reflect the cumulative commitment amount of our loan and the loans senior to our position divided by as-completed appraised value, or the cumulative commitment amount of our loan and loans senior to our position divided by projected total cost basis. (7) Loan 26 was placed on nonaccrual status in December 2023; as such, no income is being recognized.
Detachment loan-to-value reflect the cumulative commitment amount of our loan and the loans senior to our position divided by as-completed appraised value, or the cumulative commitment amount of our loan and loans senior to our position divided by projected total cost basis. (7) Loan 65 was placed on nonaccrual status in April 2024; as such, no income is being recognized.
Net leased properties consist of CRE properties with long-term leases to tenants on a net-lease basis, where such tenants generally will be responsible for property operating expenses such as insurance, utilities, maintenance capital expenditures and real estate taxes. We continue to target net leased equity investments on a selective basis.
Net leased properties consist of CRE properties with long-term leases to tenants on a net-lease basis, where such tenants generally will be responsible for property operating expenses such as insurance, utilities, maintenance capital expenditures and real estate taxes.
(2) Amounts include minimum principal and interest obligations through the initial maturity date of the collateral assets. Interest on floating rate debt was determined based on the applicable index at December 31, 2023. (3) The timing of future principal payments was estimated based on expected future cash flows of underlying collateral loans.
(2) Amounts include minimum principal and interest obligations through the initial maturity date of the collateral assets. Interest on floating rate debt was determined based on Term SOFR at December 31, 2024. (3) The timing of future principal payments was estimated based on expected future cash flows of underlying collateral loans.
(5) On a quarterly basis, the Company’s senior and mezzanine loans are rated “1” through “5,” from less risk to greater risk. Represents risk ranking as of December 31, 2023.
(5) On a quarterly basis, our senior and mezzanine loans are rated “1” through “5,” from less risk to greater risk. Represents risk ranking as of December 31, 2024.
Cash Flows The following presents a summary of our consolidated statements of cash flows for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands): Year Ended December 31, Cash flow provided by (used in): 2023 2022 2021 Operating activities $ 137,624 $ 125,277 $ (21,270) Investing activities 384,160 89,337 (555,789) Financing activities (558,600) (161,451) 384,356 Operating Activities Cash inflows from operating activities are generated primarily through interest received from loans and preferred equity held for investment, and property operating income from our real estate portfolio.
Cash Flows The following presents a summary of our consolidated statements of cash flows for the years ended December 31, 2024, 2023, and 2022 (dollars in thousands): Year Ended December 31, Cash flow provided by (used in): 2024 2023 2022 Operating activities $ 103,405 $ 137,624 $ 125,277 Investing activities 313,080 384,160 89,337 Financing activities (327,947) (558,600) (161,451) Operating Activities Cash inflows from operating activities are generated primarily through interest received from loans and preferred equity held for investment, and property operating income from our real estate portfolio.
As of date hereof, the borrowing base valuation is sufficient to permit borrowings of up to 66 Table of Contents $165.0 million. If any borrowing is outstanding for more than 180 days after its initial draw, the borrowing base valuation will be reduced by 50% until all outstanding borrowings are repaid in full.
As of December 31, 2024, the borrowing base valuation is sufficient to permit borrowings of up to the entire $165.0 million. If any borrowing is outstanding for more than 180 days after its initial draw, the borrowing base valuation will be reduced by 50% until all outstanding borrowings are repaid in full.
The sale resolution may result in a valuation impairment or investment loss. Net Leased and Other Real Estate Our net leased real estate investment strategy focuses on direct ownership in commercial real estate with an emphasis on properties with stable cash flow, which may be structurally senior to a third-party partner’s equity.
Net Leased and Other Real Estate Our net leased real estate investment strategy focuses on direct ownership in commercial real estate with an emphasis on properties with stable cash flow, which may be structurally senior to a third-party partner’s equity.
We recorded no impairment for the year ended December 31, 2022. 59 Table of Contents Compensation and benefits Compensation and benefits increased by $6.5 million to $39.5 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to fully recognizing stock compensation on performance stock units issued in March 2023 and stock compensation on restricted stock grants issued in March 2023.
Compensation and benefits Compensation and benefits increased by $6.5 million to $39.5 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to fully recognizing stock compensation on performance stock units issued in March 2023 and stock compensation on restricted stock grants issued in March 2023.
We apply a discounted cash flow (“DCF”) methodology to determine the fair value of the collateral where it is probable that we will foreclose or the borrower is experiencing financial difficulty based on our assessment at the reporting date, and the repayment is expected to be provided substantially through the operation or sale of the collateral.
We apply broadly accepted and standard real estate valuation techniques, such as a discounted cash flow (“DCF”) or direct capitalization methodology, to determine the fair value of the collateral where it is probable that we will foreclose or the borrower is experiencing financial difficulty based on our assessment at the reporting date, and the repayment is expected to be provided substantially through the operation or sale of the collateral.
Net cash provided by investing activities in 2022 resulted primarily from originations and future advances on our loans held for investment, net of $972.1 million partially offset by repayments on loans held for investment of $909.8 million, proceeds from sales of real estate of $55.6 million, proceeds from sales of investments in unconsolidated ventures of $38.1 million, proceeds from sales of beneficial interests of securitization trusts of $36.2 million and repayments of principal in mortgage loans held in securitization trusts of $18.7 million.
Net cash provided by investing activities in 2022 resulted primarily from repayments on loans held for investment of $909.8 million, proceeds from sales of real estate of $55.6 million, proceeds from sales of investments in unconsolidated ventures of $38.1 million, proceeds from sales of beneficial interests of securitization trusts of $36.2 million and repayments of principal in mortgage loans held in securitization trusts of $18.7 million, partially offset by originations and future advances on our loans held for investment, net of $972.1 million Financing Activities We finance our investing activities largely through borrowings secured by our investments along with capital from third party investors.
Net interest income on mortgage loans and obligations held in securitization trusts, net Net interest income on mortgage loans and obligation held in securitization trusts, net decreased by $2.7 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022 due to the sale of our final retained interest in a securitization trust in November 2022.
Net interest income on mortgage loans and obligations held in securitization trusts, net Net interest income on mortgage loans and obligation held in securitization trusts, net decreased by $2.7 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022 due to the sale of our final retained interest in a securitization trust in November 2022. 56 Table of Contents Property and other income Property operating income Property operating income increased by $3.2 million to $93.4 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Our senior and mezzanine loans consisted of 87 senior and mezzanine loans with a weighted average cash coupon of 3.7% and a weighted average all-in unlevered yield of 9.3%. Our net leased and other real estate consisted of approximately 7.0 million total square feet of space and total 2023 NOI of that portfolio was approximately $66.5 million.
Our senior and mezzanine loans consisted of 76 senior and mezzanine loans with a weighted average cash coupon of 3.4% and a weighted average all-in unlevered yield of 7.6%. Our net leased and other real estate consisted of approximately 6.9 million total square feet of space and total 2024 NOI of that portfolio was approximately $67.7 million.
At the time of origination or purchase, loans and preferred equity held for investment are ranked as a “3” and will move accordingly going forward based on the ratings which are defined as follows: 1. Very Low Risk 2. Low Risk 3. Medium Risk 4.
At the time of origination or purchase, loans held for investment are ranked as a “3” and will move accordingly going forward based on the ratings which are defined as follows: 1. Very Low Risk 2. Low Risk 3. Medium Risk 4. High Risk/Potential for Loss— A loan that has a high risk of realizing a principal loss. 5.
As of December 31, 2023, we had $731.6 million of unpaid principal balance of CRE debt investments financed with BRSP 2021-FL1. As of December 31, 2023, the securitization reflects an advance rate of 82.2% at a weighted average cost of funds of Term SOFR plus 1.53% (before transaction costs), and is collateralized by a pool of 26 senior loan investments.
At December 31, 2024, we had $639.5 million of unpaid principal balance of CRE debt investments financed with BRSP 2021-FL1. As of December 31, 2024, the securitization reflects an advance rate of 79.7% at a weighted average cost of funds of Term SOFR plus 1.59% (before transaction costs), and is collateralized by a pool of 24 senior loan investments.
In addition, the audit committee of our Board of Directors, in consultation with management, periodically reviews our policies with respect to risk assessment and risk management, including key risks to which we are subject, including credit risk, liquidity risk and market risk, and the steps that management has taken to monitor and control such risks.
In addition, the audit committee of our Board of Directors, in consultation with management, periodically reviews our policies with respect to risk assessment and risk management, including key risks to which we are subject, including credit risk, liquidity risk and market risk, and the steps that management has taken to monitor and control such risks. 67 Table of Contents Inflation Virtually all of our assets and liabilities are interest rate sensitive in nature.
The following tables present a reconciliation of net income (loss) attributable to our common stockholders to Distributable Earnings and Adjusted Distributable Earnings attributable to our common stockholders and noncontrolling interest of the Operating Partnership (dollars and share amounts in thousands, except per share data) for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Net income (loss) attributable to BrightSpire Capital, Inc. common stockholders $ (15,549) $ 45,788 $ (101,046) Adjustments: Net income (loss) attributable to noncontrolling interest of the Operating Partnership — 1,013 (1,803) Non-cash equity compensation expense 14,056 7,888 14,016 Transaction costs — — 109,321 Depreciation and amortization 32,050 33,949 36,447 Net unrealized loss (gain): Impairment of operating real estate 7,590 — — Other unrealized loss (gain) on investments 1,747 (1,155) (47,352) General CECL reserves 26,983 13,692 (2,684) Gain on sales of real estate, preferred equity and investments in unconsolidated joint ventures — (30,709) (66,827) Adjustments related to noncontrolling interests (805) (730) 1,254 Distributable Earnings (Loss) attributable to BrightSpire Capital, Inc. common stockholders and noncontrolling interest of the Operating Partnership $ 66,072 $ 69,736 $ (58,674) Distributable Earnings (Loss) per share (1) $ 0.51 $ 0.53 $ (0.44) Adjustments: Specific CECL reserves $ 81,166 $ 56,944 $ 1,251 Fair value adjustments (9,055) — 133,200 Realized loss on hedges — — 1,466 Realized loss on CRE debt securities and B-piece — 797 38,842 Adjusted Distributable Earnings attributable to BrightSpire Capital, Inc. common stockholders and noncontrolling interest of the Operating Partnership $ 138,183 $ 127,477 $ 116,085 Adjusted Distributable Earnings per share (1) $ 1.06 $ 0.98 $ 0.87 Weighted average number of shares of Class A common stock and OP units (1) 129,794 130,539 132,807 ________________________________________ (1) We calculate Distributable Earnings (Loss) per share, and Adjusted Distributable Earnings per share, non-GAAP financial measures, based on a weighted-average number of common shares and OP units (held by members other than us or our subsidiaries).
The following tables present a reconciliation of net income (loss) attributable to our common stockholders to Distributable Earnings and Adjusted Distributable Earnings attributable to our common stockholders (dollars and share amounts in thousands, except per share data) for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 Net income (loss) attributable to BrightSpire Capital, Inc. common stockholders $ (131,979) $ (15,549) $ 45,788 Adjustments: Net income attributable to noncontrolling interest of the Operating Partnership — — 1,013 Non-cash equity compensation expense 11,649 14,056 7,888 Depreciation and amortization 41,082 32,050 33,949 Net unrealized loss (gain): Impairment of operating real estate 54,211 7,590 — Other unrealized loss (gain) on investments 125 1,747 (1,155) General CECL reserves 97,767 26,983 13,692 Gain on sales of real estate, preferred equity and investments in unconsolidated joint ventures (144) — (30,709) Adjustments related to noncontrolling interests (1,552) (805) (730) Distributable Earnings attributable to BrightSpire Capital, Inc. common stockholders $ 71,159 $ 66,072 $ 69,736 Distributable Earnings per share (1) $ 0.55 $ 0.51 $ 0.53 Adjustments: Specific CECL reserves $ 38,031 $ 81,166 $ 56,944 Fair value adjustments — (9,055) — Realized loss on CRE debt securities and B-piece — — 797 Adjusted Distributable Earnings attributable to BrightSpire Capital, Inc. common stockholders $ 109,190 $ 138,183 $ 127,477 Adjusted Distributable Earnings per share (1) $ 0.84 $ 1.06 $ 0.98 Weighted average number of shares of Class A common stock (1) 130,150 129,794 130,539 ________________________________________ (1) We calculate Distributable Earnings (Loss) per share, and Adjusted Distributable Earnings per share, non-GAAP financial measures, based on a weighted-average number of common shares and OP units (held by members other than us or our subsidiaries).
Inflation Virtually all of our assets and liabilities are interest rate sensitive in nature. As a result, interest rates and other factors influence our performance significantly more than inflation does. A change in interest rates may correlate with the inflation rate.
As a result, interest rates and other factors influence our performance significantly more than inflation does. A change in interest rates may correlate with the inflation rate.
Net cash provided by operating activities increased for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to higher income earned as a result of higher interest rates. For the year ended December 31, 2021, our operating activities used net cash outflows of $21.3 million.
Our operating activities provided net cash inflows of $137.6 million and $125.3 million for the years ended December 31, 2023 and 2022, respectively. Net cash provided by operating activities increased for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to higher income earned as a result of higher interest rates.
Other potential sources of financing In the future, we may also use other sources of financing to fund the acquisition of our target assets, including secured and unsecured forms of borrowing and selective wind-down and dispositions of assets.
Other potential sources of financing In the future, we may also use other sources of financing to fund the acquisition of our target assets, including secured and unsecured forms of borrowing and selective wind-down and dispositions of assets. We may also seek to raise equity capital or issue debt securities in order to fund our future investments.
The market for office properties was particularly negatively impacted by the COVID-19 pandemic and continues to experience headwinds driven by the normalization of work from home and hybrid work arrangements and elevated costs to operate or reconfigure office properties. These factors have largely resulted in lower demand for office space and driven rising vacancy rates.
The market for office properties was particularly negatively impacted by the COVID-19 pandemic and continues to experience headwinds driven by the normalization of work from home and hybrid work arrangements and elevated costs to operate or reconfigure office properties.
(3) Refer to “Non-GAAP Supplemental Financial Measures” for further information on NOI. 54 Table of Contents The following table provides asset-level detail of our net leased and other real estate as of December 31, 2023: Collateral type City, State Number of properties Rentable square feet (“RSF”) / units/keys (1) Weighted average % leased (2) Weighted average lease term (yrs) (3) Principal amount of debt (4) Final debt maturity date Net leased real estate Net lease 1 Industrial Various - U.S. 2 2,787,343 RSF 100% 14.6 $ 200,000 Sep-33 Net lease 2 Office Stavanger, Norway 1 1,290,926 RSF 100% 6.4 157,216 Jun-25 Net lease 3 Office Aurora, CO 1 183,529 RSF 100% 3.9 29,352 Aug-26 Net lease 4 Office Indianapolis, IN 1 338,000 RSF 100% 7.0 21,976 Oct-27 Net lease 5 (5) Retail Various - U.S. 7 319,600 RSF 100% 4.0 28,353 Nov-26 & Mar-28 Net lease 6 Retail Keene, NH 1 45,471 RSF 100% 5.1 6,787 Nov-26 Net lease 7 Retail South Portland, ME 1 52,900 RSF 100% 8.1 — — Net lease 8 Retail Fort Wayne, IN 1 50,000 RSF 100% 0.7 3,146 Nov-26 Total/Weighted average net leased real estate 15 5,067,769 RSF 100% 9.7 $ 446,830 Other real estate Other real estate 1 Office Creve Coeur, MO 7 847,604 RSF 85% 2.9 $ 96,197 Oct-24 Other real estate 2 Office Warrendale, PA 5 496,414 RSF 83% 5.5 61,690 Jan-25 Other real estate 3 (6) Office Long Island City, NY 1 128,195 RSF 9% 6.9 — — Other real estate 4 (6) Multifamily Phoenix, AZ 1 236 units 78% n/a — — Other real estate 5 (6) Office Long Island City, NY 1 220,872 RSF 30% 5.2 — — Other real estate 6 (7) Office Washington, D.C. 1 186,181 RSF 42% 1.1 — — Other real estate 7 (6) Office Oakland, CA 1 90,693 RSF 44% 3.0 — — Total/Weighted average other real estate 17 n/a 64% 4.3 $ 157,887 Total net leased and other real estate 32 _________________________________________ (1) Rentable square feet based on carrying value at our share as of December 31, 2023.
(3) Refer to “Non-GAAP Supplemental Financial Measures” for further information on NOI. 52 Table of Contents The following table provides asset-level detail of our net leased and other real estate as of December 31, 2024: Collateral type City, State Number of properties Rentable square feet (“RSF”) / units/keys (1) Weighted average % leased (2) Weighted average lease term (yrs) (3) Principal amount of debt (4) Final debt maturity date Net leased real estate Net lease 1 Industrial Various - U.S. 2 2,787,343 RSF 100% 13.6 $ 200,000 Sep-33 Net lease 2 (5) Office Stavanger, Norway 1 1,290,926 RSF 100% 5.4 132,879 Jun-25 Net lease 3 Office Aurora, CO 1 183,529 RSF 100% 2.9 28,671 Aug-26 Net lease 4 Office Indianapolis, IN 1 338,000 RSF 100% 6.0 21,368 Oct-27 Net lease 5 (5)(6) Retail Various - U.S. 7 319,600 RSF 100% 3.0 27,670 Nov-26 & Mar-28 Net lease 6 (5) Retail Keene, NH 1 45,471 RSF 100% 4.1 6,620 Nov-26 Net lease 7 Retail South Portland, ME 1 52,900 RSF 100% 7.1 — — Net lease 8 (5) Retail Fort Wayne, IN 1 50,000 RSF 100% 0.7 3,069 Nov-26 Total/Weighted average net leased real estate 15 5,067,769 RSF 100% 9.0 $ 420,277 Other real estate Other real estate 1 (5)(7) Office Creve Coeur, MO 7 847,604 RSF 82% 3.5 $ 94,263 Dec-28 Other real estate 2 (5) Office Warrendale, PA 5 496,440 RSF 85% 5.1 60,252 Jan-25 (8) Other real estate 3 Multifamily Arlington, TX 1 436 Units 72% n/a — — Other real estate 4 (9) Multifamily Phoenix, AZ 1 236 Units 92% n/a — — Other real estate 5 (9) Multifamily Fort Worth, TX 1 354 Units 84% n/a — — Other real estate 6 (9) Office Long Island City, NY 1 220,872 RSF 31% 4.1 — — Other real estate 7 (5)(9) Office Long Island City, NY 1 128,195 RSF 2% 5.2 — — Other real estate 8 (5)(9) Office Oakland, CA 1 90,693 RSF 42% 2.8 — — Total/Weighted average other real estate 18 n/a 70% 4.2 $ 154,515 Total net leased and other real estate 33 _________________________________________ (1) Rentable square feet based on carrying value at our share as of December 31, 2024.
Operating expense Operating expense decreased by $1.5 million to $13.2 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to lower third-party fees.
Operating expense Operating expense decreased by $1.3 million to $11.9 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to lower third-party costs.
A change in our ability and/or intent to continue to hold any of our assets may result in our recognizing an impairment charge or realizing losses upon the sale of such investments.
A change in our ability and/or intent to continue to hold any of our assets, which includes the inability to modify, extend or refinance existing mortgage debt on our real estate portfolio, may result in our recognizing an impairment charge or realizing losses upon the sale of such investments.
Other income (loss) Unrealized gain on mortgage loans and obligations held in securitization trusts, net During the year ended December 31, 2022, we recorded an unrealized gain of $0.9 million on mortgage loans and obligations held in securitization trusts, net due to the sale of retained investments in the subordinate tranches of a securitization trust.
Operating expense Operating expense decreased by $1.5 million to $13.2 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to lower third-party fees. 57 Table of Contents Other income (loss) Unrealized gain on mortgage loans and obligations held in securitization trusts, net During the year ended December 31, 2022, we recorded an unrealized gain of $0.9 million on mortgage loans and obligations held in securitization trusts, net due to the sale of retained investments in the subordinate tranches of a securitization trust.
Comparison of Year Ended December 31, 2022 and Year Ended December 31, 2021 Net Interest Income Interest income Interest income increased by $67.3 million to $236.2 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021.
Comparison of Year Ended December 31, 2023 and Year Ended December 31, 2022 Net Interest Income Interest income Interest income increased by $62.5 million to $298.7 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
For clauses (ix) and (x), such exclusions shall only be applied after approval by a majority of our independent directors. Distributable Earnings include specific CECL reserves when realized.
For clauses (viii) and (ix), such exclusions shall only be applied after approval by a majority of our independent directors.
This is partially offset by payment of interest expenses for credit facilities and mortgages payable, and operating expenses supporting our various lines of business, including property management and operations, loan servicing and workout of loans in default, investment transaction costs, as well as general administrative costs. 70 Table of Contents Our operating activities provided net cash inflows of $137.6 million and $125.3 million for the years ended December 31, 2023 and 2022, respectively.
This is partially offset by payment of interest expenses for credit facilities and mortgages payable, and operating expenses supporting our various lines of business, including property management and operations, loan servicing and workout of loans in default, investment transaction costs, as well as general administrative costs.
CLNC 2019-FL1 included a two-year reinvestment feature that allowed us to contribute existing or newly originated loan investments in exchange for proceeds from repayments or repurchases of loans held in CLNC 2019-FL1, subject to the satisfaction of certain conditions set forth in the indenture. The reinvestment period for CLNC 2019-FL1 expired on October 19, 2021.
BRSP 2024-FL2 also includes a two-year reinvestment feature that allows us to contribute existing or newly originated loan investments in exchange for proceeds from repayments of loans held in BRSP 2024-FL2, subject to the satisfaction of certain conditions set forth in the indenture.
As of December 31, 2023, the securitization reflects an advance rate of 65.3% at a weighted average 68 Table of Contents cost of funds of Adjusted Term SOFR plus 2.17% (before transaction expenses) and is collateralized by a pool of 14 senior loan investments.
As of December 31, 2024, the securitization reflects an advance rate of 86.5% at a weighted average cost of funds of Term SOFR plus 2.47% (before transaction costs), and is collateralized by a pool of 24 senior loan investments and cash.
The following tables present a reconciliation of net income (loss) on our net leased and other real estate portfolios attributable to our common stockholders to NOI attributable to our common stockholders (dollars in thousands) for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Net income (loss) attributable to BrightSpire Capital, Inc. common stockholders $ (15,549) $ 45,788 $ (101,046) Adjustments: Net (income) loss attributable to non-net leased and other real estate portfolios (1) 14,426 (32,342) 109,565 Net income attributable to noncontrolling interests in investment entities (70) (12) (79) Amortization of above- and below-market lease intangibles (126) (364) (97) Interest income (71) — 18 Interest expense on real estate 26,024 28,717 32,278 Other income (437) (18) (3) Transaction, investment and servicing expense 317 681 (35) Depreciation and amortization 33,321 33,886 36,162 Impairment of operating real estate 7,590 — — Operating expense 95 231 233 Other (gain) loss on investments, net 1,660 (10,287) (4,691) Income tax (benefit) expense 527 231 (68) NOI attributable to noncontrolling interest in investment entities (1,204) (1,200) (15,323) Total NOI, at share $ 66,503 $ 65,311 $ 56,914 ________________________________________ (1) Net (income) loss attributable to non-net leased and other real estate portfolios includes net (income) loss on our senior and mezzanine loans and preferred equity and corporate and other business segments.
In addition, our methodology for calculating NOI involves subjective judgment and discretion and may differ from the methodologies used by other companies, when calculating the same or similar supplemental financial measures and may not be comparable with other companies. 60 Table of Contents The following tables present a reconciliation of net income (loss) on our net leased and other real estate portfolios attributable to our common stockholders to NOI attributable to our common stockholders (dollars in thousands) for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 Net income (loss) attributable to BrightSpire Capital, Inc. common stockholders $ (131,979) $ (15,549) $ 45,788 Adjustments: Net (income) loss attributable to non-net leased and other real estate portfolios (1) 79,127 14,426 (32,342) Net loss attributable to noncontrolling interests in investment entities (3,538) (70) (12) Amortization of above- and below-market lease intangibles 287 (126) (364) Net interest income (69) (71) — Interest expense on real estate 29,117 26,024 28,717 Other income (380) (437) (18) Transaction, investment and servicing expense 32 317 681 Depreciation and amortization 40,381 33,321 33,886 Impairment of operating real estate 54,211 7,590 — Operating expense 64 95 231 Other gain (loss) on investments, net 682 1,660 (10,287) Income tax expense 961 527 231 NOI attributable to noncontrolling interest in investment entities (1,216) (1,204) (1,200) Total NOI, at share $ 67,680 $ 66,503 $ 65,311 ________________________________________ (1) Net (income) loss attributable to non-net leased and other real estate portfolios includes net (income) loss on our senior and mezzanine loans and preferred equity and corporate and other business segments.
We have sufficient sources of liquidity to meet our material cash commitments for the next 12 months and the foreseeable future. 65 Table of Contents Financing Strategy We have a multi-pronged financing strategy that includes an up to $165.0 million secured revolving credit facility as of December 31, 2023, up to approximately $2.0 billion in secured revolving repurchase facilities, $913.9 million in non-recourse securitization financing, $617.4 million in commercial mortgages and $34.5 million in other asset-level financing structures.
Financing Strategy We have a multi-pronged financing strategy that includes an up to $165.0 million secured revolving credit facility as of December 31, 2024, up to approximately $2.0 billion in secured revolving repurchase facilities, $1.1 billion in non-recourse securitization financing, $587.2 million in commercial mortgages and $34.5 million in other asset-level financing structures.
In addition to our current sources of liquidity, there may be opportunities from time to time to access liquidity through public offerings of debt and equity securities.
In addition to our current sources of liquidity, there may be opportunities from time to time to access liquidity through public offerings of debt and equity securities. We have sufficient sources of liquidity to meet our material cash commitments for the next 12 months and the foreseeable future.
At the time of origination or purchase, loans held for investment are ranked as a “3” and will move accordingly going forward based on the ratings which are defined as follows: 1. Very Low Risk 2. Low Risk 3. Medium Risk 47 Table of Contents 4.
At the time of origination or purchase, loans and preferred equity held for investment are ranked as a “3” and will move accordingly going forward based on the ratings.
During the fourth quarter of 2023, we had the following risk ranking activity for risk ranked 4 and 5 assets: • Repayments: one hotel loan with a risk ranking of 4 was partially repaid (refer to “Our Portfolio - Asset Specific Loan Summaries” section for further discussion); • Downgrades: one multifamily loan was downgraded to a risk ranking of 5 from a risk ranking of 4; • Other: one multifamily loan with a risk ranking of 5 was resolved when the property was acquired through a deed-in-lieu of foreclosure and reclassified to real estate owned; and one office loan with a risk ranking of 5 was resolved when the property was acquired through legal foreclosure and reclassified to real estate held for sale.
During the fourth quarter of 2024, we had the following risk ranking activity for risk ranked 4 and 5 assets: • Upgrades: one multifamily loan and one office loan were upgraded to a risk ranking of 3 from a risk ranking of 4; • Downgrades: one multifamily loan was downgraded to a risk ranking of 5 from a risk ranking of 4 and another multifamily loan was downgraded to a risk ranking of 4 from a risk ranking of 3; • Other: one multifamily loan with a risk ranking of 5 was resolved when the property was acquired through a foreclosure and reclassified to real estate owned.
Debt-to-Equity Ratio The following table presents our debt-to-equity ratio: December 31, 2023 December 31, 2022 Debt-to-equity ratio (1) 1.9x 2.0x _________________________________________ (1) Represents (i) total consolidated outstanding secured debt less cash and cash equivalents of $257.5 million and $306.3 million at December 31, 2023 and December 31, 2022, respectively to (ii) total equity, in each case, at period end.
We will seek to match the nature and duration of the financing with the underlying asset’s cash flow, including using hedges, as appropriate. 61 Table of Contents Debt-to-Equity Ratio The following table presents our debt-to-equity ratio: December 31, 2024 December 31, 2023 Debt-to-equity ratio (1) 2.1x 1.9x _________________________________________ (1) Represents (i) total consolidated outstanding secured debt less cash and cash equivalents of $302.2 million and $257.5 million at December 31, 2024 and December 31, 2023, respectively to (ii) total equity, in each case, at period end.
Property and other income Property operating income Property operating income increased by $3.2 million to $93.4 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Property and other income Property operating income Property operating income increased by $9.0 million to $102.4 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase was primarily driven by property acquisitions during 2023 and 2024.
We are currently operating the property with a plan to increase occupancy, renovate vacant units, and address additional deferred maintenance. 57 Table of Contents Results of Operations The following table summarizes our portfolio results of operations for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands): Year Ended December 31, Change 2023 2022 2021 2023 compared to 2022 2022 compared to 2021 Net interest income Interest income $ 298,702 $ 236,181 $ 168,845 $ 62,521 $ 67,336 Interest expense (173,309) (111,806) (55,484) (61,503) (56,322) Interest income on mortgage loans held in securitization trusts — 32,163 51,609 (32,163) (19,446) Interest expense on mortgage obligations issued by securitization trusts — (29,434) (45,460) 29,434 16,026 Net interest income 125,393 127,104 119,510 (1,711) 7,594 Property and other income Property operating income 93,403 90,191 102,634 3,212 (12,443) Other income 13,921 6,058 2,333 7,863 3,725 Total property and other income 107,324 96,249 104,967 11,075 (8,718) Expenses Management fee expense — — 9,596 — (9,596) Property operating expense 26,640 24,222 30,286 2,418 (6,064) Transaction, investment and servicing expense 2,499 3,434 4,556 (935) (1,122) Interest expense on real estate 25,909 28,717 32,278 (2,808) (3,561) Depreciation and amortization 33,504 34,099 36,399 (595) (2,300) Increase (decrease) of current expected credit loss reserve 108,149 70,635 (1,432) 37,514 72,067 Impairment of operating real estate 7,590 — — 7,590 — Compensation and benefits 39,501 33,031 32,143 6,470 888 Operating expense 13,150 14,641 17,868 (1,491) (3,227) Restructuring charges — — 109,321 — (109,321) Total expenses 256,942 208,779 271,015 48,163 (62,236) Other income Unrealized gain on mortgage loans and obligations held in securitization trusts, net — 854 41,904 (854) (41,050) Realized loss on mortgage loans and obligations held in securitization trusts, net — (854) (36,623) 854 35,769 Other gain, net 613 34,630 74,067 (34,017) (39,437) Income (loss) before equity in earnings of unconsolidated ventures and income taxes (23,612) 49,204 32,810 (72,816) 16,394 Equity in earnings (loss) of unconsolidated ventures 9,055 25 (131,115) 9,030 131,140 Income tax expense (1,062) (2,440) (6,276) 1,378 3,836 Net income (loss) $ (15,619) $ 46,789 $ (104,581) $ (62,408) $ 151,370 Comparison of Year Ended December 31, 2023 and Year Ended December 31, 2022 Net Interest Income Interest income Interest income increased by $62.5 million to $298.7 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
(9) Property was acquired through foreclosure or deed-in-lieu of foreclosure. 53 Table of Contents Results of Operations The following table summarizes our portfolio results of operations for the years ended December 31, 2024, 2023 and 2022 (dollars in thousands): Year Ended December 31, Change 2024 2023 2022 2024 compared to 2023 2023 compared to 2022 Net interest income Interest income $ 244,773 $ 298,702 $ 236,181 $ (53,929) $ 62,521 Interest expense (153,910) (173,309) (111,806) 19,399 (61,503) Interest income on mortgage loans held in securitization trusts — — 32,163 — 32,163 Interest expense on mortgage obligations issued by securitization trusts — — (29,434) — (29,434) Net interest income 90,863 125,393 127,104 (34,530) (1,711) Property and other income Property operating income 102,443 93,403 90,191 9,040 3,212 Other income 11,589 13,921 6,058 (2,332) 7,863 Total property and other income 114,032 107,324 96,249 6,708 11,075 Expenses Property operating expense 33,887 26,640 24,222 7,247 2,418 Transaction, investment and servicing expense 1,641 2,499 3,434 (858) (935) Interest expense on real estate 27,026 25,909 28,717 1,117 (2,808) Depreciation and amortization 40,506 33,504 34,099 7,002 (595) Increase of current expected credit loss reserve 135,798 108,149 70,635 27,649 37,514 Impairment of operating real estate 54,211 7,590 — 46,621 7,590 Compensation and benefits 34,644 39,501 33,031 (4,857) 6,470 Operating expense 11,867 13,150 14,641 (1,283) (1,491) Total expenses 339,580 256,942 208,779 82,638 48,163 Other income Unrealized gain on mortgage loans and obligations held in securitization trusts, net — — 854 — (854) Realized loss on mortgage loans and obligations held in securitization trusts, net — — (854) — 854 Other gain, net 228 613 34,630 (385) (34,017) Income (loss) before equity in earnings of unconsolidated ventures and income taxes (134,457) (23,612) 49,204 (110,845) (72,816) Equity in earnings of unconsolidated ventures — 9,055 25 (9,055) 9,030 Income tax expense (1,060) (1,062) (2,440) 2 1,378 Net income (loss) $ (135,517) $ (15,619) $ 46,789 $ (119,898) $ (62,408) Comparison of Year Ended December 31, 2024 and Year Ended December 31, 2023 Net Interest Income Interest income Interest income decreased by $53.9 million to $244.8 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
At December 31, 2023, there were no specific CECL reserves on our consolidated balance sheet (refer to “Our Portfolio - Asset Specific Loan Summaries” section for further discussion); ◦ Recorded a net increase in our general CECL reserves of $27.0 million.
At December 31, 2024, there were no specific CECL reserves on our consolidated balance sheet; ◦ Recorded a net increase in our general CECL reserves of $89.7 million.
We believe cash flows from operations, available cash balances and our ability to generate cash through short and long-term borrowings are sufficient to fund our operating liquidity needs.
We believe cash flows from operations, available cash balances and our ability to generate cash through short and long-term borrowings are sufficient to fund our operating liquidity needs. Investing Activities Investing activities include cash outlays for disbursements on new and/or existing loans, which are partially offset by repayments of loans held for investment.
Since the expiration of the reinvestment period on July 20, 2023 and through February 20, 2024, two loans held in BRSP 2021-FL1 were fully repaid and one loan was partially repaid, totaling $74.4 million. The proceeds from the repayment were used to amortize the securitization bonds in accordance with the securitization priority of repayments.
During the year ended December 31, 2024, two loans held in BRSP 2021-FL1 were fully repaid, totaling $79.7 million, and four loans were partially repaid totaling $11.4 million. The proceeds from the repayments were used to amortize the securitization bonds in accordance with the securitization priority of repayments.
The following table presents our net leased and other real estate investments as of December 31, 2023 (dollars in thousands): Count (1) Carrying Value (2) NOI for the year ended December 31, 2023 (3) Net leased real estate 8 $ 579,366 $ 41,878 Other real estate 7 289,941 24,625 Total/Weighted average net leased and other real estate 15 $ 869,307 $ 66,503 ________________________________________ (1) Count represents the number of investments.
The following table presents our net leased and other real estate investments as of December 31, 2024 (dollars in thousands): Count (1) Carrying Value (2) NOI for the year ended December 31, 2024 (3) Net leased real estate 8 $ 504,494 $ 49,455 Other real estate 8 310,358 18,225 Total/Weighted average net leased and other real estate 16 $ 814,852 $ 67,680 ________________________________________ (1) Count represents the number of investments.
Loans are charged off when all or a portion of the principal amount is determined to be uncollectible. 73 Table of Contents Changes in the CECL reserve for our financial instruments are recorded in increase/decrease in current expected credit loss reserve on the consolidated statement of operations with a corresponding offset to the loans held for investment or as a component of other liabilities for future loan fundings recorded on our consolidated balance sheets.
Changes in the CECL reserve for our financial instruments are recorded in increase/decrease in current expected credit loss reserve on the consolidated statement of operations with a corresponding offset to the loans held for investment or as a component of other liabilities for future loan fundings recorded on our consolidated balance sheets Real Estate Impairment We evaluate real estate held for investment for impairment periodically or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, generally on an individual property basis.
Equity in earnings (loss) of unconsolidated ventures Equity in earnings of unconsolidated ventures was de minimis during the year ended December 31, 2022.
Equity in earnings of unconsolidated ventures We did not record equity in earnings of unconsolidated ventures during the year ended December 31, 2024.
Financing Activities We finance our investing activities largely through borrowings secured by our investments along with capital from third party or affiliated co-investors. We also have the ability to raise capital in the public markets through issuances of common stock, as well as draw upon our corporate credit facility, to finance our investing and operating activities.
We also have the ability to raise capital in the public markets through issuances of common stock, as well as draw 66 Table of Contents upon our corporate credit facility, to finance our investing and operating activities. Accordingly, we incur cash outlays for payments on third party debt and dividends to our common stockholders.
Underwriting Process We use an investment and underwriting process that has been developed by our senior management team leveraging their extensive commercial real estate expertise over many years and real estate cycles.
(4) Net carrying value at our share represents the proportionate carrying value based on asset ownership less any associated financing based on ownership as of December 31, 2024 . 45 Table of Contents Underwriting Process We use an investment and underwriting process that has been developed by our senior management team leveraging their extensive commercial real estate expertise over many years and real estate cycles.
During the fourth quarter of 2023, we recorded $10.0 million of specific CECL reserves related to one Phoenix, Arizona multifamily senior loan prior to acquiring the asset through a deed-in-lieu of foreclosure. As a result, the $10.0 million in specific CECL reserves were charged off. At December 31, 2023, there are no specific CECL reserves on our consolidated balance sheet.
During the fourth quarter of 2024, we recorded total specific CECL reserves of $10.0 million related to one multifamily loan and one office loan which were subsequently charged off during the quarter. As a result, we have no specific CECL reserves at December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

18 edited+4 added−2 removed17 unchanged
Biggest changeWe seek to undertake a rigorous credit evaluation of the tenants prior to acquiring properties. This analysis includes an extensive due diligence investigation of the tenants’ businesses, as well as an assessment of the strategic importance of the underlying real estate to the respective tenants’ core business operations.
Biggest changeThis analysis includes an extensive due diligence investigation of the tenants’ businesses, as well as an assessment of the strategic importance of the underlying real estate to the respective tenants’ core business operations. Where appropriate, we may seek to augment the tenants’ commitment to the properties by structuring various credit enhancement mechanisms into the underlying leases.
We utilize a variety of financial instruments on some of our investments, including interest rate swaps, caps, floors and other interest rate exchange contracts, in order to limit the effects of fluctuations in interest rates on their operations.
We utilize a variety of financial instruments on some of our investments, including interest rate swaps, caps, floors and other interest rate exchange contracts, in order to limit the effects of fluctuations in interest rates on our operations.
The market values of commercial real estate are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional, and local economic conditions, as well as changes or weakness in specific industry segments, and other macroeconomic factors beyond our control, including the COVID-19 pandemic, which have and may continue to affect occupancy rates, capitalization rates and absorption rates.
The market values of commercial real estate are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional, and local economic conditions, as well as changes or weakness in specific industry segments, and other macroeconomic factors beyond our control which have and may continue to affect occupancy rates, capitalization rates and absorption rates.
Our Master Repurchase Facilities are partial recourse, and margin call provisions do not permit valuation adjustments based on capital markets events; rather they are limited to collateral-specific credit marks generally determined on a commercially reasonable basis. For the year ended December 31, 2023, and through February 20, 2024, we have not received any margin calls under our Master Repurchase Facilities.
Our Master Repurchase Facilities are partial recourse, and margin call provisions do not permit valuation adjustments based on capital markets events; rather they are limited to collateral-specific credit marks generally determined on a commercially reasonable basis. For the year ended December 31, 2024, and through February 18, 2025, we have not received any margin calls under our Master Repurchase Facilities.
Termination or maturity of currency hedging instruments may result in an obligation for payment to or from the counterparty to the hedging agreement. We are exposed to credit loss in the event of non-performance by counterparties for these contracts.
Termination or maturity of currency hedging instruments may have resulted in an obligation for payment to or from the counterparty to the hedging agreement. We were exposed to credit loss in the event of non-performance by counterparties for these contracts.
All loans are subject to a certain probability of default. We manage credit risk through the underwriting process, acquiring investments at the appropriate discount to face value, if any, and establishing loss assumptions. Performance of the loans is carefully monitored, including those held through joint venture investments, as well as external factors that may affect their value.
We manage credit risk through the underwriting process, acquiring investments at the appropriate discount to face value, if any, and establishing loss assumptions. We carefully monitor performance of all loans, including those held through joint venture investments, as well as the external factors that may affect their value.
See the “Factors Impacting Our Operating Results” section in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion on interest rates. Prepayment risk Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, resulting in a less than expected return on an investment.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion on interest rates. Prepayment risk Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, resulting in a less than expected return on an investment.
We have amended our Bank Credit Facility and Master Repurchase Facilities to adjust certain covenants (such as the tangible net worth covenant), reduce advance rates on certain financed assets, obtain margin call holidays and permitted modification flexibilities, in an effort to mitigate the risk of future compliance issues, including margin calls, under our financing arrangements. 75 Table of Contents Foreign Currency Risk We have foreign currency rate exposures related to our foreign currency-denominated investments held by our foreign subsidiaries.
We have amended our Bank Credit Facility and Master Repurchase Facilities to adjust certain covenants (such as the tangible net worth covenant), reduce advance rates on certain financed assets, obtain margin call holidays and permitted modification flexibilities, in an effort to mitigate the risk of future compliance issues, including margin calls, under our financing arrangements.
The use of these types of derivatives to hedge interest-earning assets and/or interest-bearing liabilities carries certain risks, including the risk that losses on a hedge position will reduce the funds available for distribution and that such losses may exceed the amount invested in such instruments. A hedge may not perform its intended purpose of offsetting losses of rising interest rates.
The use of these 69 Table of Contents types of derivatives to hedge interest-earning assets and/or interest-bearing liabilities carries certain risks, including the risk that losses on a hedge position will reduce the funds available for distribution and that such losses may exceed the amount invested in such instruments.
A summary of the foreign exchange contracts in place at December 31, 2023, including notional amount and key terms, is included in Note 14, “Derivatives,” to Part IV, Item 15, “Exhibits and Financial Statements Schedules.” The maturity dates of these instruments approximate the projected dates of related cash flows for specific investments.
Our previous foreign exchange contracts, including notional amount and key terms, is included in Note 14, “Derivatives,” to Part IV, Item 15, “Exhibits and Financial Statements Schedules.” The maturity dates of these instruments approximated the projected dates of related cash flows for specific investments.
Default rates are subject to a wide variety of factors, including, but not limited to, borrower financial condition, property performance, property management, supply/demand factors, construction trends, consumer behavior, regional economics, interest rates, the strength of the U.S. economy and other factors beyond our control, all of which have and may continue to be 74 Table of Contents detrimentally impacted by the COVID-19 pandemic.
Default rates are subject to a wide variety of factors, including, but not limited to, borrower financial condition, property performance, property management, supply/demand factors, construction trends, consumer behavior, regional economics, interest rates, the strength of the U.S. economy and other factors beyond our control. All loans are subject to a certain probability of default.
There can be no assurance that the measures taken will be sufficient to address the negative impact the ongoing effects of COVID-19 may have on our future operating results, liquidity and financial condition. Real estate market risk We are exposed to the risks generally associated with the commercial real estate market.
There can be no assurance that the measures we take will be sufficient to address or mitigate the impact of credit risk on our future operating results, liquidity and financial condition. 70 Table of Contents Real estate market risk We are exposed to the risks generally associated with the commercial real estate market.
Changes in foreign currency rates can adversely affect the fair values and earning of our non-U.S. holdings. We generally mitigate this foreign currency risk by utilizing currency instruments to hedge our net investments in our foreign subsidiaries. The type of hedging instruments that we employ on our foreign subsidiary investments are put options.
Foreign Currency Risk We have foreign currency rate exposures related to our foreign currency-denominated investments held by our foreign subsidiaries. Changes in foreign currency rates can adversely affect the fair values and earning of our non-U.S. holdings. We generally mitigate this foreign currency risk by utilizing currency instruments to hedge our net investments in our foreign subsidiaries.
At December 31, 2023, we had approximately NOK 588.9 million or a total of $57.9 million, in net investments in our European subsidiaries. A 1.0% change in the foreign currency rate would result in a $0.6 million increase or decrease in translation gain or loss included in other comprehensive income in connection with our European subsidiary.
A 1.0% change in the foreign currency rate would result in a $0.2 million increase or decrease in translation gain or loss included in other comprehensive income in connection with our European subsidiary. We had no foreign exchange contracts in place at December 31, 2024.
We are also subject to the credit risk of the tenants in our properties, including business closures, occupancy levels, meeting rent or other expense obligations, lease concessions, and ESG standards and practices among other factors, all of which have and may continue to be detrimentally impacted by the COVID-19 pandemic.
We are also subject to the credit risk of the tenants in our properties, including business closures, occupancy levels, meeting rent or other expense obligations, lease concessions, and ESG standards and practices among other factors. We seek to undertake a rigorous credit evaluation of the tenants prior to acquiring properties.
We seek to mitigate these risks by monitoring the debt capital markets to inform our decisions on the amount, timing and terms of our borrowings. The COVID-19 pandemic has had a direct and volatile impact on the global markets, including the commercial real estate equity and debt capital markets.
We seek to mitigate these risks by monitoring the debt capital markets to inform our decisions on the amount, timing and terms of our borrowings.
To manage this risk, we select major international banks and financial institutions as counterparties and perform a quarterly review of the financial health and stability of our trading counterparties. Based on our review at December 31, 2023, we do not expect any counterparty to default on its obligations. Item 8.
To manage this risk, we selected major international banks and financial institutions as counterparties and performed a quarterly review of the financial health and stability of our trading counterparties. No counterparty defaulted on its obligations when we held foreign exchange contracts. Item 8.
Our profitability may be adversely affected during any period as a result of changing interest rates. As of December 31, 2023, a hypothetical 100 basis point increase or decrease in the applicable interest rate benchmark on our loan portfolio would increase or decrease interest income by $7.4 million annually, net of interest expense.
As of December 31, 2024, a hypothetical 100 basis point increase or decrease in the applicable interest rate benchmark on our loan portfolio would increase or decrease interest income by $3.8 million annually, net of interest expense. See the “Factors Impacting Our Operating Results” section in “Item 7.
Removed
Where appropriate, we may seek to augment the tenants’ commitment to the properties by structuring various credit enhancement mechanisms into the underlying leases. These mechanisms could include security deposit requirements or guarantees from entities that are deemed credit worthy. We are working closely with our borrowers and tenants to address any impact of COVID-19 on their businesses.
Added
A hedge may not perform its intended purpose of offsetting losses of rising interest rates.
Removed
The continued disruption caused by COVID-19 has led to a negative impact on asset valuations and significant constraints on liquidity in the capital markets, which have led to restrictions on lending activity, downward pressure on covenant compliance and requirements to post margin or repayments under master repurchase financing arrangements.
Added
Our profitability may be adversely affected during any period as a result of changing interest rates. At December 31, 2024, we held no derivative instruments.
Added
These mechanisms could include security deposit requirements or guarantees from entities that are deemed credit worthy.
Added
The type of hedging instruments that we employed on our foreign subsidiary investments were put options. At December 31, 2024, we had approximately NOK 251.7 million or a total of $22.2 million, in net investments in our European subsidiaries.

Other BRSP 10-K year-over-year comparisons