BrightSpire Capital, Inc 10-Q for FY2026 Q1
BrightSpire Capital, Inc. (BRSP)
10-Q
2026-04-29
For: 2026-03-31
View Original
Added on
April 29, 2026
About this 10-Q
BrightSpire Capital, Inc filed this 10-Q on April 29, 2026, covering the quarter ended March 31, 2026 (FY2026 Q1).
Headline figures
Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $85.14M
- up 9.8% from $77.56M a year earlier
- Net income
- $4.85M
- down 9.3% from net income of $5.34M a year earlier
- Diluted EPS
- $0.03
- down 25.0% from $0.04 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission File Number: 001-38377
| (Exact Name of Registrant as Specified in Its Charter) | ||||||||||||||
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of Principal Executive Offices, Including Zip Code)
(212 ) 547-2631
(Registrant’s Telephone Number, Including Area Code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:
As of April 28, 2026, BrightSpire Capital, Inc. had 130,278,065 shares of Class A common stock, par value $0.01 per share, outstanding.
BRIGHTSPIRE CAPITAL, INC.
FORM 10-Q
TABLE OF CONTENTS
| Index | Page | |||||||
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond our control, and may cause actual results to differ significantly from those expressed in any forward-looking statement.
Among others, the following uncertainties and other factors could cause actual results to differ from those set forth in the forward-looking statements:
•operating costs and business disruption may be greater than expected;
•we depend on borrowers and tenants for a substantial portion of our revenue and, accordingly, our revenue and our ability to make distributions to stockholders will be dependent upon the success and economic viability of such borrowers and tenants;
•higher interest rates may adversely impact the value of our variable-rate investments, resulting in higher interest expense, materially impacting our borrowers’ ability to refinance existing loans, and creating disruptions to our borrowers’ and tenants’ ability to finance their activities, on whom we depend for a substantial portion of our revenue;
•lower interest rates may materially impact earnings as a result of generating less income on our loans and our ability to redeploy funds in a timely manner or to supplement earnings loss;
•our ability to manage and stabilize properties;
•deterioration in the performance of the properties securing our investments (including the impact of higher interest expense, depletion of interest and other reserves or payment-in-kind concessions in lieu of current interest payment obligations, population shifts and migration, or reduced demand for office, multifamily, hospitality or retail space) may cause deterioration in the performance of our investments and, potentially, principal losses to us;
•the fair value of our investments may be subject to uncertainties including impacts associated with inflationary trends, decisions, actions and inactions of the Federal government that cause instability, the volatility of interest rates and credit spreads increased market volatility affecting commercial real estate businesses and public securities;
•our use of leverage and interest rate mismatches between our assets and borrowings could hinder our ability to make distributions and may significantly impact our liquidity position;
•the ability to realize expected returns on equity and/or yields on investments;
•adverse impacts on our corporate revolver, including covenant compliance and borrowing base capacity;
•adverse impacts on our liquidity, including available capacity under and margin calls on master repurchase facilities, debt service or lease payment defaults or deferrals, demands for protective advances and capital expenditures;
•our real estate investments are relatively illiquid and we may not be able to vary our portfolio in response to changes in economic and other conditions, which may result in losses to us;
•our inability to refinance existing mortgage debt on our real estate portfolio;
•the timing of and ability to deploy available capital;
•our lack of an established minimum distribution payment level, and whether we can continue to pay distributions in the future;
•the timing of and ability to complete repurchases of our common stock;
•the 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; and
•the impact of legislative, regulatory, tax and competitive changes, regime changes and the actions of governmental authorities, and in particular those affecting the commercial real estate finance and mortgage industry or our business.
The foregoing list of factors is not exhaustive. We urge you to carefully review the disclosures we make concerning risks in the sections entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, “Risk Factors” in this Form 10-Q for the quarter ended March 31, 2026 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein.
We caution investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. The Company is under no duty to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q, nor to conform prior statements to actual results or revised expectations, and the Company does not intend to do so.
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
BRIGHTSPIRE CAPITAL, INC.
CONSOLIDATED BALANCE SHEETS
(in Thousands, Except Share and Per Share Data)
| March 31, 2026 (Unaudited) | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Loans and preferred equity held for investment | |||||||||||
| Current expected credit loss reserve | ( | ( | |||||||||
| Loans and preferred equity held for investment, net | |||||||||||
| Real estate, net | |||||||||||
| Receivables, net | |||||||||||
| Deferred leasing costs and intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Securitization bonds payable, net | $ | $ | |||||||||
| Mortgage and other notes payable, net | |||||||||||
| Credit facilities | |||||||||||
| Accrued and other liabilities | |||||||||||
| Escrow deposits payable | |||||||||||
| Dividends payable | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 13) | |||||||||||
| Equity | |||||||||||
| Stockholders’ equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Class A, | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Noncontrolling interests in investment entities | ( | ( | |||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
BRIGHTSPIRE CAPITAL, INC.
CONSOLIDATED BALANCE SHEETS
(in Thousands)
The following table presents assets and liabilities of securitization vehicles and certain real estate properties that have noncontrolling interests as variable interest entities for which the Company is determined to be the primary beneficiary.
| March 31, 2026 (Unaudited) | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Loans and preferred equity held for investment, net | |||||||||||
| Real estate, net | |||||||||||
| Receivables, net | |||||||||||
| Deferred leasing costs and intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Securitization bonds payable, net | $ | $ | |||||||||
| Mortgage and other notes payable, net | |||||||||||
| Credit facilities | |||||||||||
| Accrued and other liabilities | |||||||||||
| Escrow deposits payable | |||||||||||
| Total liabilities | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
BRIGHTSPIRE CAPITAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in Thousands, Except Per Share Data)
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| Net interest income | ||||||||||||||||||||||||||||||||
| Interest income | $ | $ | ||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ||||||||||||||||||||||||||||||
| Net interest income | ||||||||||||||||||||||||||||||||
| Property and other income | ||||||||||||||||||||||||||||||||
| Property operating income | ||||||||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||||||
| Total property and other income | ||||||||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||
| Property operating expense | ||||||||||||||||||||||||||||||||
| Transaction, investment and servicing expense | ||||||||||||||||||||||||||||||||
| Interest expense on real estate | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||||||||
| Increase (decrease) of current expected credit loss reserve | ( | |||||||||||||||||||||||||||||||
Compensation and benefits (including $ | ||||||||||||||||||||||||||||||||
| Operating expense | ||||||||||||||||||||||||||||||||
| Total expenses | ||||||||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||||||
| Other loss, net | ( | ( | ||||||||||||||||||||||||||||||
| Income before income taxes | ||||||||||||||||||||||||||||||||
| Income tax expense | ( | ( | ||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests in investment entities | ||||||||||||||||||||||||||||||||
| Net income attributable to BrightSpire Capital, Inc. common stockholders | $ | $ | ||||||||||||||||||||||||||||||
Net income per common share - basic (Note 14) | $ | $ | ||||||||||||||||||||||||||||||
Net income per common share - diluted (Note 14) | $ | $ | ||||||||||||||||||||||||||||||
Weighted average shares of common stock outstanding - basic (Note 14) | ||||||||||||||||||||||||||||||||
Weighted average shares of common stock outstanding - diluted (Note 14) | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
BRIGHTSPIRE CAPITAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in Thousands)
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| Net income | $ | $ | ||||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||||||
| Foreign currency translation gain | ||||||||||||||||||||||||||||||||
| Total other comprehensive income | ||||||||||||||||||||||||||||||||
| Comprehensive income | ||||||||||||||||||||||||||||||||
| Comprehensive loss attributable to noncontrolling interests: | ||||||||||||||||||||||||||||||||
| Investment entities | ||||||||||||||||||||||||||||||||
| Comprehensive income attributable to common stockholders | $ | $ | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
BRIGHTSPIRE CAPITAL, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(in Thousands)
(Unaudited)
| Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | Noncontrolling Interests in Investment Entities | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance and amortization of equity-based compensation | $ | $ | $ | — | $ | — | $ | $ | — | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and distributions declared ($ | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares canceled for tax withholding on vested stock awards | ( | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance and amortization of equity-based compensation | $ | $ | $ | — | $ | — | $ | $ | — | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends and distributions declared ($ | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares canceled for tax withholding on vested stock awards | ( | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
7
BRIGHTSPIRE CAPITAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in Thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||||||||||||||
| Net income | $ | $ | |||||||||||||||||||||||||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
| Straight-line rental income | ( | ( | |||||||||||||||||||||||||||||||||
| Discount accretion and fee amortization, net on loans held for investment and securitization bonds payable | ( | ||||||||||||||||||||||||||||||||||
| Amortization of deferred financing costs | |||||||||||||||||||||||||||||||||||
| Paid-in-kind interest added to loan principal | ( | ( | |||||||||||||||||||||||||||||||||
| Realized loss on sale of real estate | |||||||||||||||||||||||||||||||||||
| Increase (decrease) of current expected credit loss reserve | ( | ||||||||||||||||||||||||||||||||||
| Amortization of equity-based compensation | |||||||||||||||||||||||||||||||||||
| Non-cash adjustments | |||||||||||||||||||||||||||||||||||
| Deferred income tax (benefit) expense | ( | ||||||||||||||||||||||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||||||||||||||||||||
| Receivables, net | ( | ||||||||||||||||||||||||||||||||||
| Deferred costs and other assets | ( | ||||||||||||||||||||||||||||||||||
| Other liabilities | ( | ( | |||||||||||||||||||||||||||||||||
| Net cash provided by operating activities | |||||||||||||||||||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||||||||||||||
| Acquisition, origination and funding of loans and preferred equity held for investment, net | ( | ( | |||||||||||||||||||||||||||||||||
| Repayment on loans held for investment | |||||||||||||||||||||||||||||||||||
| Proceeds from sale of real estate | |||||||||||||||||||||||||||||||||||
| Acquisition of and additions to real estate and related intangibles | ( | ( | |||||||||||||||||||||||||||||||||
| Cash and restricted cash received related to consolidation of loans held for investment and real estate owned | |||||||||||||||||||||||||||||||||||
| Change in escrow deposits payable | ( | ( | |||||||||||||||||||||||||||||||||
| Net cash (used in) provided by investing activities | ( | ||||||||||||||||||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||||||||||||||
| Distributions paid on common stock | ( | ( | |||||||||||||||||||||||||||||||||
| Shares canceled for tax withholding on vested stock awards | ( | ( | |||||||||||||||||||||||||||||||||
| Repayment of mortgage notes | ( | ( | |||||||||||||||||||||||||||||||||
| Borrowings from master repurchase and credit facilities | |||||||||||||||||||||||||||||||||||
| Repayment of master repurchase and credit facilities | ( | ( | |||||||||||||||||||||||||||||||||
| Borrowing from securitization bonds | |||||||||||||||||||||||||||||||||||
| Repayment of securitization bonds | ( | ( | |||||||||||||||||||||||||||||||||
| Payment of deferred financing costs | ( | ( | |||||||||||||||||||||||||||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||||||||||||||||||||||||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | |||||||||||||||||||||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||||||||||||||||||||||||||
| Cash, cash equivalents and restricted cash - beginning of period | |||||||||||||||||||||||||||||||||||
| Cash, cash equivalents and restricted cash - end of period | $ | $ | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
8
BRIGHTSPIRE CAPITAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(in Thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets | |||||||||||||||||||||||||||||||||||
| Beginning of the period | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | |||||||||||||||||||||||||||||||||
| Restricted cash | |||||||||||||||||||||||||||||||||||
| Total cash, cash equivalents and restricted cash, beginning of period | $ | $ | |||||||||||||||||||||||||||||||||
| End of the period | |||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | |||||||||||||||||||||||||||||||||
| Restricted cash | |||||||||||||||||||||||||||||||||||
| Total cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Supplemental disclosure of cash flow information: | |||||||||||||||||||||||||||||||||||
| Cash paid for interest | $ | $ | |||||||||||||||||||||||||||||||||
| Cash paid for income taxes, net of refunds | ( | ||||||||||||||||||||||||||||||||||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||||||||||||||||||||||||||||||
| Accrual of distribution payable | |||||||||||||||||||||||||||||||||||
| Assets transferred to held for sale | |||||||||||||||||||||||||||||||||||
| Assumption of accounts payable, accrued expenses and other liabilities related to consolidation of VIE and assumption of real estate | ( | ( | |||||||||||||||||||||||||||||||||
| Assumption of receivables and other assets related to consolidation of VIE and assumption of real estate | |||||||||||||||||||||||||||||||||||
| Assumption of real estate and consolidation of VIE (refer to Note 4) | |||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
9
1. Business and Organization
BrightSpire Capital, Inc. (the “Company”) is an internally-managed commercial real estate (“CRE”) credit real estate investment trust (“REIT”) focused on originating, acquiring, financing and managing a diversified portfolio consisting primarily of CRE debt investments. CRE debt investments primarily consist of senior mortgage loans, which is the Company’s primary investment strategy. Additionally, the Company may selectively originate mezzanine loans and make preferred equity investments, which may include profit participations. The mezzanine loans and preferred equity investments may be in conjunction with the Company’s origination of corresponding senior mortgages on the same properties.
The Company was organized in the state of Maryland on August 23, 2017 and maintains key offices in New York, New York and Los Angeles, California. The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, beginning with the taxable year ended December 31, 2018. The Company conducts all activities and holds substantially all assets and liabilities through the Company’s operating subsidiary, BrightSpire Capital Operating Company, LLC (the “OP”).
2. Summary of Significant Accounting Policies
The significant accounting policies of the Company are described below. The accounting policies of the Company’s unconsolidated ventures are substantially similar to those of the Company.
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. However, the results of operations for the interim period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2026, or any other future period. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in, or presented as exhibits to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this interim report.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its controlled subsidiaries. All intercompany accounts and transactions have been eliminated. The portions of equity, net income and other comprehensive income of consolidated subsidiaries that are not attributable to the parent are presented separately as amounts attributable to noncontrolling interests in the consolidated financial statements.
The Company consolidates entities in which it has a controlling financial interest by first considering if an entity meets the definition of a variable interest entity (“VIE”) for which the Company is deemed to be the primary beneficiary, or if the Company has the power to control an entity through a majority of voting interest or through other arrangements.
Variable Interest Entities
Variable Interest Entities—A VIE is an entity that either (i) lacks sufficient equity to finance its activities without additional subordinated financial support from other parties; (ii) whose equity holders as a group lack the characteristics of a controlling financial interest; or (iii) is established with non-substantive voting rights. A VIE is consolidated by its primary beneficiary, which is defined as the party who has a controlling financial interest in the VIE through (a) power to direct the activities of the VIE that most significantly affect the VIE’s economic performance, and (b) obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE.
10
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Voting Interest Entities—Unlike VIEs, voting interest entities have sufficient equity to finance their activities and equity investors exhibit the characteristics of a controlling financial interest through their voting rights. The Company consolidates such entities when it has the power to control these entities through ownership of a majority of the entities’ voting interests or through other arrangements.
At each reporting period, the Company reassesses whether changes in facts and circumstances cause a change in the status of an entity as a VIE or voting interest entity, and/or a change in the Company’s consolidation assessment.
As of March 31, 2026 and December 31, 2025, the Company has identified certain consolidated and unconsolidated VIEs. Assets of each of the VIEs, other than the OP, may only be used to settle obligations of the respective VIE. Creditors of each of the VIEs have no recourse to the general credit of the Company.
Consolidated VIEs
Consolidated VIEs include the entities which issue securitization bonds payable, net, the entities holding the Arlington, Texas and Mesa, Arizona multifamily properties and certain operating real estate properties that have noncontrolling interests. The noncontrolling interests in the operating real estate properties represent a third party joint venture partner with an ownership of 5.0
Unconsolidated VIEs
Fixed Preferred Return(2) | Maximum Exposure to Loss(3) | Carrying Value | Commitment | ||||||||||||||||||||||||||||||||||||||
Preferred Equity Investments 6 pack(1) | % | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Preferred Equity Investments 7-10 | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
____________________________________
(1) The preferred equity investments were funded in relation to six senior loans that were originated prior to the second quarter of 2025, all with the same sponsor. The preferred equity investments are cross-collateralized. If there is a shortfall upon resolution of any of the six preferred equity investments, the Company will receive proceeds from the resolution of the other six remaining preferred equity investments.
(2) The Company does not hold any upside above the Fixed Preferred Returns.
(3) The Maximum Exposure to Loss represents the unpaid principal balances of the senior loans and preferred equity investments at March 31, 2026.
The Company has determined that it is not the primary beneficiary of the VIEs noted in the table above as it does not have power over decisions that most significantly affect the VIEs and has not consolidated these VIEs. The Company accounts for these investments as debt investments due to the mandatory redemption features within the preferred equity investment agreements. The mandatory redemption date is the same as the maturity date for the corresponding senior loans. The investments are included in loans and preferred equity held for investment, net on the Company’s consolidated balance sheets.
Noncontrolling Interests
Noncontrolling Interests in Investment Entities represents interests in consolidated investment entities held by third party joint venture partners, including the operations of the Arlington, Texas and Mesa, Arizona multifamily properties collateralizing the senior loans.
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Fair Value Measurement
Fair value is based on an exit price, defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Where appropriate, the Company makes adjustments to estimated fair values to appropriately reflect counterparty credit risk as well as the Company’s own creditworthiness.
The estimated fair value of financial assets and financial liabilities are categorized into a three-tier hierarchy, prioritized based on the level of transparency in inputs used in the valuation techniques, as follows:
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in non-active markets, or valuation techniques utilizing inputs that are derived principally from or corroborated by observable data directly or indirectly for substantially the full term of the financial instrument.
Level 3—At least one assumption or input is unobservable, and it is significant to the fair value measurement, requiring significant management judgment or estimate.
Where the inputs used to measure the fair value of a financial instrument fall into different levels of the fair value hierarchy, the financial instrument is categorized within the hierarchy based on the lowest level of input that is significant to its fair value measurement.
Fair Value Option
Business Combinations
Definition of a Business—The Company evaluates each purchase transaction to determine whether the acquired assets meet the definition of a business. If substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the set of transferred assets and activities is not a business. If not, for an acquisition to be considered a business, it would have to include an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., there is a continuation of revenue before and after the transaction). A substantive process is not ancillary or minor, cannot be replaced without significant costs, effort or delay or is otherwise considered unique or scarce. To qualify as a business without outputs, the acquired assets would require an organized workforce with the necessary skills, knowledge and experience that performs a substantive process.
Asset Acquisitions—For acquisitions that are not deemed to be businesses, the assets acquired are recognized based on their cost to the Company as the acquirer and no gain or loss is recognized. The cost of assets acquired in a group is allocated to individual assets within the group based on their relative fair values and does not give rise to goodwill. Transaction costs related to the acquisition of assets are included in the cost basis of the assets acquired. Such valuations require management to make significant estimates and assumptions.
Cash and Cash Equivalents
Short-term, highly liquid investments with original maturities of three months or less at the time of acquisition are considered to be cash equivalents. The Company’s cash is held with major financial institutions. Certain cash account balances exceed Federal Deposit Insurance Corporation insurance limits of $250,000 per account and as a result, there is a concentration of
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credit risk related to amounts in excess of the insurance limits. The Company monitors the financial stability of these financial institutions and believes it is not exposed to any significant credit risk in cash and cash equivalents.
Restricted Cash
Loans and Preferred Equity Held for Investment
The Company originates and purchases loans and preferred equity held for investment. The accounting framework for loans and preferred equity held for investment depends on the Company’s strategy whether to hold or sell the loan and preferred equity or whether the loan was credit-impaired at the time of acquisition.
Loans and Preferred Equity Held for Investment
Loans and preferred equity that the Company has the intent and ability to hold for the foreseeable future are classified as held for investment. Originated loans and preferred equity are recorded at amortized cost, or outstanding unpaid principal balance plus exit fees less net deferred loan fees. Net deferred loan fees include unamortized origination and other fees charged to the borrower less direct incremental loan origination costs incurred by the Company. Purchased loans and preferred equity are recorded at amortized cost, or unpaid principal balance plus purchase premium or less unamortized discount. Costs to purchase loans and preferred equity are expensed as incurred. Preferred equity investments included in loans and preferred equity held for investment, net have fixed interest rates and mandatory redemption dates.
Interest Income—Interest income is recognized based upon contractual interest rate and unpaid principal balance of the loans and preferred equity. Net deferred loan fees on originated loans are deferred and amortized as adjustments to interest income over the expected life of the loans and preferred equity using the effective yield method. Premium or discount on purchased loans and preferred equity are amortized as adjustments to interest income over the expected life of the loans and preferred equity using the effective yield method. When a loan or preferred equity is prepaid, prepayment fees and any excess of proceeds over the carrying amount of the loan and preferred equity is recognized as additional interest income.
The Company has debt investments in its portfolio that contain a payment-in-kind (“PIK”) provision. Contractual PIK interest, which represents contractually deferred interest added to the loan or preferred equity balance that is due at the end of the loan term, is generally recorded on an accrual basis to the extent such amounts are expected to be collected. The Company will generally cease accruing PIK interest if there is insufficient value to support the accrual or management does not expect the borrower to be able to pay all principal and interest due.
Nonaccrual—Accrual of interest income is suspended on nonaccrual loans and preferred equity. Loans and preferred equity that are past due 90 days or more as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status. Interest receivable is reversed against interest income when loans and preferred equity are placed on nonaccrual status. Interest collected is recognized on a cash basis by crediting income when received; or if ultimate collectability of loan or and preferred equity principal is uncertain, interest collected is recognized using a cost recovery method by applying interest collected as a reduction to loan and preferred equity carrying value. Loans and preferred equity may be restored to accrual status when all principal and interest are current and full repayment of the remaining contractual principal and interest are probable.
Loans Held for Sale
Operating Real Estate
Real Estate Acquisitions—Real estate acquired in acquisitions that are deemed to be business combinations is recorded at the fair values of the acquired components at the time of acquisition, allocated among land, buildings, improvements, equipment and lease-related tangible and identifiable intangible assets and liabilities, including forgone leasing costs, in-place lease values and above- or below-market lease values and assumed debt, if any. Real estate acquired in acquisitions that are deemed to be
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asset acquisitions is recorded at the total value of consideration transferred, including transaction costs, and allocated to the acquired components based upon relative fair value. The estimated fair value of acquired land is derived from recent comparable sales of land and listings within the same local region based on available market data. The estimated fair value of acquired buildings and building improvements is derived from comparable sales, discounted cash flow analysis using market-based assumptions, or replacement cost, as appropriate. The fair value of site and tenant improvements is estimated based upon current market replacement costs and other relevant market rate information.
Real Estate Held for Investment
Real estate held for investment is carried at cost less accumulated depreciation.
Costs Capitalized or Expensed—Expenditures for ordinary repairs and maintenance are expensed as incurred, while expenditures for significant renovations that improve or extend the useful life of the asset are capitalized and depreciated over their estimated useful lives.
Depreciation—Real estate held for investment, other than land, is depreciated on a straight-line basis over the estimated useful lives of the assets, as follows:
| Real Estate Assets | Term | |||||||
| Building (fee interest) | ||||||||
| Building leasehold interests | Lesser of remaining term of the lease or remaining life of the building | |||||||
| Building improvements | Lesser of the useful life or remaining life of the building | |||||||
| Land improvements | ||||||||
| Tenant improvements | Lesser of the useful life or remaining term of the lease | |||||||
| Furniture, fixtures and equipment | ||||||||
Impairment—The Company evaluates its real estate held for investment for impairment periodically or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Company evaluates real estate for impairment on the lowest level of identifiable cash flows, which is generally on an individual property basis. If an impairment indicator exists, the Company evaluates the undiscounted future net cash flows that are expected to be generated by the property, including any estimated proceeds from the eventual disposition of the property. If multiple outcomes are under consideration, the Company may apply a probability-weighted approach to the impairment analysis. Another key consideration in this assessment is the Company’s assumptions about the highest and best use of its real estate investments and its intent and ability to hold them for a reasonable period that would allow for the recovery of their carrying values. If such assumptions change and the Company shortens its expected hold period, this may result in the recognition of impairment losses. Based upon the analysis, if the carrying value of a property exceeds its undiscounted future net cash flows, an impairment loss is recognized for the excess of the carrying value of the property over the estimated fair value of the property. In evaluating and/or measuring impairment, the Company considers, among other things, current and estimated future cash flows associated with each property, market information for each sub-market, including, where applicable, capitalization rates, discount rates, leasing trends, occupancy trends, lease or room rates, and the market prices of similar properties recently sold or currently being offered for sale, and other quantitative and qualitative factors. See Note 4, “Real Estate, net” and Note 11, “Fair Value” for further detail.
Real Estate Held for Sale
Real estate is classified as held for sale in the period when (i) management approves a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, subject only to usual and customary terms, (iii) a program is initiated to locate a buyer and actively market the asset for sale at a reasonable price, and (iv) completion of the sale is probable within one year. Real estate held for sale is stated at the lower of its carrying amount or estimated fair value less disposal cost, with any write-down to fair value less disposal cost recorded as an impairment loss. For any increase in fair value less disposal cost subsequent to classification as held for sale, the impairment loss may be reversed, but only up to the amount of cumulative loss previously recognized. Depreciation is not recorded on assets classified as held for sale. At the time a sale is consummated, the excess, if any, of sale price less selling costs over carrying value of the real estate is recognized as a gain.
If circumstances arise that were previously considered unlikely and, as a result, the Company decides not to sell the real estate asset previously classified as held for sale, the real estate asset is reclassified as held for investment. Upon reclassification, the real estate asset is measured at the lower of (i) its carrying amount prior to classification as held for sale, adjusted for depreciation expense that would have been recognized had the real estate been continuously classified as held for investment, and (ii) its estimated fair value at the time the Company decides not to sell.
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At March 31, 2026, there were no properties classified as held for sale. At December 31, 2025, the Company classified one property as held for sale. Refer to Note 4, “Real Estate, net” and Note 11, “Fair Value” for further detail.
Foreclosed Properties
The Company receives foreclosed properties in full or partial settlement of loans held for investment by taking legal title or physical possession of the properties. Foreclosed properties are generally recognized at the time the real estate is received at foreclosure sale or upon execution of a deed-in-lieu of foreclosure. Foreclosed properties are initially measured at fair value. If the fair value of the property is lower than the carrying value of the loan, the difference is recognized through CECL reserves and the cumulative reserve on the loan is charged off prior to recording the loan as real estate. Fair value of foreclosed properties is generally based on a discounted cash flow, third party appraisals, broker price opinions, comparable sales, direct capitalization method or a combination thereof. At March 31, 2026, the Company held four foreclosed properties in other real estate, net with a combined carrying value of $252.9 million. At December 31, 2025, the Company held four foreclosed properties in other real estate, net with a combined carrying value of $237.0 million.
Identifiable Intangibles
Identifiable intangibles recognized in acquisitions of operating real estate properties generally include in-place leases, above- or below-market leases and deferred leasing costs, all of which have finite lives. In-place leases generate value over and above tangible real estate because a property that is occupied with leased space is typically worth more than a vacant building without an operating lease contract in place. The estimated fair value of acquired in-place leases is derived based on management’s assessment of costs avoided from having tenants in place, including lost rental income, rent concessions and tenant allowances or reimbursements, that hypothetically would be incurred to lease a vacant building to its actual existing occupancy level on the valuation date. The net amount recorded for acquired in-place leases is included in intangible assets and amortized on a straight-line basis as an increase to depreciation and amortization expense over the remaining term of the applicable leases. If an in-place lease is terminated, the unamortized portion is charged to depreciation and amortization expense.
The estimated fair value of the above- or below-market component of acquired leases represents the present value of the difference between contractual rents of acquired leases and market rents at the time of the acquisition for the remaining lease term, discounted for tenant credit risks. Above- or below-market operating lease values are amortized on a straight-line basis as a decrease or increase to rental income, respectively, over the applicable lease terms. This includes fixed rate renewal options in acquired leases that are below market, which are amortized to decrease rental income over the renewal period. Above- or below-market ground lease obligations are amortized on a straight-line basis as a decrease or increase to rent expense, respectively, over the applicable lease terms. If the above- or below-market operating lease values or above- or below-market ground lease obligations are terminated, the unamortized portion of the lease intangibles are recorded in rental income or rent expense, respectively.
Deferred leasing costs represent management’s estimate of the avoided leasing commissions and legal fees associated with an existing in-place lease. The net amount is included in intangible assets and amortized on a straight-line basis as an increase to depreciation and amortization expense over the remaining term of the applicable lease.
Transfers of Financial Assets
Sale accounting for transfers of financial assets requires the transfer of an entire financial asset, a group of financial assets in its entirety or if a component of the financial asset is transferred, that the component meets the definition of a participating interest with characteristics that mirror the original financial asset.
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. If the Company has any continuing involvement, rights or obligations with the transferred financial asset (outside of standard representations and warranties), sale accounting requires that the transfer meets the following sale conditions: (1) the transferred asset has been legally isolated; (2) the transferee has the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred asset; and (3) the Company does not maintain effective control over the transferred asset through an agreement that provides for (a) both an entitlement and an obligation by the Company to repurchase or redeem the asset before its maturity, (b) the unilateral ability by the Company to reclaim the asset and a more than trivial benefit attributable to that ability, or (c) the transferee requiring the Company to repurchase the asset at a price so favorable to the transferee that it is probable the repurchase will occur.
If sale accounting is met, the transferred financial asset is removed from the balance sheet and a net gain or loss is recognized upon sale, taking into account any retained interests. Transfers of financial assets that do not meet the criteria for sale are
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accounted for as financing transactions, or secured borrowing, including the Company’s Master Repurchase Facilities (as defined herein).
Financing Costs
Revenue Recognition
Property Operating Income
Property operating income includes the following:
Rental Income—Rental income is recognized on a straight-line basis over the non-cancellable term of the related lease, together with renewal options that are reasonably certain of being exercised, which includes the effects of minimum rent increases and rent abatements under the lease. Rents received in advance are deferred.
When it is determined that the Company is the owner of tenant improvements, the cost to construct the tenant improvements, including costs paid for or reimbursed by the tenants, is capitalized. For tenant improvements owned by the Company, the amount funded by or reimbursed by the tenants are recorded as deferred revenue, which is amortized on a straight-line basis as additional rental income over the term of the related lease. Rental income recognition commences when the leased space is substantially ready for its intended use and the tenant takes possession of the leased space.
When it is determined that the tenant is the owner of tenant improvements, the Company’s contribution towards those improvements is recorded as a lease incentive, included in deferred leasing costs and intangible assets on the balance sheet, and amortized as a reduction to rental income on a straight-line basis over the term of the lease. Rental income recognition commences when the tenant takes possession of the leased space.
Tenant Reimbursements—In net lease arrangements, the tenant is generally responsible for operating expenses related to the property, including real estate taxes, property insurance, maintenance, repairs and improvements. Costs reimbursable from tenants and other recoverable costs are recognized as revenue in the period the recoverable costs are incurred. When the Company is the primary obligor with respect to purchasing goods and services for property operations and has discretion in selecting the supplier and retains credit risk, tenant reimbursement revenue and property operating expenses are presented on a gross basis in the statements of operations. For certain triple net leases where the lessee self-manages the property, hires its own service providers and retains credit risk for routine maintenance contracts, no reimbursement revenue and expense are recognized.
Hotel Operating Income—Hotel operating income includes room revenue, food and beverage sales and other ancillary services. Revenue is recognized upon occupancy of rooms, consummation of sales and provision of services.
Foreign Currency
Assets and liabilities denominated in a foreign currency for which the functional currency is a foreign currency are translated using the exchange rate in effect at the balance sheet date and the corresponding results of operations for such entities are translated using the average exchange rate in effect during the period. The resulting foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income or loss in stockholders’ equity. Upon sale, complete or substantially complete liquidation of a foreign subsidiary, or upon partial sale of a foreign equity method investment, the translation adjustment associated with the investment, or a proportionate share related to the portion of equity method investment sold, is reclassified from accumulated other comprehensive income or loss into earnings. Refer to Note 10, “Stockholders’ Equity” for further discussion.
Assets and liabilities denominated in a foreign currency for which the functional currency is the U.S. dollar are remeasured using the exchange rate in effect at the balance sheet date and the corresponding results of operations for such entities are remeasured using the average exchange rate in effect during the period. The resulting foreign currency remeasurement adjustments are recorded in other gain (loss), net on the consolidated statements of operations.
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Equity-Based Compensation
Equity-classified stock awards granted to executive officers and non-employee directors are based on the closing price of the Class A common stock on the grant date and recognized on a straight-line basis over the requisite service period of the awards for restricted stock awards. For performance stock units (“PSUs”) the fair value is based on a Monte Carlo simulation as of the grant date and the expense is generally recognized on a straight-line basis over the measurement period, except when certain performance metrics are achieved. See Note 9, “Equity-Based Compensation” for further discussion.
The compensation expense is adjusted for actual forfeitures upon occurrence. Equity-based compensation is classified within compensation and benefits in the consolidated statements of operations.
Earnings Per Share
Income Taxes
For U.S. federal income tax purposes, the Company elected to be taxed as a REIT beginning with its taxable year ended December 31, 2018. To qualify as a REIT, the Company must continually satisfy tests concerning, among other things, the real estate qualification of sources of its income, the real estate composition and values of its assets, the amounts it distributes to stockholders and the diversity of ownership of its stock.
To the extent that the Company qualifies as a REIT, it generally will not be subject to U.S. federal income tax to the extent of its distributions to stockholders. The Company believes that all of the criteria to maintain the Company’s REIT qualification have been met for the applicable periods, but there can be no assurance that these criteria will continue to be met in subsequent periods. If the Company were to fail to meet these requirements, it would be subject to U.S. federal income tax and potential interest and penalties, which could have a material adverse impact on its results of operations and amounts available for distributions to its stockholders. The Company’s accounting policy with respect to interest and penalties is to classify these amounts as a component of income tax expense, where applicable.
The Company may also be subject to certain state, local and franchise taxes. Under certain circumstances, U.S. federal income and excise taxes may be due on its undistributed taxable income. The Company previously held an investment in Europe which was subject to tax in its local jurisdiction.
The Company made joint elections to treat certain subsidiaries as taxable REIT subsidiaries (“TRSs”) which may be subject to taxation by U.S. federal, state and local authorities. In general, a TRS of the Company may perform non-customary services for tenants, hold assets that the Company cannot hold directly and engage in most real estate or non-real estate-related business.
Certain subsidiaries of the Company are subject to taxation by U.S. federal, state and local authorities for the periods presented. Income taxes are accounted for by the asset/liability approach in accordance with GAAP. Deferred taxes, if any, represent the expected future tax consequences when the reported amounts of assets and liabilities are recovered or paid. Such amounts arise from differences between the financial reporting and tax bases of assets and liabilities and are adjusted for changes in tax laws and tax rates in the period during which such changes are enacted. A provision for income tax represents the total of income taxes paid or payable for the current period, plus the change in deferred taxes. Current and deferred taxes are recorded on the portion of earnings (losses) recognized by the Company with respect to its interest in TRSs. Deferred income tax assets and liabilities are calculated based on temporary differences between the Company’s GAAP consolidated financial statements and the U.S. federal, state and local tax basis of assets and liabilities as of the consolidated balance sheet date. The Company evaluates the realizability of its deferred tax assets (e.g., net operating loss and capital loss carryforwards) and recognizes a
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valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of its deferred tax assets will not be realized. When evaluating the realizability of its deferred tax assets, the Company considers estimates of expected future taxable income, existing and projected book/tax differences, tax planning strategies available and the general and industry-specific economic outlook. This realizability analysis is inherently subjective, as it requires the Company to forecast its business and general economic environment in future periods. Changes in estimate of deferred tax asset realizability, if any, are included in income tax expense in the consolidated statements of operations.
For the three months ended March 31, 2026 and 2025, the Company recorded income tax expense of $0.1 million and $0.3 million, respectively.
Current Expected Credit Loss (“CECL”) reserve
The CECL reserve for the Company’s 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. Factors considered by the Company 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.
The CECL reserve is measured on a collective (pool) basis when similar risk characteristics exist for multiple financial instruments. If similar risk characteristics do not exist, the Company measures the CECL reserve on an individual instrument basis. The determination of whether a particular financial instrument should be included in a pool can change over time. If a financial asset’s risk characteristics change, the Company evaluates whether it is appropriate to continue to keep the financial instrument in its existing pool or evaluate it individually.
In measuring the CECL reserve for financial instruments that share similar risk characteristics, the Company primarily applies a probability of default (“PD”)/loss given default (“LGD”) model for instruments that are collectively assessed, whereby the CECL reserve is calculated as the product of PD, LGD and exposure at default. The Company’s model principally utilizes historical loss rates derived from a commercial mortgage-backed securities database with historical losses from 1998 through March 2026 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. Where management has determined that the credit loss model does not fully capture certain external factors, including portfolio trends or loan specific factors, a qualitative adjustment to the reserve may be recorded.
For loans that do not share similar risk characteristics, the Company evaluates the CECL reserve on an individual basis. The Company considers loans to be collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral or foreclosure is probable. For such loans, the Company estimates the CECL reserve based on the difference between the fair value of the underlying collateral, net of selling costs, as applicable, and the amortized cost basis of the loan.
The Company applies broadly accepted and standard real estate valuation techniques, such as a discounted cash flow (“DCF”), direct capitalization methodology, or sales comparables to determine the fair value of the collateral. 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, market 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.
Management only expects to charge-off the CECL reserves in the consolidated financial statements if and when such amounts are deemed non-recoverable. This is generally at the time a loan is repaid or foreclosed. However, non-recoverability may also be concluded if, management determines, it is nearly certain that all amounts will not be collected.
In connection with developing the CECL reserve for its loans and preferred equity held for investment, the Company determines the risk ranking of each loan and preferred equity investment as a key credit quality indicator. The risk rankings are based on a variety of factors, including, without limitation, underlying real estate performance and asset value, values of comparable properties, durability and quality of property cash flows, sponsor experience and financial wherewithal, and the existence of a risk-mitigating loan structure. Additional key considerations include loan-to-value ratios, debt service coverage ratios, loan structure, real estate and credit market dynamics, and risk of default or principal loss. Based on a five-point scale, the Company’s loans and preferred equity held for investment are rated “1” through “5,” from less risk to greater risk, and the
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ratings are updated quarterly. 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.High Risk/Potential for Loss—A loan that has a high risk of realizing a principal loss.
5.Impaired/Loss Likely—A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss.
The Company also considers qualitative factors, including, but not limited to, economic and business conditions, borrower actions, nature and volume of the loan portfolio, lending terms, volume and severity of past due loans, concentration of credit and changes in the level of such concentrations in its determination of the CECL reserve.
The Company has elected to not measure a CECL reserve for accrued interest receivable as it is reversed against interest income when a loan or preferred equity investment is placed on nonaccrual status. Loans and preferred equity investments are charged off when all or a portion of the principal amount is determined to be uncollectible. See “Nonaccrual” in “Loans and Preferred Equity Held for Investment” above for further detail.
Future Application of Accounting Standards
Disaggregation of Income Statement Expenses—In November 2024, the FASB issued ASU No. 2024-03, Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40), and in January 2025, the FASB issues ASU No. 2025-01, Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. ASU 2024-03 requires disclosures on certain costs and expenses for each interim and annual reporting period. ASU No. 2024-03, as clarified by ASU No. 2025-01, is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of ASU No. 2024-03 to have a material impact on its consolidated financial statements.
Business Combinations and Consolidation—In May 2025, the FASB issued ASU No. 2025-03, Business Combinations and Consolidation: Determining The Accounting Acquirer In The Acquisition of a Variable Interest Entity. The ASU requires reporting entities involved in a business combination effected primarily by the exchange of equity interests to consider the new guidance to determine which entity is the accounting acquirer regardless of whether the legal acquiree is a VIE. As a result, a reporting entity can determine that a transaction in which the legal acquiree is a VIE represents a reverse acquisition and the acquirer is identified as the acquiree for accounting purposes. This ASU is effective for periods beginning after December 15, 2026, with early adoption permitted. The Company is evaluating the impact of this standard.
Interim Reporting—In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements. The guidance is intended to improve the literature surrounding interim disclosures and when such disclosures are required. The amendment also adds a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The guidance is not intended to change current requirements and is intended to provide clarity on current requirements. This ASU is effective for periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of this standard.
Any new accounting standards that have not been disclosed that have been issued or proposed by FASB and that do not require adoption until a future date are being evaluated and not expected to have a material impact on the financial statements.
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3. Loans and Preferred Equity Held for Investment, net
The following table provides a summary of the Company’s loans and preferred equity held for investment, net (dollars in thousands):
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unpaid Principal Balance | Carrying Value | Weighted Average Coupon(1) | Weighted Average of Contractual Maturity(2) | Weighted Average Maturity in Years(3) | Unpaid Principal Balance | Carrying Value | Weighted Average Coupon(1) | Weighted Average of Contractual Maturity(2) | Weighted Average Maturity in Years(3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Variable rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior loans | $ | $ | % | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securitized loans(4) | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior loans | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mezzanine loans | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred equity interests | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and preferred equity held for investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CECL reserve | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and preferred equity held for investment, net | $ | $ | % | $ | $ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
_________________________________________
(1)Calculated based on contractual interest rate, except for nonaccrual loans. As of March 31, 2026 and December 31, 2025, all variable rate loans utilize Term Secured Overnight Financing Rate (“Term SOFR”).
(2)Calculated using current maturity date.
(3)Calculated using extended maturity date.
(4)Represents loans transferred into securitization trusts that are consolidated by the Company.
The Company had $10.7 million and $10.8 million of related to its loans and preferred equity held for investment, net as of March 31, 2026, and December 31, 2025, respectively. This is included in receivables, net on the Company’s consolidated balance sheets.
20
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Activity relating to the Company’s loans and preferred equity held for investment, net was as follows (dollars in thousands):
| Carrying Value | |||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| Balance at January 1 | $ | $ | |||||||||||||||
Acquisitions/originations/additional funding(1) | |||||||||||||||||
Loan maturities/principal repayments(1) | ( | ( | |||||||||||||||
(Increase) decrease of CECL reserve(2) | ( | ||||||||||||||||
| Discount accretion and fee amortization, net | ( | ||||||||||||||||
| Capitalized interest, net of repayments | |||||||||||||||||
Transfer to Real Estate, net(3)(4) | ( | ( | |||||||||||||||
Charge-off of CECL reserve-transfer to Real Estate, net(3)(4) | |||||||||||||||||
Charge-off of loan held for investment(5)(6) | ( | ( | |||||||||||||||
Charge-off of CECL reserve-other(5)(6) | |||||||||||||||||
| Balance at March 31 | $ | $ | |||||||||||||||
_________________________________________
(1)During the first quarter of 2025, the Company amended a senior mixed-use loan as part of the resolution of a senior mixed-use loan with the same sponsor. In relation to this amendment, there was a transfer of principal of $8.8 million. This transfer is not included within these captions as it was neither additional funding nor a repayment. See “Loan Modifications” below for more detail. During the three months ended March 31, 2026, the Company originated eight loans and preferred equity with a total of $280.1 million in committed principal balance.
(2)(Decrease) increase of CECL reserve excludes $1.2 million for the three months ended March 31, 2026 and $0.5 million for the three months ended March 31, 2025 as determined by the Company’s PD/LGD model for unfunded commitments reported on the consolidated statements of operations, with a corresponding offset to accrued and other liabilities recorded on the Company’s consolidated balance sheets.
(3)During the first quarter of 2026, the Company acquired legal title to one multifamily property through foreclosure. As a result, the property was consolidated as real estate and removed from loans held from investment, net. The CECL reserve related to this loan was charged off in 2025. There was no gain or loss recorded as part of the consolidation. Refer to Note 4, “Real Estate, net” for further discussion.
(4)During the first quarter of 2025, the Company eliminated a multifamily loan in Mesa, Arizona as part of the consolidation of the Mesa, Arizona property as the primary beneficiary. There was no gain or loss recorded as part of the consolidation. As a result, the property was consolidated as real estate and removed from loans held from investment, net. The CECL reserve related to this loan was charged off and the net amount is reflected as an addition to real estate, net. There was no gain or loss recorded as part of the consolidation. Refer to Note 4, “Real Estate, net” for further discussion.
(5)During the three months ended March 31, 2026, the Company charged off uncollectible amounts of $3.5 million relating to two multifamily loans based on resolution of the loans. In addition, the Company had a reversal of charge-offs of $0.8 million based on additional proceeds received upon resolution of an office loan and an industrial loan.
(6)During the three months ended March 31, 2025, the Company charged off uncollectible amounts of $9.2 million relating to one multifamily loan upon resolution of the loan.
Loan Modifications
The Company may amend or modify a loan depending on the loan’s specific facts and circumstances. These loan modifications typically include additional time for the borrower to refinance or sell the collateral property, adjustment or waiver of performance tests that are prerequisite to the extension of a loan’s maturity, and/or deferral of scheduled principal payments. In exchange for a modification, the Company may receive a partial repayment of principal, a short-term accrual of capitalized interest for a portion of interest due, a cash infusion to replenish interest or capital improvement reserves, termination of all or a portion of the remaining unfunded loan commitment, additional call protection, and/or increase the loan coupon.
During the first quarter of 2025, the Company amended a senior mixed-use loan (“Loan A”) as part of the resolution of a senior mixed-use loan (“Loan B”) with the same sponsor. The sponsor obtained new financing on Loan B collateral that was $8.8 million short of a full principal payoff. The $8.8 million of principal was transferred to Loan A as part of the full resolution of Loan B. A joint venture agreement was entered into with the sponsor with respect to the Loan B collateral providing that (i) any available cash after Loan B debt service is paid is distributed to the Company to pay down Loan A and (ii) if, at any time after two years , Loan A is not paid off, the Company may unilaterally force a sale of the collateral for Loan B. During the fourth quarter of 2025, Loan A was further modified to allow funds to be used to pay for architecture, design, and permitting fees to better position the collateral for a sale. The maturity of Loan A and the venture agreement were also shortened by nine months.
21
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Preferred Equity Investment Originations
During the first quarter of 2026, the Company originated one preferred equity investment. During the year ended December 31, 2025, the Company originated nine preferred equity investments. Refer to “Unconsolidated VIEs” in Note 2, “Summary of Significant Accounting Policies” for more details on these originations.
Nonaccrual and Past Due Loans
Loans that are 90 days or more past due as to principal or interest, or where reasonable doubt exists as to timely collection, are generally considered nonperforming and placed on nonaccrual status.
The following table provides an aging summary of loans held for investment at carrying values before CECL reserve (dollars in thousands):
| Current or Less Than 30 Days Past Due | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or More Past Due (1)(2) | Total Loans | ||||||||||||||||||||||||||||
| March 31, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||
_________________________________________
(1)At March 31, 2026, includes one multifamily mezzanine loan which was placed on nonaccrual status during the three months ended March 31, 2026, with a carrying value of $31.5 million and one office mezzanine loan which was placed on nonaccrual status on April 1, 2024, with a carrying value of $14.9 million. Subsequent to March 31, 2026. the multifamily mezzanine loan was resolved.
(2)At December 31, 2025, includes one industrial senior loan which was placed on nonaccrual status on September 9, 2025, with a carrying value of $22.0 million and an office mezzanine loan which was placed on nonaccrual status on April 1, 2024, with a carrying value of $14.7 million. Subsequent to December 31, 2025, the industrial loan was resolved.
As of March 31, 2026, all loans were performing in accordance with the contractual terms of their governing documents and were categorized as performing loans, except one nonaccrual multifamily mezzanine loan in maturity default and one nonaccrual office mezzanine loan. As of December 31, 2025, all loans were performing in accordance with the contractual terms of their governing documents and were categorized as performing loans, except for one nonaccrual industrial senior loan and one nonaccrual office mezzanine loan. For the three months ended March 31, 2026, and March 31, 2025, no 10.0
Current Expected Credit Loss Reserve
The following table provides details on the changes in CECL reserves (dollars in thousands):
| CECL reserve at December 31, 2025 | $ | |||||||
Decrease in general CECL reserve(1) | ( | |||||||
Increase in specific CECL reserve(2) | ||||||||
Charge-off of CECL reserve-other(2) | ( | |||||||
| CECL reserve at March 31, 2026 | $ | |||||||
| CECL reserve at December 31, 2024 | $ | |||||||
Decrease in general CECL reserve(1) | ( | |||||||
Increase in specific CECL reserve(2) | ||||||||
Charge-offs of CECL reserve other(2) | ( | |||||||
Charge-offs of CECL reserve-transfer to Real Estate, net and Real Estate Held for Sale(3) | ( | |||||||
| CECL reserve at March 31, 2025 | $ | |||||||
_________________________________________
(1)Excludes $1.2 million and $0.5 million of CECL reserves related to unfunded commitments reported on the consolidated statement of operations for the three months ended March 31, 2026, and 2025, respectively.
(2)During the first quarter of 2026, the Company recorded specific CECL reserves totaling $2.8 million for one multifamily mezzanine loan, $0.6 million for one multifamily senior loan and had reversals of $0.6 million relating to one industrial loan and $0.2 million relating to one office senior loan. The CECL reserves were charged off during the period. During the first quarter of 2025, the Company recorded specific CECL reserves totaling $9.2 million for one multifamily loan. The specific CECL reserves were charged off during the period upon resolution.
(3)During the first quarter of 2025, the Company consolidated a multifamily loan as the primary beneficiary. As a result, the property was consolidated as real estate. The CECL reserve related to this loan was charged off.
22
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Loans are typically secured by direct senior priority liens on real estate properties or by interests in entities that directly own real estate properties, which serve as the primary source of cash for the payment of principal and interest. The Company evaluates its loans at least quarterly and differentiates the relative credit quality principally based on: (i) whether the borrower is currently paying contractual debt service in accordance with its contractual terms; and (ii) whether the Company believes the borrower will be able to perform under its contractual terms in the future, as well as the Company’s expectations as to the ultimate recovery of principal at maturity.
The following tables provide a summary by carrying values before any CECL reserves of the Company’s loans and preferred equity held for investment by year of origination and credit quality risk ranking as of March 31, 2026, and December 31, 2025 (dollars in thousands). Refer to Note 2, “Summary of Significant Accounting Policies” for loan risk ranking definitions.
At March 31, 2026, the weighted average risk ranking for loans held for investment was 3.1 .
| March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Year of Origination | |||||||||||||||||||||||||||||||||||||||||
| Risk Rankings | 2026 | 2025 | 2024 | 2023 | 2022 and earlier | Total | |||||||||||||||||||||||||||||||||||
| Senior loans | |||||||||||||||||||||||||||||||||||||||||
| 3 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| 4 | |||||||||||||||||||||||||||||||||||||||||
| 5 | |||||||||||||||||||||||||||||||||||||||||
| Total Senior loans | |||||||||||||||||||||||||||||||||||||||||
| Mezzanine loans | |||||||||||||||||||||||||||||||||||||||||
| 3 | |||||||||||||||||||||||||||||||||||||||||
| 5 | |||||||||||||||||||||||||||||||||||||||||
| Total Mezzanine loans | |||||||||||||||||||||||||||||||||||||||||
| Preferred Equity | |||||||||||||||||||||||||||||||||||||||||
| 3 | |||||||||||||||||||||||||||||||||||||||||
| 4 | |||||||||||||||||||||||||||||||||||||||||
| Total Preferred Equity | |||||||||||||||||||||||||||||||||||||||||
| Total Loans and preferred equity held for investment | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Current period gross write-offs | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
23
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Subsequent to March 31, 2026, one risk ranked “5” mezzanine loan totaling $31.5 million of carrying value was resolved. Following resolution, the loan was removed from the watchlist. Additionally, the two remaining risk ranked “5” loans totaling $67.1 million of carrying value are expected to be repaid in the first half of 2026, as the underlying collateral is under executed purchase and sale agreements for both loans.
As of December 31, 2025, the weighted average risk ranking for loans held for investment was 3.1 .
| December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Year of Origination | |||||||||||||||||||||||||||||||||||||||||
| Risk Rankings | 2025 | 2024 | 2023 | 2022 | 2021 and earlier | Total | |||||||||||||||||||||||||||||||||||
| Senior loans | |||||||||||||||||||||||||||||||||||||||||
| 3 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| 4 | |||||||||||||||||||||||||||||||||||||||||
| 5 | |||||||||||||||||||||||||||||||||||||||||
| Total Senior loans | |||||||||||||||||||||||||||||||||||||||||
| Mezzanine loans | |||||||||||||||||||||||||||||||||||||||||
| 3 | |||||||||||||||||||||||||||||||||||||||||
| Total Mezzanine loans | |||||||||||||||||||||||||||||||||||||||||
| Preferred Equity | |||||||||||||||||||||||||||||||||||||||||
| 3 | |||||||||||||||||||||||||||||||||||||||||
| 4 | |||||||||||||||||||||||||||||||||||||||||
| Total Preferred Equity | |||||||||||||||||||||||||||||||||||||||||
| Total Loans and preferred equity held for investment | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Current period gross write-offs(1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
_____________________________________
(1)Current period gross write-offs exclude all transfers to real estate, net.
Lending Commitments
24
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
4. Real Estate, net
The following table presents the Company’s net lease portfolio, net, as of March 31, 2026 and December 31, 2025 (dollars in thousands):
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Land and improvements | $ | $ | ||||||||||||
| Buildings, building leaseholds, and improvements | ||||||||||||||
| Tenant improvements | ||||||||||||||
| Subtotal | $ | $ | ||||||||||||
| Less: Accumulated depreciation | ( | ( | ||||||||||||
| Net lease portfolio, net | $ | $ | ||||||||||||
The following table presents the Company’s portfolio of other real estate, net as of March 31, 2026 and December 31, 2025 (dollars in thousands):
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Land and improvements | $ | $ | ||||||||||||
| Buildings, building leaseholds, and improvements | ||||||||||||||
| Tenant improvements | ||||||||||||||
| Furniture, fixtures and equipment | ||||||||||||||
| Construction-in-progress | ||||||||||||||
| Subtotal | $ | $ | ||||||||||||
| Less: Accumulated depreciation | ( | ( | ||||||||||||
| Other portfolio, net | $ | $ | ||||||||||||
Depreciation Expense
Depreciation expense on real estate was $6.0 million and $7.1 million for the three months ended March 31, 2026 and 2025, respectively.
Property Operating Income
For the three months ended March 31, 2026 and 2025 the components of were as follows (dollars in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| Lease revenues | ||||||||||||||||||||||||||||||||
| Minimum lease revenue | $ | $ | ||||||||||||||||||||||||||||||
| Variable lease revenue | ||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||
| Hotel operating income | ||||||||||||||||||||||||||||||||
Total property operating income(1) | $ | $ | ||||||||||||||||||||||||||||||
_________________________________________
For the three months ended March 31, 2026, the Company had one property with property operating income equal to or greater than 10% of the Company’s total revenue. The property had property operating income of $14.4 million or 17 % of the Company’s total revenue. For the three months ended March 31, 2025 the Company had no single property with property operating income equal to or greater than 10% of total revenue of the Company.
Real Estate Acquisitions
During the three months ended March 31, 2026, the Company acquired legal title to one multifamily property through foreclosure, which is included in real estate, net on the Company’s consolidated balance sheets.
25
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
During the year ended December 31, 2025, the Company acquired legal title to one multifamily construction/development project and one office property through deeds-in-lieu of foreclosure, and one hotel property via foreclosure, all of which are included in real estate, net on the Company’s consolidated balance sheets. The office property was subsequently sold. See “Real Estate Sales” below for further detail on the gain on sale.
The Company previously held an investment in a senior loan collateralized by a multifamily property in Mesa, Arizona that was determined to be a VIE. The Company was determined to be the primary beneficiary of the VIE and consolidated the assets and liabilities as well as the operations of the multifamily property in February 2025. The multifamily property is included in real estate, net on the Company’s consolidated balance sheets. The consolidation did not result in a gain or loss.
In accordance with ASC 805-50, the Company allocated the fair value of the assumed assets and liabilities on the respective acquisition dates for each property acquired.
The following table summarizes the Company’s real estate acquisitions for the three months ended March 31, 2026 and year ended December 31, 2025 (dollars in thousands):
| Purchase Price Allocation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition Date | Property Type and Location | Number of Buildings/Units(1) | Purchase Price | Land and Improvements(2) | Building and Improvements(2) | Furniture and Fixtures(2) | Lease Intangible Assets(2) | Other Assets | Lease Intangible Liabilities(2) | Other Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| January 2026 | Multifamily - Texas(3) | $ | $ | $ | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| September 2025 | Office - Oregon(3) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| July 2025 | Multifamily/Pre-dev - California(3)(4) | n/a | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| May 2025 | Hotel - California(3) | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| February 2025 | Multifamily - Arizona(5) | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
_________________________________________
(1) For multifamily properties, represents number of units. For hotels, it represents number of rooms.
(2) Useful life of real estate acquired is 28 to 40 years for buildings, to 15 years for tenant improvements, to for furniture and fixtures, and to 12 years for lease intangibles.
(3) Represents assets acquired by the Company through foreclosure or a deed-in-lieu of foreclosure.
(4) Represents a multifamily construction/development project located in California.
(5) Represents a multifamily property held in a VIE for which the Company was deemed the primary beneficiary. The Company consolidated the assets, liabilities and the property's operations on the acquisition date in accordance with ASC 810.
Impairment
There was no impairment recorded during the three months ended March 31, 2026 and 2025, respectively.
Real Estate Sales
During three months ended March 31, 2026, the Company sold one office property for a total gross sales price of $28.0 million. The Company recorded a net gain on the sale of $0.1 million and it is included in other loss, net on the Company’s consolidated statement of operations.
During the year ended December 31, 2025, the Company sold three office properties and one multifamily property previously acquired through deeds-in-lieu of foreclosure for a total gross sales price of $85.6 million. Prior to the sale of one office property, the Company recorded an impairment loss of $6.3 million due to shortening the expected hold period. The impairment loss was based on the net proceeds received from the sale. This is included in impairment of operating real estate in the Company’s consolidated statement of operations. The net gain of $1.1 million on three office properties and one multifamily property is included in other gain (loss), net on the Company’s consolidated statement of operations.
26
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. Deferred Leasing Costs and Other Intangibles
The Company’s deferred leasing costs, other intangible assets and intangible liabilities at March 31, 2026 and December 31, 2025 are as follows (dollars in thousands):
| March 31, 2026 | ||||||||||||||||||||
| Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| Deferred Leasing Costs and Intangible Assets | ||||||||||||||||||||
| In-place lease values | $ | $ | ( | $ | ||||||||||||||||
| Deferred leasing costs | ( | |||||||||||||||||||
| Above-market lease values | ( | |||||||||||||||||||
| $ | $ | ( | $ | |||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| Deferred Leasing Costs and Intangible Assets | ||||||||||||||||||||
| In-place lease values | $ | $ | ( | $ | ||||||||||||||||
| Deferred leasing costs | ( | |||||||||||||||||||
| Above-market lease values | ( | |||||||||||||||||||
| $ | $ | ( | $ | |||||||||||||||||
| Intangible Liabilities | ||||||||||||||||||||
| Below-market lease values | $ | $ | ( | $ | ||||||||||||||||
The following table summarizes the amortization of deferred leasing costs, intangible assets and intangible liabilities for the three months ended March 31, 2026 and 2025 (dollars in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| Above-market lease values | $ | ( | $ | ( | ||||||||||||||||||||||||||||
| Below-market lease values | ||||||||||||||||||||||||||||||||
| Net decrease to property operating income | $ | ( | $ | ( | ||||||||||||||||||||||||||||
| In-place lease values | $ | $ | ||||||||||||||||||||||||||||||
| Deferred leasing costs | ||||||||||||||||||||||||||||||||
| Amortization expense | $ | $ | ||||||||||||||||||||||||||||||
6. Restricted Cash, Other Assets and Accrued and Other Liabilities
The following table presents a summary of restricted cash as of March 31, 2026, and December 31, 2025 (dollars in thousands):
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||
| Restricted cash: | ||||||||||||||||||||
| Borrower escrow deposits | $ | $ | ||||||||||||||||||
| Real estate escrow reserves | ||||||||||||||||||||
| Capital expenditure reserves | ||||||||||||||||||||
| Working capital and other reserves | ||||||||||||||||||||
| Tenant lockboxes | ||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
27
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following table presents a summary of other assets as of March 31, 2026, and December 31, 2025 (dollars in thousands):
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Other assets: | ||||||||||||||
| $ | $ | |||||||||||||
| Tax receivable and deferred tax assets | ||||||||||||||
| Prepaid expenses and other | ||||||||||||||
| Deferred financing costs, net - credit facilities | ||||||||||||||
| Investments in unconsolidated ventures at fair value | ||||||||||||||
| Total | $ | $ | ||||||||||||
The following table presents a summary of accrued and other liabilities as of March 31, 2026 and December 31, 2025 (dollars in thousands):
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Accrued and other liabilities: | ||||||||||||||
| Accounts payable, accrued expenses and other liabilities | $ | $ | ||||||||||||
| Prepaid rent and unearned revenue | ||||||||||||||
| Interest payable | ||||||||||||||
| Unfunded CECL loan allowance | ||||||||||||||
| Tenant security deposits | ||||||||||||||
| Total | $ | $ | ||||||||||||
28
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
7. Debt
The following table presents debt as of March 31, 2026, and December 31, 2025 (dollars in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capacity ($) | Recourse vs. Non-Recourse(1) | Final Maturity | Contractual Interest Rate | Principal Amount(2) | Carrying Value(2) | Principal Amount(2) | Carrying Value(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Securitization bonds payable, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BRSP 2026-FL3(3) | Non-recourse | Aug-43 | SOFR + | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
BRSP 2024-FL2(3) | Non-recourse | Aug-37 | SOFR + | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BRSP 2021-FL1(3) | Non-recourse | (4) | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal securitization bonds payable, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage and other notes payable, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net lease 1 | Non-recourse | Sep-33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net lease 3 | Non-recourse | Aug-26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net lease 4 | Non-recourse | Oct-27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net lease 5(5) | Non-recourse | Nov-26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net lease 5(6) | Non-recourse | Mar-28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net lease 6 | Non-recourse | Nov-26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net lease 8 | Non-recourse | Nov-26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other real estate 1 | Non-recourse | Dec-28(7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 1(8) | Non-recourse | Jul-28(8) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal mortgage and other notes payable, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank credit facility | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank credit facility | $ | Recourse | Dec-28 (9) | SOFR + | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal bank credit facility | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Master repurchase facilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank 1 | Limited Recourse(10) | Apr-27 | SOFR + | (11) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank 2 | Limited Recourse(10) | Apr-30(12) | n/a | (11) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank 3 | Limited Recourse(13) | June-30(14) | SOFR + | (11) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank 4 | Limited Recourse(10) | Nov-29(15) | SOFR + | (11) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank 5 | Limited Recourse(10) | Mar-31(16) | SOFR + | (11) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal master repurchase facilities | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal credit facilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
_________________________________________
(1)Subject to customary non-recourse carveouts.
(2)Difference between principal amount and carrying value of securitization bonds payable, net and mortgage and other notes payable, net is attributable to deferred financing costs, net and premium/discount on mortgage notes payable.
(3)The Company, through indirect Cayman subsidiaries, securitized commercial mortgage loans originated by the Company. Senior notes issued by the securitization trusts were generally sold to third parties and subordinated notes were retained by the Company. These securitizations are accounted for as secured financings with the underlying mortgage loans pledged as collateral. Principal payments from underlying collateral loans must be applied to repay the notes until fully paid off, irrespective of the contractual maturities on the notes. Underlying collateral loans have initial terms of to three years .
(4)On February 19, 2026, the Company redeemed the outstanding securities under BRSP 2021-FL1, including the 2021-FL1 Notes, at a redemption price of $310.7 million.
(5)Payment terms are periodic payment of principal and interest for debt on two properties and periodic payment of interest only with principal at maturity (except for principal repayments to release collateral properties disposed) for debt on one property.
(6)Represents a mortgage note collateralized by three properties. In April 2025, the contractual interest rate on Net lease 5 was modified to 7.25 %.
29
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(7)The current maturity date is December 2027, with a one-year extension available, subject to satisfaction of certain customary conditions set forth in the governing documents.
(8)During the third quarter of 2025, the Company acquired legal title to the multifamily construction/development project collateralizing the note payable through a deed-in-lieu of foreclosure. Additionally, the Company refinanced the note payable, with a two-year initial term plus one one-year extension option. The principal balance and spread of the note payable did not change. Refer to Note 4, “Real Estate, net” for further discussion.
(9)On December 9, 2025, the Company, through its subsidiaries, including the OP, entered into an Amendment No. 1 to the Restated Credit Agreement. Refer to “Bank Credit Facility” within this note for more details.
(10)Recourse solely with respect to 25.0 % of the financed amount.
(11)Represents the weighted average spread as of March 31, 2026. The contractual interest rate depends upon asset type and characteristics and ranges from SOFR plus 1.35 % to 2.75 %.
(12)The current maturity date is April 2028, with two one-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the governing documents.
(13)Recourse is either 25.0 % or 50.0 % depending on loan metrics.
(14)The current maturity date is June 2028, with two one-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the governing documents. In December 2025, the maximum facility size was increased to $500.0 million.
(15)The current maturity date is November 2026, with three one-year extensions available at the option of the Company, which may be exercised upon the satisfaction of certain customary conditions set forth in the governing documents.
Future Minimum Principal Payments
The following table summarizes future scheduled minimum principal payments at March 31, 2026 based on initial maturity dates or extended maturity dates to the extent criteria are met and the extension option is at the borrower’s discretion (dollars in thousands):
| Total | Securitization Bonds Payable, Net | Mortgage and Other Notes Payable, Net | Credit Facilities | ||||||||||||||||||||
| Remainder of 2026 | $ | $ | $ | $ | |||||||||||||||||||
| 2027 | |||||||||||||||||||||||
| 2028 | |||||||||||||||||||||||
| 2029 | |||||||||||||||||||||||
| 2030 | |||||||||||||||||||||||
| 2031 and thereafter | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Bank Credit Facility
The Company uses bank credit facilities (including term loans and revolving facilities) to finance the business. These financings may be collateralized or non-collateralized and may involve one or more lenders. Credit facilities typically have maturities ranging from to five years and may accrue interest at either fixed or floating rates.
The OP (together with certain subsidiaries of the OP from time-to-time party thereto as borrowers, collectively, the “Borrowers”) is party to an Amended and Restated Credit Agreement (as amended to date, the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), and the several lenders from time to time party thereto (the “Lenders”). The Amended Credit Agreement provides for a revolving credit facility in the aggregate principal amount of up to $120.0 million, of which up to $25.0 million is available as letters of credit.
Loans under the Amended Credit Agreement may be advanced in U.S. dollars and certain foreign currencies, including euros, pounds sterling and Swiss francs.
The Amended Credit Agreement also includes an option for the Borrowers to increase the maximum available principal amount to up to $180.0 million, subject to one or more new or existing Lenders agreeing to provide such additional loan commitments and satisfaction of other customary conditions.
Advances under the Amended Credit Agreement accrue interest at a per annum rate equal to, at the applicable Borrower’s election, either (x) a Term SOFR rate plus a margin of 2.25 %, or (y) a base rate equal to the highest of (i) the Wall Street Journal’s prime rate, (ii) the federal funds rate plus 0.50 % and (iii) the Term SOFR rate plus 1.00 %, plus a margin of 1.25 %.
30
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
An unused commitment fee at a rate of 0.25 % or 0.35 %, per annum, depending on the amount of facility utilization, applies to unutilized borrowing capacity under the Amended Credit Agreement. Amounts owed under the Amended Credit Agreement may be prepaid at any time without premium or penalty, subject to customary breakage costs in the case of borrowings with respect to which a Term SOFR rate election is in effect.
The maximum amount available for borrowing at any time under the Amended Credit Agreement is limited to a borrowing base valuation of certain investment assets, with the valuation of such investment assets generally determined according to a percentage of adjusted net book value. As of March 31, 2026, the borrowing base valuation is sufficient to permit borrowings of up to the entire $120.0 million commitment. 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 ability to borrow new amounts under the Amended Credit Agreement terminates and any outstanding revolving loans will mature on December 8, 2028.
The obligations of the Borrowers under the Amended 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 (as such terms are defined in the Guarantee and Collateral Agreement) in which the proceeds of investment asset distributions are maintained.
The Amended Credit Agreement contains various affirmative and negative covenants, including, among other things, the obligation of the Company to maintain REIT status and be listed on the New York Stock Exchange or any other U.S. national or international securities exchange, and limitations on debt, liens and restricted payments. In addition, the Amended Credit Agreement includes the following financial covenants applicable to the OP and its consolidated subsidiaries: (a) minimum consolidated tangible net worth of the OP to be greater than or equal to the sum of (i) $900,000,000 and (ii) 70 % of the net cash proceeds received by the OP from any offering of its common equity after December 9, 2025 and of the net cash proceeds from any offering by the Company of its common equity to the extent such proceeds are contributed to the OP, excluding any such proceeds that are contributed to the OP within ninety (90 ) days of receipt and applied to acquire capital stock of the OP; (b) the OP’s EBITDA plus lease expenses to fixed charges for any period of four consecutive fiscal quarters not less than 1.40 to 1.00; (c) the OP’s minimum interest coverage ratio not less than 3.00 to 1.00; and (d) the OP’s ratio of consolidated total debt to consolidated total assets must not exceed 0.80 to 1.00. The Amended Credit Agreement also includes customary events of default, including, among other things, failure to make payments when due, breach of covenants or representations, cross default to material indebtedness, material judgment defaults, bankruptcy matters involving any Borrower or any Guarantor and certain change of control events. The occurrence of an event of default will limit the ability of the OP and its subsidiaries to make distributions and may result in the termination of the credit facility, acceleration of repayment obligations and the exercise of remedies by the Lenders with respect to the collateral.
As of March 31, 2026, the Company was in compliance with all of its financial covenants under the Amended Credit Agreement.
Securitization Financing Transactions
Securitization bonds payable, net represent debt issued by securitization vehicles consolidated by the Company. Senior notes issued by these securitization trusts were generally sold to third parties and subordinated notes retained by the Company. Following expiration of the reinvestment period, payments from underlying collateral loans must be applied to repay the notes until fully paid off, irrespective of the contractual maturities of the loans.
The Company evaluated the key terms in the collateralized loan obligation (“CLO”) governing documents of the issuers of the CRE CLOs (“CRE CLO Issuers”), which are wholly owned subsidiaries of the Company, to determine if they were VIEs and, if so, whether the Company was the primary beneficiary and therefore consolidate the CRE CLOs. The Company concluded that the CRE CLO Issuers are VIEs and the Company is the primary beneficiary because it has the ability to control the most significant activities of the CRE CLO Issuers, the obligation to absorb losses to the extent of its equity investments, and the right to receive benefits that could potentially be significant to these entities.
As of March 31, 2026, the Company had $1.6 billion carrying value of CRE debt investments financed with $1.4 billion of securitization bonds payable, net. As of December 31, 2025, the Company had $1.2 billion carrying value of CRE debt investments financed with $982.1 million of securitization bonds payable, net.
31
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
BRSP 2026-FL3
In February 2026, the Company executed a $955.0 million securitization transaction through wholly-owned subsidiaries, BRSP 2026-FL3, Ltd. and BRSP 2026-FL3, LLC (collectively, “BRSP 2026-FL3”), which resulted in the sale of $833.2 million of investment grade notes (the “2026-FL3 Notes”).
BRSP 2026-FL3 includes a six-month ramp-up acquisition period that allows the Company to contribute existing or newly originated loan investments in exchange for $98.3 million in unused proceeds held in BRSP 2026-FL3, subject to the satisfaction of certain conditions set forth in the indenture. At March 31, 2026, the unused proceeds have been fully utilized. BRSP 2026-FL3 also includes a 30-month reinvestment feature that allows the Company to contribute existing or newly originated loan investments in exchange for proceeds from repayments of loans held in BRSP 2026-FL3, subject to the satisfaction of certain conditions set forth in the indenture.
At March 31, 2026, the Company had $955.0 million of unpaid principal balance of CRE debt investments financed with BRSP 2026-FL3. As of March 31, 2026, the securitization reflects an advance rate of 87.3 % at a weighted average cost of funds of Term SOFR plus 1.69 % (before transaction costs), and is collateralized by a pool of 32 senior loan investments.
Additionally, BRSP 2026-FL3 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. The Company did not fail any note protection tests during the three months ended March 31, 2026. While the Company continues to closely monitor all loan investments contributed to BRSP 2026-FL3, a deterioration in the performance of an underlying loan could negatively impact its liquidity position.
BRSP 2024-FL2
BRSP 2024-FL2 is a $675.0 million securitization vehicle operated through wholly-owned subsidiaries, BRSP 2024-FL2, Ltd. and BRSP 2024-FL2, LLC (collectively, “BRSP 2024-FL2”), which have issued $583.9 million of investment grade notes (the “2024-FL2 Notes”).
BRSP 2024-FL2 includes a two-year reinvestment feature that allows the Company 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. At March 31, 2026, the Company had $675.0 million of unpaid principal balance of CRE debt investments financed with BRSP 2024-FL2. As of March 31, 2026, 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 27 senior loan investments.
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. The Company did not fail any note protection tests during the three months ended March 31, 2026. While the Company continues to closely monitor all loan investments contributed to BRSP 2024-FL2, a deterioration in the performance of an underlying loan could negatively impact its liquidity position.
BRSP 2021-FL1
On February 19, 2026, the Company redeemed the outstanding securities under the securitization vehicle operated through wholly-owned subsidiaries, BRSP 2021-FL1, Ltd and BRSP 2021-FL1, LLC (collectively, “BRSP 2021-FL1”) including the investment grade notes issued thereunder, at a redemption price of $310.7 million. The 17 senior loan investments, with an aggregate unpaid principal balance of $440.8 million, held by BRSP 2021-FL1 were refinanced by the issuance of securities under BRSP 2026-FL3 and with existing Master Repurchase Facilities.
32
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Master Repurchase Facilities
As of March 31, 2026, the Company, through subsidiaries, had entered into repurchase agreements with multiple global financial institutions to provide an aggregate principal amount of up to $2.4 billion to finance the origination of first mortgage loans and senior loan participations secured by senior loan investments (each, a “Master Repurchase Facility” and collectively, the “Master Repurchase Facilities”). The Company agreed to guarantee certain obligations under the Master Repurchase Facilities, which contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of this type. The Master Repurchase Facilities act as revolving loan facilities that can be paid down as assets are repaid or sold and re-drawn upon for new investments. As of March 31, 2026, the Company was in compliance with all of its financial covenants under the Master Repurchase Facilities.
As of March 31, 2026, the Company had $1.2 billion carrying value of CRE debt investments financed with $772.3 million under the Master Repurchase Facilities. As of December 31, 2025, the Company had $1.5 billion carrying value of CRE debt investments financed with $1.1 billion under the Master Repurchase Facilities.
As of March 31, 2026, the Company had two 204.6 million and $94.8 million, respectively.
As of December 31, 2025, the Company had three 216.4 million, $100.0 million and $122.0 million, respectively.
8. Related Party Arrangements
The Company had no
9. Equity-Based Compensation
On February 15, 2022, the Company’s board of directors adopted, and at the annual meeting of stockholders held on May 5, 2022, the stockholders approved, the 2022 Equity Incentive Plan (the “2022 Plan”), which was effective as of May 5, 2022 and amends and restates the Company’s 2018 Equity Incentive Plan (the “2018 Plan”) to increase the total number of shares of the Class A common stock issuable by 10.0 million shares (subject to adjustment pursuant to the terms of the 2022 Plan) and extending the termination date to May 4, 2032. Awards may be granted under the 2022 Plan to (x) any employee, officer, director, consultant or advisor (who is a natural person) providing services to the Company, or its affiliates and (y) any other individual whose participation in the 2022 Plan is determined to be in the best interests of the Company. The following types of awards may be made under the 2022 Plan, subject to the limitations set forth in the plan: (i) stock options (which may be either incentive stock options or non-qualified stock options); (ii) stock appreciation rights; (iii) restricted stock awards; (iv) stock units; (v) unrestricted stock awards; (vi) dividend equivalent rights; (vii) performance awards; (viii) annual cash incentive awards; (ix) long-term incentive units; and (x) other equity-based awards.
Shares subject to an award granted under the 2022 Plan will be counted against the maximum number of shares of Class A common stock available for issuance thereunder as one share of Class A common stock for every one share of Class A common stock subject to such an award. Shares subject to an award granted under the 2022 Plan will again become available for issuance under the 2022 Plan if the award terminates by expiration, forfeiture, cancellation, or otherwise without the issuance of such shares (except as set forth in the following sentence). The number of shares of Class A common stock available for issuance under the 2022 Plan will not be increased by (i) any shares tendered or withheld in connection with the purchase of shares upon exercise of a stock option, (ii) any shares deducted or delivered in connection with the Company’s tax withholding obligations, or (iii) any shares purchased by the Company with proceeds from stock option exercises. Shares granted to non-independent directors, officers and employees, if applicable, generally vest ratably in three annual installments following the grant date.
On May 5, 2022, the Company granted 1,456,366 shares of Class A common stock to certain of its employees, including executive officers. The remaining one-third increment of such share grant vested on March 15, 2025. On March 6, 2023, the Company granted 1,391,217 shares of Class A common stock to certain of its employees, including executive officers. The remaining one-third of such share grant vested on March 15, 2026. On March 15, 2024, the Company granted 1,243,696 shares of Class A common stock to certain of its employees, including executive officers. The remaining one-third of such share grant will vest on March 15, 2027.
33
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
On May 17, 2024, the Company granted 79,495 shares of Class A common stock to the non-employee directors of the Company which vested on May 17, 2025.
On March 17, 2025, the Company granted 1,392,965 shares of Class A common stock to certain of its employees, including executive officers. The remaining one-third increments of such share grant will vest on March 15, 2027 and March 15, 2028. Additionally, on March 17, 2025 the Company granted 225,544 shares of Class A common stock to its executive officers. Such share grant vested immediately.
On May 19, 2025, the Company granted 92,940 shares of Class A common stock to the non-employee directors of the Company which vest on May 19, 2026.
On March 16, 2026, the Company granted 1,907,157 shares of Class A common stock to certain of its employees, including executive officers. The shares vest in one-third increments on March 15, 2027, March 15, 2028 and March 15, 2029.
Equity-Based Compensation Expense
In connection with the share grants, the Company recognized share-based compensation expense of $2.9 million and $4.2 million within compensation and benefits in the consolidated statements of operations for the three months ended March 31, 2026 and 2025, respectively.
Restricted Stock—Restricted stock awards relating to the Company’s Class A common stock are granted to non-employee directors of the Company and generally vest within one year . Restricted stock awards are granted to certain employees of the Company, with service conditions only and are generally subject to annual time-based vesting in equal tranches over a three-year period. Restricted stock is entitled to dividends declared and paid on the Company’s Class A common stock and such dividends are not forfeitable prior to vesting of the award. Restricted stock awards are valued based on the Company’s Class A common stock price on grant date and equity-based compensation expense is recognized on a straight-line basis over the requisite three-year service period.
Performance Stock Units (“PSU”)—PSUs are granted to certain employees of the Company and are subject to both a service condition and a market condition. Following the end of the measurement period for the PSUs, the recipients of PSUs may be eligible to vest in all or a portion of PSUs granted, and be issued a number of shares of the Company’s Class A common stock, ranging from 0 % to 200 % of the number of PSUs granted and eligible to vest, to be determined based upon the Company’s total shareholder return relative to certain peer group companies at the end of a three-year measurement period for the 2024 PSU grant (the “2024 Grant”), the 2025 PSU grant (the “2025 Grant”) and the 2026 PSU grant (the “2026 Grant”). PSUs also contain dividend equivalent rights which entitle the recipients to a payment equal to the amount of dividends that would have been paid on the shares that are ultimately issued at the end of the measurement period.
Fair value of PSUs, including dividend equivalent rights, was determined using a Monte Carlo simulation, with the following assumptions.
| 2026 Grant | 2025 Grant | 2024 Grant | ||||||||||||||||||||||||
Expected volatility(1) | % | % | % | |||||||||||||||||||||||
Risk free rate(2) | % | % | % | |||||||||||||||||||||||
Expected dividend yield(3) | ||||||||||||||||||||||||||
_________________________________________
(1)Based upon the Company’s historical stock volatility.
(2)Based upon the continuously compounded zero-coupon U.S. Treasury yield for the term coinciding with the measurement period of the award as of valuation date.
(3)Based upon award holders being entitled to dividends paid during the measurement period on any shares earned.
Fair value of PSU awards, excluding dividend equivalent rights, is generally recognized on a straight-line basis over their measurement period as compensation expense, except when certain performance metrics are achieved. Following the completion of the measurement period for the 2023 Grant, the Company issued 603,478 shares of Class A common stock to certain of its employees in March 2026.
34
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The table below summarizes the Company’s awards granted, forfeited or vested under the 2022 Plan during the three months ended March 31, 2026 and 2025:
| Number of Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||||||||||
| Restricted Stock | PSUs | Total | Restricted Stock | PSUs | ||||||||||||||||||||||||||||
| Unvested shares at December 31, 2024 | $ | $ | ||||||||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||||||||||
| Vested | ( | ( | ||||||||||||||||||||||||||||||
| Unvested shares at March 31, 2025 | ||||||||||||||||||||||||||||||||
| Unvested shares at December 31, 2025 | $ | $ | ||||||||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||||||||||
| Vested | ( | ( | ( | |||||||||||||||||||||||||||||
| Unvested shares at March 31, 2026 | ||||||||||||||||||||||||||||||||
Fair value of equity awards that vested during the three months ended March 31, 2026 and March 31, 2025, determined based on their respective fair values at vesting date, was $10.2 million and $8.5 million, respectively. Fair value of granted awards is determined based on the closing price of the Class A common stock on the date of vesting of the awards. Equity-based compensation is classified within compensation and benefits in the consolidated statement of operations.
10. Stockholders’ Equity
Authorized Capital
As of March 31, 2026, the Company had the authority to issue up to 1.0 billion shares of stock, at $0.01 par value per share, consisting of 950.0 million shares of Class A common stock and 50.0 million shares of preferred stock.
The Company had no
Dividends
During the three months ended March 31, 2026 and 2025, the Company declared the following dividends on its common stock:
| Declaration Date | Record Date | Payment Date | Per Share | |||||||||||||||||
| March 16, 2026 | March 31, 2026 | April 15, 2026 | $ | |||||||||||||||||
| March 17, 2025 | March 31, 2025 | April 15, 2025 | $ | |||||||||||||||||
Share Repurchases
In April 2026, the Company’s board of directors have authorized a stock repurchase program (“Stock Repurchase Program”) under which the Company may repurchase up to $50.0 million of its outstanding Class A common stock until April 30, 2027. The Stock Repurchase Program replaces the prior repurchase program authorization which was set to expire on April 30, 2026. Under the Stock Repurchase Program, the Company may repurchase shares in open market purchases, in privately negotiated transactions or otherwise. The Company has 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. The Stock Repurchase Program will be utilized at management’s 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.
During the three months ended March 31, 2026, the Company did not repurchase any shares of Class A common stock. As of March 31, 2026, there was $40.2 million remaining available to make repurchases under the prior stock repurchase program.
35
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Accumulated Other Comprehensive Income (Loss)
The following tables present the changes in each component of Accumulated Other Comprehensive Income (Loss) (“AOCI”) attributable to stockholders, net of immaterial tax effect. During the three months ended March 31, 2026, there was no AOCI.
Changes in Components of AOCI - Stockholders
| (dollars in thousands) | Unrealized gain on net investment hedges | Foreign currency translation gain (loss) | Total | ||||||||||||||||||||
| AOCI at December 31, 2024 | $ | $ | ( | $ | ( | ||||||||||||||||||
| Other comprehensive gain | |||||||||||||||||||||||
| AOCI at March 31, 2025 | $ | $ | ( | $ | ( | ||||||||||||||||||
11. Fair Value
Fair Value Option
The Company may elect to apply the fair value option of accounting for certain of its financial assets or liabilities due to the nature of the instrument at the time of the initial recognition of the investment. As of March 31, 2026, the Company has elected not to apply the fair value option for any other eligible financial assets or liabilities.
Fair Value of Financial Instruments
In addition to the above disclosures regarding financial assets or liabilities which are recorded at fair value, GAAP requires disclosure of fair value about all financial instruments. The following disclosure of estimated fair value of financial instruments was determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value.
The following table presents the principal amount, carrying value and fair value of certain financial assets and liabilities as of March 31, 2026 and December 31, 2025 (dollars in thousands):
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
| Principal Amount | Carrying Value | Fair Value | Principal Amount | Carrying Value | Fair Value | |||||||||||||||||||||||||||||||||
Financial assets:(1) | ||||||||||||||||||||||||||||||||||||||
Loans and preferred equity held for investment, net(2)(3) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Financial liabilities:(1) | ||||||||||||||||||||||||||||||||||||||
| Securitization bonds payable, net | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Mortgage and other notes payable, net | ||||||||||||||||||||||||||||||||||||||
| Master repurchase facilities | ||||||||||||||||||||||||||||||||||||||
_________________________________________
(1)The fair value of other financial instruments not included in this table is estimated to approximate their carrying value.
(2)Excludes future funding commitments of $117.3 million and $112.2 million as of March 31, 2026 and December 31, 2025, respectively.
(3)Carry value excludes CECL reserves of $85.3 million and $87.4 million as of March 31, 2026 and December 31, 2025, respectively.
Disclosure about fair value of financial instruments is based on pertinent information available to management as of March 31, 2026. Although management is not aware of any factors that would significantly affect fair value, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.
Loans and Preferred Equity Held for Investment, Net
For loans and preferred equity held for investment, net, fair values were determined: (i) primarily by using rates currently available with similar terms and remaining maturities to estimate fair value. These measurements are determined using comparable U.S. Treasury rates as of the end of the reporting period; or (ii) in some cases, based on discounted cash flow projections or similar analysis of principal and interest expected to be collected, which includes consideration of the financial
36
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
standing of the borrower or sponsor as well as operating results of the underlying collateral. Since some fair value measurements are based on unobservable inputs, they are classified as Level 3 of the fair value hierarchy.
Securitization Bonds Payable, Net
The Company’s securitization bonds payable, net bear floating rates of interest. As of March 31, 2026, the Company believes the unpaid principal balance approximates fair value given the floating rate nature of the bonds and significant level of subordination within the securitization. These fair value measurements are based on observable inputs, and as such, are classified as Level 2 of the fair value hierarchy.
Mortgage and Other Notes Payable, Net
For mortgage and other notes payable, net, the Company primarily uses rates currently available with similar terms and remaining maturities to estimate fair value. These measurements are determined using comparable U.S. Treasury rates as of the end of the reporting period. These fair value measurements are based on observable inputs, and as such, are classified as Level 2 of the fair value hierarchy.
Master Repurchase Facilities
The Company has amounts outstanding under Master Repurchase Facilities. The Master Repurchase Facilities bear floating rates of interest. As of March 31, 2026, the Company believes the carrying value approximates fair value due to the short-term nature of the debt, and as a result, contractual rates should equate to market rates. These fair value measurements are based on observable inputs, and as such, are classified as Level 2 of the fair value hierarchy.
Other
The carrying values of cash and cash equivalents, restricted cash, receivables, and accrued and other liabilities approximate fair value due to their short term nature and credit risks, if any, are negligible.
Nonrecurring Fair Values
The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for sale or write-down of asset values due to impairment.
CECL
During the first quarter of 2026, the Company recorded specific CECL reserves of $2.8 million related to one multifamily loan based on the expected proceeds from the sale of the underlying collateral. The specific CECL reserves were also charged off during the first quarter of 2026 and the multifamily loan was resolved in April 2026.
12. Commitments and Contingencies
Lending Commitments
The Company has lending commitments to borrowers pursuant to certain loan agreements in which the borrower may submit a request for funding contingent on achieving certain criteria, which must be approved by the Company as lender, such as leasing, performance of capital expenditures and construction in progress with an approved budget. At March 31, 2026, assuming the terms to qualify for future fundings, if any, had been met, total unfunded lending commitments for loans held for investment were $108.0 million for senior loans, $1.9 million for mezzanine loans and $7.4 million for preferred equity. At December 31, 2025, total unfunded lending commitments for loans held for investment were $101.9 million for senior loans, $2.1 million for mezzanine loans and $8.2 million for preferred equity.
Ground Lease Obligation
In connection with real estate acquisitions, the Company assumed certain non-cancellable operating ground leases as lessee or sublessee with expiration dates through 2050. Rent on certain ground leases are paid directly by tenants.
At March 31, 2026 and December 31, 2025, the weighted average remaining lease term was 11.8 years and 11.8 years for ground leases, respectively.
37
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following table presents ground lease expense, included in property operating expense, for the three months ended March 31, 2026 and 2025 (dollars in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| Operating lease expense: | ||||||||||||||||||||||||||||||||
| Minimum lease expense | $ | $ | ||||||||||||||||||||||||||||||
| Variable lease expense | ||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||
The operating lease liability for ground leases was determined using a weighted average discount rate of 5.4 %. The following table presents future minimum rental payments, excluding contingent rents, on noncancellable ground leases on real estate as of March 31, 2026 (dollars in thousands):
| Remainder of 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 and thereafter | ||||||||
| Total lease payments | ||||||||
| Less: Present value discount | ||||||||
| Operating lease liability (Note 6) | $ | |||||||
For these ground leases, the Company has elected the practical expedient to combine lease and related nonlease components as a single lease component.
Office Lease
At March 31, 2026 and December 31, 2025, the weighted average remaining lease term was 3.1 years and 3.4 years for office leases, respectively. The office leases are located in New York, New York and Los Angeles, California.
For the three months ended March 31, 2026 and 2025, the following table summarizes lease expense, included in operating expense (dollars in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| Corporate Offices | ||||||||||||||||||||||||||||||||
| Operating lease expense: | ||||||||||||||||||||||||||||||||
| Fixed lease expense | $ | $ | ||||||||||||||||||||||||||||||
| Variable lease expense | ||||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||
38
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Total cash paid for office leases was $0.1 million for the three months ended March 31, 2026.
The operating lease liability for the office leases was determined using a weighted average discount rate of 2.4 %. As of March 31, 2026, the Company’s future operating lease commitments for the corporate office leases were as follows (dollars in thousands):
| Corporate Offices | ||||||||
| Remainder of 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 and thereafter | ||||||||
| Total lease payments | ||||||||
| Less: Present value discount | ||||||||
| Operating lease liability (Note 6) | $ | |||||||
For these office leases, the Company has elected the practical expedient to combine lease and related nonlease components as a single lease component.
Litigation and Claims
The Company may be involved in litigation and claims in the ordinary course of the business. As of March 31, 2026, the Company was not involved in any legal proceedings that are expected to have a material adverse effect on the Company’s results of operations, financial position, or liquidity.
13. Segment Reporting
The Company presents its business through three
•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 CRE 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. It also includes other real estate, currently consisting of one investment with direct ownership in commercial real estate and four additional properties that the Company acquired through foreclosure or deed-in-lieu of foreclosure and two properties that the Company consolidates as the primary beneficiary.
•Corporate and Other—includes corporate-level asset management and other fees including expenses related to the Company’s secured revolving credit facility (the “Bank Credit Facility”) and compensation and benefits. It also includes money market income on its cash balances and a sub-portfolio of private equity funds.
U.S. GAAP defines the Chief Operating Decision Maker (“CODM”) as the person or persons who perform the function of allocating resources to and assessing the performance of segments of a public entity. The Company has identified the CODM as its Chief Executive Officer, who is responsible for making key operating decisions of the Company. The CODM reviews net income (loss) for each of the three
The Company primarily generates revenue from net interest income on the loan portfolio and rental and other income from its net leased, multi-tenant office and hotel assets. The Company’s income is primarily derived through the difference between revenue and the cost at which the Company is able to finance its investments. The Company may also acquire investments which generate attractive returns without any leverage.
39
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following tables present the relevant financial information for the reportable segments for the three months ended March 31, 2026 and 2025 (dollars in thousands):
| Senior and Mezzanine Loans and Preferred Equity | Net Leased and Other Real Estate | Corporate and Other | Total | |||||||||||||||||||||||
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||
| Interest income | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Property and other income | ||||||||||||||||||||||||||
| Property operating expense | ( | ( | ||||||||||||||||||||||||
| Transaction, investment and servicing expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Interest expense on real estate | ( | ( | ||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | |||||||||||||||||||||||
| Increase of current expected credit loss reserve | ( | ( | ||||||||||||||||||||||||
| Compensation and benefits | ( | ( | ||||||||||||||||||||||||
| Operating expense | ( | ( | ( | |||||||||||||||||||||||
| Other loss, net | ( | ( | ||||||||||||||||||||||||
| Income (loss) before income taxes | ( | ( | ||||||||||||||||||||||||
| Income tax expense | ( | ( | ( | |||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
| Senior and Mezzanine Loans and Preferred Equity | Net Leased and Other Real Estate | Corporate and Other | Total | |||||||||||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||
| Interest income | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Property and other income | ||||||||||||||||||||||||||
| Property operating expense | ( | ( | ||||||||||||||||||||||||
| Transaction, investment and servicing expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Interest expense on real estate | ( | ( | ||||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | |||||||||||||||||||||||
| Decrease of current expected credit loss reserve | ||||||||||||||||||||||||||
| Compensation and benefits | ( | ( | ||||||||||||||||||||||||
| Operating expense | ( | ( | ||||||||||||||||||||||||
| Other loss, net | ( | ( | ||||||||||||||||||||||||
| Income (loss) before income taxes | ( | ( | ||||||||||||||||||||||||
| Income tax expense | ( | ( | ( | |||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
40
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following table presents total assets by segment as of March 31, 2026 and December 31, 2025 (dollars in thousands):
| Total Assets | Senior and Mezzanine Loans and Preferred Equity | Net Leased and Other Real Estate | Corporate and Other(1) | Total | ||||||||||||||||||||||||||||
| March 31, 2026 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||
_________________________________________
(1)Includes cash, unallocated receivables and deferred costs and other assets, net.
Geography
Geography is generally defined as the location in which the income producing assets reside or the location in which income generating services are performed. Geography information on total income includes equity in earnings of unconsolidated ventures. Geography information on total income and long-lived assets are presented as follows (dollars in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| Total income by geography: | ||||||||||||||||||||||||||||||||
| United States | $ | $ | ||||||||||||||||||||||||||||||
| Norway | ||||||||||||||||||||||||||||||||
Total(1) | $ | $ | ||||||||||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Long-lived assets by geography: | ||||||||||||||
| United States | $ | $ | ||||||||||||
Total(2) | $ | $ | ||||||||||||
_________________________________________
(1)Includes interest income and property and other income.
41
BRIGHTSPIRE CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
14. Earnings Per Share
The Company’s net loss and weighted average shares outstanding for the three months ended March 31, 2026 and 2025 consist of the following (dollars in thousands, except per share data):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| Net income | $ | $ | ||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests: | ||||||||||||||||||||||||||||||||
| Investment Entities | ||||||||||||||||||||||||||||||||
| Net income attributable to BrightSpire Capital, Inc. common stockholders | $ | $ | ||||||||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||||||||
| Dividends allocated to participating securities (non-vested shares) | $ | ( | $ | ( | ||||||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | $ | ||||||||||||||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||||||||
Weighted average shares outstanding - basic(1) | ||||||||||||||||||||||||||||||||
| Weighted average shares outstanding - diluted | ||||||||||||||||||||||||||||||||
| Net income per common share - basic | $ | $ | ||||||||||||||||||||||||||||||
| Net income per common share - diluted | $ | $ | ||||||||||||||||||||||||||||||
_________________________________________
(1)The outstanding shares used to calculate the weighted average basic shares outstanding exclude 3,550,286 and 2,932,427 of restricted stock awards as of March 31, 2026 and March 31, 2025, net of forfeitures, respectively, as those shares were issued but were not vested and therefore, not considered outstanding for purposes of computing basic net income (loss) per common share.
15. Subsequent Events
Dividends
In April 2026, the Company paid a quarterly cash dividend of $0.16 per share of its Class A common stock for the quarter ended March 31, 2026, to stockholders of record as of March 31, 2026.
Repayments
42
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes thereto, which are included in Item 1 of this Quarterly Report, as well as the information contained in our Annual Report on Form 10-K for the year ended December 31, 2025, which is accessible on the SEC’s website at www.sec.gov.
Introduction
We are an internally-managed commercial real estate (“CRE”) credit real estate investment trust (“REIT”) focused on originating, acquiring, financing and managing a diversified portfolio consisting primarily of CRE debt investments. CRE debt investments primarily consist of senior mortgage loans, which is our primary investment strategy. Additionally, we may also selectively originate mezzanine loans and preferred equity investments, which may include profit participations. The mezzanine loans and preferred equity investments may be in conjunction with our origination of corresponding senior mortgages on the same properties.
We were organized in the state of Maryland on August 23, 2017 and maintain key offices in New York, New York and Los Angeles, California. We elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, beginning with our taxable year ended December 31, 2018. We conduct all our activities and hold substantially all our assets and liabilities through our operating subsidiary, BrightSpire Capital Operating Company, LLC (the “OP”).
Our Target Assets
Our investment strategy is to originate and selectively acquire our target assets, which consist of the following:
•Senior Loans. Our primary focus is originating and selectively acquiring senior loans that are backed by CRE assets. These loans are secured by a first mortgage lien on a commercial property and provide mortgage financing to a commercial property developer or owner. The loans may vary in duration, bear interest at a fixed or floating rate and amortize, if at all, over varying periods, often with a balloon payment of principal at maturity. Senior loans may include junior participations in our originated senior loans for which we have syndicated the senior participations to other investors and retained the junior participations for our portfolio. We believe these junior participations are more like the senior loans we originate than other loan types given their credit quality and risk profile.
•Mezzanine Loans. We may originate or acquire mezzanine loans, which are structurally subordinate to senior loans, but senior to the borrower’s equity position. Generally, we will originate or acquire these loans if we believe we have the ability to protect our position and fund the first mortgage, if necessary. Mezzanine loans may be structured such that our return accrues and is added to the principal amount rather than paid on a current basis. We may also pursue equity participation opportunities in instances when the risk-reward characteristics of the investment warrant additional upside participation in the possible appreciation in value of the underlying assets securing the investment.
•Preferred Equity. We may make investments that are subordinate to senior and mezzanine loans, but senior to the common equity in the mortgage borrower. Preferred equity investments may be structured such that our return accrues and is added to the principal amount rather than paid on a current basis. We also may pursue equity participation opportunities in preferred equity investments, like such participations in mezzanine loans.
Our operating and reportable segments are Senior and Mezzanine Loans and Preferred Equity, and Net Leased and Other Real Estate and Corporate and Other.
The allocation of our capital among our target assets will depend on prevailing market conditions at the time we invest and may change over time in response to different prevailing market conditions. In addition, in the future, we may invest in assets other than our target assets or change our target assets. With respect to all our investments, we invest so as to maintain our qualification as a REIT for U.S. federal income tax purposes and our exclusion or exemption from regulation under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
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. 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. This includes intermediate servicing and negotiating, restructuring of non-performing investments, foreclosure considerations, management or development of owned real estate, in each case to reposition and achieve optimal value realization for us and our stockholders. Depending on the nature of the underlying investment, we may pursue repositioning strategies through judicious capital investment in order to extract
43
maximum value from the investment or recognize unanticipated losses to reinvest resulting liquidity in higher-yielding performing investments.
Our Business Segments
We present our business through three operating and reportable 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. It also includes other real estate, currently consisting of one investment with direct ownership in commercial real estate, four additional properties that we acquired through foreclosure or deed-in-lieu of foreclosure and two properties 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. It also includes money market income on our cash balances and a sub-portfolio of private equity funds.
Significant Developments
During the three months ended March 31, 2026, and through April 28, 2026, significant developments affecting our business and results of operations of our portfolio included the following:
Capital Resources
•On February 17, 2026, we closed a $955.0 million securitization transaction, BRSP 2026-FL3. We placed $833.2 million of investment grade securities with institutional investors providing term financing on a non-mark-to-market, non-recourse basis. BRSP 2026-FL3 is collateralized by interests in 32 first-lien floating rate mortgages secured by 33 properties, with an 87.25% initial advance rate at a weighted average coupon at issuance of Term SOFR + 1.69%, before transaction costs. (See “Liquidity and Capital Resources” for more information);
•On February 19, 2026, we redeemed the outstanding securities under BRSP 2021-FL1, including the investment grade notes issued thereunder, at a redemption price of $310.7 million. The 17 senior loan investments, with an aggregate unpaid principal balance of $440.8 million, held by BRSP 2021-FL1 were refinanced by the issuance of securities under BRSP 2026-FL3 and with existing Master Repurchase Facilities;
•On March 12, 2026, we entered into a Master Repurchase Agreement with Bank 5 which provides up to $250.0 million to finance first mortgage loans, senior loan participations and related mezzanine loans secured by commercial real estate. The initial maturity date of the Repurchase Agreement is March 12, 2029, with two one-year extensions, which may be exercised upon the satisfaction of certain conditions set forth in the Repurchase Agreement; and
•We declared and paid a first quarter dividend of $0.16 per share on April 15, 2026.
44
Our Portfolio
•We originated nine senior mortgage loans for a total commitment of $346.1 million;
•We received loan repayment proceeds of $201.4 million from seven loans;
•We continued to make progress resolving our watchlist (loans with a risk ranking of 4 or 5) and real estate owned properties:
◦Sold the remaining Long Island City office property, generating gross proceeds of $28.0 million and a gain of $0.1 million;
◦Received total repayment proceeds of $73.9 million related to three risk ranked 5 loans; and
◦Acquired one multifamily property through foreclosure;
•As of April 28, 2026, our watchlist (loans with a risk ranking of 4 or 5) consisted of the following (refer to “Our Portfolio” for further discussion):
◦Two loans with a risk ranking of 5 and a total carrying value of $67.1 million that are expected to be repaid in the second quarter of 2026, as the underlying collateral for both loans are under executed purchase and sale agreements;
◦Two loans with a risk ranking of 4 with an aggregate unpaid principal balance of $67.4 million;
•We recorded specific CECL reserves of $2.8 million related to one mezzanine loan that were charged off during the three months ended March 31, 2026. The mezzanine loan was repaid in April 2026. At March 31, 2026, there were no specific CECL reserves on our consolidated balance sheets; and
•Our general CECL reserve decreased by $0.9 million from December 31, 2025 to March 31, 2026. At March 31, 2026, our general CECL reserve for our outstanding loans and future loan funding commitments is $87.2 million, which is 3.06% of the aggregate commitment amount of our loan portfolio.
Financial Results
•Generated GAAP net income of $4.8 million, or $0.03 per basic and diluted share, Distributable Earnings of $15.6 million or $0.12 per share and Adjusted Distributable Earnings of $18.2 million or $0.14 per share for the three months ended March 31, 2026. Distributable Earnings and Adjusted Distributable Earnings are non-GAAP financial measures. A reconciliation of these measures to net income/(loss) attributable to the Company’s common stockholders is in the section “Non-GAAP Supplemental Financial Measures” below.
Trends Affecting Our Business
Global Markets
Commercial real estate markets continue to be influenced by elevated interest rates, reduced transaction activity and uncertainty from the Administration’s tariff initiative, inflationary worries and geopolitical unrest. The Federal Reserve has recently maintained a cautious approach to monetary policy, keeping interest rates steady while signaling potential cuts later in 2026, but it is uncertain as to if, when, how many and by how much subsequent interest rate cuts will be made. Higher borrowing costs and conservative lending practices have pressured property valuations and refinancing activity, particularly for loans originated in prior low‑rate environments. To the extent certain of our borrowers are experiencing significant financial dislocation as a result of economic conditions, we have and may continue to use interest and other reserves and/or replenishment obligations of the borrower and/or guarantors to meet current interest payment obligations for a limited period.
Property fundamentals remain mixed by sector and geography. Multifamily and industrial assets have generally demonstrated more resilient performance, though rent growth has moderated in select markets. Other than in select cities such as Manhattan, NY, Dallas, TX and more recently, San Francisco, CA, office properties continue to face structural and demand‑related challenges, which may adversely affect occupancy, cash flows, and valuations, particularly for older or less competitive assets. Given the continuing uncertainty in the office market, there is risk of future valuation impairment or investment loss on our loans secured by office properties. Similarly, these trends may impact our ability to manage debt covenant tests, maturity dates and/or seek suitable refinancing opportunities on certain of our office property equity investments, which may adversely impact valuation assessments and cash flow generated by such investments.
While macroeconomic conditions continue to be challenged, we cannot predict whether they will in fact improve or even intensify. Due to the inherent uncertainty of these conditions, their impact on our business is difficult to predict and quantify.
Factors Impacting Our Operating Results
Our results of operations are affected by a number of factors and depend primarily on, among other things, the ability of the borrowers of our assets to service their debt as it is due and payable, the ability of our tenants to pay rent and other amounts due under their leases, our ability to actively and effectively service any sub-performing and non-performing loans and other assets
45
we may have from time to time in our portfolio, the market value of our assets and the supply of, and demand for, CRE senior loans, mezzanine loans, preferred equity, net leased properties and our other assets, and the level of our net operating income (“NOI”). Our net interest income, which includes the amortization of origination and exit fees, varies primarily as a result of changes in market interest rates, prepayment rates and frequency on our CRE loans and the ability of our borrowers to make scheduled interest payments. Interest rates and prepayment rates vary according to the type of investment, conditions in the financial markets, creditworthiness of our borrowers, competition and other factors, none of which can be predicted with any certainty. 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. As a result, we do not expect that changes in market value will impact our operating results. However, at least on a quarterly basis, we assess both our ability and intent to hold such assets for the long-term. As part of this process, we monitor our assets for impairment. In addition, we maintain an allowance for credit losses on our financial assets in accordance with the CECL methodology, which requires us to estimate expected credit losses over the life of our loans and recognize provisions for loan losses earlier in the lending cycle. 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, an increase in our CECL reserves or realizing losses upon the sale of such investments.
Changes in market interest rates
With respect to our business operations, increases in interest rates, in general, may over time cause:
•the value of our fixed-rate investments to decrease;
•prepayments on certain assets in our portfolio to slow, thereby slowing the amortization of origination and exit fees;
•coupons on our floating and adjustable-rate mortgage loans to reset, although on a delayed basis, to higher interest rates;
•interest rate caps required by our borrowers to increase in cost;
•borrowers’ unwillingness to purchase new interest rate caps at loan maturity to qualify for an extension;
•financial hardship to our borrowers, whose ability to service their debt as it is due and payable and to pass maturity extension tests may be materially adversely impacted, resulting in foreclosures;
•to the extent we use leverage to finance our assets, the interest expense associated with our borrowings to increase; and
•to the extent we enter into interest rate swap agreements as part of our hedging strategy, the value of these agreements to increase.
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 origination and exit fees;
•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.
Credit risk
We are subject to varying degrees of credit risk in connection with our target assets. We seek to mitigate this risk by seeking to acquire high quality assets, at appropriate prices given anticipated and unanticipated losses and by employing a comprehensive review and asset selection process and by careful ongoing monitoring of acquired assets. Nevertheless, unanticipated credit losses could occur, which could adversely impact our operating results.
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Size of investment portfolio
The size of our portfolio, as measured by the aggregate principal balance of our commercial mortgage loans, other commercial real estate-related debt investments and the other assets we own, is also a key revenue driver. Generally, as the size of our portfolio grows, the amount of interest income we earn increases, but the amount of our expenses also increases to the extent that we incur additional interest expense to finance our assets.
Our Portfolio
As of March 31, 2026, our portfolio consisted of 115 investments representing approximately $3.4 billion in carrying value (based on our share of ownership and excluding cash, cash equivalents and certain other assets). Our senior and mezzanine loans and preferred equity consisted of 100 investments with a weighted average cash coupon of 3.4% and a weighted average all-in unlevered yield of 7.2%. Our net leased and other real estate consisted of approximately 4.7 million total square feet of space and total first quarter 2026 NOI of that portfolio was approximately $12.4 million. Refer to “Non-GAAP Supplemental Financial Measures” below for further information on NOI.
As of March 31, 2026, our portfolio consisted of the following investments (dollars in thousands):
Count(1) | Carrying value (Consolidated) | Carrying value (at BRSP share)(2) | Net carrying value (Consolidated)(3) | Net carrying value (at BRSP share)(4) | ||||||||||||||||||||||||||||
| Our Portfolio | ||||||||||||||||||||||||||||||||
| Senior loans | 88 | $ | 2,669,459 | $ | 2,669,459 | $ | 586,395 | $ | 586,395 | |||||||||||||||||||||||
| Mezzanine loans | 2 | 46,425 | 46,425 | 46,425 | 46,425 | |||||||||||||||||||||||||||
| Preferred equity | 10 | 14,188 | 14,188 | 14,188 | 14,188 | |||||||||||||||||||||||||||
| Subtotal | 100 | 2,730,072 | 2,730,072 | 647,008 | 647,008 | |||||||||||||||||||||||||||
| Net leased real estate | 7 | 313,345 | 313,345 | 28,793 | 28,793 | |||||||||||||||||||||||||||
| Other real estate | 7 | 405,759 | 401,399 | 174,470 | 169,503 | |||||||||||||||||||||||||||
| Private equity interests | 1 | 2,016 | 2,016 | 2,016 | 2,016 | |||||||||||||||||||||||||||
| Total | 115 | $ | 3,451,192 | $ | 3,446,832 | $ | 852,287 | $ | 847,320 | |||||||||||||||||||||||
________________________________________
(1)Count for net leased real estate and other real estate represents number of investments.
(2)Carrying value at our share represents the proportionate carrying value based on ownership by asset as of March 31, 2026.
(3)Net carrying value represents carrying value less any associated financing as of March 31, 2026.
(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 March 31, 2026.
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. The underwriting process focuses on some or all of the following factors designed to ensure each investment is evaluated appropriately: (i) macroeconomic conditions that may influence operating performance; (ii) fundamental analysis of underlying real estate, including tenant rosters, lease terms, zoning, necessary licensing, operating costs and the asset’s overall competitive position in its market; (iii) real estate market factors that may influence the economic performance of the investment, including leasing conditions and overall competition; (iv) the operating expertise and financial strength and reputation of a tenant, operator, partner or borrower; (v) the cash flow in place and projected to be in place over the term of the investment and potential return; (vi) the appropriateness of the business plan and estimated costs associated with tenant buildout, repositioning or capital improvements; (vii) an internal and third-party valuation of a property, investment basis relative to the competitive set and the ability to liquidate an investment through a sale or refinancing; (viii) review of third-party reports including appraisals, engineering and environmental reports; (ix) physical inspections of properties and markets; (x) the overall legal structure of the investment, contractual implications and the lenders’ rights; and (xi) the tax and accounting impact.
Loan Risk Rankings
In connection with developing the CECL reserve for our loans and preferred equity held for investment, we determine the risk ranking of each loan and preferred equity investment as a key credit quality indicator. The risk rankings are based on a variety of factors, including, without limitation, underlying real estate performance and asset value, values of comparable properties, durability and quality of property cash flows, borrower/sponsor experience and financial wherewithal, and the existence of a risk-mitigating loan structure. Additional key considerations include loan-to-value ratios, debt service coverage ratios, loan structure, real estate and credit market dynamics, and risk of default or principal loss. Based on a five-point scale, our loans and preferred equity held for investment are rated “1” through “5,” from less risk to greater risk, and the ratings are updated
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quarterly. 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.High Risk/Potential for Loss—A loan that has a high risk of realizing a principal loss.
5.Impaired/Loss Likely—A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss.
At March 31, 2026, our weighted average risk ranking remained unchanged at 3.1 compared to at December 31, 2025. During the first quarter of 2026, we had the following risk ranking activity for risk ranked 4 and 5 assets:
•One office loan and one industrial loan with risk rankings of 5 were repaid;
•One multifamily loan with a risk ranking of 5 was acquired through foreclosure and reclassified to real estate;
•One multifamily loan was downgraded to a risk ranking of 5 and repaid in April 2026;
•No loans were downgraded to a risk ranking of 4.
Senior and Mezzanine Loans
The following tables provide a summary of our senior and mezzanine loans based on our internal risk rankings, collateral property type and geographic distribution as of March 31, 2026 (dollars in thousands):
Carrying Value (at BRSP share)(1) | ||||||||||||||||||||||||||||||||||||||
| Risk Ranking | Count | Senior loans | Mezzanine loans | Preferred Equity | Total | % of Total | ||||||||||||||||||||||||||||||||
| 3 | 93 | $ | 2,537,260 | $ | 14,895 | $ | 11,898 | $ | 2,564,053 | 93.9 | % | |||||||||||||||||||||||||||
| 4 | 4 | 65,122 | — | 2,290 | 67,412 | 2.5 | % | |||||||||||||||||||||||||||||||
5(2) | 3 | 67,077 | 31,530 | — | 98,607 | 3.6 | % | |||||||||||||||||||||||||||||||
| 100 | $ | 2,669,459 | $ | 46,425 | $ | 14,188 | $ | 2,730,072 | 100.0 | % | ||||||||||||||||||||||||||||
| Weighted average risk ranking | 3.1 | |||||||||||||||||||||||||||||||||||||
_________________________________________
(1)Carrying value at our share represents the proportionate carrying value based on ownership by asset as of March 31, 2026.
(2)Subsequent to March 31, 2026, one risk ranked 5 loan with a carrying value at our share of $31.5 million was resolved.
Carrying value (at BRSP share)(1) | ||||||||||||||||||||||||||||||||||||||
| Collateral property type | Count | Senior loans | Mezzanine loans | Preferred Equity | Total | % of Total | ||||||||||||||||||||||||||||||||
| Multifamily | 73 | $ | 1,833,557 | $ | 31,530 | $ | 12,135 | $ | 1,877,222 | 68.8 | % | |||||||||||||||||||||||||||
| Office | 19 | 559,846 | 14,895 | 2,053 | 576,794 | 21.1 | % | |||||||||||||||||||||||||||||||
Other (Mixed-use)(2) | 6 | 219,902 | — | — | 219,902 | 8.1 | % | |||||||||||||||||||||||||||||||
| Industrial | 1 | 31,727 | — | — | 31,727 | 1.2 | % | |||||||||||||||||||||||||||||||
| Hotel | 1 | 24,427 | — | — | 24,427 | 0.8 | % | |||||||||||||||||||||||||||||||
| Total | 100 | $ | 2,669,459 | $ | 46,425 | $ | 14,188 | $ | 2,730,072 | 100.0 | % | |||||||||||||||||||||||||||
_________________________________________
(1)Carrying value at our share represents the proportionate carrying value based on ownership by asset as of March 31, 2026.
(2)Other includes commercial and residential development assets.
Carrying value (at BRSP share)(1) | |||||||||||||||||||||||||||||||||||||||||
| Region | Count | Senior loans | Mezzanine loans | Preferred Equity | Total | % of Total | |||||||||||||||||||||||||||||||||||
| US West | 34 | $ | 996,110 | $ | 31,530 | $ | 454 | $ | 1,028,094 | 37.7 | % | ||||||||||||||||||||||||||||||
| US Southwest | 43 | 945,403 | — | 13,734 | 959,137 | 35.1 | % | ||||||||||||||||||||||||||||||||||
| US Northeast | 9 | 326,544 | 14,895 | — | 341,439 | 12.5 | % | ||||||||||||||||||||||||||||||||||
| US Southeast | 10 | 271,410 | — | — | 271,410 | 9.9 | % | ||||||||||||||||||||||||||||||||||
| US Midwest | 4 | 129,992 | — | — | 129,992 | 4.8 | % | ||||||||||||||||||||||||||||||||||
| Total | 100 | $ | 2,669,459 | $ | 46,425 | $ | 14,188 | $ | 2,730,072 | 100.0 | % | ||||||||||||||||||||||||||||||
_________________________________________
(1)Carrying value at our share represents the proportionate carrying value based on ownership by asset as of March 31, 2026.
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The following table provides asset level detail for our senior and mezzanine loans as of March 31, 2026 (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) | Q1 Risk ranking(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Multifamily | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 1 | Senior | 12/12/2025 | Los Angeles, CA | $ | 70,144 | $ | 70,800 | Floating | 2.4% | 6.3% | 1/9/2031 | 76% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 2 | Senior | 5/17/2022 | Las Vegas, NV | 56,425 | 54,866 | Floating | 2.0% | 5.7% | 6/9/2027 | 74% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 3 | Senior | 12/10/2025 | St. Louis, MO | 52,531 | 53,000 | Floating | 2.5% | 6.7% | 1/9/2031 | 68% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 4 | Senior | 5/26/2021 | Las Vegas, NV | 48,469 | 47,731 | Floating | 3.0% | 8.4% | 6/9/2028 | 80% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 5 | Senior | 3/17/2026 | San Diego, CA | 46,530 | 47,000 | Floating | 2.4% | 6.6% | 4/9/2031 | 65% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 6 | Senior | 3/16/2026 | San Jose, CA | 45,594 | 46,094 | Floating | 2.4% | 6.3% | 4/9/2031 | 68% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 7 | Senior | 1/8/2026 | San Bernadino, CA | 41,894 | 42,300 | Floating | 2.7% | 6.7% | 2/9/2031 | 71% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 8 | Senior | 7/15/2021 | Jersey City, NJ | 41,887 | 41,779 | Floating | 3.1% | 6.8% | 8/9/2026 | 66% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 9 | Senior | 3/31/2022 | Louisville, KY | 41,206 | 41,095 | Floating | 2.8% | 6.5% | 4/9/2027 | 72% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 10 | Senior | 12/30/2025 | Madison, AL | 41,109 | 41,500 | Floating | 2.5% | 6.5% | 1/9/2031 | 75% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal top 10 multifamily | $ | 485,789 | $ | 486,165 | 18% of total loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 11 | Senior | 11/6/2025 | Mesa, AZ | $ | 40,924 | $ | 41,332 | Floating | 2.6% | 6.6% | 11/9/2030 | 68% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 12 | Senior | 7/15/2021 | Dallas, TX | 40,338 | 40,338 | Floating | 3.2% | 6.9% | 8/9/2026 | 77% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 13 | Senior | 3/31/2022 | Long Beach, CA | 40,114 | 40,114 | Floating | 3.4% | 7.1% | 4/9/2027 | 74% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 14 | Senior | 1/8/2026 | Tucson, AZ | 39,322 | 39,773 | Floating | 2.6% | 6.5% | 1/9/2031 | 74% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 15 | Senior | 7/12/2022 | Irving, TX | 38,442 | 38,379 | Floating | 3.6% | 7.4% | 8/9/2027 | 73% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 16 | Senior | 12/21/2020 | Austin, TX | 37,000 | 37,000 | Floating | 3.1% | 6.8% | 1/9/2029 | 54% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 17 | Senior | 1/12/2022 | Los Angeles, CA | 36,550 | 36,550 | Floating | 3.4% | 7.0% | 2/9/2027 | 65% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 18 | Senior | 3/8/2022 | Austin, TX | 36,314 | 36,215 | Floating | 3.3% | 6.9% | 3/9/2027 | 75% | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 19 | Senior | 7/29/2021 | Phoenix, AZ | 33,325 | 33,325 | Floating | 3.4% | 7.0% | 8/9/2026 | 75% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 20 | Senior | 2/20/2025 | Las Vegas, NV | 32,847 | 33,000 | Floating | 3.4% | 7.6% | 3/9/2030 | 59% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal top 20 multifamily | $ | 860,965 | $ | 862,191 | 32% of total loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 21 | Senior | 12/23/2025 | Jackson, TN | $ | 32,691 | $ | 33,000 | Floating | 3.0% | 7.0% | 1/9/2031 | 62% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 22 | Senior | 10/14/2025 | San Antonio, TX | 32,078 | 32,340 | Floating | 2.6% | 6.8% | 11/9/2030 | 68% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| 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) | Q1 Risk ranking(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 23(6) | Mezzanine | 2/8/2022 | Las Vegas, NV | 31,530 | 31,530 | n/a(6) | n/a(6) | n/a(6) | 2/8/2027 | 56% - 79% | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 24 | Senior | 4/29/2021 | Las Vegas, NV | 31,087 | 31,087 | Floating | 3.2% | 6.9% | 5/9/2026 | 76% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 25 | Senior | 2/17/2022 | Long Beach, CA | 31,024 | 31,023 | Floating | 3.4% | 7.3% | 3/9/2027 | 67% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 26 | Senior | 1/18/2022 | Dallas, TX | 30,763 | 30,578 | Floating | 3.5% | 7.1% | 2/9/2027 | 75% | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 27 | Senior | 4/15/2022 | Mesa, AZ | 30,160 | 30,160 | Floating | 3.4% | 7.0% | 5/9/2027 | 75% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 28 | Senior | 2/13/2025 | Las Vegas, NV | 29,635 | 29,773 | Floating | 2.7% | 6.8% | 3/9/2030 | 70% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 29 | Senior | 9/18/2025 | Nashville, TN | 29,068 | 29,324 | Floating | 2.6% | 6.6% | 10/9/2030 | 68% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 30 | Senior | 8/31/2021 | Glendale, AZ | 28,889 | 28,801 | Floating | 3.3% | 6.9% | 3/9/2027 | 75% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 31 | Senior | 9/26/2025 | Nashville, TN | 27,781 | 28,000 | Floating | 2.7% | 6.9% | 10/9/2030 | 65% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 32 | Senior | 1/22/2026 | Costa Mesa, CA | 27,737 | 28,000 | Floating | 2.4% | 6.6% | 2/9/2031 | 63% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 33 | Senior | 5/27/2021 | Houston, TX | 27,600 | 27,600 | Floating | 3.1% | 6.8% | 6/9/2026 | 67% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 34 | Senior | 12/21/2021 | Phoenix, AZ | 25,596 | 25,596 | Floating | 3.6% | 7.3% | 1/9/2027 | 75% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 35 | Senior | 7/12/2022 | Irving, TX | 25,474 | 25,433 | Floating | 3.6% | 7.4% | 8/9/2027 | 72% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 36 | Senior | 2/25/2025 | Denver, CO | 25,188 | 25,188 | Floating | 3.3% | 7.4% | 3/9/2028 | 68% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 37 | Senior | 3/8/2022 | Glendale, AZ | 25,046 | 25,046 | Floating | 3.5% | 7.1% | 3/9/2027 | 73% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 38 | Senior | 11/4/2025 | Santa Rosa, CA | 24,461 | 24,721 | Floating | 2.8% | 6.8% | 12/9/2030 | 74% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 39 | Senior | 3/31/2022 | Phoenix, AZ | 24,001 | 24,001 | Floating | 3.7% | 7.3% | 4/9/2027 | 75% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 40 | Senior | 11/4/2021 | Austin, TX | 23,590 | 23,529 | Floating | 3.4% | 7.0% | 11/9/2026 | 71% | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 41 | Senior | 12/10/2024 | Seattle, WA | 23,028 | 23,123 | Floating | 2.8% | 6.9% | 1/9/2030 | 65% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 42 | Senior | 1/10/2025 | Lebanon, TN | 22,500 | 22,500 | Floating | 3.4% | 7.0% | 2/9/2030 | 71% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 43 | Senior | 6/22/2021 | Phoenix, AZ | 22,292 | 22,292 | Floating | 3.3% | 6.9% | 7/9/2026 | 75% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 44 | Senior | 7/1/2021 | Aurora, CO | 21,342 | 21,306 | Floating | 3.2% | 6.9% | 7/9/2026 | 73% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 45 | Senior | 12/19/2025 | Minneapolis, MN | 21,308 | 21,500 | Floating | 2.5% | 6.7% | 1/9/2031 | 65% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 46 | Senior | 8/14/2025 | Dallas, TX | 21,292 | 21,474 | Floating | 3.0% | 7.1% | 9/9/2030 | 59% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 47 | Senior | 1/12/2022 | Austin, TX | 20,276 | 20,276 | Floating | 3.4% | 7.0% | 2/9/2027 | 75% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 48 | Senior | 12/21/2021 | Gresham, OR | 20,235 | 20,235 | Floating | 2.8% | 6.4% | 7/9/2028 | 74% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 49 | Senior | 8/6/2021 | La Mesa, CA | 19,787 | 19,787 | Floating | 2.8% | 6.4% | 8/9/2028 | 70% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
50
| 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) | Q1 Risk ranking(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 50 | Senior | 10/18/2024 | Garland, TX | 19,760 | 19,920 | Floating | 3.7% | 7.6% | 11/9/2029 | 70% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 51 | Senior | 9/1/2021 | Bellevue, WA | 19,308 | 19,308 | Floating | 3.4% | 7.1% | 9/9/2026 | 64% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 52 | Senior | 7/14/2021 | Salt Lake City, UT | 18,830 | 18,783 | Floating | 2.8% | 6.4% | 8/9/2028 | 73% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 53 | Senior | 5/5/2022 | Charlotte, NC | 18,000 | 18,000 | Floating | 3.5% | 7.2% | 5/9/2027 | 61% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 54 | Senior | 11/20/2025 | Los Angeles, CA | 17,662 | 17,815 | Floating | 2.5% | 6.7% | 12/9/2030 | 59% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 55 | Senior | 6/25/2021 | Phoenix, AZ | 17,649 | 17,650 | Floating | 3.2% | 6.9% | 7/9/2026 | 75% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 56 | Senior | 10/23/2025 | Huntsville, AL | 17,548 | 17,700 | Floating | 2.8% | 7.0% | 11/9/2030 | 55% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 57 | Senior | 9/16/2025 | Glendale, AZ | 16,967 | 17,118 | Floating | 2.6% | 6.6% | 10/9/2030 | 73% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 58 | Senior | 9/18/2025 | Mobile, AL | 14,422 | 14,559 | Floating | 2.8% | 6.8% | 10/9/2030 | 73% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 59 | Senior | 5/5/2025 | Dallas, TX | 13,663 | 13,750 | Floating | 2.9% | 7.1% | 5/9/2030 | 65% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 60 | Senior | 8/19/2025 | Phoenix, AZ | 13,655 | 13,771 | Floating | 2.7% | 6.7% | 9/9/2030 | 75% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 61 | Senior | 7/3/2025 | Northridge, CA | 13,162 | 13,250 | Floating | 3.3% | 7.4% | 7/3/2030 | 74% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 62 | Senior | 11/22/2024 | Garland, TX | 12,714 | 12,809 | Floating | 3.5% | 7.4% | 12/9/2029 | 63% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 63 | Senior | 11/20/2025 | Hoboken, NJ | 12,393 | 12,500 | Floating | 2.4% | 6.6% | 12/9/2030 | 61% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 64 | Senior | 3/8/2022 | Glendale, AZ | 11,664 | 11,664 | Floating | 3.5% | 7.1% | 3/9/2027 | 73% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 65 | Senior | 12/19/2025 | Mesa, AZ | 11,266 | 11,387 | Floating | 2.8% | 6.8% | 1/9/2031 | 70% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 66(7) | Preferred | 5/9/2025 | Glendale, AZ | 2,072 | 2,076 | Fixed | n/a(7) | 14.0% | 3/9/2027 | n/a | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 67(7) | Preferred | 5/9/2025 | Mesa, AZ | 1,967 | 1,971 | Fixed | n/a(7) | 15.0% | 5/9/2027 | n/a | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 68(7) | Preferred | 5/9/2025 | Phoenix, AZ | 1,786 | 1,790 | Fixed | n/a(7) | 15.0% | 4/9/2027 | n/a | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 69(7) | Preferred | 5/9/2025 | Phoenix, AZ | 1,781 | 1,785 | Fixed | n/a(7) | 14.0% | 1/9/2027 | n/a | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 70(7) | Preferred | 5/9/2025 | Phoenix, AZ | 1,707 | 1,710 | Fixed | n/a(7) | 15.0% | 8/9/2026 | n/a | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 71(7) | Preferred | 5/9/2025 | Phoenix, AZ | 1,522 | 1,525 | Fixed | n/a(7) | 15.0% | 7/9/2026 | n/a | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 72(8) | Preferred | 12/23/2025 | Austin, TX | 691 | 691 | Fixed | n/a(8) | 15.0% | 11/9/2026 | n/a | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 73(8) | Preferred | 2/18/2026 | Austin, TX | 609 | 609 | Fixed | n/a(8) | 15.0% | 2/9/2027 | n/a | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total/Weighted average multifamily loans | $ | 1,877,222 | $ | 1,881,555 | 69% of total loans | 2.9% | 6.8% | 2.7 years | 3.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
51
| 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) | Q1 Risk ranking(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Office | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 74 | Senior | 1/19/2021 | Phoenix, AZ | $ | 74,442 | $ | 74,038 | Floating | 3.7% | 7.3% | 8/9/2026 | 70% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 75 | Senior | 8/28/2018 | San Jose, CA | 73,571 | 73,571 | Floating | 4.9% | 8.5% | 2/28/2027 | 69% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 76 | Senior | 2/13/2019 | Baltimore, MD | 58,606 | 58,606 | Floating | 3.6% | 7.3% | 2/9/2027 | 74% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 77 | Senior | 11/17/2021 | Dallas, TX | 41,532 | 41,532 | Floating | 4.0% | 7.6% | 12/9/2026 | 61% | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 78 | Senior | 5/23/2022 | Plano, TX | 38,633 | 38,524 | Floating | 4.3% | 7.9% | 6/9/2027 | 64% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 79 | Senior | 4/27/2022 | Plano, TX | 38,542 | 38,438 | Floating | 4.1% | 7.8% | 5/9/2027 | 70% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 80 | Senior | 4/7/2022 | San Jose, CA | 32,406 | 32,406 | Floating | 4.2% | 7.8% | 4/9/2027 | 70% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 81 | Senior | 10/21/2021 | Blue Bell, PA | 29,932 | 29,932 | Floating | 3.8% | 7.4% | 4/9/2026 | 67% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 82 | Senior | 3/31/2022 | Blue Bell, PA | 29,406 | 29,406 | Floating | 4.2% | 7.8% | 4/9/2026 | 59% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 83 | Senior | 2/26/2019 | Charlotte, NC | 27,084 | 27,084 | Floating | 4.3% | 7.9% | 7/9/2026 | 56% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal top 10 office loans | $ | 444,154 | $ | 443,537 | 16% of total loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 84 | Senior | 12/7/2018 | Carlsbad, CA | 26,728 | 26,350 | Floating | 3.9% | 7.5% | 12/9/2026 | 74% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 85 | Senior | 7/30/2021 | Denver, CO | 23,828 | 23,828 | Floating | 5.0% | 8.7% | 8/9/2026 | 72% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 86 | Senior | 8/27/2019 | San Francisco, CA | 22,716 | 22,716 | Floating | 2.9% | 6.6% | 9/9/2026 | 74% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 87 | Senior | 10/13/2021 | Burbank, CA | 18,216 | 18,216 | Floating | 4.0% | 7.7% | 11/9/2026 | 65% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 88(9) | Mezzanine | 2/13/2023 | Baltimore, MD | 14,895 | 14,895 | n/a(9) | n/a(9) | n/a(9) | 2/9/2027 | 84% - 85% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 89 | Senior | 11/10/2021 | Richardson, TX | 13,362 | 13,320 | Floating | 4.1% | 7.8% | 12/9/2026 | 71% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 90 | Senior | 10/29/2020 | Denver, CO | 10,842 | 10,841 | Floating | 3.7% | 7.4% | 11/9/2026 | 64% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 91(10) | Preferred | 12/12/2025 | Dallas, TX | 1,599 | 1,599 | Fixed | n/a(10) | 15.0% | 12/9/2026 | n/a | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan 92(11) | Preferred | 9/9/2025 | San Francisco, CA | 454 | 454 | Fixed | n/a(11) | 20.0% | 9/9/2026 | n/a | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total/Weighted average office loans | $ | 576,794 | $ | 575,756 | 21% of total loans | 3.9% | 7.6% | 0.7 years | 3.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
52
| 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) | Q1 Risk ranking(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other (Mixed-use) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 93 | Senior | 10/24/2019 | Brooklyn, NY | $ | 79,308 | $ | 79,308 | Floating | 4.2% | 7.8% | 11/9/2026 | 66% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 94 | Senior | 1/13/2022 | New York, NY | 46,090 | 46,090 | Floating | 3.5% | 7.2% | 2/9/2027 | 67% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 95 | Senior | 5/3/2022 | Brooklyn, NY | 28,923 | 28,923 | Floating | 4.4% | 8.0% | 5/9/2027 | 68% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 96 | Senior | 4/3/2024 | South Pasadena, CA | 25,809 | 25,808 | Fixed | 20.0% | 20.0% | 6/9/2026 | 84% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 97 | Senior | 10/8/2025 | Venice, CA | 23,884 | 24,100 | Floating | 4.8% | 8.9% | 10/9/2030 | 67% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 98 | Senior | 8/31/2021 | Los Angeles, CA | 15,888 | 15,888 | Floating | 4.6% | 8.3% | 9/9/2026 | 66% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total/Weighted average other (mixed-use) loans | $ | 219,902 | $ | 220,117 | 8% of total loans | 6.0% | 9.3% | 1.1 years | 3.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Industrial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 99 | Senior | 3/25/2026 | Oklahoma City, OK | $ | 31,727 | $ | 32,087 | Floating | 2.8% | 6.9% | 4/9/2031 | 56% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total/Weighted average industrial loans | $ | 31,727 | $ | 32,087 | 2.8% | 6.9% | 5.0 years | 3.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hotel | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan 100 | Senior | 3/12/2026 | Chicago, IL | $ | 24,427 | $ | 24,700 | Floating | 3.2% | 7.4% | 4/9/2031 | 50% | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total/Weighted average hotel loans | $ | 24,427 | $ | 24,700 | 3.2% | 7.4% | 5.0 years | 3.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total/Weighted average senior and mezzanine loans - Our Portfolio | $ | 2,730,072 | $ | 2,734,215 | 3.4% | 7.2% | 2.2 years | 3.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
_________________________________________
(1)Represents carrying values at our share as of March 31, 2026 and excludes general CECL reserves.
(2)Represents the stated coupon rate for loans; for floating rate loans, does not include Secured Overnight Financing Rate (“SOFR”), which was 3.66% as of March 31, 2026.
(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. Unlevered all-in yield for the loan portfolio assumes the applicable floating benchmark rate as of March 31, 2026 for weighted average calculations.
(4)Senior loans reflect the initial loan amount divided by the as-is appraised value as of the date the loan was originated. Mezzanine loans include attachment loan-to-value and detachment loan-to-value, respectively. Attachment loan-to-value reflects initial funding of loans senior to our position divided by the as-is appraised value as of the date the loan was originated. Detachment loan-to-value reflects the cumulative initial funding of our loan and the loans senior to our position divided by the as-is appraised value as of the date the loan was originated.
(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 March 31, 2026.
(6)Loan 23 was placed on nonaccrual status in January 2026; as such, no income is being recognized. Subsequent to March 31, 2026, Loan 23 was resolved following repayment.
(7)Loans 66-71 have payment-in-kind provisions and accrue interest at 14%.
(8)Loans 72-73 have payment-in-kind provisions and accrue interest at 15%.
(9)Loan 88 was placed on nonaccrual status in April 2024; as such, no income is being recognized.
(10)Loan 91 has a payment-in-kind provision and accrues interest at 15%.
(11)Loan 92 has a payment-in-kind provision and accrues interest at 20%.
53
At March 31, 2026, our general CECL reserve for our outstanding loans and future loan funding commitments is $87.2 million, which is 3.06% of the aggregate commitment amount of our loan portfolio. This represents a decrease of $0.9 million from $88.1 million or 3.15% of the aggregate commitment amount of our loan portfolio at December 31, 2025. The decrease in our general CECL reserves was primarily driven by macroeconomic forecasts offset by specific inputs on certain multifamily and office loans utilized in our general CECL model.
Net Leased and Other Real Estate
We have seven direct investments in CRE 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. Additionally, we have one other real estate investment through a joint venture with one partner. We also own four properties included in other real estate that were acquired through deeds-in-lieu of foreclosure and foreclosure and consolidated two properties after being deemed the primary beneficiary of the variable interest entity holding it.
As of March 31, 2026, $714.7 million or 20.7% of our assets were invested in net leased and other real estate properties and these properties were 86.9% occupied. The following table presents our net leased and other real estate investments as of March 31, 2026 (dollars in thousands):
Count(1) | Carrying Value(2) | NOI for the three months ended March 31, 2026(3) | ||||||||||||||||||
| Net leased real estate | 7 | $ | 313,345 | $ | 7,666 | |||||||||||||||
| Other real estate | 7 | 401,399 | 4,777 | |||||||||||||||||
| Total/Weighted average net leased and other real estate | 14 | $ | 714,744 | $ | 12,443 | |||||||||||||||
________________________________________
(1)Count represents the number of investments.
(2)Represents carrying values at our share as of March 31, 2026; includes real estate tangible assets, deferred leasing costs and other intangible assets.
(3)Refer to “Non-GAAP Supplemental Financial Measures” for further information on NOI.
54
The following table provides asset-level detail of our net leased and other real estate as of March 31, 2026:
| Collateral type | City, State | Number of properties | Rentable square feet (“RSF”) / units/keys(1) | Weighted average % leased(2) | Weighted average lease term (yrs)(3) | Undepreciated net book value(4) | SL Rent Receivable (5) | Principal amount of debt(6) | Final debt maturity date | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net leased real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net lease 1 | Industrial | Various - U.S. | 2 | 2,787,343 RSF | 100% | 12.4 | $ | 92,156 | $ | 14,006 | $ | 200,000 | Sep-33 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net lease 2 | Office | Aurora, CO | 1 | 183,529 RSF | 100% | 1.7 | 26,848 | 283 | 27,771 | Aug-26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net lease 3 | Office | Indianapolis, IN | 1 | 338,000 RSF | 100% | 4.8 | 18,823 | 596 | 20,563 | Oct-27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net lease 4(7)(8) | Retail | Various - U.S. | 7 | 319,600 RSF | 100% | 2.7 | — | 49 | 26,854 | Nov-26 & Mar-28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net lease 5(7) | Retail | Keene, NH | 1 | 45,471 RSF | 100% | 2.8 | — | 33 | 6,399 | Nov-26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net lease 6 | Retail | South Portland, ME | 1 | 52,900 RSF | 100% | 5.8 | 4,730 | 96 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net lease 7(7) | Retail | Fort Wayne, IN | 1 | 50,000 RSF | 100% | 4.4 | — | — | 2,966 | Nov-26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total/Weighted average net leased real estate | 14 | 3,776,843 RSF | 100% | 9.8 | $ | 142,557 | $ | 15,063 | $ | 284,553 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other real estate 1(9) | Hotel | San Jose, CA | 1 | 541 Keys | 72% | n/a | $ | 143,299 | $ | — | $ | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Other real estate 2(7)(10) | Office | Creve Coeur, MO | 7 | 847,604 RSF | 81% | 3.4 | — | 2,988 | 91,690 | Dec-28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other real estate 3(9) | Multifamily | Dallas, TX | 1 | 624 Units | 70% | n/a | 44,791 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other real estate 4(9) | Multifamily/Pre-dev(11) | Santa Clara, CA | 1 | n/a | n/a | n/a | 5,929 | — | 33,831 | Jul-28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other real estate 5 | Multifamily | Arlington, TX | 1 | 436 Units | 69% | n/a | 39,383 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other real estate 6(9) | Multifamily | Fort Worth, TX | 1 | 354 Units | 90% | n/a | 36,942 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other real estate 7 | Multifamily | Mesa, AZ | 1 | 285 Units | 92% | n/a | 31,784 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total/Weighted average other real estate | 13 | n/a | 77% | 3.4 | $ | 302,128 | $ | 2,988 | $ | 125,521 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total net leased and other real estate | 27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
_________________________________________
(1)Rentable square feet based on carrying value at our share as of March 31, 2026.
(2)Represents the percent leased as of March 31, 2026. Weighted average calculation based on carrying value at our share as of March 31, 2026.
(3)Based on in-place leases (defined as occupied and paying leases) as of March 31, 2026, and assumes that no renewal options are exercised. Weighted average calculation based on carrying value at our share as of March 31, 2026.
(4)Represents undepreciated book value at our share net of associated principal amounts of debt at our share as of March 31, 2026. Undepreciated book value per share is a non-GAAP financial measure. Refer to “Undepreciated Book Value Per Share” in “Non-GAAP Supplemental Measures” for further information.
(5)Represents straight line rent receivable as of March 31, 2026. This is included in “Receivables, net” on our consolidated balance sheet.
(6)Represents principal amount of debt at our share as of March 31, 2026.
(7)Represents a property where we recorded impairment during the year ended December 31, 2025 or year ended December 31, 2024. For Net lease 4, three individual properties were impaired.
(8)Net lease 4 consists of two separate mortgage notes.
(9)Property was acquired through foreclosure or deed-in-lieu of foreclosure.
(10)The current maturity date is December 2027, with a one-year extension available, subject to satisfaction of certain customary conditions set forth in the governing documents.
(11)Represents a multifamily construction/development project.
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Results of Operations
The following table summarizes our portfolio results of operations for the three months ended March 31, 2026 and December 31, 2025 (dollars in thousands):
| Three Months Ended March 31, | Three Months Ended December 31, | Q1 ‘26 vs Q4 ‘25 | ||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||||||||||||||||
| Net interest income | ||||||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 49,515 | $ | 49,250 | $ | 265 | ||||||||||||||||||||||||||||||||||||||
| Interest expense | (33,394) | (31,766) | (1,628) | |||||||||||||||||||||||||||||||||||||||||
| Net interest income | 16,121 | 17,484 | (1,363) | |||||||||||||||||||||||||||||||||||||||||
| Property and other income | ||||||||||||||||||||||||||||||||||||||||||||
| Property operating income | 32,654 | 32,587 | 67 | |||||||||||||||||||||||||||||||||||||||||
| Other income | 2,971 | 1,326 | 1,645 | |||||||||||||||||||||||||||||||||||||||||
| Total property and other income | 35,625 | 33,913 | 1,712 | |||||||||||||||||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||||||||||||
| Property operating expense | 20,078 | 19,622 | 456 | |||||||||||||||||||||||||||||||||||||||||
| Transaction, investment and servicing expense | 832 | 651 | 181 | |||||||||||||||||||||||||||||||||||||||||
| Interest expense on real estate | 5,091 | 5,207 | (116) | |||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 8,627 | 7,990 | 637 | |||||||||||||||||||||||||||||||||||||||||
| Increase of current expected credit loss reserve | 1,746 | 15,439 | (13,693) | |||||||||||||||||||||||||||||||||||||||||
| Impairment of operating real estate | — | 7,984 | (7,984) | |||||||||||||||||||||||||||||||||||||||||
| Compensation and benefits | 9,056 | 8,287 | 769 | |||||||||||||||||||||||||||||||||||||||||
| Operating expense | 3,095 | 3,019 | 76 | |||||||||||||||||||||||||||||||||||||||||
| Total expenses | 48,525 | 68,199 | (19,674) | |||||||||||||||||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||||||||||||||||||
| Other gain (loss), net | (4) | 813 | (817) | |||||||||||||||||||||||||||||||||||||||||
| Income (loss) before equity in earnings of unconsolidated ventures and income taxes | 3,217 | (15,989) | 19,206 | |||||||||||||||||||||||||||||||||||||||||
| Income tax expense | (94) | (10) | (84) | |||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 3,123 | $ | (15,999) | $ | 19,122 | ||||||||||||||||||||||||||||||||||||||
Comparison of Three Months Ended March 31, 2026 and Three Months Ended December 31, 2025
Net Interest Income
Interest income
Interest income increased by $0.3 million to $49.5 million for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. The increase was primarily due to $6.0 million related to loan originations and $0.5 million in higher modification fees. This was partially offset by $2.3 million related to loan repayments, $2.2 million due to lower interest rates, $1.0 million related to a mezzanine loan placed on nonaccrual status and $0.9 million related to a loan which was acquired via foreclosure in January 2026. The income associated with this property is now classified as property operating income.
Interest expense
Interest expense increased by $1.6 million to $33.4 million for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. The increase was primarily due to $5.2 million related to the financing of newly originated loans and $0.4 million in higher deferred financing costs. This was partially offset by $1.8 million due to lower interest rates, $1.2 million from paydowns on our Master Repurchase Facilities and $1.2 million related to the net impact of the BRSP 2026-FL3 issuance and the unwinding of the BRSP 2021-FL1 securitization trust.
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Property and other income
Property operating income
Property operating income increased by $0.1 million to $32.7 million for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. The increase was primarily driven by $1.0 million from a property acquired through foreclosure in the first quarter of 2026, $1.0 million in higher revenue from a hotel property and $0.1 million in higher rental income from a multifamily property, partially offset by $2.2 million related to two properties sold during 2025.
Other income
Other income increased by $1.6 million to $3.0 million during the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. The increase was primarily due to $2.2 million of interest income on a one-time tax refund partially offset by $0.3 million in lower money market income.
Expenses
Property operating expense
Property operating expense increased by $0.5 million to $20.1 million for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. The increase was primarily driven by $1.1 million from a property acquired through foreclosure in the first quarter of 2026 and a one-time $0.7 million tax refund recorded during the three months ended December 31, 2025. This was partially offset by $1.5 million from properties sold during 2025.
Transaction, investment and servicing expense
Transaction, investment and servicing expense increased by $0.2 million to $0.8 million for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. The increase was primarily due to higher deal-level expenses incurred during the three months ended March 31, 2026.
Interest expense on real estate
Interest expense on real estate decreased by $0.1 million to $5.1 million for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025 due to quarterly amortization.
Depreciation and amortization
Depreciation and amortization expense increased by $0.6 million to $8.6 million for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. The increase was primarily driven by $2.1 million related to a property acquired through foreclosure in the first quarter of 2026, partially offset by $1.1 million from properties sold during 2025.
Increase of current expected credit loss reserve
During the three months ended March 31, 2026, we recorded an increase in CECL reserves of $1.7 million. The increase in our CECL reserves was driven by a net increase in specific reserves of $2.6 million offset by a net decrease in general CECL reserves of $0.9 million. The increase in specific reserves was primarily related to $2.8 million from one multifamily loan that was resolved in April 2026. The reserves for the multifamily loan were charged off during the three months ended March 31, 2026.
During the three months ended December 31, 2025, we recorded a net increase in CECL reserves of $15.4 million. The increase in our CECL reserves was driven by an increase in specific reserves of $54.9 million partially offset by a net decrease in general CECL reserve of $39.4 million. The increase in specific reserves was related to three multifamily loans, one office loan and one industrial loan, all of which were charged off during the three months ended December 31, 2025.
Impairment of operating real estate
During the three months ended March 31, 2026, we did not record any impairment.
During the three months ended December 31, 2025, we recorded impairment of $7.9 million related to two office properties. The impairment charges were based on the proceeds received from the sales, one of which occurred in December 2025 and the other in March 2026.
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Compensation and benefits
Compensation and benefits increased by $0.8 million to $9.1 million for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. The increase was driven by higher benefit costs of $0.4 million due to the annual reset of 401(k) and Social Security contributions and payroll taxes of $0.2 million related to stock vesting events.
Operating expense
Operating expense increased by $0.1 million to $3.1 million for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025, primarily due to higher third-party costs incurred.
Other income
Other gain (loss), net
We recorded a de minimis other loss, net for the three months ended March 31, 2026. We recorded other gain, net of $0.8 million for the three months ended December 31, 2025 related to the realized gain on sale on one office property.
Income tax expense
Income tax expense increased by $0.1 million to $0.1 million for the three months ended March 31, 2026, as compared to the three months ended December 31, 2025. The increase was related to higher taxable income during the period.
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The following table summarizes our portfolio results of operations for the three months ended March 31, 2026 and March 31, 2025 (dollars in thousands):
| Three Months Ended March 31, | Three Months Ended March 31, | Q1’26 vs Q1’25 | ||||||||||||||||||||||||
| 2026 | 2025 | Amount | ||||||||||||||||||||||||
| Net interest income | ||||||||||||||||||||||||||
| Interest income | $ | 49,515 | $ | 48,086 | $ | 1,429 | ||||||||||||||||||||
| Interest expense | (33,394) | (32,211) | (1,183) | |||||||||||||||||||||||
| Net interest income | 16,121 | 15,875 | 246 | |||||||||||||||||||||||
| Property and other income | ||||||||||||||||||||||||||
| Property operating income | 32,654 | 26,858 | 5,796 | |||||||||||||||||||||||
| Other income | 2,971 | 2,618 | 353 | |||||||||||||||||||||||
| Total property and other income | 35,625 | 29,476 | 6,149 | |||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Property operating expense | 20,078 | 9,966 | 10,112 | |||||||||||||||||||||||
| Transaction, investment and servicing expense | 832 | 629 | 203 | |||||||||||||||||||||||
| Interest expense on real estate | 5,091 | 6,565 | (1,474) | |||||||||||||||||||||||
| Depreciation and amortization | 8,627 | 10,552 | (1,925) | |||||||||||||||||||||||
| Increase (decrease) of CECL reserve | 1,746 | (235) | 1,981 | |||||||||||||||||||||||
| Compensation and benefits | 9,056 | 10,429 | (1,373) | |||||||||||||||||||||||
| Operating expense | 3,095 | 3,214 | (119) | |||||||||||||||||||||||
| Total expenses | 48,525 | 41,120 | 7,405 | |||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||
| Other loss, net | (4) | (241) | 237 | |||||||||||||||||||||||
| Income before income taxes | 3,217 | 3,990 | (773) | |||||||||||||||||||||||
| Income tax expense | (94) | (282) | 188 | |||||||||||||||||||||||
| Net income | $ | 3,123 | $ | 3,708 | $ | (585) | ||||||||||||||||||||
Comparison of Three Months Ended March 31, 2026 and Three Months Ended March 31, 2025
Net Interest Income
Interest income
Interest income increased by $1.4 million to $49.5 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to $13.0 million in loan originations. This was partially offset by $5.1 million related to loan repayments, $2.9 million from loans now classified as real estate, $2.3 million due to lower rates and $0.9 million due to one mezzanine loan placed on nonaccrual status in January 2026.
Interest expense
Interest expense increased by $1.2 million to $33.4 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to $3.7 million related to financing on new originations and $1.2 million related to the net impact of the BRSP 2026-FL3 issuance and the unwinding of the BRSP 2021-FL1 securitization trust following the redemption of all outstanding securities thereunder. This was partially offset by $2.3 million related to lower rates and $1.6 million related to repayments.
Property and other income
Property operating income
Property operating income increased by $5.8 million to $32.7 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to $15.7 million from properties acquired during
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2025 and the first quarter of 2026, partially offset by $8.3 million from two subsidiaries deconsolidated during 2025 and $2.1 million from properties sold during 2025 and the first quarter of 2026.
Other income
Other income increased by $0.4 million to $3.0 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to $2.2 million of interest income on a one-time tax refund offset by $2.1 million in lower money market income.
Expenses
Property operating expense
Property operating expense increased by $10.1 million to $20.1 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to $13.5 million from properties acquired during 2025 and the first quarter of 2026, partially offset by $2.4 million from two subsidiaries deconsolidated during 2025 and $1.5 million from properties sold during 2025 and the first quarter of 2026.
Transaction, investment and servicing expense
Transaction, investment and servicing expense increased by $0.2 million to $0.8 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to higher deal-level expenses incurred.
Interest expense on real estate
Interest expense on real estate decreased by $1.5 million to $5.1 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. This decrease was primarily due to $2.0 million from two subsidiaries deconsolidated during 2025, partially offset by $0.5 million from one property acquired during 2025.
Depreciation and amortization
Depreciation and amortization expense decreased by $1.9 million to $10.6 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was primarily due to $2.6 million from two subsidiaries deconsolidated during 2025, $1.5 million from fully amortized in-place leases at two multifamily properties and $0.6 million from properties sold during 2025 and first quarter of 2026, partially offset by $3.0 million from properties acquired during 2025 and first quarter of 2026.
Increase (decrease) of current expected credit loss reserve
During the three months ended March 31, 2026, we recorded an increase in CECL reserves of $1.7 million. The increase in our CECL reserves was driven by a net increase in specific reserves of $2.6 million offset by a net decrease in general CECL reserves of $0.9 million. The increase in specific reserves was primarily related to $2.8 million from one multifamily loan that was resolved in April 2026. The reserves for the multifamily loan were charged off during the three months ended March 31, 2026.
During the three months ended March 31, 2025, we recorded a decrease in CECL reserves of $0.2 million. The decrease in our CECL reserves was driven by a net decrease in general reserves of $9.0 million offset by a net increase in specific reserves of $8.8 million. The increase in specific reserves was related to $9.2 million from one multifamily loan following its resolution during the quarter offset by a $0.4 million reversal of specific CECL from the receipt of additional proceeds received from a previously resolved loan.
Compensation and benefits
Compensation and benefits decreased by $1.4 million to $9.1 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was primarily driven by $1.3 million in stock compensation expense following a one-time vesting event in March 2025.
Operating expense
Operating expense decreased by $0.1 million to $3.1 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to lower third-party costs incurred.
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Other income (loss)
Other loss, net
Other loss, net decreased by $0.2 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. We recorded a $0.2 million realized loss on sale of an office property during the three months ended March 31, 2025.
Income tax expense
Income tax expense decreased by $0.2 million to $0.1 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was primarily due to $0.3 million from a subsidiary deconsolidated during 2025.
Non-GAAP Supplemental Financial Measures
Distributable Earnings
We present Distributable Earnings, which is a non-GAAP supplemental financial measure of our performance. We believe that Distributable Earnings provides meaningful information to consider in addition to our net income and cash flow from operating activities determined in accordance with GAAP, and this metric is a useful indicator for investors in evaluating and comparing our operating performance to our peers and our ability to pay dividends. We elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, beginning with our taxable year ended December 31, 2018. As a REIT, we are required to distribute substantially all of our taxable income and we believe that dividends are one of the principal reasons investors invest in credit or commercial mortgage REITs such as our company. Over time, Distributable Earnings has been a useful indicator of our dividends per share and we consider that measure in determining the dividend, if any, to be paid. This supplemental financial measure also helps us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current portfolio and operations.
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. For clauses (viii) and (ix), such exclusions shall only be applied after approval by a majority of our independent directors. Distributable Earnings include specific CECL reserves.
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. We believe Adjusted Distributable Earnings is a useful indicator for investors to further evaluate and compare our operating performance to our peers and our ability to pay dividends, net of the impact of any gains or losses on assets sales or fair value adjustments, as described above.
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. In addition, our methodology for calculating Distributable Earnings and Adjusted Distributable Earnings may differ from methodologies employed by other companies to calculate the same or similar non-GAAP supplemental financial measures, and accordingly, our reported Distributable Earnings and Adjusted Distributable Earnings may not be comparable to the Distributable Earnings and Adjusted Distributable Earnings reported by other companies.
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The following tables present a reconciliation of net income 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 three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Net income attributable to BrightSpire Capital, Inc. common stockholders | $ | 4,845 | $ | 5,342 | ||||||||||||||||
| Net income per common share - basic | $ | 0.03 | $ | 0.04 | ||||||||||||||||
| Net income per common share - diluted | $ | 0.03 | $ | 0.04 | ||||||||||||||||
| Adjustments: | ||||||||||||||||||||
| Non-cash equity compensation expense | 2,918 | 4,213 | ||||||||||||||||||
| Depreciation and amortization | 8,763 | 10,748 | ||||||||||||||||||
| Net unrealized loss (gain): | ||||||||||||||||||||
| Other unrealized loss on investments | — | 2 | ||||||||||||||||||
| General CECL reserves | (889) | (9,018) | ||||||||||||||||||
| Loss on sales of real estate, preferred equity and investments in unconsolidated joint ventures | 4 | 239 | ||||||||||||||||||
| Adjustments related to noncontrolling interests | (73) | (172) | ||||||||||||||||||
| Distributable Earnings attributable to BrightSpire Capital, Inc. common stockholders | $ | 15,568 | $ | 11,354 | ||||||||||||||||
Distributable Earnings per share(1) | $ | 0.12 | $ | 0.09 | ||||||||||||||||
| Adjustments: | ||||||||||||||||||||
| Specific CECL reserves | $ | 2,634 | $ | 8,782 | ||||||||||||||||
| Adjusted Distributable Earnings attributable to BrightSpire Capital, Inc. common stockholders | $ | 18,202 | $ | 20,136 | ||||||||||||||||
Adjusted Distributable Earnings per share(1) | $ | 0.14 | $ | 0.16 | ||||||||||||||||
Weighted average number of shares of Class A common stock(1) | 128,921 | 129,860 | ||||||||||||||||||
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(1)We calculate Distributable Earnings per share, and Adjusted Distributable Earnings per share, non-GAAP financial measures, based on a weighted-average number of common shares.
Undepreciated Book Value Per Share
We believe that presenting Undepreciated Book Value per share is a more useful and consistent measure of the value of our current portfolio and operations for our investors as it enhances the comparability to our peers who do not hold similar real estate investments. Undepreciated Book Value per share excludes our share of accumulated depreciation and amortization on real estate investments (including related intangible assets and liabilities) and as of the quarter ended June 30, 2024, includes non-GAAP impairment of real estate and any related foreign currency translation. Non-GAAP impairment of real estate is a non-GAAP measure that reflects our share of a property’s carrying value on certain net leased and other real estate office properties whose non-recourse mortgages have matured or who have been placed in a cash flow sweep by their lender. Our ability to refinance at their maturity dates is burdened by the current interest rate environment, lenders’ aversion to finance or refinance office properties and/or associated improvements or paydowns potentially demanded at such properties. Loan maturity defaults can and have led to foreclosures. Cash flow sweeps restrict our ability to utilize earnings generated by a property. As such, we believe it is prudent to recognize impairments and exclude our share of the carrying value related to these properties.
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The following table calculates our GAAP book value per share and Undepreciated Book Value per share ($ in thousands, except per share data):
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||
| Stockholders’ equity excluding noncontrolling interests in investment entities | $ | 917,918 | $ | 938,432 | ||||||||||||||||
| Accumulated depreciation and amortization | 186,777 | 180,937 | ||||||||||||||||||
| Non-GAAP impairment of real estate | (31,712) | (33,617) | ||||||||||||||||||
| Undepreciated Book Value | $ | 1,072,983 | $ | 1,085,752 | ||||||||||||||||
| GAAP book value per share | $ | 7.05 | $ | 7.30 | ||||||||||||||||
| Accumulated depreciation and amortization per share | 1.43 | 1.41 | ||||||||||||||||||
| Non-GAAP impairment of real estate | (0.24) | (0.26) | ||||||||||||||||||
Undepreciated Book Value per share(1) | $ | 8.24 | $ | 8.44 | ||||||||||||||||
| Total outstanding shares - Class A common stock | 130,278 | 128,627 | ||||||||||||||||||
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(1)Per share data may differ due to rounding.
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Impairment attributable to BrightSpire Capital, Inc. | $ | — | $ | 61,620 | ||||||||||
| Adjustments: | ||||||||||||||
| Current year non-GAAP impairment of operating real estate | (1,905) | (100,961) | ||||||||||||
| Non-GAAP impairment as of prior fiscal year-end | 33,617 | 134,578 | ||||||||||||
| Impairment attributable to BrightSpire Capital, Inc. | — | (61,620) | ||||||||||||
| Non-GAAP impairment of real estate | $ | 31,712 | $ | 33,617 | ||||||||||
NOI
We believe NOI to be a useful measure of operating performance of our net leased and other real estate portfolios as they are more closely linked to the direct results of operations at the property level. NOI excludes historical cost depreciation and amortization, which are based on different useful life estimates depending on the age of the properties, as well as adjustments for the effects of real estate impairment and gains or losses on sales of depreciated properties, which eliminate differences arising from investment and disposition decisions. 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. However, the exclusion of these items as well as others, such as capital expenditures and leasing costs, which are necessary to maintain the operating performance of the Company’s properties, and transaction costs and administrative costs, may limit the usefulness of NOI. NOI may fail to capture significant trends in these components of GAAP net income (loss) which further limits its usefulness.
NOI should not be considered as an alternative to net income (loss), determined in accordance with GAAP, as an indicator of operating performance. 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.
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The following tables present a reconciliation of net income 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 three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | ||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||
| Net income attributable to BrightSpire Capital, Inc. common stockholders | $ | 4,845 | $ | 5,342 | ||||||||||||||||
| Adjustments: | ||||||||||||||||||||
Net income attributable to non-net leased and other real estate portfolios(1) | (4,218) | (6,287) | ||||||||||||||||||
| Net loss attributable to noncontrolling interests in investment entities | (1,722) | (1,634) | ||||||||||||||||||
| Amortization of above-and below-market lease intangibles | (12) | 59 | ||||||||||||||||||
| Net interest expense | 12 | 39 | ||||||||||||||||||
| Interest expense on real estate | 5,091 | 7,940 | ||||||||||||||||||
| Other income | (38) | (34) | ||||||||||||||||||
| Transaction, investment and servicing expense | 29 | 38 | ||||||||||||||||||
| Depreciation and amortization | 8,594 | 10,519 | ||||||||||||||||||
| Operating expense | 3 | 1 | ||||||||||||||||||
| Other (gain) loss on investments, net | (19) | 742 | ||||||||||||||||||
| Income tax expense | — | 254 | ||||||||||||||||||
| NOI attributable to noncontrolling interest in investment entities | (122) | (267) | ||||||||||||||||||
| Total NOI attributable to BrightSpire Capital, Inc. common stockholders | $ | 12,443 | $ | 16,712 | ||||||||||||||||
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(1)Net income 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.
Liquidity and Capital Resources
Overview
Our material cash commitments include commitments to repay borrowings, finance our assets and operations, meet future funding obligations, make distributions to our stockholders and fund other general business needs. We use significant cash to make investments, meet commitments to existing investments, repay the principal of and interest on our borrowings and pay other financing costs, make distributions to our stockholders and fund our operations.
Our primary sources of liquidity include cash on hand, cash generated from our operating activities and cash generated from asset sales and investment maturities. However, subject to maintaining our qualification as a REIT and our Investment Company Act exclusion, we may use several sources to finance our business, including bank credit facilities (including term loans and revolving facilities), Master Repurchase Facilities and securitizations, as described below. 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.
Financing Strategy
We have a multi-pronged financing strategy that includes an up to $120.0 million secured revolving credit facility, up to approximately $2.4 billion in secured revolving repurchase facilities, $1.4 billion in non-recourse securitization financing, $381.1 million in commercial mortgages and $33.8 million in other asset-level financing structures, in each case, as of March 31, 2026.
In addition, we may use other forms of financing, including warehouse facilities, public and private secured and unsecured debt issuances and equity or equity-related securities issuances by us or our subsidiaries. We may also finance a portion of our investments through the syndication of one or more interests in a whole loan. We will seek to match the nature and duration of the financing with the underlying asset’s cash flow, including using hedges, as appropriate.
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Debt-to-Equity Ratio
The following table presents our debt-to-equity ratio:
| March 31, 2026 | December 31, 2025 | |||||||||||||
Debt-to-equity ratio(1) | 2.7x | 2.6x | ||||||||||||
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(1)Represents (i) total consolidated outstanding secured debt less cash and cash equivalents of $96.6 million and $66.8 million at March 31, 2026 and December 31, 2025, respectively to (ii) total equity, in each case, at period end.
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. 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. Additionally, due to the current market conditions, warehouse lenders may take a more conservative stance by increasing funding costs, which may lead to margin calls.
Our primary sources of liquidity include borrowings available under our credit facilities, Master Repurchase Facilities and monthly mortgage payments from our borrowers.
Bank Credit Facilities
We use bank credit facilities (including term loans and revolving facilities) to finance our business. These financings may be collateralized or non-collateralized and may involve one or more lenders. Credit facilities typically have maturities ranging from two to five years and may accrue interest at either fixed or floating rates.
The OP (together with certain subsidiaries of the OP from time-to-time party thereto as borrowers, collectively, the “Borrowers”) is party to an Amended and Restated Credit Agreement (as amended to date, the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), and the several lenders from time to time party thereto (the “Lenders”). The Amended Credit Agreement provides for a revolving credit facility in the aggregate principal amount of up to $120.0 million, of which up to $25.0 million is available as letters of credit.
Loans under the Amended Credit Agreement may be advanced in U.S. dollars and certain foreign currencies, including euros, pounds sterling and Swiss francs.
The Amended Credit Agreement also includes an option for the Borrowers to increase the maximum available principal amount to up to $180.0 million, subject to one or more new or existing Lenders agreeing to provide such additional loan commitments and satisfaction of other customary conditions.
Advances under the Amended Credit Agreement accrue interest at a per annum rate equal to, at the applicable Borrower’s election, either (x) a Term SOFR rate plus a margin of 2.25%, or (y) a base rate equal to the highest of (i) the Wall Street Journal’s prime rate, (ii) the federal funds rate plus 0.50% and (iii) the Term SOFR rate plus 1.00%, plus a margin of 1.25%. An unused commitment fee at a rate of 0.25% or 0.35%, per annum, depending on the amount of facility utilization, applies to unutilized borrowing capacity under the Amended Credit Agreement. Amounts owed under the Amended Credit Agreement may be prepaid at any time without premium or penalty, subject to customary breakage costs in the case of borrowings with respect to which a Term SOFR rate election is in effect.
The maximum amount available for borrowing at any time under the Amended Credit Agreement is limited to a borrowing base valuation of certain investment assets, with the valuation of such investment assets generally determined according to a percentage of adjusted net book value. As of March 31, 2026, the borrowing base valuation is sufficient to permit borrowings of up to the entire $120.0 million commitment. 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 ability to borrow new amounts under the Amended Credit Agreement terminates and any outstanding revolving loans will mature on December 8, 2028.
The obligations of the Borrowers under the Amended 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 (as such terms are defined in the Guarantee and Collateral Agreement) in which the proceeds of investment asset distributions are maintained.
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The Amended Credit Agreement contains various affirmative and negative covenants, including, among other things, the obligation of the Company to maintain REIT status and be listed on the New York Stock Exchange or any other U.S. national or international securities exchange, and limitations on debt, liens and restricted payments. In addition, the Amended Credit Agreement includes the following financial covenants applicable to the OP and its consolidated subsidiaries: (a) minimum consolidated tangible net worth of the OP to be greater than or equal to the sum of (i) $900,000,000 and (ii) 70% of the net cash proceeds received by the OP from any offering of its common equity after December 9, 2025 and of the net cash proceeds from any offering by the Company of its common equity to the extent such proceeds are contributed to the OP, excluding any such proceeds that are contributed to the OP within ninety (90) days of receipt and applied to acquire capital stock of the OP; (b) the OP’s EBITDA plus lease expenses to fixed charges for any period of four consecutive fiscal quarters not less than 1.40 to 1.00; (c) the OP’s minimum interest coverage ratio to be not less than 3.00 to 1.00; and (d) the OP’s ratio of consolidated total debt to consolidated total assets must not exceed 0.80 to 1.00. The Amended Credit Agreement also includes customary events of default, including, among other things, failure to make payments when due, breach of covenants or representations, cross default to material indebtedness, material judgment defaults, bankruptcy matters involving any Borrower or any Guarantor and certain change of control events. The occurrence of an event of default will limit the ability of the OP and its subsidiaries to make distributions and may result in the termination of the credit facility, acceleration of repayment obligations and the exercise of remedies by the Lenders with respect to the collateral.
As of March 31, 2026, the Company was in compliance with all of its financial covenants under the Amended Credit Agreement.
Master Repurchase Facilities
Currently, our primary sources of financing the origination of first mortgage loans and senior loan participations secured by senior loan investments are our repurchase agreements with multiple global financial institutions (each, a “Master Repurchase Facility” and collectively, the “Master Repurchase Facilities”). 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. Under these agreements, we sell our loans to a counterparty and agree to repurchase the same loans from the counterparty at a price equal to the original sales price plus an interest factor. During the term of a repurchase agreement, we receive the principal and interest on the related loans and pay interest to the lender under the master repurchase agreement. We intend to maintain formal relationships with multiple counterparties to obtain master repurchase financing.
The following table presents a summary of our Master Repurchase Facilities and Bank Credit Facility as of March 31, 2026 (dollars in thousands):
| Maximum Facility Size | Current Borrowings | Weighted Average Final Maturity (Years) | Weighted Average Interest Rate(1) | |||||||||||||||||||||||
| Master Repurchase Facilities | ||||||||||||||||||||||||||
| Bank 1 | $ | 600,000 | $ | 341,594 | 1.0 | SOFR + 2.42% | ||||||||||||||||||||
| Bank 2 | 600,000 | — | 4.0 | n/a | ||||||||||||||||||||||
| Bank 3 | 500,000 | 224,445 | 4.2 | SOFR + 1.77% | ||||||||||||||||||||||
| Bank 4 | 400,000 | 85,646 | 3.6 | SOFR + 1.64% | ||||||||||||||||||||||
| Bank 5 | 250,000 | 120,642 | 4.9 | SOFR + 2.25% | ||||||||||||||||||||||
| Total Master Repurchase Facilities | 2,350,000 | 772,327 | ||||||||||||||||||||||||
| Bank Credit Facility | 120,000 | — | 2.7 | SOFR + 2.25% | ||||||||||||||||||||||
| Total Facilities | $ | 2,470,000 | $ | 772,327 | ||||||||||||||||||||||
(1)All facilities utilize Term SOFR at March 31, 2026.
The following table presents the quarterly average unpaid principal balance (“UPB”), end of period UPB and the maximum UPB at any month-end related to our Master Repurchase Facilities and Bank Credit Facility (dollars in thousands):
| Quarter Ended | Quarterly Average UPB | End of Period UPB | Maximum UPB at Any Month-End | |||||||||||||||||
| March 31, 2026 | $ | 925,213 | $ | 772,327 | $ | 1,190,049 | ||||||||||||||
| December 31, 2025 | 928,385 | 1,078,098 | 1,078,098 | |||||||||||||||||
| September 30, 2025 | 784,202 | 778,671 | 823,583 | |||||||||||||||||
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| June 30, 2025 | 761,613 | 789,729 | 791,532 | |||||||||||||||||
| March 31, 2025 | 759,339 | 733,494 | 818,603 | |||||||||||||||||
The decrease in our end of period UPB from December 31, 2025 to March 31, 2026 was driven by financing paydowns and the issuance of BRSP 2026-FL3.
Securitizations
We may seek to utilize non-recourse long-term securitizations of our investments in mortgage loans, especially loan originations, to the extent consistent with the maintenance of our REIT qualification and exclusion from the Investment Company Act in order to generate cash for funding new investments. This would involve conveying a pool of assets to a special purpose vehicle (or the issuing entity), which would issue one or more classes of non-recourse notes pursuant to the terms of an indenture. The notes would be secured by the pool of assets. In exchange for the transfer of assets to the issuing entity, we would receive the cash proceeds on the sale of non-recourse notes and a 100% interest in the equity of the issuing entity. The securitization of our portfolio investments might magnify our exposure to losses on those portfolio investments because any equity interest we retain in the issuing entity would be subordinate to the notes issued to investors and we would, therefore, absorb all of the losses sustained with respect to a securitized pool of assets before the owners of the notes experience any losses.
BRSP 2021-FL1
On February 19, 2026, we redeemed the outstanding securities under the securitization vehicle operated through wholly-owned subsidiaries BRSP 2021-FL1, Ltd and BRSP 2021-FL1, LLC (collectively, “BRSP 2021-FL1”), including the investment grade notes issued thereunder, at a redemption price of $310.7 million. The 17 senior loan investments, with an aggregate unpaid principal balance of $440.8 million, held by BRSP 2021-FL1 were refinanced by the issuance of securities under BRSP 2026-FL3 and with existing Master Repurchase Facilities.
BRSP 2024-FL2
BRSP 2024-FL2 is a $675.0 million securitization vehicle operated through wholly-owned subsidiaries, BRSP 2024-FL2, Ltd. and BRSP 2024-FL2, LLC (collectively, “BRSP 2024-FL2”), which have issued $583.9 million of investment grade notes (the “2024-FL2 Notes”).
BRSP 2024-FL2 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. At March 31, 2026, we had $675.0 million of unpaid principal balance of CRE debt investments financed with BRSP 2024-FL2. As of March 31, 2026, 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 27 senior loan investments.
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. We did not fail any note protection tests during the three months ended March 31, 2026. While we continue to closely monitor all loan investments contributed to BRSP 2024-FL2, a deterioration in the performance of an underlying loan could negatively impact its liquidity position.
BRSP 2026-FL3
In February 2026, we executed a $955.0 million securitization transaction through wholly-owned subsidiaries, BRSP 2026-FL3, Ltd. and BRSP 2026-FL3, LLC (collectively, “BRSP 2026-FL3”), which resulted in the sale of $833.2 million of investment grade notes (the “2026-FL3 Notes”).
BRSP 2026-FL3 includes a six-month ramp-up acquisition period that allows us to contribute existing or newly originated loan investments in exchange for $98.3 million in unused proceeds held in BRSP 2026-FL3, subject to the satisfaction of certain conditions set forth in the indenture. At March 31, 2026, the unused proceeds have been fully utilized. BRSP 2026-FL3 also includes a 30-month reinvestment feature that allows us to contribute existing or newly originated loan investments in exchange for proceeds from repayments of loans held in BRSP 2026-FL3, subject to the satisfaction of certain conditions set forth in the indenture.
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At March 31, 2026, we had $955.0 million of unpaid principal balance of CRE debt investments financed with BRSP 2026-FL3. As of March 31, 2026, the securitization reflects an advance rate of 87.3% at a weighted average cost of funds of Term SOFR plus 1.69% (before transaction costs), and is collateralized by a pool of 32 senior loan investments.
Additionally, BRSP 2026-FL3 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. We did not fail any note protection tests during the three months ended March 31, 2026. While we continue to closely monitor all loan investments contributed to BRSP 2026-FL3, a deterioration in the performance of an underlying loan could negatively impact its liquidity position.
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.
Liquidity Needs
In addition to our loan origination activity and general operating expenses, our primary liquidity needs include interest and principal payments under our Bank Credit Facility, securitization bonds, and secured debt. Information concerning our contractual obligations and commitments to make future payments, including our commitments to repay borrowings, is included in the following table as of March 31, 2026. This table excludes our obligations that are not fixed and determinable (dollars in thousands):
| Payments Due by Period | ||||||||||||||||||||||||||||||||
| Total | Less than a Year | 1-3 Years | 3-5 Years | More than 5 Years | ||||||||||||||||||||||||||||
Bank credit facility(1) | $ | 825 | $ | 413 | $ | 412 | $ | — | $ | — | ||||||||||||||||||||||
Secured debt(2) | 1,314,085 | 750,629 | 320,790 | 19,080 | 223,586 | |||||||||||||||||||||||||||
Securitization bonds payable(3) | 1,586,628 | 742,477 | 774,380 | 69,771 | — | |||||||||||||||||||||||||||
Ground lease obligations(4) | 22,256 | 3,128 | 5,507 | 3,657 | 9,964 | |||||||||||||||||||||||||||
| Office leases | 4,062 | 1,194 | 2,435 | 433 | — | |||||||||||||||||||||||||||
| $ | 2,927,856 | $ | 1,497,841 | $ | 1,103,524 | $ | 92,941 | $ | 233,550 | |||||||||||||||||||||||
Lending commitments(5) | 117,344 | |||||||||||||||||||||||||||||||
| Total | $ | 3,045,200 | ||||||||||||||||||||||||||||||
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(1)Future interest payments were estimated based on the applicable index at March 31, 2026 and unused commitment fee of 0.25% per annum, assuming principal is repaid on the current maturity date of January 2027.
(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 March 31, 2026.
(3)The timing of future principal payments was estimated based on expected future cash flows of underlying collateral loans. Repayments are estimated to be earlier than contractual maturity only if proceeds from underlying loans are repaid by the borrowers.
(4)The amounts represent minimum future base rent commitments through initial expiration dates of the respective noncancellable operating ground leases, excluding any contingent rent payments. Rents paid under ground leases are recoverable from tenants.
(5)Future lending commitments may be subject to certain conditions that borrowers must meet to qualify for such fundings. Commitment amount assumes future fundings meet the terms to qualify for such fundings.
Share Repurchases
In April 2026, 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, 2027. The Stock Repurchase Program replaces the prior stock repurchase program authorization which was set to expire on April 30, 2026. 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. 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.
During the three months ended March 31, 2026, we did not repurchase any shares of Class A common stock. As of March 31, 2026, there was $40.2 million remaining available to make repurchases under the prior stock repurchase program.
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Cash Flows
The following presents a summary of our consolidated statements of cash flows for the three months ended March 31, 2026 and 2025 (dollars in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| Cash flow provided by (used in): | 2026 | 2025 | Change | |||||||||||||||||||||||
| Operating activities | $ | 10,928 | $ | 10,501 | $ | 427 | ||||||||||||||||||||
| Investing activities | (89,508) | 13,607 | (103,115) | |||||||||||||||||||||||
| Financing activities | 94,021 | (183,406) | 277,427 | |||||||||||||||||||||||
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. This is partially offset by payment of interest expenses for master repurchase and 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.
Our operating activities provided net cash inflows of $10.9 million and $10.5 million for the three months ended March 31, 2026 and 2025, respectively. Net cash provided by operating activities increased for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to higher net interest income recorded during the three months ended March 31, 2026.
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.
Investing activities used net cash of $89.5 million for the three months ended March 31, 2026. Net cash used in investing activities during the three months ended March 31, 2026 resulted primarily from origination and fundings on our loans and preferred equity held for investment, net of $270.4 million, partially offset by repayments on loans and preferred equity held for investment, net of $169.9 million and proceeds from the sale of real estate of $25.8 million.
Investing activities generated net cash inflows of $13.6 million for the three months ended March 31, 2025. Net cash provided by investing activities for the three months ended March 31, 2025 resulted primarily from repayments on loans and preferred equity held for investment, net of $133.0 million partially offset by the origination and fundings on our loans and preferred equity held for investment, net of $112.6 million and the change in escrow deposit activity of $9.9 million.
Financing Activities
We finance our investing activities largely through borrowings secured by our investments along with capital from third party investors. We also have the ability to raise capital in the public markets through issuances of common stock, as well as draws upon our corporate credit facility and master repurchase facilities, to finance our investing and operating activities. Accordingly, we incur cash outlays for payments on third party debt and dividends to our common stockholders.
Financing activities generated net cash of $94.0 million for the three months ended March 31, 2026, which resulted primarily from borrowings from securitization bonds of $833.2 million and borrowings from master repurchase and credit facilities of $594.4 million, partially offset by repayment of master repurchase and credit facilities of $900.2 million, repayment of securitization bonds of $398.2 million and distributions paid on common stock of $21.9 million.
Financing activities used net cash of $183.4 million for the three months ended March 31, 2025, which resulted primarily from payment of securitization bonds of $104.3 million, repayment of master repurchase and credit facilities of $100.9 million and distributions paid on common stock of $20.7 million partially offset by borrowings from master repurchase and credit facilities of $49.2 million.
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Our Investment Strategy
Our objective is to generate consistent and attractive risk-adjusted returns to our stockholders. We seek to achieve this objective primarily through cash distributions and the preservation of invested capital. We believe our investment strategy provides flexibility through economic cycles to achieve attractive risk-adjusted returns. This approach is driven by a disciplined investment strategy, focused on:
•leveraging long standing relationships, our organizational structure and the experience of our team;
•the underlying real estate and market dynamics to identify investments with attractive risk-return profiles;
•primarily originating and structuring CRE senior loans and selective investments in mezzanine loans and preferred equity with attractive return profiles relative to the underlying value and financial operating performance of the real estate collateral, given the strength and quality of the sponsorship;
•structuring transactions with a prudent amount of leverage, if any, given the risk of the underlying asset’s cash flows, attempting to match the structure and duration of the financing with the underlying asset’s cash flows, including through the use of hedges, as appropriate; and
•operating our net leased real estate investments in an efficient and profitable manner, enhancing property value through proactive capital improvements and leasing strategies, and pursuing sale transactions to capture appreciation.
The period for which we intend to hold our investments will vary depending on the type of asset, interest rates, investment performance, micro and macro real estate environment, capital markets and credit availability, among other factors. We generally expect to hold debt investments until the stated maturity and equity investments in accordance with each investment’s proposed business plan. We may sell all or a partial ownership interest in an investment before the end of the expected holding period if we believe that market conditions have maximized its value to us, or the sale of the asset would otherwise be in the best interests of our stockholders.
Our investment strategy is flexible, enabling us to adapt to shifts in economic, real estate and capital market conditions and to exploit market inefficiencies. We may expand or change our investment strategy or target assets over time in response to opportunities available in different economic and capital market conditions. This flexibility in our investment strategy allows us to employ a customized, solutions-oriented approach, which we believe is attractive to borrowers and tenants. We believe that our diverse portfolio, our ability to originate, acquire and manage our target assets and the flexibility of our investment strategy positions us to capitalize on market inefficiencies and generate attractive long-term risk-adjusted returns for our stockholders through a variety of market conditions and economic cycles.
Underwriting, Asset and Risk Management
We closely monitor our portfolio and actively manage risks associated with, among other things, our assets and interest rates. Prior to investing in any particular asset, the underwriting team, in conjunction with third party providers, undertakes a rigorous asset-level due diligence process, involving intensive data collection and analysis, to ensure that we understand fully the state of the market and the risk-reward profile of the asset. Beginning in 2021, our investment and portfolio management and risk assessment practices diligence the sustainability and other 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 engagement and belonging practices in workforce leadership, composition and hiring practices. Prior to making a final investment decision, we focus on portfolio diversification to determine whether a target asset will cause our portfolio to be too heavily concentrated with, or cause too much risk exposure to, any one borrower, real estate sector, geographic region, source of cash flow for payment or other geopolitical issues. If we determine that a proposed acquisition presents excessive concentration risk, we may determine not to acquire an otherwise attractive asset.
For each asset that we acquire, our asset management team engages in active management of the asset, the intensity of which depends on the attendant risks. The asset manager works collaboratively with the underwriting team to formulate a strategic plan for the particular asset, which includes evaluating the underlying collateral and updating valuation assumptions to reflect changes in the real estate market and the general economy. This plan also generally outlines several strategies for the asset to extract the maximum amount of value from each asset under a variety of market conditions. 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. We continuously track the progress of an asset against the original business plan to ensure that the attendant risks of continuing to own the asset do not outweigh the associated rewards. Under these circumstances, certain assets will require intensified asset management in order to achieve optimal value realization.
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Our asset management team engages in a proactive and comprehensive on-going review of the credit quality of each asset it manages. In particular, for debt investments on at least an annual basis, the asset management team will evaluate the financial wherewithal of individual borrowers to meet contractual obligations as well as review the financial stability of the assets securing such debt investments. Further, there is ongoing review of borrower covenant compliance including the ability of borrowers to meet certain negotiated debt service coverage ratios and debt yield tests. For equity investments, the asset management team, with the assistance of third-party property managers, monitors and reviews key metrics such as occupancy, same-store sales, tenant payment rates, property budgets and capital expenditures. If through this analysis of credit quality, the asset management team encounters declines in credit quality not in accordance with the original business plan, the team evaluates the risks and determines what changes, if any, are required to the business plan to ensure that the attendant risks of continuing to hold the investment do not outweigh the associated rewards.
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.
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. Substantially all of the leases at our multifamily properties allow for monthly or annual rent increases which provide us with the opportunity to achieve increases, where justified by the market, as each lease matures. Such types of leases generally minimize the risks of inflation on our multifamily properties.
Refer to Item 3, “Quantitative and Qualitative Disclosures About Market Risk” for additional details.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, which requires the use of estimates and assumptions that involve the exercise of judgment and that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. There have been no material changes to our critical accounting estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Recent Accounting Updates
For recent accounting updates, refer to Note 2, “Summary of Significant Accounting Policies” in our accompanying consolidated financial statements included in Part I, Item 1, “Financial Statements.”
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our primary market risks are interest rate risk, prepayment risk, extension risk, credit risk, real estate market risk, capital market risk and foreign currency risk, either directly through the assets held or indirectly through investments in unconsolidated ventures.
Interest Rate Risk
Interest rate risk relates to the risk that the future cash flow of a financial instrument will fluctuate because of changes in market interest rates. Interest rate risk is highly sensitive to many factors, including governmental, monetary and tax policies, domestic and international economic and political considerations, international conflicts, inflation and other factors beyond our control. Credit curve spread risk is highly sensitive to the dynamics of the markets for loans and securities we hold. Excessive supply of these assets combined with reduced demand will cause the market to require a higher yield. This demand for higher yield will cause the market to use a higher spread over the U.S. Treasury securities yield curve, or other benchmark interest rates, to value these assets.
As U.S. Treasury securities are priced to a higher yield and/or the spread to U.S. Treasuries used to price the assets increases, the price at which we could sell some of our fixed rate financial assets may decline. Conversely, as U.S. Treasury securities are priced to a lower yield and/or the spread to U.S. Treasuries used to price the assets decreases, the value of our fixed rate financial assets may increase. Fluctuations in SOFR may affect the amount of interest income we earn on our floating rate borrowings and interest expense we incur on borrowings indexed to SOFR, including under credit facilities and investment-level financing.
We have utilized, and in the future may 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
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our operations. 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. Moreover, with respect to certain of the instruments used as hedges, there is exposure to the risk that the counterparties may cease making markets and quoting prices in such instruments, which may inhibit the ability to enter into an offsetting transaction with respect to an open position. Our profitability may be adversely affected during any period as a result of changing interest rates. At March 31, 2026, we held no derivative instruments.
As of March 31, 2026, 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 $0.5 million annually, net of interest expense.
See the “Factors Impacting Our Operating Results” section in “Item 2. 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. As prepayments of principal are received, any premiums paid on such assets are amortized against interest income, while any discounts on such assets are accreted into interest income. Therefore, an increase in prepayment rates has the following impact: (i) accelerates amortization of purchase premiums, which reduces interest income earned on the assets; and conversely, (ii) accelerates accretion of purchase discounts, which increases interest income earned on the assets.
Extension risk
The weighted average life of assets is projected based on assumptions regarding the rate at which borrowers will prepay or extend their mortgages. If prepayment rates decrease or extension options are exercised by borrowers at a rate that deviates significantly from projections, the life of fixed rate assets could extend beyond the term of the secured debt agreements. This in turn could negatively impact liquidity to the extent that assets may have to be sold and losses may be incurred as a result.
Credit risk
Investment in loans held for investment is subject to a high degree of credit risk through exposure to loss from loan defaults. 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. 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.
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 sustainability standards and practices among other factors. We 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. 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.
Our in-depth understanding of CRE and real estate-related investments, and in-house underwriting, asset management and resolution capabilities, provides us and management with a sophisticated full-service platform to regularly evaluate our investments and determine primary, secondary or alternative strategies to manage the credit risks described above. This includes intermediate servicing and complex and creative negotiating, restructuring of non-performing investments, foreclosure considerations, intense management or development of owned real estate, in each case to manage the risks faced to achieve value realization events in our interests and our stockholders. Solutions considered may include defensive loan or lease modifications, temporary interest or rent deferrals or forbearances, converting current interest payment obligations to payment-in-kind, repurposing reserves and/or covenant waivers. Depending on the nature of the underlying investment and credit risk, we may pursue repositioning strategies through judicious capital investment in order to extract value from the investment or limit losses.
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.
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Real estate market risk
We are exposed to the risks generally associated with the commercial real estate market. 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. This in turn could impact the performance of tenants and borrowers. We seek to manage these risks through our underwriting due diligence and asset management processes and the solutions-oriented process described above.
Capital markets risk
We are exposed to risks related to the debt capital markets, specifically the ability to finance our business through borrowings under secured revolving repurchase facilities, secured and unsecured warehouse facilities or other debt instruments. 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.
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 three months ended March 31, 2026, and through April 28, 2026, we have not received any margin calls under our Master Repurchase Facilities.
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.
Foreign Currency Risk
We previously had foreign currency rate exposures related to our prior foreign currency-denominated investments held by our foreign subsidiaries. Changes in foreign currency rates could have adversely affected the fair values and earning of our non-U.S. holdings. We generally mitigated this foreign currency risk by utilizing currency instruments to hedge our prior net investments in our foreign subsidiaries. The type of hedging instruments that we employed on our foreign subsidiary investments were put options.
We had no foreign exchange contracts in place at March 31, 2026. The maturity dates of the prior instruments approximated the projected dates of related cash flows for specific investments. 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. 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 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(b) under the Exchange Act, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2026, our disclosure controls and procedures were effective at providing reasonable assurance regarding the reliability of the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—Other Information
Item 1. Legal Proceedings
The Company is not currently subject to any material legal proceedings. We anticipate that we may from time to time be involved in legal actions arising in the ordinary course of business, the outcome of which we would not expect to have a material adverse effect on our financial position, results of operations or cash flow.
Item 1A. Risk Factors
An investment in our common stock involves a high degree of risk. You should carefully consider the risks included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 before deciding to purchase shares of our common stock. If any of the events, contingencies, circumstances or conditions described in the risks therein actually occurs, they could have a material adverse effect in our business, results of operations and financial conditions or cause our stock price to decline.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no sales of unregistered securities of our Company during the three months ended March 31, 2026.
Purchases of Equity Securities by Issuer
The Company did not repurchase any of its Class A common stock during the three months ended March 31, 2026.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
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Item 6. Exhibits
EXHIBIT INDEX
| Exhibit Number | Description of Exhibit | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 10.1 | ||||||||
| 10.2 | ||||||||
| 10.3 | ||||||||
| 10.4 | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32.1* | ||||||||
| 32.2* | ||||||||
| 101.INS* | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
* Filed herewith
† Denotes a management contract or compensatory plan, contract or arrangement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: April 29, 2026
BRIGHTSPIRE CAPITAL, INC. | ||||||||
| By: | /s/ Michael J. Mazzei | |||||||
| Michael J. Mazzei | ||||||||
| Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| By: | /s/ Frank V. Saracino | |||||||
| Frank V. Saracino | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Accounting Officer) | ||||||||
Exhibit 31.1
CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO
17 CFR 240.13a-14(a)/15(d)-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael J. Mazzei, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of BrightSpire Capital, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /s/ Michael J. Mazzei | ||||||||||
| Michael J. Mazzei | |||||||||||
| Chief Executive Officer | |||||||||||
| Date: | April 29, 2026 | ||||||||||
Exhibit 31.2
CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO
17 CFR 240.13a-14(a)/15(d)-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Frank V. Saracino, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of BrightSpire Capital, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /s/ Frank V. Saracino | ||||||||||
| Frank V. Saracino | |||||||||||
| Chief Financial Officer | |||||||||||
| Date: | April 29, 2026 | ||||||||||
Exhibit 32.1
CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of BrightSpire Capital, Inc. (the “Company”) for the three months ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Mazzei, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section §1350, as adopted pursuant to Section §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| By: | /s/ Michael J. Mazzei | ||||||||||
| Michael J. Mazzei | |||||||||||
| Chief Executive Officer | |||||||||||
| Date: | April 29, 2026 | ||||||||||
The foregoing certification is being furnished solely pursuant to 18 U.S.C §1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION BY THE CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of BrightSpire Capital, Inc. (the “Company”) for the three months ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frank V. Saracino, as Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section §1350, as adopted pursuant to Section §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| By: | /s/ Frank V. Saracino | ||||||||||
| Frank V. Saracino | |||||||||||
| Chief Financial Officer | |||||||||||
| Date: | April 29, 2026 | ||||||||||
The foregoing certification is being furnished solely pursuant to 18 U.S.C §1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.