BrightSpire Capital, Inc.

Greetings and welcome to the Colony Credit Real Estate Incorporated first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Palame, General Counsel. Thank you, David. You may begin.

Good afternoon, and welcome to Colony Credit Real Estate Inc's first quarter and full year 2021 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, Frank Cerasino. Before I hand the call over, 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 COVID-19. For 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, May 5th, 2021, unless otherwise indicated, 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 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 Mazzei, President and Chief Executive Officer of Colony Credit Real Estate. Mike.

Thank you, David. Welcome to our first quarter earnings call. On behalf of the CLNC team, I would like to start by wishing everyone well, and I thank you for joining us today. We are off to a very productive start in 2021, and we are incredibly excited about embarking on a new chapter for Colony Credit Real Estate. On April 5th, we announced that CLNC had entered into an agreement with our external manager, Colony Capital, to terminate the management agreement and internalize the company's management and operating functions. This transaction was successfully completed on April 30th. The CLNC team is appreciative of the support and recognition it has received from Colony Capital, who continues as our largest shareholder. In taking this step, Colony Capital has unlocked value for CLC shareholders by allowing this management team to chart its own course in this next stage. We also thank our CLC board members who have invested tremendous time and focus as we worked through this process. Additionally, we are also very proud to announce today, independent director Katie Rice has assumed the position as the chairperson of our board of directors. We look forward to Ms. Rice's continued guidance and leadership. The internalization provides CLNC shareholders tremendous value enhancement. The self-managed structure will considerably reduce CLNC's expenses and be significantly accretive to earnings in 2021. This use of capital will provide a permanent return on equity in the mid-teens. To succeed the equity returns we target on loan investments by at least several hundred basis points. Furthermore, This transaction provides CL&C with important governance benefits as well as increased certainty and control over the company's future strategic direction. CL&C is now positioned as one of the few internally managed public commercial mortgage REITs. We feel strongly that being internally managed is simply a better structure for public shareholders. The internalized structure results in a more transparent organizational model. It provides a dedicated employee base that will focus exclusively on CLNC and be fully aligned with the company and its shareholders. Our CFO, Frank Saracino, will provide additional details regarding the internalization in his remarks. During this last quarter, we have continued to steadily redeploy capital into floating rate first mortgage loans. Since commencing with new transactions in the fourth quarter of 2020, we have closed or committed on 31 loans for approximately $1 billion. As we emerge from the pandemic, the commercial real estate lending markets have begun to stabilize. And while lending has become a bit more competitive, we are concurrently seeing pricing improvements on the liability and financing side of the balance sheet, resulting in lower cost of funds. Also, given the improvements we are seeing from the reopening of the U.S. economy, we are expanding our lending focus beyond multifamily and suburban office. Turning now to some key financial headlines. For the first quarter, we had adjusted distributable earnings of 14 cents a share. Our current liquidity as of May 3rd is $443 million. As we continue to work very closely with our borrowers who have been most impacted by COVID-19, we maintain what we believe to be sufficient liquidity to navigate through the lingering effects of the pandemic. With respect to our dividend, our Board of Directors has approved an increase in our second quarter dividend from 10 cents to 14 cents a share. This is the product of the cost savings achieved from the internalization as well as the continued successful execution of our business plan and resulted growth in earnings. We will continue to closely review our dividend policy as earnings increase. The CRMC team continues to make progress executing on the stated business plan. Now, I would like to provide a recap of where we are and where we are planning to go in 2021. The management internalization is complete and we will now begin to transition operational functions to CLMC. Since returning to active lending in the fourth quarter, we have sourced approximately $1 billion of new loans, and as such, we have recently initiated the process for the issuance of our second CLO. Most importantly, As we've continued to deploy existing cash and grow earnings, we have thus reinstated and have now increased our dividend. For the remainder of 2021, we will look to put the pandemic further behind us and work to resolve any remaining underperforming or non-earning assets. This last step will also allow us to repatriate capital into the deployment for new loans. Our success around these 2021 initiatives will lead to further earnings growth and the expansion of our dividend. We believe these steps will lead to closing the gap between our current market share price and book value. In closing, I would again like to thank my CLNC partners for their many achievements over this past year. I also again thank Colony Capital and our CLNC board members for their commitment and support as evidenced by this transformative event. I would like to now turn the call over to our Chief Operating Officer, Andy Witt. Andy?