Weekly Series: mREIT And BDC Recommendations (And Price Targets) As Of 09/21/2025
Summary
- CWMF initiated a new preferred share position in RITM-E, currently listed as RITMV.
- Scott increased his position in BXSL.
- New section added for subscribers. Scott discusses RITM’s proposed acquisition of PGRE.
In the exclusive section for full members:
- All of the current ratings and price targets, as we do each time we publish this article.
- The REIT Forum’s Q2 2025 estimates by Scott Kennedy for earnings and book values or net asset values.
- Tables comparing results to projections.
- The dividend projections for each mREIT and BDC for Q3 2025.
We aim to retain the same layout from week to week. I hope that makes it easier to find the parts that are most relevant to you.
Weekly Notes From Colorado Wealth Management Fund
Positions: 1 trade over the last week. I initiated a position in RITM-E, which is currently traded as RITMV. This is the new 8.75% fixed-rate preferred share from RITM. I don’t expect this to be an extremely long-term holding. But it offers a respectable yield with some upside from the call protection.
2 Links:
Commentary: I’ve been looking to increase my allocations to the preferred shares. We’re seeing short-term rates clearly trending lower with the Federal Reserve indicating a couple more cuts on the horizon. The trend lower in rates is favorable for the fixed-rate preferred shares. We can get upside on fixed-rate preferred shares through two different methods. Either the share can trade at a material discount to call value or the share can have call protection.
When shares are callable, we rarely see prices move substantially above $25.00 plus dividend accrual. If the shares are not callable yet, the price can rise higher. However, the new fixed-rate preferred shares are also trading much closer to $25.00 already. So why pick RITM-E? A large part of it is due to the favorable reception we’ve seen for NLY-J and AGNCZ. The market is showing interest in the higher-quality fixed-rate preferred shares. Further, we usually see a bump for new preferred shares as they switch over to their permanent ticker. That’s also when they tend to become easier to trade for a wider audience.
I’ll be working on another batch of target updates for the preferred shares. As interest rates have been trending lower (especially short-term rates), I’m expecting to increase most targets for fixed-rate preferred shares. Remember that the fixed-rate share targets are influenced more by interest rates. As we see rates trend lower, it makes those shares more attractive.
Scott’s Ultra-Brief Summary
“Another fairly quiet week for BDC NAVs. Another fairly positive week for mREIT BVs as a whole. In this week's discussion, I added a several paragraph summary regarding RITM's proposed acquisition of Paramount Group. I added a few additional PGRE metrics and thoughts in this summary versus my recent discord chat discussions.
It's listed as "3c" in the mREIT general notes (below the recently added Crestline acquisition; 3b). The mREIT discussion section is getting pretty lengthy but it's been pretty busy recently with all the changes/events/developments.”
Note: Readers can use control + F (the find command) and simply enter “3c” to find that part. Alternatively, you’ll notice that many of Scott’s notes deeper in the article are in numerical order, so going to part 3 and finding “3c” isn’t too hard. If you're reading this on our website, I added a bright blue box right above that section to call attention to it.
Weekly Notes From Scott Kennedy
Positions: 1 trade over the past week.
On 9/15/2025, as largely telegraphed in my last trade, I increased my position in BXSL at a weighted average purchase price of $27.725 per share. BXSL currently has very good - great value. If the price drops further, I will likely accumulate a larger position over time (next leg likely $27.00 per share). The BDC sector, as a whole, has recently declined in price. Not just limited to BXSL. During this decline, I/we only had BXSL as starting to be attractively valued. All the other BDCs were either appropriately valued, overvalued, or notably overvalued. Currently, several other BDC names have now moved into the attractively valued range. It's basically due to the speculation around future interest rates/yields (in particular the Fed Funds Rate/SOFR and the notion of future dividend reductions). Again, not a "race" with this position. I'm being patient and "layering into" this position over time and this specific cutting cycle will persist moving into 2026. That said, BXSL has recently been "beaten up" over more dire rate cutting speculation and the impact to earnings performance. The pace of stock price declines cannot persist at this pace. The valuation is becoming more and more compelling as the price drops which matches nicely to the valuation methodology. That's why I started with a small position and have been building up larger "blocks" as it has decreased. There will likely eventually be a dividend reduction in 2026 (even with the very large cumulative UTI balance; remaining unbiased). However, the recent drop in price from $32+ all the way down to the mid $27’s is, in my opinion, the market coming to this reality. Even with a future dividend reduction, BXSL provides very good long-term value and I believe the market has "overshot" this decline in stock price.
In general, I am being patient regarding selectively deploying capital in attractively-valued mREIT common stocks with a less attractive risk/performance rating. My sector allocation to mREIT common stocks remains high (thus aligning with continuing to hold existing positions and selectively adding for future appreciation over the long-term). Patience remains key as catalysts/events will take time to play out (especially within commercial/multifamily mREITs). I will continue to remain disciplined regarding “picking and choosing” investments and lot sizes.
BDC Weekly Change: For the 4th straight week, high yield/speculative-grade credit spreads were relatively unchanged. As of mid September 2025, we have continued to see a decent retracement in high yield/speculative-grade credit spreads after a very volatile April 2025. This is mainly due to continued optimism regarding tariff negotiations and semi-attractive economic data (inflation remaining fairly subdued, relatively flat unemployment rate, etc…). Spreads remain relatively unchanged during calendar Q3 2025 (through 9/19/2025).
BDC Other Comments (Current Week):
I will continue to monitor Middle East and Russia/Ukraine geopolitical tensions and monitor impacts in high yield/speculative grade markets as new events unfold. I continue to not anticipate any material/notable direct impacts to the BDC sector from these events. I am also monitoring all ongoing tariff updates and their impacts to each BDC’s underlying portfolio companies via weekly credit research. As is always the case, I will continue to monitor upcoming U.S. economic data/monetary policy and each event’s impact to the BDC sector.
Calendar Q1 2025 + Q2 2025 + Q3 2025 Recommendation/Target Range + Risk/Performance Upgrades (Downgrades) (Running Tally):