Weekly Series: mREIT And BDC Recommendations (And Price Targets) As Of 10/12/2025

Summary

• Recent trades for both analysts. As usual, you’ll find both analysts recent trades at the top of their respective sections.
• Upgrades for BDCs continue as valuations fall further. On average prices were down 6.3% this week compared to projected NAV falling 0.8%.
• Since readers have been most interested in BDCs lately, I will provide a few charts to share some perspective on the recent swing in the sector.
• The charts contrast the swing in prices with the change in projected net asset value and show how our rating distribution has changed over the last 30 weeks.

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 Q3 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 Q4 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: A few trades last week:

• Purchased shares of Blackstone Secured Lending Fund (BXSL) at $25.015. This takes my allocation from about 0.71% to 1.09%. 
• Sold 1,759 shares of PMTW at $25.50 to $25.5012 per share. 
• Used proceeds to purchase 1,756 shares of PMTV at $25.5281 per share. I had about $28.43 left because execution was slightly more favorable than my limit price. These baby bonds are extremely similar, but PMTV offered us about $.18 more dividend accrual. That was easily worth paying $.03 in the price. 
• Overall, this improves our position by about $.15 per share (that’s $.18 minus $.03), though I would consider it a tiny bit more favorable given the difference in maturity dates. It is not life-changing money, but it was a pretty easy way to pick up a few hundred bucks in value. 

Commentary: The big story in our sectors lately is probably the decline in BDC valuations. On average the BDC share prices have declined by 14% over the last month (since 9/12/2025). That’s a big dip. Projected BVs are only down slightly. A portion of the dip can be explained by ex-dividend dates, but it’s only a modest portion.

The following chart demonstrates the changes over the last month:

We’ve been starting to build a position in BXSL. As investors watch it, they might think it’s getting crushed more than the sector. However, it actually declined slightly less than the average for peers over the same period. BXL was down 12.5% compared to a peer average that was down 14%.

So what’s happening? Well, short-term rates have been unfavorable. Since many assets are floating rate, the interest income takes a hit with lower rates. However, there’s also concern following bankruptcies by companies such as Tricolor and First Brands. Many BDCs are not actually exposed to those companies at all. The ones with exposure usually had only modest exposure. But it leads to more fear about BDCs the loans they own. Loans which have generally performed very well over many years.

If the BDC prices rallied by 14%, many investors would’ve figured that’s just how things go. The market goes up, right?

Meanwhile, you can use the following chart to see the shift in our ratings for the sector over the last 30 measurements.

There were 3 batches of periods where there wasn’t a single bullish rating. We didn’t have anything hit the “Strong Buy” category for a long time. We were just waiting patiently for an opportunity to develop.

Let me know what you think of the chart. I could also do it as a stacked area chart:

The point is simply to convey that opportunities are finally opening up again. There’s always so much gloom when prices finally dip and provide a nice opportunity. If you prefer one chart or the other, let me know. The feedback is always helpful.

Scott’s Ultra-Brief Summary

“4 trades this past week. Initiated a position in MFA, added to my RITM and BXSL positions, and sold out of my DX position for a quick, attractive gain.

With market "jitters"/volatility, I am projecting both BDC NAVs and mREIT BVs slightly decreased during the week. Regarding the mREIT projected BV decreases, this could be a bit of a surprise to some since mortgage interest rates/U.S. Treasury yields slightly declined during the week. Simply put, I would point out MBS/mortgage-related investments underperformed derivative instruments this week (rise in spread/basis risk). We should get a good read on how the agency mREITs fared during Q3 2025 when ORC provides their monthly company update after the market close on Wednesday.

I'll likely provide a quick assessment Wednesday night (as I/we do every quarter).”

Weekly Notes From Scott Kennedy

Positions: 4 trades over the past week.

• On 10/6/2025, as recently telegraphed, I increased my position in RITM at a weighted average purchase price of $11.00 per share. I believe this is an attractive valuation. Sure, RITM has been on a "buying spree" lately which has negatively impacted the share price over the short-term. These acquisitions have been discussed below. However, it's all about diversification and improving overall performance if/when interest rates net decrease (to counter the company's prior heavier focus on MSR and MSR-related products). Remember, RITM continues to utilize very low "at risk" leverage. I will likely look for my next RITM purchase at the $10.50 per common share level. 
• On 10/7/2025, as recently telegraphed, I initiated a position in MFA at a weighted average purchase price of $8.95 per share. I believe this is an attractive valuation and I am projecting a MFA core earnings increase for Q3 2025. This was a minor purchase size (starter position). I will likely look for my next MFA purchase at the $8.50 per common share level.
• On 10/8/2025, I sold my entire DX position at a weighted average sales price of $13.05 per common share. I wanted to capture some quick, attractive gains within this position. In only 2 weeks, this position nearly increased 10%. As such, DX quickly went from being slightly undervalued to the middle of my/our appropriately valued range. In the end, a very good/solid quick DX investment with a weighted purchase price of $11.95 per common share. If DX moves back down to approximately $12.00 per common share, I will likely purchase shares again.
• On 10/10/2025, I increased my position in BXSL at a weighted average purchase price of $24.90 per share. Again (sounds like a broken record at this point), I am patiently layering into this position as market perception towards the BDC sector, as a whole, has recently soured (and is now overdone in most names in my opinion). As previously noted, I am patiently building a position in this stock (not "a race" per se to build a position all at once). This specific purchase was slightly larger versus my last purchase. The BDC sector has recently been "beaten up" over speculation regarding a more rapid interest rate cutting cycle and more bearish/negative projected future economic performance.  If such a scenario were to play out, this would  negatively impact BDC sector earnings and NAV performance. That said,  I continue to not be as bearish as some market participants/recent implied sentiment.  I continue to project more of a “soft economic landing”.  As such, BXSL’s valuation is becoming more and more compelling as the price drops which matches nicely to my/our valuation methodology. That's why I started with a small position and have been building up larger "blocks" as it has decreased. To remain unbiased, there will likely eventually be a dividend reduction in 2026 (even with the very large cumulative UTI balance). However, the recent quick drop in stock price from $32+ all the way down to the high $24’s is, in my opinion, the market coming to this reality. Even with a future dividend reduction, BXSL provides very good - great long-term value and I believe the market has "overshot" this recent decline in stock price.

Regarding potential upcoming mREIT common stock buying in my personal portfolio, I'll likely add to my RITM, CIM, and MFA positions if each company's stock price hits $10.50, $12.50, and $8.50 per common share, respectively.  Regarding potential upcoming BDC stock buying in my personal portfolio, I'll likely add to my BXSL position if the company's stock price hits $24.00 per common share, respectively.  

In general, I am being very 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: Unlike the past 6 weeks, high yield/speculative-grade credit spreads widened out a bit this past week.   Still, as of mid October 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 have slightly widened out thus far during calendar Q4 2025 (through 10/10/2025).      

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, including the recent government shutdown, 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.

Regarding the recent BDC sector sell-off, I believe it basically comes down to how well one thinks the future economy will be. If one believes the economy is going to get very bad/negative, that means interest rates will have to rapidly decline, non-accruals will rapidly increase, spreads will notably "spike" higher, and valuations/multiples will notably contract. Simply put, this scenario would result in a decrease to both net investment income (NII; earnings) and net asset value (NAV; valuation). The recent BDC sell-off would, at least partially, seem to indicate some of this general sentiment. I continue to not be that negative/bearish. That said, as pointed out over the summer (in particular July 2025), I/we had most of the sector as being nearly overvalued, overvalued, or notably overvalued prior to this sector sell-off.  As such, the sector’s general sell-off is not that much of a surprise. There's even still some names that I/we deem overvalued/notably overvalued. However, there appears to be a couple names where "speculation/fear" is overblown. I would classify BXSL as being one of those names (yes, even when considering lowering NII/adjusted NII, a likely "bump" in future non-accruals, and a 2026 dividend reduction).   

Calendar Q2 2025 + Q3 2025 + Q4 2025 Recommendation/Target Range + Risk/Performance Upgrades (Downgrades) (Running Tally):