Q2 2025 BrightSpire Capital Inc Earnings Call
Quarter 2025 earnings conference call.
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I would now like to turn the conference over to David palame general counsel. Please go ahead, sir.
Good morning and welcome to brightspyre capitals second quarter 2025 earnings conference call. We will refer to brightspire Capital as brightspyre brsp or the company throughout this call.
Speaking on the call today are the company's chief executive officer, Mike Maisie president and Chief Operating Officer, Andy wit, and Chief Financial Officer. Frank saracino.
before I hand the call over, please note that on this call certain information presented contains forward-looking statements
These statements, which are based on Management's, current expectations are subject to risks uncertainties and assumptions potential risks, and uncertainties, could cause the company's business and financial results to differ materially.
For a discussion of risks that could affect results, please see the risk factor section of our most recent 10-K 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, July 30th 2025 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 yesterday afternoon and is available on the company's website, presents reconciliations to the appropriate Gap measures and an explanation of why the company believes such non-gaap Financial measures are useful to investors.
Before I turn the call over to Mike, I will provide a brief recap on our results.
The company reported second quarter, gaap, net loss attributable, to Common stockholders of 23.1 million or 19 cents per share.
Distributable earnings of 3.4 million or 3 cents per share and adjusted, distributable earnings of 22.9 million or 18 cents per share.
Current liquidity stands at 325 million of, which 106 million is unrestricted. Cash.
The company also, reported, gaap net Book, value of 7.65 cents, per share, and underappreciated Book, value of 8.75 cents per share as of June 30th 2025.
Finally, during this call management, May refer to distributable earnings as d e.
With that I would now like to turn the call over to Mike.
Thanks David and Welcome to our second quarter earnings call. We had a solid second quarter and are pleased with our progress and the results. Our dividend was covered by adjusted de. While our underappreciated Book value. Remained unchanged. In addition our net loan originations were again, positive for the quarter.
Most importantly, we made substantial headway in reducing exposure to watch list loans, thus making further progress and continuing to manage risk in the portfolio.
We also, of course remain actively engaged in the resolution of aerial assets.
Turning briefly to the markets. We saw a notable Improvement in market conditions and a welcome decline in volatility since our call on April.
Commercial real estate. Debt markets appear to be a largely unaffected by the headlines over the last 90 days.
We've seen credit and lending, spread stabilize loan, inquiry has increased steadily and the cnbs market has returned to normal and is quite active.
Moreover Bank Warehouse lenders, have remained ready, willing and engaged to provide competitive financing throughout the second quarter. These recent improvements are encouraging and provide optimism for the CRA markets continued progress.
Now turning briefly to our balance sheet during the quarter and subsequently we have reduced the watch list on a net basis by 50%.
The most notable reduction was the result of foreclosing on the San Jose hotel loan.
We now own the property free and clear with no financing in place.
closure process, the hotel experienced meaningful deferred maintenance that we are now in the process of addressing
Our intention is to make much needed, and neglected physical, and operational improvements to the property ahead of significant events. Taking place in the Bay Area, through mid 2026.
This is most notably the Super Bowl and the World Cup.
We will look to sell the asset sometime in 2026.
However, while the asset remains unlevered, it is currently cash flow positive and is now contributing to earnings.
In the interim, given the asset is unlevered. It also serves as a significant source of immediate liquidity as a result of committed, but undrawn financing capacity.
On the origination side as anticipated and highlighted in our last call, we experienced a lull and new loan closing during the second quarter.
This quarter is origination Dynamics where mirrored by a Slowdown in payoffs in our own loan portfolio.
As a result, on a net basis, we experienced positive growth in the loan book.
We expect loan origination conditions to improve in the second half of the year, as we already have an additional 6 loans for $114 million that have closed or are in execution.
Finally, during the quarter, we repurchased 561,000 shares at an average price of 5.19.
BrightSpire continues to trade at a roughly 40% discount to its undepreciated book value.
This equates to a discount of approximately $450 million to a book value, which includes a sessile reserve of $137 million, or $6 per share.
Given the recent improvements in our watch list and the consistency in Book value, we feel the stock is significantly undervalued.
In closing, we navigated a very Dynamic first half of the year.
We delivered net positive growth in our loan book, our adjusted distributable earnings cover, the dividend, and we cut the watch list in half.
We will continue to make progress on our remaining watch lists loans as well as our Oro resolutions.
The Oreo resolution proceeds are a significant source of liquidity for future loan, originations and the continued regrowth in our loan book.
We enter the second half of the year with a more defined path forward to capitalize on the opportunities ahead.
With that, I will turn the call over to our President, Andy Wed. Andy.
Thank you. Mike, echoing Mike's comments, we continue to execute on our stated objectives, resulting in a positive quarter of significant watch list reductions. Stable book value and meaningful progress on the portfolio management firm.
During the second quarter, the portfolio grew by approximately 3% or 70 million on a net basis.
Excluding the impact of the San Jose loan moving to Ariel.
Capital deployment was relatively monitoring the quarter consisting of 98 million across 2, new senior loan, originations and across collateralized preferred Equity investment, as well as future. Funding of 7 million resulting in total deployment of 105 million.
Repayments were insignificant consisting of 5, partial pay Downs. However, we anticipate repayment volume related to both loan payoffs and Ariel resolutions to increase over the next several quarters.
The combination of current liquidity on balance sheet and resolution proceeds, will be redeployed in the coming quarters in new loans.
During the quarter and subsequently we continue to make progress on the watch list loans. Reducing total watch list exposure by nearly 50% and by 2 loans on a net basis. The reduction watch list exposure was primarily driven by the removal of our 2 risk rank 5 loans,
During the quarter and subsequently, we took ownership of the San Jose hotel loan, and the Santa Clara multifamily pre-development loan as a result. There are no risk ranked by loans on our watch list.
Additionally, we upgraded 2 risk Rank, 4 loans. The loans were previously downgraded. Due to uncertainty in both cases, the borrower contributed fresh Equity to support the execution of the underlying business plan resulting in the upgrades.
Given the uncertainty, the borrower is no longer supporting the property and brsp is evaluating options which include either a sale on the short term or potentially managing the property through this period of uncertainty.
Additionally, we downgraded the Austin, Texas multifamily loan.
Occupancy at the property has been stable. However, the supply glut in the market has put downward pressure on rental rates,
On a net basis, watch list loan exposure was reduced from 396 million at the end of q1 to 202 million today or 9% of the loan portfolio.
While the watch list experienced a significant reduction, our REO portfolio has grown measurably.
Currently, our REO portfolio is comprised of 8 properties with an aggregate and depreciated gross book value of $379 million.
The San Jose hotel property accounts for 136 million or 36% of the REO portion of our portfolio.
As Mike previously mentioned our current plan for the property contemplates, holding it in the near term to improve property level performance to maximize shareholder value.
The office portion of our REO, portfolio is comprised of 2, Long Island City properties with a combined undepreciated, gross boat value of 60 million, or 16% of the REO portfolio.
We are focused on leasing up one of the properties where we have a tenant taking one full floor. We are also negotiating with another for significant space imminently. The second building will be marketed for sale.
The remaining portion of our REO. Portfolio is comprised of 4, multi, family properties and 1. Multi-family pre-development site for Combined undepreciated, gross Book value of 183 million or 48% of the REO portfolio.
As it relates to the 4 multi, Family Properties were actively engaged in the execution of value. Ad business plans. We anticipate resolving, most of the multi family portion of our REO, portfolio over the next year, or so subject to how the market evolves.
Currently we are in the process of finalizing the sale of our Phoenix. Arizona multifamily property in line with our carrying value. We expect to close on the transaction next month or shortly thereafter.
As previously, highlighted our corporate business plan contemplates. Repatriating capital from this portion of our portfolio for redeployment. New loans at present, our 8, REO properties, have an aggregate undepreciated gross carrying value of 379 million and a debt to assets ratio of approximately 31% resulting in an undepreciated, net carrying value of 263 million
As we look to execute our business plan, we'll exercise Prudence with a focus on maximizing, the value of our existing Pro.
Parties to provide fuel for the loan portfolio growth over the next several quarters. Currently, the loan portfolio stands at $2.4 billion across 81 loans, with an average loan balance of $30 million.
with that, I will turn the call over to Frank Saros.
Our Chief Financial Officer to elaborate on the second quarter results. Frank thank you. Andy and good morning everyone.
For the second quarter, we generated adjusted de of 22.9 million or 18 cents per share.
Second quarter de was 3.4 million or 3 cents per share.
De includes specific preserves of approximately 19.5 million.
Additionally, we reported total Company GAAP net loss of $23.1 million, or $0.19 per share.
I would first like to provide an update on 2 of our Legacy office Equity Investments.
First, our equinor Norway, net lease asset reached the maturity default on its Bond financing, and the lenders foreclosed on the property,
As a result, we decided to align all Equinor assets and liabilities from the balance sheet and recorded a gap impairment of approximately $49 million and an income tax benefit of approximately $22 million.
As for the second of the 2 properties, in January earlier, this year, we defaulted on the cnbs financing for our multi-tenanted office Equity property located, just outside Pittsburgh.
Subsequent to quarter in. A receiver, was appointed for the property. And as a result, we will Decon the assets and liabilities from the companies Consolidated balance sheet in the third quarter.
We reported a gap impairment of approximately $2 million related to the property.
The combined items lowered the second quarter total GAAP net book value to $7.65 per share from $7.92 per share in the first quarter.
However, the impairment charges and offsetting tax benefits had no impact on our undepreciated book value as we had previously written both Investments down to zero over a year ago. As such for the second quarter, we reported underappreciated Book value of 8.75 flat quarter of a quarter.
Now, I'd like to quickly bridge to the second quarter adjusted distributable, earnings of 18 cents versus the 16 cents recorded in the first quarter.
The change was primarily driven by loan originations and operating income from the San Jose hotel.
Looking at reserves during the second quarter, we recorded specific reserves of approximately $19.5 million related to taking ownership of the properties associated with the San Jose hotel loan and the Santa Clara, California, multi-family pre-development loan.
As both loans were resolved during the quarter, we subsequently charged off their reserves.
Our general provision stands at $137 million, or 549 basis points on total loan commitments. This is approximately $20 million lower than the prior quarter.
As a sessile provision, it is flat quarter of a quarter. The decrease is primarily driven by the charge-offs.
Our debt to assets ratio is 63%. And our debt to equity ratio is 2.0 times, we have no corporate debt, or final maturities. Due until 2027,
Lastly, our liquidity as of today stands at approximately 325 million. This comprises 106 million in current cash, 100, 165 million under our credit facility and approximately 54 million of approved. But undrawn borrowings available on our warehouse lines.
This concludes our prepared remarks. And with that, let's open it up for questions.
Operator.
Thank you.
We will now begin the question and answer session to ask a question. You may press star then 1 on your touchtone phone,
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At this time, we will pause momentarily to assemble our roster.
And your first question today will come from Randy Ber with B. Riley FBR. Please go ahead.
Hey, good morning. Um so that was well covered good quarter. Um, I guess my my my question here is related to um, the the Rio portfolio specifically the the San Jose hotel and the uh,
The multifamily properties. You mentioned, can you could you give a little caller kind of like on value?
And then in, in San Jose, I think there's there's events coming to that market or just like to, like love to hear like a little bit of caller about, like, how how the Outlook is is going for for, for, for managing those and, and adding value to the, to the process. As you said, thanks.
Okay. Hey, Randy. How are you? Um,
This is my, uh, I'll discuss the San Jose asset, and Andy is deeply involved in the, uh, the multifamily assets that you could tell you what we're doing there.
Uh, which is some of them are very heavy lifts, and the team is doing a great job, um, on the San Jose hotel. Again, as I said, it was a very protracted, uh, process, uh, and ended up foreclosing on the asset. Um, there is a considerable amount of deferred maintenance at the asset, uh, given that the foreclosure process was a long one. Uh, and there was some distress at the asset. Uh, there were just basic things like elevators; some elevators were not operating, um, and offline. So there are things like that that we need to address. When I talk about getting those things done, there are some big events that are coming up. You obviously want the hotel fully operational, uh, and in the best condition. Uh, so we are going to be investing capital, uh, over the next six months into the hotel for deferred, uh, deferred capex and things that need to be addressed.
Uh there are some big events coming up. Uh I believe the fall is the peak season.
To, uh, Levi Stadium, which is uh, very close proximity to, uh, our hotel. And then we have the, uh, March Madness in San Jose, uh, in March obviously. So, we want, we want to do things that we need to do to get that hotel, uh, fully operational, and, and Peak condition, uh, before those, uh, before those events. So, we would Envision because it's going to take some time to get some of these things addressed, uh,
Probably about 6 months, we're going to hold the asset, certainly to do that, address the capex, uh, that's been deferred and then prepare for these big events. And that's why I think uh, we'll look to potentially sell the hotel sometime uh, in mid uh, 2026 but we don't really have a timeline for it. Yet, it is contributing to earnings. The hotel is the NY is above Opex. So there is a positive noi, but it's still in a trough and the ROI on that asset is still low. Uh, we don't have an incumbent right now. Um, we can draw our modest amount against it on a, on our pre-approved, uh, capacity with our lender, uh, something like 60 million bucks, uh, in in terms of potential liquidity, uh, but right now we're going to keep it unencumbered. Um, the Roe is low but hopefully, the cash flow will increase. And again, we'll look to address this in 2026.
And now, I'll turn it over to Andy to, to talk a little bit about some of the multi family Oro that we have.
Thank you, Mike. So as it relates to our our multifamily uh, Aro and we've got 1 that's on the precipice of being sold. And then for the remaining assets, the business plans, largely comprised of addressing deferred capex. Uh, addressing some of the unit improvements leasing up the property, in some cases, improving the curb appeal, but these are relatively straightforward executions. And, you know, in most of the cases here were well along the way in terms of the execution of that business plan, and, you know, it's essentially taking an asset that is, you know, least at a below market rate, improving the, the look and feel of the asset and, and driving towards Market occupancy. And so, you know, we anticipate exiting the
The other three assets over the next several quarters, you know, they're in various phases of that business plan that I laid out. So they'll come in sequence.
so we're we're we're you know, encouraged by, you know, what we're seeing, uh, in terms of the demand for the underlying product and, you know, we anticipate
executing these plans and, and getting them to Market.
I think that's great, go ahead. I'm sorry. Randy know I was gonna say that was that that's super helpful on both both fronts, but my you're going to say
no, thank you. That's it.
And your next question today will come from Steve Delaney with citizens, JP. Please go ahead.
Hello everyone. Thanks for taking the question and also congratulations on your stock up 6% today. Um,
Mike: Just a little, the uh, it's kind of a theoretical question to start. If we look at bridge loans that you're underwriting today.
Especially after having worked through some fours and fives of bridge loans made in 2022 or 2023.
Is there a difference in?
The.
The quality of the borrowers or the properties of the structures. Um, what have we as an industry? I'm throwing myself in there as an analyst but the interim Bridge lending commercial real estate Lending.
Uh, apparatus in the country. Has there been a lesson learned is the bridge loan business today. Meaningfully different from what was being done. Postco 2022 with with lower rates. I'm just curious if there's something kind of cyclical going on there or or the new version if you will. It's 2.0 gonna be better than 1.0. Thanks.
I feel like I'm talking to my daddy. Yes. There's been a lesson learned.
One of the things that we're driving the market. Before that, we've spoken about in past calls the syndicators, and that they're largely gone, and that's a huge positive.
We're also operating in a different rate environment, and we're also operating where some of these properties, the values are getting are getting reset. And so that's also very positive. Uh, so right now we're looking at going in debt yields at a much better than we were before and exit debt yields also better. I think the backdrop Capital markets are looking very good CL Market. We have a deal that's in the market, not us but in other lender that should price shortly, spreads look like it may tighten on that.
The cmds market as you've heard on other calls. Uh, today the cmbs market is wide open and doing well. Uh, we mentioned on our call, the bank Warehouse, uh, lenders are very active
Uh, as you know, Freddie and Fannie, probably from your GSC, uh, lender calls, Freddie and Fannie are robust. Lending activity is very aggressive, and hopefully we'll have a Fed cut in September. So the capital markets are feeling very good.
Uh, after this quarter we're very constructive on multi family. Uh, we feel like the recovery is u-shaped and we're at the bottom of that trough. We're still seeing concessions that are given, but construction lending is down.
Uh, considerably than where it was, uh, in our previous cycle in 202021 and 22, uh, the rent versus own proposition is looking stronger than ever which bods very well for multi family. So, we think that in 2026 27, you're going to see rank in session, burn offs and rent increases and hopefully our credit people are recovering from the pdsd of the past 2 years, and they're seeing that and we're we're trying to lean into the underwriting more because we do believe that that market will tighten um, we we are picking our spots, we we would prefer
New construction takeout, uh, and properties, obviously brand new in areas where, uh, we're seeing uh, higher household incomes where you could potentially, uh, push push rents further, uh, than in other older vintage, uh, multi family. Uh, we still think it's a, uh, A lender driven market. We've said that repeatedly on the last 2 or 3 calls meaning that this billions of dollars coming up for refinancing in the next 2 years, which bodes, well, for the bridge Market. Uh, and, and the lenders are at the end of the rope with regard to uh, loan extensions without putting equity in the deals. And so the borrowers that are coming to us are still looking and this is why inquiry is increased dramatically. 75% of it is is still refi. The reason why the hit ratio is still low is because those
Those borrowers are seeking to do better than the pay Downs required by their existing lenders. So they're coming to the market asking for a a an equity neutral refinancing uh and those are still a struggle and so as the lenders that they currently have are working with them. We're starting to see those refined requests turn into sales and we're seeing more acquisition activity, which we largely prefer over bridge to bridge lending. So, uh, hopefully that investment sales activity will continue to grow, as lenders, are pushing their borrowers into the market saying, sell the property or pay or pay down or pay down the loan. So we're pretty constructive.
in the market right now, uh,
Especially for multifamily, we think that this is a much different lending market than you're seeing. This is evidenced by the fact, Steve, that you're seeing the advance rate on costs about 5 percentage points higher than they were in 2022 because the debt yields going in are much better than what we saw in 2022.
That's very helpful. Great, you know. Look back and roll forward uh you know, to where we sit here today and given where we are today, at June 30th was 2.4 billion. If you look at and maybe Andy wants to whoever, wants to answer it, I guess I'll address it to the team but looking at your Capital Base today in that portfolio how much increment
Loan portfolio growth. Do you believe you have with your uh your existing Capital base? To maybe move beyond the 2.4 billion portfolio at June 30th? Well, I'm gonna I'm gonna turn it over to Annie because he, he did say and he'll clarify further in uh from what has prepared remarks were about, how much embedded Capital we have in our, in our Aro, Andy
You know, right now today we're sitting on about 260 million of Netbook value in our REO portfolio. And so we're incredibly focused on, you know, getting to liquidity as it relates to those underlying positions, we're sitting on a healthy cash position. So we're we're deploying Capital, but as we look forward, we think the portfolio has the opportunity to grow to about 3 and a half billion. Um, you've given our existing Capital base. Now that's going to happen over time. Obviously you're going to have, you know, repayments occur during that period of time are you know, deployment is going to be somewhat moderated by our ability to dispose of the existing REO. But that's certainly the focus of of the organization at this point.
Excellent. Well thank you for that all for your comments. That's very helpful.
Thank you, Steve.
And your next question today will come from John Nicodemus with BTIG. Please go ahead.
Hello, good morning everyone. Somewhat related to Steve's last question, something that Andy went over in your prepared remarks: the repayments. Obviously, you noticed that they were low in the second quarter. It’s good to hear that they're going to be bouncing back. We did note that there were just $7 million total so far in July. Is that something that looks like it'll be happening before the end of the third quarter or deeper into the year? We just...
Kind of curious what the repayment trajectory is looking like throughout the rest of 2025.
Yeah, it
Difficult to, you know, predict with a high degree of accuracy, what the repayment, you know, schedule will look like and you know, getting to the REO proceeds. But we're certainly going to see an uptick over Q2 uh without a doubt. We've got some, you know, rather significant positions that we've got a clear line of sight in terms of resolving. So I think, you know, over the back half of the year, you are going to see some rather material uh resolutions. Both you know in the the existing REO portfolio and uh as it relates to repayments, um, and it, it's really difficult to size that.
I will also I'll add to that that we are. We are seeing we had some uh a modest pay down on 1 of the risk rated for office loans.
Um, we expect a small office loan to pay off at the end of the month.
We also are seeing on some of the larger office loan assets that we have. Uh, I think hopefully next quarter. We we should have this discussion about some underlying leasing that we're seeing there and the Phoenix office asset. Uh, there are in the process of working on a lease uh, that could be meaningful for the building. We cannot speak for the borrower. But there's a chance that that borrower in in executing that lease will put that asset up for sale.
Uh, so we'll hopefully of that. Again, we can't speak to their, uh, their goals and what their intentions are. But, uh, we, we would hope that that would be the case in Baltimore.
That asset is a relatively highly leased asset that office asset. Um and it is in it is it is competing for a number of leases for state agencies. There was a state agency building.
That was owned by Marilyn government that, um, they are deciding not to invest new capital in. And they've told those tenants, those 9 agencies in the building for about 250,000 square feet to go find some new space.
And uh, our building is our our owner or borrower is competing for some of that space. And again, we can't speak on their behalf but uh, we hopefully that will get done and that may lead to that property being sold and if we can get the office portfolio down,
By about 20% from where it is today. It's it's shrunk over time, uh, that would bring it down to like a 5 handle 500 million. Um, then I think we would potentially look at the market for uh, doing new office loans. Uh, the cmbs market is accepting, uh, office properties. More than it has over the past year. Uh, so we're, uh, we're optimistic. That we can get some, uh, some 1-off deals done in the office Market. Again, we'd have to shrink the office portfolio and then I would also add that uh, in Long Island City. Andy alluded to this uh 1 of the buildings. We have, at least 1 floor.
At least gets done. Uh it's probably a little premature to say that because it's not fully baked. Uh hopefully we'll have more to say about that positively next quarter.
Thanks so much, Mike. And Andy, that's some great color and definitely exciting to hear what's coming through.
Then for my follow-up, a little bit more of a pivot, and I know this is something we've discussed before, I believe in the spring with your team.
Just wanted to hear any updates, your team might have now that Texas has moved to change its legislation on traveling. Hfcs has it changed? How your team's looking at your existing loans as well as any future loans? There just giving your Texas multi, family exposure. Thank you.
You know, we made it, we, we have, uh, executed on some of the hfcs. Um, and, uh, we understand what the new legislation says, it gives us a a 2-year benefit in taxes. Um, unless we sell the assets, we will probably, we will be selling the assets before all that 2 year Horizon. So, that is what it is. And and we think that, um, that we'll have no, really no impact on our strategy and executing on those on those Rouse we are, uh, right now.
Almost complete with, uh, complete capex on the Fort Worth asset, and I think that will probably see the light of day, in terms of a sale. Uh, after we after we list the, uh, the Mesa multi family asset, that will be the next 1 that goes up. Uh, the Fort Worth asset, uh, is is experiencing extensive leasing progress after the refurbishments that we put in place. And we'll put that 1 out on the market. My guests around first quarter of 2026 and then, after that asset, the next 1 that will follow will be the 1 in Arlington Texas, uh, and that'll probably be around the second quarter of 2026.
Great. Thank you so much Mike. Appreciate it. And that's all for me.
Again, if you have a question, please press star and then 1.
And your next question will come from Jason Weaver with Jones Trading. Please go ahead.
Good morning guys. Thanks for taking my question.
Uh, just looking at the decline in property operating margins in the quarter, I assume a good portion of that from the two you took back, specifically San Jose. But how should we be thinking about the trajectory from here moving forward? Um, Andy, you mentioned in your prepared remarks that there was a lot of deferred maintenance. Did that contribute to the extra expense burden there?
I need 4. This, Frank Burke operating, uh, during the quarter. We remember, we foreclosed on signia San Jose hotel. So that would have, uh, not only increased property income but as well as property expenditures quarter. So maybe that combination that's
Looking odd.
But capex. Wouldn't wouldn't affect uh would affect the noi.
Got it. So, can you point to anything else that is affecting the operating margin there? It declined about 10 points before I'm getting.
No, I'm not. I'm failing, I'm failing to get the gist of where you're going. Uh, we can we can revisit no worries. Um, second, you know, may may be related to Steve's question. Uh, it seems like many of the peers out there that, you know, a few have reported but they're still having some difficulty, you know, seeing net net growth in their portfolios, anything that you can point to from a competitive perspective on why you've been able to win more mandates. Whether that's, you know, pricing Covenant structures, Etc.
Yeah, I I'll be perfectly honest with you here. I mean we feel we're we're disappointed in the second quarter. Uh, we said that going into the uh it last quarter that we would have a low and quite frankly has to offer some of our competitors. Uh, uh, you know, we've we've we've uh, We've looked at uh, our friends at uh, trtx have done a great job for the quarter and and we look to follow suit. We we feel like the inquiry that we've gotten
Uh, has increased, as I said in the prepared remarks dramatically year-over-year. So we're we're getting the looks that we want and that's that's the main thing that you we want to see as much as possible that's out there. Uh, and then it's up to us about the hit ratio. The struggle has been
necessarily think that we've done or outperformed our peer group and originations, uh, this quarter
All right, thank you for that, caller.
And your next question today will come from Guava with Alliance Global Partners. Please, go ahead. Yeah, thank you. Good morning. I was hoping to get some more color on the cross-collateralized preferred equity investments that you guys had in 225.
Sure. This is Andy. I'll take that question. So, this is related to the prep equity position that we originated during the quarter, correct?
Yeah.
Okay, so so this is a, a, a cross collateralized prep across 6, uh, Properties or loans. Um, they're all located in Phoenix. These were existing loans. So this was, um, Crossing the, the performance of those, uh, 6 properties under this pref Equity agreement. Um, and, you know, the underlying collateral consists of just over 900 units and the occupancy is about 92 93%. Um,
In terms of the rate on that particular instrument, I believe it was 14%.
I don't know if you you had any other questions as it related to this particular loan.
No, that's helpful. And and I as a follow-up, I wanted to ask you on the standard, clera multi family. That's in REO. Um, I look at the carry value 39 million. It seems like it's different than 57 million that was reported when it wasn't a watch list, just wanted to get some more color on the difference in the carry value.
Which asset?
You're seeing the charge off of the Cecil that's related to that.
So that was increased. This was our CEO reserve that we had against it.
And that, that's that accounts.
Okay, understood uh thank you. That's all I had.
This concludes our question and answer session. I would like to turn the conference back over to Mike Maisie for any closing remarks.
Thank you. Okay, in closing. Um, we would like to mention, uh, to the families, uh, friends, and colleagues of the victims of the 3455 Park Avenue tragedy.
And our friends and Industry colleagues at Blackstone and Rudin that we offer our thoughts and prayers and deepest condolences.
And a thank you to the NYPD, the first responders, and to all of the building security staffs who keep us safe. Thank you, and thank you for joining us today. This ends our call.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.