Administration characterised 2025 as a transition yr, reaching the second-largest funding quantity in firm historical past at $12.7 billion regardless of broader market volatility.
Efficiency was impacted by non permanent timing points, together with excessive money balances from $4.4 billion in capital raises and the preliminary dilution from the $2.2 billion internet lease acquisition.
The corporate is deliberately avoiding pressured liquidations of distressed belongings, selecting to take over administration and execute value-add plans to guard long-term shareholder foundation.
Strategic diversification has lowered industrial lending to 54% of the asset base, with U.S. workplace loans now representing a report low of solely 8% of the whole portfolio.
The particular servicing phase acted as a counter-cyclical hedge, with charges reaching their highest stage since 2017 because of elevated CMBS maturity defaults.
Administration emphasised a conservative leverage profile of two.4x, considerably decrease than friends, prioritizing stability sheet sturdiness over near-term earnings maximization.
Administration expects dividend protection to enhance steadily all through 2026 as $1.9 billion in unfunded commitments fund and extra liquidity is deployed.
The brand new internet lease platform is projected to show accretive in 2026, supported by 2.3% annual hire escalations and optimized capital constructions.
Steering assumes a restoration in transaction volumes pushed by decrease rates of interest and a big discount in multifamily provide over the following 18-24 months.
The corporate is concentrating on the decision of roughly $1 billion in nonaccrual and REO belongings throughout 2026 to recycle capital into higher-yielding originations.
Administration is exploring the mixing of AI and knowledge analytics to streamline underwriting and cut back embedded structural prices throughout its numerous enterprise cylinders.
Three belongings migrated to a danger score of 5 this quarter, together with a $108 million studio manufacturing asset and a $269 million New York asset the place the sponsor ceased capital contributions.
A $91 million multifamily mortgage in Phoenix was labeled as credit score deteriorated, leading to a $20 million particular reserve reclassification.
The Woodstar inexpensive housing portfolio noticed a $17 million unrealized truthful worth enhance, with rents remaining 30% to 50% under market charges in key Florida markets.
Administration famous that if non-cash losses and money drag have been excluded, distributable earnings would have totally coated the dividend in 2025.
