BrightSpire Capital(BRSP) - 2021 Q3 - Quarterly Report

Financial Position - Total assets as of September 30, 2021, were $5,478,555, a decrease from $6,211,937 as of December 31, 2020[13] - Total liabilities decreased to $3,799,262 from $4,253,259, indicating a reduction of about 10.7%[13] - Total stockholders' equity decreased to $1,432,579 from $1,665,673, a decline of about 14%[13] - The company reported accumulated deficit of $(1,468,231), an increase from $(1,234,224), reflecting a worsening of approximately 19%[13] - Cash, cash equivalents, and restricted cash at the end of the period totaled $279.015 million, down from $535.049 million at the end of the previous year[34] - As of September 30, 2021, total cash, cash equivalents, and restricted cash decreased to $279.0 million from $535.0 million at the end of the same period in 2020, representing a decline of approximately 48%[38] Loans and Investments - Loans and preferred equity held for investment increased to $3,166,236 from $2,220,688, reflecting a growth of approximately 42.5%[13] - The company incurred $1.306 billion in acquisition, origination, and funding of loans and preferred equity held for investment, compared to $122.424 million in the previous year[34] - The balance of loans and preferred equity held for investment increased by $1,305,599 thousand due to acquisitions and originations during the nine months ended September 30, 2021[190] - Total senior loans held for investment as of September 30, 2021, amounted to $1,196.1 million, an increase from $180.7 million in the previous period[202] - The average risk rating for loans and preferred equity held for investment was 3.2 for the quarter ended September 30, 2021[202] Income and Expenses - Net interest income for the three months ended September 30, 2021, was $33,418, an increase of 32.5% compared to $25,223 for the same period in 2020[22] - Total property and other income decreased to $27,322 for the three months ended September 30, 2021, down from $41,708 in the prior year, representing a decline of 34.2%[22] - Total expenses for the three months ended September 30, 2021, were $37,751, a significant decrease of 46.7% from $70,597 in the same period of 2020[22] - Net income (loss) attributable to BrightSpire Capital, Inc. common stockholders was $(70,057) for the three months ended September 30, 2021, compared to $5,007 in the prior year[22] - Net income (loss) per common share for the three months ended September 30, 2021, was $(0.54), a decline from $0.04 in the same period of 2020[22] Loan Losses and Provisions - The allowance for loan losses increased to $42,730 from $37,191, indicating a rise of about 15%[13] - Provision for loan losses was $769 for the three months ended September 30, 2021, significantly lower than $10,404 in the same period of 2020[22] - The Company recorded a provision for loan losses of $5,884 thousand for the nine months ended September 30, 2021[197] Cash Flow - Cash provided by operating activities was negative $70.985 million, a significant decrease from positive cash flow of $44.862 million in the prior year[34] - Net cash used in investing activities was $474.690 million, a decrease from cash provided of $831.295 million in the prior year[34] - The company reported a net cash provided by financing activities of $283.535 million, contrasting with a net cash used of $535.660 million in the previous year[34] Management and Operations - The Company completed the internalization of its management and operating functions on April 30, 2021, resulting in a one-time termination fee of $102.3 million, which is expected to lead to savings in operating costs[44] - The Company’s executive team remains unchanged following the internalization, with key leadership continuing to manage operations[45] - The Company has realigned its business segments to better reflect how the Chief Operating Decision Makers manage the business[47] Market Conditions and Risks - The Company anticipates challenges in its hospitality and retail investments due to COVID-19, including significant declines in operating cash flows and potential payment defaults[48] - The Company’s financial condition and results of operations may continue to be negatively affected by the economic fallout from COVID-19, with ongoing assessments of asset recoverability[49] Taxation and Accounting - The Company elected to be taxed as a REIT beginning with its taxable year ended December 31, 2018, and must satisfy specific tests to maintain this status[155] - The Company recorded an income tax expense of $2.1 million for the three months ended September 30, 2021, compared to an income tax benefit of $15.4 million for the same period in 2020[161] - The Company has established a Current Expected Credit Losses (CECL) reserve, which represents a lifetime estimate of expected credit losses for financial instruments carried at amortized cost[161] Unrealized Gains and Losses - Unrealized gain (loss) on mortgage loans and obligations held in securitization trusts was $3,867 for the three months ended September 30, 2021, compared to a loss of $(13,162) in the prior year[22] - The Company recognized unrealized losses on mortgage loans and obligations held in securitization trusts of $32.021 million, compared to gains of $41.589 million in the prior year[34] - As of September 30, 2021, the Company recognized unrealized gains of $32.0 million and realized losses of $23.4 million during the nine months ended[68] Equity and Investments - The Company has investments in commercial mortgage-backed securities (CMBS) and collateralized loan obligations (CLOs), with a selective approach to future investments in higher-rated securities[42] - Investments in unconsolidated ventures decreased to $204.4 million as of September 30, 2021, down from $373.4 million at the end of 2020[204] - Equity method investments totaled $199.6 million as of September 30, 2021, compared to $366.5 million at December 31, 2020[204]