BrightSpire Capital, Inc.

Thank you for standing by. This is the conference operator. Welcome to Colony Credit Real Estate Inc's third quarter 2020 earnings conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to David Palame, General Counsel. Please go ahead.

Good afternoon, and welcome to Colony Credit Real Estate Inc.' 's third quarter 2020 earnings conference call. We will refer to Colony Credit Real Estate Inc. as CLNC, Colony Credit Real Estate, Colony Credit, or the company throughout this call. Speaking on the call today are the company's President and Chief Executive Officer, Mike Mazzei, Chief Operating Officer, Andy Witt, and Chief Financial Officer Neil Reddington. Chief Accounting Officer Frank Saraceno is also on the line to answer questions. Before I hand over the call, please note that on this call, certain information presented contains forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties, and assumptions. Potential risks and uncertainties could cause the company's business and financial results to differ materially, including the potential adverse effect of and heightened risks associated with the current pandemic of the novel coronavirus or COVID-19. For a discussion of risks that could affect results, please see the risk factors section of our most recent 10Q 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, November 5th, 2020, 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 represent non-GAAP financial measures. The company's earnings release and supplemental presentation, which was released this afternoon and is available on the company's website, presents reconciliations to the appropriate GAAP measures, and an explanation of why the company believes such non-GAAP financial measures are useful to investors. And now, I'd like to turn the call over to Mike Mazze, President and Chief Executive Officer of Colony Credit Real Estate. Mike?

Thank you, David. Welcome to our third quarter earnings call. On behalf of the CMLC team, I would like to start by wishing everyone well and thanking you for joining. After considerable effort from our employees over these past quarters, we have succeeded in solidifying the CLNC balance sheet, including full repayment of our revolving credit facility. I would like to thank this team for their dedication and accomplishments thus far during this difficult period. Of course, the risks and uncertainties of COVID-19 still exist. However, while the team continues to remain focused on asset and liability management, we've also begun to pivot the organization toward offense and on the execution of our business plan. First, I'd like to cover some of the key third quarter takeaways. For this quarter, we had gap and total core earnings per share of 4 cents and 30 cents, respectively. Our third quarter gap and underappreciated book value per share are 13.25 and 14.53, respectively. These book values have both increased this quarter. Currently, CLNC's Unrestricted cash position is $438 million, or approximately $3.33 a share. We will seek to redeploy this cash over time into new earning assets. Regarding core asset sales, in the third quarter, we closed on the last sale of an operating property and realized a gain of $7.5 million. We have also terminated a contract for sale on an owned industrial net lease portfolio. Therefore, at this time, we have no other core assets held for sale. Last quarter, we took a write-down for the mezzanine loan on the L.A. mixed-use project and stated the project required additional outside capital. I am pleased to inform you that while working closely with the senior lender and borrower, we have successfully closed a third-party recapitalization for $275 million. This was a complex transaction and I would like to thank the CLNC team and our counterparties for their combined efforts in seeing this through. There are no changes for the loan status this quarter. I would refer you to our third quarter form 10Q filing for more details. We continue to make progress on the resolution of our legacy non-strategic assets. We anticipate collapsing our bifurcated financial reporting in this portfolio segment in the first quarter of 2021 as it will have been substantially resolved. This will also simplify our reporting in 2021. As we begin to pivot towards offense, we have started the implementation of our business plan to build earnings. This entails the reinvestment of our cash balances into newly originated first mortgage loans. Our strategy will be to focus on making floating rate loans to transitional assets, as well as fixed rate CMBS conduit loans. We will utilize our warehouse lines for interim financing where we have $1.5 billion of available capacity. We will later contribute these loans into CLO or CNBS securitizations as we expect those markets to further improve in 2021. Along those lines, we would also like to welcome George Koch as a new member of the CLMC team. George has joined us as our Chief Credit Officer. He has spent 35 years in commercial real estate credit and is a proven leader and business builder. In addition, George will further enhance the L&C's relationships with our banking counterparties and investors. Lastly, to underscore the progress we've made in stabilizing the financial position of the company in light of COVID-19, we plan to reinstitute a quarterly dividend in 2021, assuming macroeconomic conditions do not deteriorate. We will be addressing this with the CLNC Board of Directors and aim to announce a reinstatement of the dividend beginning with the first quarter. That said, it is important to note that our decisive actions thus far to protect the CLNC balance sheet during COVID-19 came at a cost to the company in both the form of a reduction in NAV and in revenues. We exited and financed certain income-producing assets in order to build cash liquidity. Earnings have been impacted and therefore the initial dividend policy will reflect this. We also recognize that our current share price is a deep discount to our book value. This discount is also greater than that of our peer group. The current market valuation effectively implies that there are approximately $1.2 billion of future potential losses. We feel the best way to address this disconnect is by shifting the focus and momentum of the saliency team beyond the challenges of COVID-19, and toward playing offense. In our effort to close this gap, we are committed to continuing to protect the balance sheet while redeploying capital into new investments, building earnings, and reinstituting a quarterly dividend. In summary, while not fully out of the woods, we have accomplished many of our goals during this challenging time. We are now focused on executing our business plan to grow earnings. We have already begun to originate new loans while continuing to remain vigilant on asset liability and cash management. The continued risks of COVID-19 can by no means be dismissed. However, through the efforts of the CLMC team and the support of our counterparties, CLMC is now in a position to lean forward. At this time, I would like to turn the call over to our Chief Operating Officer, Andy Witt.