BrightSpire Capital Watch List Rises to $187 Million in Q3

BrightSpire Capital's list of troubled loans grew 38% in the third quarter to $187 million, or 6% of its $3.1 billion loan book, the commercial real estate lender said after the market close on Tuesday, Oct. 27. Two office loans in Blue Bell, Pennsylvania, totaling $60 million moved to its watch list, according to the supplemental report BrightSpire (NYSE: BRSP) furnished to the Securities and Exchange Commission with a Form 8-K.

The REIT reported GAAP net income attributable to common stockholders of $46.9 million, or $0.37 a share. Distributable earnings were $10.3 million, or $0.08 a share, and adjusted distributable earnings were $17.8 million, or $0.14 a share. It paid a $0.16 dividend on Oct. 14. GAAP book value rose to $7.08 a share from $6.81 on June 30, mainly on a gain from selling a net lease industrial property, the report says.

Which BrightSpire loans are on the watch list?

Five floating-rate senior loans, all rated 4 on the company's 1-to-5 risk scale. Three were already there on June 30: a Las Vegas apartment loan ($58 million), an Austin apartment loan ($25 million) and a Dallas office loan ($44 million). The two Blue Bell office loans, $30 million each, were downgraded from a 3 in the quarter. An $11 million Denver office loan on the list repaid.

The company's total loss reserve under the CECL accounting standard rose to $107.2 million, or $0.86 a share, from $100 million on June 30. The weighted average risk ranking edged up to 3.1 from 3.0.

Measure	June 30, 2026	Sept. 30, 2026
Loan portfolio, carrying value	$2.89 billion	$3.08 billion
Watch list loans	$136 million	$187 million
CECL reserve	$100 million	$107 million
Foreclosed property (REO)	$330 million	$301 million
GAAP book value per share	$6.81	$7.08

Source: BrightSpire Capital third-quarter 2026 supplemental financial report.

Multifamily made up 72% of the 111 loans, and office 19%. The loans carried a weighted average unlevered all-in yield of 7.4%. BrightSpire committed $272 million to seven new senior loans in the quarter at a weighted average coupon of SOFR plus 2.43%, and received $79 million of repayments.

How does BrightSpire fund its loans?

Mostly through CLOs and bank repurchase lines. On Sept. 30 it had $2.64 billion of debt at a blended all-in cost of 5.75%. That included $1.37 billion of CLO bonds in two deals and $1.01 billion drawn on master repurchase facilities at SOFR plus 1.80%, the type of credit line explained in our warehouse line of credit guide. Repo capacity totals $2.35 billion, with $1.4 billion available.

After quarter end, BrightSpire closed the $960 million BRSP 2026-FL4 CLO at SOFR plus 1.54% and collapsed, or paid off, its 2024-FL2 deal, which cost SOFR plus 2.51%. Chief Executive Michael J. Mazzei said in the release that CLOs now make up "nearly two thirds of our loan portfolio financing." The report put 65% of senior loans on non-recourse, non-mark-to-market debt as of Oct. 23.

Because most of its loans and debt float, the company estimates a 0.50-point drop in SOFR would cut annual net interest income by about $3.4 million. For current SOFR, prime and Treasury levels, see hard money and private lending rates today. For other third-quarter lender results, see our reports on Ladder Capital's loan book and TPG RE Finance's Plano foreclosure loss.

BrightSpire will discuss the results on a call at 10 a.m. ET on Wednesday, Oct. 28.