BrightSpire Posts Loss as Book Value Falls for Fifth Quarter
BrightSpire Capital swung to a GAAP net loss of $18.3 million even as loan originations and a record buyback signaled a push to stabilize the portfolio.
BrightSpire Capital (BRSP) swung to a GAAP net loss attributable to common stockholders of $18.3 million, or $0.15 a share, in the second quarter, reversing net income of $4.8 million, or $0.03 a share, in the first quarter. The commercial real estate lender and owner reported the loss alongside a fifth consecutive quarterly decline in book value, even as it accelerated loan originations and executed its largest share buyback in company history.
GAAP net book value per share fell to $6.81 from $7.05 in the prior quarter, extending a slide from $7.65 a year earlier. Undepreciated book value per share followed the same path, dropping to $8.10 from $8.75 over the same five quarters. The erosion has been uneven: a fourth-quarter 2023 distributable loss of $35.5 million, or $0.28 a share, tied to an accelerated resolution of REO and watch-list assets, did far more damage to book value than the more modest results posted since.
Distributable Earnings, the metric BrightSpire uses to size its dividend capacity, held roughly flat at $15.8 million, or $0.12 a share, compared with $15.6 million in the first quarter. Adjusted Distributable Earnings told a softer story, slipping to $16.8 million, or $0.13 a share, from $18.2 million in the first quarter and down further from $21.2 million in the third quarter of 2023. The company kept its quarterly dividend at $0.16 a share for a fifth straight quarter, a payout that has now exceeded Adjusted Distributable Earnings per share in three of the last four periods.
Origination activity moved in the opposite direction. BrightSpire closed $319 million of committed capital in the second quarter and had an additional $295 million closed or in execution after quarter end, building on $311 million closed and $283 million in execution as of the first-quarter release. Its total loan book had reached approximately $2.9 billion, up more than 20% year over year. Management also reported a continued net reduction in watch-list exposure, extending a de-risking trend that included a roughly 50% cut in mid-2023 and a 39% year-to-date reduction as of the first quarter, though the second-quarter reduction was not quantified.
BrightSpire is rotating capital out of owned real estate and into first mortgage loans. The company disclosed a new contract to sell a triple net lease asset, describing it as part of that shift, and its standard company description no longer references net leased properties as part of the core portfolio, a change from all four prior releases.
The company backed the strategy with capital returns. It authorized a new $50 million Stock Repurchase Program on April 22, 2024, replacing a program dated April 29, 2023, and executed its largest quarterly buyback since inception during the second quarter, a level of repurchase activity not highlighted in any of the three preceding releases.
The combination of rising originations against a falling book value points to a lender pushing new capital out the door while working through the tail of a legacy portfolio still weighing on per-share value.