BrightSpire Capital, Inc.

Greetings, and welcome to the Brightspire Capital Third Quarter 2021 Earnings Conference 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, sir. You may begin.

Good morning, and welcome to Brightspire Capital's third quarter 2021 earnings conference call. We will refer to Brightspire Capital as Brightspire, BRSP, 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 Saraceno. 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 continuing potential adverse effects associated with COVID-19. For a discussion of risks that could affect results, please see the risk factor 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 3rd, 2021, 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 morning 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 Brightspire Capital. Mike.

Thank you, David. Welcome to our third quarter earnings call. I would like to start by wishing everyone well, and I thank you for joining us today. Starting off with some key financial highlights. For the third quarter, adjusted distributable earnings were 26 cents per share, up 30 percent from last quarter. Our current liquidity, as of November 1st, stands at $367 million, and our undepreciated book value per share is $12. The reduction in book value from the prior quarter reflects the write-off of the LA mixed-use MES loan, which I will discuss in my remarks later. With respect to our dividend, I am pleased to report our Board of Directors has approved an increase in our fourth quarter dividend to 18 cents a share. This is up from 16 cents in the prior quarter and is the third increase since reinstating our dividend earlier this year. The increase is supported by the cost savings realized from the internalization of management and the continued successful execution of our overall business plan. Our goal is to further increase our dividends as we reach full deployment of our cash balances. Looking at our third quarter performance, we had a solid quarter in capital deployment, which Andy will discuss in more detail. At a high level, in the last 12 months, we have closed on or committed to 69 loans totaling $2.1 billion. In the third quarter, our largest non-accrual loan, the San Jose Hotel, has been reinstated to accrual status without loss. The borrower is emerging from bankruptcy, and the property will open as a newly rebranded Signia Hotel under the Hilton Hotel's umbrella. During this last quarter, we have steadily increased our loan originations outside of multifamily to include more middle market office properties. Further, subsequent to quarter end, we have committed to a multifamily mezzanine loan with a repeat borrower that has a strong performance track record with Brightspire. Going forward, we will continue to selectively consider mezzanine lending opportunities, but only in situations where we have the wherewithal to fund the first mortgage if necessary. For the remainder of 2021 and into 2022, our plan is to continue to redeploy company cash into new loan originations and substantially complete the rotation of our asset portfolio and liability structure with an eye toward issuing our third CLO. Finally, I would like to discuss the write-off of the remaining book value of $98 million in the mezzanine participation interest on the LA mixed-use property. As you may recall, we retain a junior mezzanine participation interest in connection with Rescue Capital that came in the form of a $275 million senior participation in that mezzanine loan. This was funded and controlled by a substantial third-party investor in September of 2020. The existing first mortgage, mezzanine, and EB-5 loans went into maturity default this past July. Just last month, we were notified that the same private investor in that senior mezzanine participation exercised their rights to purchase the defaulted first mortgage loan. This mortgage had a loan balance of approximately $950 million and a fully committed amount of $1.035 billion. While the hotel of the property has officially opened for business, the sale of the hotel has still not yet been achieved. Furthermore, sales of additional condo units have also been nonexistent. We have been in dialogue with the key parties regarding the possible restructuring, and the situation remains very fluid. However, with this recent change in the ownership of the first mortgage, there is an increased likelihood of a mortgage foreclosure on the entire capital stack. While we have not yet received a formal foreclosure notice, we have been advised that this may occur. A foreclosure action would clearly result in a substantial negative impact on any potential recovery. This recent change in circumstances, along with continued stagnant property and condo unit sales, has resulted in a write-off of the investment. Please refer to the past and current disclosures in our Form 10-Q for more details. Now, before turning it over to Andy, I would like to close by mentioning an important new addition to the Bryce Fire Board. Last month, we announced the appointment of Tim Diamond as a new board member. As a former founding executive of Kroll Bond Rating Agency and managing director at Standard & Poor's, Kim has more than 30 years of experience in commercial real estate and risk oversight. Following her appointment, the Brightspire Board will now have five independent directors. We look forward to working with Kim and drawing upon her vast experience as we continue to grow our business. And with that, I would now like to turn the call over to our Chief Operating Officer, Andy Witt. Andy?