BrightSpire BRSP Q4 2025 Earnings Call Transcript

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Date

Wednesday, February 18, 2026 at 10 a.m. ET

Call participants

• Chief Executive Officer — Michael Joseph Mazzei
• President — Andrew Elmore Witt
• Chief Financial Officer — Frank Vito Saracino
• General Counsel and Corporate Secretary — David Palamé

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Takeaways

• GAAP Net Loss Attributable to Common Stockholders -- $14,400,000 or $0.12 per share, including an $8,000,000 impairment charge from the Long Island City office property sale.
• Adjusted Distributable Earnings -- $19,300,000, or $0.15 per share for the quarter; $83,600,000, or $0.64 per share, for the full year, equating to a 7.4% return on undepreciated average equity.
• Loan Portfolio Growth -- $2,700,000,000 at period end, a $115,000,000, or 13%, increase from the prior quarter, consisting of 98 loans averaging $27,000,000 each with a risk ranking of 3.1.
• Originations Activity -- 32 new loans totaling $941,000,000 since late 2024, with 13 loans and $416,000,000 in commitments closed in the fourth quarter, the highest quarterly funding since restarting originations.
• Watch List and REO Portfolio Management -- Watch list reduced to $220,000,000, or 8% of the loan book, with an anticipated reduction to two loans totaling $66,000,000 as further asset sales close; REO exposure at quarter end was $315,000,000 across six properties, increasing to $360,000,000 and seven properties after quarter end due to foreclosure activity.
• Book Value Metrics -- GAAP net book value stood at $7.30 per share, declining from $7.53 per share in the prior quarter; undepreciated book value was $8.44 per share, down from $8.68 per share.
• Dividend Coverage -- Fourth quarter adjusted distributable earnings were one cent below the dividend, but management stated that for the full year, "we covered our entire annual dividend."
• CLO Execution -- Management announced closing BrightSpire's fourth managed CRE CLO, a $955,000,000 transaction with a $98,000,000 ramp and a two-and-a-half-year reinvestment period, increasing lending capacity and flexibility.
• Liquidity Position -- Total liquidity was $168,000,000, including $98,000,000 unrestricted cash, with $64,000,000 scheduled for receipt the next day from CLO-related activities, and $70,000,000 available on the credit facility.
• CECL Reserves -- Specific CECL reserves of approximately $54,900,000 recorded for watch list and REO activity; general CECL provision decreased to $88,000,000, representing 315 basis points of total loan commitments, versus $127,000,000 (517 basis points) in the prior quarter.
• Share Repurchases -- Approximately 1,100,000 shares were repurchased at an average price of $5.39 per share, resulting in $0.03 of book value accretion.
• Debt Metrics -- Debt to assets ratio was 66% and debt to equity ratio was 2.3 times as of quarter end.
• Dividend Guidance -- Management expects to restore positive dividend coverage by midyear and to achieve full coverage by year end.
• 2026 Strategic Priorities -- Management targets growing the loan book to about $3,500,000,000, executing a fifth CLO in the second half, and achieving earnings growth and full dividend coverage.
• Originations Outlook -- Future origination pace is projected at $300,000,000–$410,000,000 per quarter, based on recent loan closings and pipeline visibility.
• Net Lease Portfolio -- No planned expansions; potential sale of assets is considered, but no activity is currently planned given existing lease terms through 2027 and 2028.

Summary

Management reported that operational focus on resolving watch list and REO assets enabled capital redeployment and meaningful growth in the loan portfolio. The closing of a $955,000,000 CRE CLO and robust loan origination volume were identified as expanding both capacity and earnings potential. Executives stated that the current loan book risk profile is stable and outlined clear plans to grow the portfolio and restore sustained dividend coverage through 2026.

• About $200,000,000 of equity remains tied up in REO assets, with recovery and redeployment anticipated by year end; the San Jose Hotel specifically accounts for $80,000,000–$85,000,000 of this equity and generates about $9,000,000 in NOI, pending completion of capital upgrades.
• Borrower and lender motivations are expected to fuel continuing multifamily refinancing and sales activity, supporting the origination targets communicated for the coming year.
• Spread compression in CRE lending has reached a "floor," with management noting, "as long as we are getting the ROEs that we need," current pricing is considered adequate.
• The portfolio is increasingly diversified as larger, riskier assets are resolved; the average loan size has trended downward and watch list exposure is set to further decline following near-term asset sales.
• Share repurchases in the quarter reflected management's stated belief that the stock is "significantly undervalued."

Industry glossary

• CRE CLO: Commercial Real Estate Collateralized Loan Obligation—a structured finance vehicle pooling commercial mortgage loans, then issuing debt securities backed by those loans.
• OREO: Other Real Estate Owned—properties that have been acquired by foreclosure and are held on the balance sheet pending resolution or sale.
• CECL: Current Expected Credit Loss—an accounting standard requiring lenders to estimate and reserve for lifetime expected credit losses on financial instruments.
• Risk Ranking: An internally derived score indicating the credit risk profile of individual loans or the overall portfolio.

Full Conference Call Transcript

Michael Joseph Mazzei; President and Chief Operating Officer, Andrew Elmore Witt; and Chief Financial Officer, Frank Vito Saracino. Before I hand the call over, please note that on this call, certain information presented contains forward-looking statements. These statements, which are based on management's current expectations, are subject to risks, uncertainties, and assumptions. Potential risks and uncertainties could cause the company's business and financial results to differ materially. For a discussion of risks that could affect results, please see the Risk Factors section of our most recent 10-K and other risk factors and forward-looking statements in the company's current and periodic reports filed with the SEC from time to time.

All information discussed on this call is as of today, 02/18/2026, and the company does not intend and undertakes no duty to update for future events or circumstances. In addition, certain financial information presented on this call represents non-GAAP financial measures. The company's earnings release and supplemental presentation, which was released yesterday afternoon, is available on the company's website and presents reconciliations to the appropriate GAAP measures and an explanation of why the company believes such non-GAAP financial measures are useful to investors. Before I turn the call over to Mike, I will provide a brief recap on our results.

The company reported fourth quarter GAAP net loss attributable to common stockholders of $14,400,000 or $0.12 per share, distributable earnings loss of $35,500,000 or $0.28 per share, and adjusted distributable earnings of $19,300,000 or $0.15 per share. Current liquidity stands at $168,000,000, of which $98,000,000 is unrestricted cash. The company also reported GAAP net book value of $7.30 per share and undepreciated book value of $8.44 per share as of 12/31/2025. Finally, during this call, management may refer to distributable earnings as— With that, I would now like to turn the call over to Michael Joseph Mazzei. Thanks, David.

Michael Joseph Mazzei: And welcome to our fourth quarter 2025 earnings call. As we reflect on the past year, I'm pleased to highlight the significant progress we've made across our business. We entered 2025 focused on rotating the portfolio by addressing challenged investments while simultaneously increasing our new loan originations. Throughout the course of the fourth quarter and into the new year, we have continued to reduce watch list loans and OREO property exposure. As a result of these efforts, we have improved the quality of the portfolio, ensuring a solid foundation for future growth. Perhaps most importantly, we gained considerable momentum in originations. As the year progressed, our pipeline grew steadily with loan inquiries and quoting activity increasing with each quarter.

Against this backdrop, the fourth quarter ended the year on a high note and was one of our most active periods in several years. Since commencing originations at the tail end of 2024, we have closed 32 new loans for $941,000,000 of total commitments, of which 13 loans of $416,000,000 were closed during the fourth quarter, our largest funding quarter since restarting originations. As of December 31, the loan portfolio increased by $115,000,000 to $2,700,000,000. That equates to a 13% increase from the third quarter. We also had a very active period executing REO sales as well as resolving loans from the watch list. We made the strategic decision to accelerate the resolutions in this part of our portfolio.

We concluded that the certainty associated with monetizing these assets and reinvesting the proceeds outweighed the prospective upside associated with holding the assets longer term. As a result, we took a limited reduction in book value to effectuate these sales during and subsequent to quarter end. In the fourth quarter supplemental presentation, available on our website, we included two pages summarizing the watch list and REO activity. The materials illustrate the substantial progress made to date along with our projected resolution timeline for each of these two segments of our portfolio. I want to reiterate that these resolutions continue to be a major focus as they represent a critical source of capital for new loan originations.

Over the coming months, our goal is to cut our current as-is watch list exposure to two loans totaling approximately $66,000,000. Further, each of the remaining REO assets has a business plan for their ultimate exit. This, of course, does not reflect the possibility of any downgrades in the future. Also, as David mentioned, our adjusted DE for the fourth quarter was $0.15 per share. As discussed on previous calls, when we resized our dividend to $0.16, we noted there could be a brief period of modest coverage shortfall primarily related to the timing of capital deployment. For the full year 2025, we covered our entire annual dividend.

However, as anticipated, in this last quarter, our adjusted DE reflects a dividend coverage of just 1p shy of breakeven. Our plan is to once again cover the dividend by midyear and achieve a positive coverage by year end. Turning our attention to the market, commercial real estate debt capital markets are wide open with a surge of new issuance in the first 45 days. This was met with high investor demand, especially for CRE CLOs, which is driven by strong historical credit performance and attractive spreads versus other credit sectors. Along those lines, I am pleased to report that we announced the closing of BrightSpire’s fourth managed CLO.

This transaction was $955,000,000 and features a $98,000,000 ramp as well as a two-and-a-half-year reinvestment period, further expanding our lending capacity and flexibility. This transaction was also very well received, with 19 investors participating across all offered tranches, including the sale of the lowest rated investment-grade tranche. Looking ahead at the demand side for CRE loans, we expect there will be a significant tailwind from continued increases in property sales transactions. On one side, property equity investors are anxious to see monetizations of legacy assets, while on the flip side, mortgage lenders are also encouraging borrowers to refinance or sell these same underlying assets. This is precisely what we are experiencing in our own portfolio.

We are therefore optimistic that there will be a solid demand for loan originations as more assets change hands in 2026. In closing, allow me to reiterate and underscore our priorities for 2026. First, grow the loan book to approximately $3,500,000,000.

Frank Vito Saracino: Third,

Michael Joseph Mazzei: execute on a fifth CLO in the second half of the year to match-fund our loans and further maximize our capital deployment efficiency. And lastly, in accomplishing these initiatives, we will grow earnings and reestablish positive dividend coverage by year end. I would like to thank our team, clients, and banking partners for their contributions and collaborations throughout the year. With that, I would like to turn the call over to our President, Andrew Elmore Witt.

Andrew Elmore Witt: Andy? Thank you, Mike. It has been a transformational year for BrightSpire and a productive fourth quarter. This year was punctuated by robust fourth quarter originations activity. It was our most active quarter in 2025, closing on $416,000,000 in commitments across 12 multifamily loans and one mixed-use loan. Repayments during the quarter were minimal and largely attributable to two loan payoffs. As a result, our loan book as of quarter end grew to approximately $2,700,000,000, up from $2,400,000,000 last quarter. The portfolio is comprised of 98 loans with an average loan balance of $27,000,000 and a risk ranking of 3.1, consistent with the previous quarter. Following quarter end, we have closed on an additional three loans for $118,000,000.

We anticipate the loan book will expand to nearly $3,000,000,000 by approximately halfway through the year. Furthermore, we anticipate our loan book will continue to grow on the back half of the year, targeting at least a $3,500,000,000 loan portfolio by year end. As it relates to portfolio management, during the fourth quarter and subsequently, we have been active and made significant progress. I will start with a review of watch list loans. During the fourth quarter, two were added to the watch list, both associated with the same borrower, bringing the total watch list to $220,000,000 or 8% of our loan portfolio.

As it relates to these two loans, our Dallas-based asset manager observed a notable shift in borrower behavior and property performance. As a result of these observations, and further analysis, we decided the best course of action was to accelerate a resolution of the entire borrower relationship comprised of three loans, one of which was already on the watch list. Ultimately, we moved decisively, taking ownership of one property by foreclosure and working cooperatively with the borrower to market the other two properties. Following quarter end, two watch list loans have been resolved via sales processes that were previously underway.

As mentioned earlier, two additional properties are in the process of being sold, and one watch list loan property is now REO. Pro forma for the anticipated sales of these two properties our watch list would consist of two remaining loans, a Dallas office loan and an Austin multifamily loan, for a combined total of $66,000,000. Repayment proceeds from the resolution of these watch list loans will be repatriated and deployed into new loans. The plan for the Dallas property, which was foreclosed on post quarter end, is to implement a value-add business plan, stabilizing operating performance, and ultimately to sell the property.

As for the REO portion of the portfolio, during the quarter we sold one of the two Long Island City office properties as well as the Oregon office property. At the end of 2025, REO exposure stood at $315,000,000 across six properties. As previously noted, post quarter end, a Dallas multifamily property from the watch list moved to REO through foreclosure, bringing the total number of REO properties to seven with an aggregate balance of approximately $360,000,000. Currently, the remaining Long Island City property is under contract to be sold.

Andrew Elmore Witt: We expect that transaction to close during Q1. Additionally, two multifamily properties are listed for sale, one located in Fort Worth, Texas, and the other in Mesa, Arizona. Pro forma for the sale of these three properties, our remaining REO will be comprised of four assets totaling $266,000,000. The San Jose Hotel represents 50% of the remaining balance with two multifamily and one residential pre-developed property making up the remainder. We anticipate marketing the majority, if not all, of the remaining REO properties for sale during 2026. In closing, we made substantial progress throughout 2025 managing and growing the loan portfolio, particularly during the fourth quarter.

The decisive actions taken this quarter should result in resolution proceeds which will fuel continued portfolio and earnings growth throughout the course of 2026. With that, I will turn the call over to Frank Vito Saracino, our Chief Financial Officer. Frank?

Frank Vito Saracino: Thank you, Andy, and good morning, everyone.

Frank Vito Saracino: For the fourth quarter, we generated adjusted DE of $19,300,000 or $0.15 per share. Fourth quarter DE was a loss of $35,500,000 or $0.28 per share. DE includes specific reserves of approximately $54,900,000. Additionally, we reported total company GAAP net loss of $14,400,000 or $0.12 per share, which also included an approximately $8,000,000 impairment charge related to the sale of our Long Island City office property. For the full year of 2025, we generated adjusted DE of $83,600,000 or $0.64 per share, representing a return on undepreciated shareholders' average equity of approximately 7.4%. Our dividend for the year of $0.64 per share was fully covered one time.

David Palamé: Quarter over quarter,

Frank Vito Saracino: total company GAAP net book value decreased to $7.30 from $7.53 per share in the third quarter.

David Palamé: We reported undepreciated book value of $8.44 versus

Frank Vito Saracino: $8.68 per share in the third quarter. As Mike mentioned earlier, we made the strategic decision to pull forward the resolution of certain watch list and REO, noting that resolving and reinvesting these proceeds from these investments outweigh the prospective upside associated with holding the assets longer term. As a result, we took a limited reduction in book value. During the quarter, we also repurchased approximately 1,100,000 shares of stock at an average share price of $5.39, which resulted in approximately $0.03 of book value accretion. Given the strong originations momentum and improvements in the portfolio, we continue to believe the stock is significantly undervalued. Looking at reserves, during 4Q, we recorded specific CECL reserves of approximately $54,900,000.

As Andy mentioned earlier, we took ownership of a Dallas multifamily property that was previously held on the watch list, resolved two watch list loans via sales process, and have two properties underlying two additional watch list loans anticipated to close in the first half of this year. Since these loans are either resolved or will be resolved imminently, we have charged off the reserves. Our general CECL provision decreased to $88,000,000, 315 basis points on total loan commitments versus $127,000,000 or 517 basis points reported in the third quarter. Our debt to assets ratio is 66%, and our debt to equity ratio stands at 2.3 times. Lastly, our liquidity as of today stands at approximately $168,000,000.

This includes $98,000,000 of cash, of which $64,000,000 will be received tomorrow associated with our CLO execution and unwind of the 2021 FL-1 CLO. Additionally, we have $70,000,000 available under our credit facility. This concludes our prepared remarks. And with that, let's open it up for questions. Operator?

Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And we ask that you please limit yourself to one question and one follow-up. And if you have further questions, you may reenter the question queue. Our first question today will come from Gabe Haughey with Raymond James. Please go ahead.

Gabe Haughey: Hey, good morning, guys. Thanks for taking the question.

Operator: Mike, Andy,

Gabe Haughey: how do you think about the amount of, just ballpark here, leverageable capital that sits underneath the various assets that have been resolved or are in process of resolution kind of year to date? That is question one. And question two is a quick follow-up of just how do you think about the credit portfolio from a go-forward basis? You have only got now two four-rated watch list loans, few assets in REO. What is the general kind of sense on where the book sits now from a 2026 credit perspective? Thank you.

Michael Joseph Mazzei: Hey, Gabe. It is Mike. Welcome back.

Gabe Haughey: Thank you.

Michael Joseph Mazzei: Pleasure to have you. Thanks for your question. When you look at our portfolio and we talk about getting to the back half of the year where we get to positive coverage, that is really linked to your question. We have about, given the foreclosure we had subsequent to quarter end, we have about $200-plus million of equity tied up in OREO assets, which are basically a drag on the portfolio. The only thing throwing off anything meaningful there is the San Jose Hotel, whose NOI is probably just shy of $9,000,000.

So, really, at the tail end of the year, you get a full game in the sense that we unwind that REO as best we can and we deploy that capital into 12-plus ROE levered assets. And that is really what is going to kick us up. So to answer your question directly, about $200,000,000 of latent capital is tied up in the portfolio right now, and we plan on getting out of that toward the end of the year. And as Andy said, a large part of that is the ROE on the San Jose Hotel. We are doing some deferred maintenance on that right now—much needed.

We have a lot of things going on in San Jose during the course of the year that will help the cash flow. So I think we are looking more toward the back half of the year for that asset. So the two multifamily assets at OREO just need to be stabilized like we have done with the rest of the portfolio, and we will sell those at the back half of the year. In terms of credit and the overall portfolio, given the turnover that you are seeing, we are feeling pretty good about it.

We have not said that for a while, but we are seeing a lot of positive things happen, especially with the movement of the watch list and the REO assets that we are embracing right now. So we are pretty optimistic about the credit in the underlying portfolio. And then you look at the average loan size, got rid of some of the bigger assets. Our average loan size is down—$30,000,000, maybe it is slightly less. And so we are feeling pretty good about the diversification in the portfolio.

Gabe Haughey: Thank you, guys. That is helpful. And nice job on the recycling, or the resolving, of the book.

Operator: The next question will come from Timothy D’Agostino with B. Riley Securities.

Frank Vito Saracino: Yes. Hi. Thank you. Good morning. Just want to touch on the San Jose property a little bit more. If you could just provide a little bit of color there.

Operator: I know you said a couple earnings calls ago that you are probably holding this through back ’26,

Frank Vito Saracino: due to events like the Super Bowl, March Madness, the World Cup.

Operator: Just wondering, you know, with Super Bowl behind us, how that event went for the hotel and, you know, are things progressing there ahead of expectations or at expectations? Thank you.

Michael Joseph Mazzei: Thanks for the question. No. The event went very well. The staff handled the volume incredibly well. We are doing some things in the hotel. We are upgrading the lobby, and we are upgrading the elevators. And all of that takes a little bit of time. The lobby is well underway. We want to redo some of the washrooms and the ballroom and get that done. These are things that if you sold the property today, any buyer would look at those items and take those off of the sale price. So we want to get that done and get that behind us.

And we also have, as you said, these major events coming up that we want to see through, including in July we have the national championship there, and CrossFit is using our hotel as the headquarters for that staging event. So we are looking forward to that as well. We did have some nonrecurring stuff that hit the NOI last year—some cancellation of events. That fell right to the bottom line. We are not modeling that this year. Those were basic windfalls. So we are not modeling that this year. So we do expect right now, we are budgeting, plus or minus for purposes of our accrual, about $9,000,000 of NOI.

And we hope to punch through that as we get to the end of the year to get to more of a double-digit NOI cash flow. And then we will consider selling the asset. But at this point in time, we are pretty comfortable. We are holding it well below replacement cost. We are seeing other assets trade at higher dollars per key, so we are going to be patient. But again, because we have a lot of capital tied up in that asset—it is throwing off some cash flow, but about $80,000,000–$85,000,000 of equity based on the leverage we have on it today—we really want to sell that asset and redeploy into the loan book.

Gabe Haughey: Okay. Great. Thank you so much. And then just a quick follow-up. Could you just provide maybe a little more color on kind of the plan for the net lease and other real estate portfolio in 2026? Know you touched a bunch on the loan portfolio, but would be great if you could get some color there. Thank you.

Michael Joseph Mazzei: Okay. So the net lease is really made up of three components. We have a triple net to LabCorp in Indianapolis. We have a triple net to Northbrook Industries in Colorado, and we have—the largest part of that is—the Albertsons portfolio. And nothing really is happening there at this moment. We have lease term on the LabCorp until 2030. That does not mature until 2027, and the Albertsons debt not until 2028. Quite frankly, we are not really looking to grow the triple net portfolio. So if we could get into a position where we may be able to sell some of those assets, we would consider doing it.

But right now, there is really nothing going on in that portfolio.

Frank Vito Saracino: Okay. Great. Thank you so much. Thanks for taking the questions.

Operator: The next question will come from Christopher Muller with Citizens Capital Markets. Please go ahead.

Christopher Muller: Hey, guys. Thanks for taking the questions. So it is nice to see originations picking up and looks like that momentum is carrying into the first quarter so far. I guess, how are you guys thinking about the pace of originations in 2026? Is 4Q a good baseline? Or will it be more back-weighted in the year? Andy, do you want to take that?

Andrew Elmore Witt: Thank you, Mike. In terms of the pace of originations, we had a great quarter in Q4 with just over $400,000,000, and we are on track here in Q1. In terms of loans closed and those that we have visibility in execution on at just over $300,000,000, we think that is probably a pretty good rate going forward, somewhere between $300,000,000–$410,000,000 a quarter is what we are modeling from a go-forward perspective.

Christopher Muller: Got it. That is helpful. And then just a quick follow-up. On the multifamily foreclosure that was subsequent to quarter end, should we expect to see a realized loss hit the first quarter related to that?

Frank Vito Saracino: No. Everything was taken in the fourth quarter, was loaded in the fourth quarter, so it came through CECL.

Christopher Muller: So is that the $8,000,000 impairment that hit the income statement?

Frank Vito Saracino: No. That is for Long Island City. So the amount of the loss was associated with one of our specific reserves in the $59,000,000.

Christopher Muller: Got it. Appreciate you clearing that up. Thanks for taking the questions.

Operator: Again, if you have a question, please press star then 1. And our next question will come from Gaurav Mehta with Alliance Global Partners. Please go ahead.

Gaurav Mehta: Yes, thank you. Good morning. I wanted to follow up on your comments around strong demand for loan originations. I was wondering if you could maybe provide some more color on which sectors you are seeing the demand in. Is it mostly multifamily? Or are you guys open to other sectors as well?

Michael Joseph Mazzei: We expect a lot of demand for credit in multifamily for the things that we laid out in the prepared remarks. We have seen, you know, we are much at the end of the rope here. You have got 2021–2022 loans that are getting to the point where they have passed their first extension hurdles. Some are getting close to maturity now. We are seeing the equity getting exhausted, and they want to move on. They want to get that equity repatriated back to the limited partners. So that is one of the drivers that we are seeing.

The other driver we are seeing are lenders like us, and what we just described in our own portfolio—we are encouraging borrowers to move assets, those same assets. We think the confluence of those two things are really going to push volume in 2026. Saw a little bit of a different originations in the fourth quarter, and we just equate that to some of these owners were saying, hey, it is past Thanksgiving. I am not going to put something in the market at this point in time for refi, or for sale.

We are starting to see that activity pick up tremendously in January and February, especially with the conferences, the mortgage banking conferences, and the multifamily conference in Vegas that just transpired. After those conferences, it is very typical to see volume pick up. So I think while transaction volume was up in 2025 over 2024, we anticipate in multifamily the transaction volume we would see 25 this year. So we are very optimistic about the demand for credit because we think we are just going to see a lot of assets changing hands.

Gaurav Mehta: Alright. Thank you. That is all I had.

Operator: The next question will come from Matthew Edner with JonesTrading. Please go ahead.

Matthew Edner: Hey, good morning, guys. Thanks for taking the question. I would like to kind of stay on the credit side there. You know, spreads have compressed, you know, a good bit since this time last year. How are you guys thinking about that going forward and more competition kind of being in the space?

Michael Joseph Mazzei: I have been doing this for 40 years, and there has never been a year, but for us a handful, and we have not had severe competition. So that is kind of business as usual. But what I will say is, I will emphasize the points that we had around the capital markets. We just executed the CLO. The demand for that, and for the army of CLOs that came out before and after us, demand was incredible. I would have actually expected and told the team, hey, we may see spreads widen given that supply, and we saw the opposite. Every deal the demand was better. I think the market is outperforming the corporate market.

We are seeing what is going on in the BDC market, the term loan market, and what is going on in software stock prices and the concern that is having in corporate credit. And we are seeing the opposite in the CRE market. A lot of it has already been dealt with over the past two years. And the CRE CLO market has performed very well. So spreads have come in. Bank lenders, on our warehouse lines, have also brought in spreads commensurately with loan spreads. We have seen loan spreads kind of floor out here. Maybe that is because of the supply that we are seeing.

So we do not anticipate a tremendous amount more of tightening in the loan spread market. But right now, as long as we are getting the ROEs that we need, based on where we are financing things and the liability structure, it is okay. And we have seen that. The market has been met with a lot of demand from investors on the CRE CLO side.

Gaurav Mehta: Now that is—

Michael Joseph Mazzei: We have Matt who runs our capital markets here as well.

Andrew Elmore Witt: Yeah. No. As Mike said, we saw tremendous demand. A lot of that market has kind of migrated to full multi. Our deal was predominantly multi, but with the ability to reinvest in various property types. So, you know, we are trying to keep our options open over the next two and a half years to deploy capital where we see fit, whether it be in, you know, some limited amount in hospitality, industrial, retail. So we are trying to keep options open and, you know, deploy where it is accretive.

Matthew Edner: Got it. That is very helpful. And then quick follow-up. The loans that you guys originated in fourth quarter, what was kind of the timing of that? Was it throughout, or was it pretty paced throughout the quarter?

Michael Joseph Mazzei: It got pretty aggressive toward the end of the quarter. A lot of deals pulled forward actually from the first quarter where borrowers wanted to close by year end. We did have some pull-forward there. I think we will see the first quarter not be like the fourth quarter, but I think it will pick up during the course of the year.

Matthew Edner: Got it. Awesome. Thank you, guys.

Michael Joseph Mazzei: Thank you.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Michael Joseph Mazzei for any closing remarks. Please go ahead, sir.

Michael Joseph Mazzei: We are very excited about the momentum we have had coming into 2026, both from our origination side and from the resolution of the assets in the watch list and REO. We are very much looking forward to updating you on our progress on those matters in April, and we thank you for joining us today.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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