BrightSpire Capital Stock

BrightSpire Capital, Inc. operates as a commercial real estate (‘CRE’) credit real estate investment trust (‘REIT’).

The company is focused on originating, acquiring, financing and managing a diversified portfolio consisting primarily of CRE debt investments and net leased properties predominantly in the United States. CRE debt investments primarily consist of first mortgage loans, which is the company’s primary investment strategy. Additionally, the company may also selectively originate mezzanine loans and preferred equity investments, which may include profit participations. The mezzanine loans and preferred equity investments may be in conjunction with the company’s origination of corresponding first mortgages on the same properties. Net leased properties consist of CRE properties with long-term leases to tenants on a net-lease basis, where such tenants generally will be responsible for property operating expenses, such as insurance, utilities, maintenance capital expenditures and real estate taxes. The company continues to target net leased equity investments on a selective basis.

The company conducts all its activities and holds substantially all the company’s assets and liabilities through its operating subsidiary, BrightSpire Capital Operating Company, LLC.

Target Assets

The company’s investment strategy is to originate and selectively acquire the company’s target assets, which consist of the following:

Senior Loans. The company’s primary focus is originating and selectively acquiring senior loans that are backed by CRE assets. These loans are secured by a first mortgage lien on a commercial property and provide mortgage financing to a commercial property developer or owner. The loans may vary in duration, bear interest at a fixed or floating rate and amortize, if at all, over varying periods, often with a balloon payment of principal at maturity. Senior loans may include junior participations in the company’s originated senior loans for which the company has syndicated the senior participations to other investors and retained the junior participations for the company’s portfolio. These junior participations are more like the senior loans the company originates than other loan types given their credit quality and risk profile.

Mezzanine Loans. The company may originate or acquire mezzanine loans, which are structurally subordinate to senior loans, but senior to the borrower’s equity position. Generally, the company will originate or acquire these loans if the company has the ability to protect its position and fund the first mortgage, if necessary. Mezzanine loans may be structured such that the company’s return accrues and is added to the principal amount rather than paid on a current basis. The company may also pursue equity participation opportunities in instances when the risk-reward characteristics of the investment warrant additional upside participation in the possible appreciation in value of the underlying assets securing the investment.

Preferred Equity. The company may make investments that are subordinate to senior and mezzanine loans, but senior to the common equity in the mortgage borrower. Preferred equity investments may be structured such that the company’s return accrues and is added to the principal amount rather than paid on a current basis. The company also may pursue equity participation opportunities in preferred equity investments, like such participations in mezzanine loans.

Net Leased and Other Real Estate. The company may occasionally invest directly in well-located commercial real estate with long-term leases to tenants on a net lease basis, where such tenants generally will be responsible for property operating expenses, such as insurance, utilities, maintenance capital expenditures and real estate taxes. In addition, tenants of the company’s properties typically pay rent increases based on: (1) increases in the consumer price index (typically subject to ceilings), (2) fixed increases, or (3) additional rent calculated as a percentage of the tenants’ gross sales above a specified level. A portfolio of properties under long-term, net lease agreements generally produces a more predictable income stream than many other types of real estate portfolios, while continuing to offer the potential for growth in rental income.

Business Segments

The company’s operating segments include Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate, all of which are included in the company’s target assets; and Corporate and Other.

Senior and Mezzanine Loans and Preferred Equity—CRE debt investments, including senior loans, mezzanine loans, and preferred equity interests, as well as participations in such loans.

Net Leased and Other Real Estate—Direct investments in commercial real estate with long-term leases to tenants on a net lease basis, where such tenants generally will be responsible for property operating expenses, such as insurance, utilities, maintenance, capital expenditures and real estate taxes. It also includes other real estate, consisting of two investments with direct ownership in commercial real estate, with an emphasis on properties with stable cash flow and five additional properties that the company acquired through foreclosure or deed-in-lieu of foreclosure.

Corporate and Other—Includes corporate-level asset management and other fees including expenses related to the company’s secured revolving credit facility (the “Bank Credit Facility”) and compensation and benefits. It also includes a sub-portfolio of private equity funds.

With respect to all the company’s investments, the company invests so as to maintain its qualification as a REIT for the U.S. federal income tax purposes and the company’s exclusion or exemption from regulation under the Investment Company Act of 1940, as amended (the ‘Investment Company Act’).

Regulation

The company holds its assets primarily through direct or indirect wholly-owned or majority-owned subsidiaries, certain of which are excluded from the definition of investment company pursuant to Section 3(c)(5)(C) or Section 3(c)(6) of the Investment Company Act.

The company’s subsidiaries that rely on the exclusion provided for in Section 3(c)(6) do so because they are primarily engaged, directly or through majority-owned subsidiaries, in Section 3(c)(5)(C) businesses or in one or more of such businesses (from which not less than 25 percent of such company’s gross income during its last fiscal year was derived) together with an additional business or businesses other than investing, reinvesting, owning, holding, or trading in securities.

The company is also required to comply with certain provisions of the Equal Credit Opportunity Act that are applicable to commercial loans and the Fair Housing Act.

Tax Status

The company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, for the U.S. federal income tax purposes beginning with its taxable year ended December 31, 2018. As a REIT, the company will not be subject to the U.S. federal income tax on the ‘REIT taxable income’ that it distributes annually to its stockholders.

History

The company was founded in 2017. It was incorporated in the state of Maryland in 2017. The company was formerly known as Colony NorthStar Credit Real Estate, Inc. and changed its name to Colony Credit Real Estate, Inc. in 2018. Further, the company changed its name to BrightSpire Capital, Inc. in 2021.