Weekly Series: mREIT And BDC Recommendations (And Price Targets) As Of 10/19/2025

Summary

• No trades last week by either analyst.
• The BDCs put together a quick rally. On average prices were up 4.1% compared to the 6.3% decline last week.
• Earnings season is now underway.

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: No trades for me last week.

Commentary: BDC valuations are still relatively good, despite quite a rally over the last week. 

We had an update for our website over the weekend. The website was offline for about 1 minute. We’re all set again. If there are any hiccups, you can send me a quick email. I've been testing it though and everything appears to be have smoothly.

We’re going to mention the Cantor Group event briefly. So, what is the Cantor Group event? It refers to the Western Alliance Bancorporation (Western Alliance) and Zions Bancorporation (Zions) news of write-downs/reserves and alleged fraud by funds managed by The Cantor Group (Cantor), in relation to investments in distressed/lower-tier commercial investments.

Scott’s Ultra-Brief Summary

“I am projecting BDC NAVs were relatively unchanged - fractionally improved while most mREIT BVs very slightly - slightly increased during the week. The lone exception to this trend were the commercial mREITs (including RC) where the whole Cantor Group event "spooked" markets a bit. Since this has been the recent topic of discussion/speculation in the chat servers, I would point out no currently-covered BDC peers have debt (or equity) exposure in First Brands Group, LLC (First Brands), Tricolor Inc. (Tricolor), The Cantor Group Funds (Cantor), or PrimaLend Capital Partners (PrimaLend).     No surprises arose from MAIN's, ORC's, and CSWC's preliminary earnings this past week (which is good). Earnings season "officially" starts on Monday and I provided the covered mREIT/BDC earnings report dates for the upcoming week near the top of my section in the weekly newsletter/article (as is typical each quarterly cycle). It will be a pretty busy week on my/my team's end this week.”

Weekly Notes From Scott Kennedy

Positions: 0 trades over the past week.

Regarding potential upcoming 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 drops to $24.50 per common share.    

In general, I am being very patient regarding selectively deploying capital in attractively-valued mREIT common stocks with a less attractive risk/performance rating (mainly 5.0 and 5.5 rated stocks).  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.

Next Week Earnings Report Dates for All Covered mREIT and BDC Stocks:

• Monday Pre-Market Open: DX
• Monday Post-Market Close: AGNC
• Tuesday Post-Market Close: PMT
• Wednesday Post-Market Close: NLY
• Thursday Post-Market Close: ORC

As a reminder, since ORC already provided preliminary earnings results (and we provided an earnings assessment article), we will not be providing additional commentary on this mREIT on Thursday.  Out of the stocks listed above, DX and AGNC will likely have an earnings assessment article provided Monday night.  PMT will likely have an earnings assessment article provided Tuesday night. NLY will likely have an earnings assessment article provided Wednesday night.  In addition, ARR is likely reporting sometime next week (an “official” date has not been provided yet).  ARR will likely have an earnings assessment article provided Thursday night if they report next Wednesday or Thursday.

BDC Weekly Change: Unlike the prior week when spreads widened out a bit, high yield/speculative-grade credit spreads were relatively unchanged this past week.  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 10/17/2025).      

BDC Other Comments (Current Week):

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 “softer economic landing”.  For example, I believe BXSL’s valuation has become more and more compelling as the price recently dropped which matches nicely to my/our valuation methodology.  I do not believe there will be a material deterioration in BXSL’s investment portfolio regarding credit quality/risk.  That's why I started with a small position and have been building up larger "blocks" as it has decreased. However, to remain unbiased, I believe BXSL’s non-accrual percentages will slightly - modestly increase at the peak of this credit cycle (likely late 2026 - early 2027).  In addition, there will likely eventually be a dividend reduction in 2026 (even with the company’s very large cumulative undistributed taxable income balance). 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. However, even with a future dividend reduction, I believe BXSL provides very good - great long-term value and the market has "overshot" this recent quick decline in stock price.  

Since this has been the recent topic of discussion/speculation in the chat servers, I would point out no currently-covered BDC peers have debt (or equity) exposure in First Brands Group, LLC (First Brands), Tricolor Inc. (Tricolor), The Cantor Group Funds (Cantor), or PrimaLend Capital Partners (PrimaLend).     

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.  As mentioned above, yes, even when considering lowering NII/adjusted NII, a likely "bump" in future non-accruals, and a likely 2026 dividend reduction.   

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