BrightSpire Capital closed a $955 million commercial real estate collateralized loan obligation this month, signaling a decisive shift for a company that spent much of the past two years absorbing losses and cleaning up its loan portfolio.
The deal, designated BRSP 2026-FL3, placed about $833.2 million of investment-grade securities with institutional investors. The remaining securities were non-investment grade. The deal is collateralized by 29 floating-rate mortgages on 30 properties — 95% multifamily — spread across 11 states.
Securitized CLO offerings are pools of loans originated by a single nonbank lender. This type of debt has increased as traditional banks remain slow to return to commercial real estate lending, analysts have said. New issuers have entered the market as well, capitalizing on the opportunity.
The BrightSpire transaction is noteworthy for a few reasons. First, the company simultaneously redeemed its 2021-FL1 securitization, effectively retiring legacy debt.
The new CLO also does more than retire old debt. It generated about $98 million in fresh capital available to deploy within a six-month ramp-up period, the company said.
In addition, 19 investors purchased bonds, including buyers of the lowest-rated investment-grade class — a signal that institutional risk appetite for commercial real estate credit has returned in force, BrightSpire noted Wednesday on its fourth-quarter earnings call.
BrightSpire's road to this moment was a bumpy one. The company reported a net loss attributable to common stockholders of $31.1 million for the full-year 2025. In the fourth quarter alone, it posted a net loss of $14.4 million.
The loss was attributed to the mortgage real estate investment trust's accelerated resolution of real estate-owned assets and watchlist loans.
CEO Michael Mazzei framed the decline as a strategic choice, not a stumble. In announcing fourth-quarter results, Mazzei stated that "the reduction in our book value this past quarter was largely driven by the decision to accelerate [real estate-owned] and watchlist resolutions and redeploy the capital."
That effort is now showing results. Since restarting originations in late 2024, BrightSpire has closed 32 new loans totaling $941 million in total commitments. Thirteen of those loans totaling $416 million closed in the fourth quarter alone, making it one of the company's most active periods in several years, according to Mazzei.
One of the largest loans originated in the fourth quarter was a $70.8 million financing of the 100-unit Lilian apartments in Los Angeles. That loan was among those securitized in the new offer, according to analysis of the deal by bond rating firm KBRA.
Andy Witt, president and chief operating officer, described the CLO deal as evidence of strategic progress.
"The successful execution of our fourth managed CRE CLO continues to highlight the strength of the platform and business strategy," Witt said in a statement. "Proceeds from the transaction will be reinvested in new loans to grow the overall loan portfolio and earnings."
BrightSpire reported growing opportunities to deploy that capital. Mazzei told analysts on the company's earnings call that commercial real estate debt capital markets have swung open sharply in early 2026.
Mazzei sees loan demand rising from both sides of the transaction table. Property equity investors want to monetize legacy assets. Mortgage lenders are pushing borrowers to refinance or sell.
"This is precisely what we are experiencing in our own portfolio," he said. "We are therefore optimistic that there will be a solid demand for loan originations as more assets change hands in 2026."