Weekly Series: mREIT And BDC Recommendations (And Price Targets) As Of 10/26/2025

Summary

• BDCs rallied again this week with another 2.9% gain on average.
• Mortgage REITs had a nice week also with a 2.1% gain on average and estimated BVs climbing about 0.8% on average. The gain to BV was mostly for agency mortgage REITs, though only some of them increased. The charts for subscribers have the % change for each.
• We usually manage to publish this article on Sunday. Sorry about the delay! The Google Sheets were still updated Sunday with the latest data.

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: It was a fairly nice week for share prices. Saw some modest rallies. The earnings releases for equity REITs have been looking positive so far for industrial and tower REITs. 

Scott’s Ultra-Brief Summary

“I added to my RITM position a bit more.  For the 2nd straight week, I am projecting most BDC NAVs were relatively unchanged - fractionally improved.  I am projecting most mREIT BVs were relatively unchanged - slightly increased during the week (aside from all earnings-related adjustments). No notable surprises arose from the 6 companies that reported earnings this past week (which is good).  Earnings season continues this week and I provided the covered mREIT/BDC earnings report dates for the upcoming week at the top of the weekly newsletter/article (as is typical).  It will be another pretty busy week regarding earnings assessment articles.”

Weekly Notes From Scott Kennedy

Positions: 1 trade over the past week.

On 10/23/2025, I increased my position in RITM at a weighted average purchase price of $10.79 per share. I believe it's an attractive - very attractive valuation. RITM "crept" into my/our notably undervalued (STRONG BUY) recommendation range. As such, I added some shares. Sure, RITM has been on a "buying spree" lately which has negatively impacted the share price over the short-term. These acquisitions are discussed towards the end of this newsletter/article. 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. This was a minor - modest purchase size. I am continuing to allocate capital to better risk/performance rating mREIT common stocks right now (3 - 4.5 ratings; as noted below).

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 (pertains to 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 Post-Market Close: TWO
• Tuesday Pre-Market Open: ARCC
• Wednesday Pre-Market Open: BXMT
• Wednesday Post-Market Close: ADAM (Formerly NYMT), FBRT
• Thursday Pre-Market Open: RITM

Out of the stocks listed above, TWO will likely have an earnings assessment article provided Monday night.  ARCC will likely have an earnings assessment article provided Tuesday night. BXMT and ADAM (formerly NYMT) will likely have an earnings assessment article provided Wednesday night.  RITM will likely have an earnings assessment article provided Thursday night.  FBRT will likely have an earnings assessment article provided Friday night.  Regarding FBRT, I will quickly review top-line metrics and make any necessary “true-up (down)” CURRENT BV/NAV adjustments the night of earnings (Wednesday night) which will be shown in the subscriber spreadsheets (prior to an earnings assessment article).

BDC Weekly Change: Similar to the prior week, high yield/speculative-grade credit spreads were relatively unchanged this past week.  As of late 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 10/24/2025).      

BDC Other Comments (Current Week):

The BDC sector has fairly 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 fairly 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 built up larger "blocks" as it has fairly recently 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 (“UTI”) balance). The fairly recent quick drop in stock price from $32+ all the way down to the high $24’s was, 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 fairly recent quick decline in stock price.  That is why I believe BXSL (and the BDC sector as a whole) has partially rebounded in price during mid - late October 2025 (oversold as fear/speculation took hold of this sector).  

Since this was the topic of discussion/speculation in the chat servers during early - mid October 2025, 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 fairly 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 fairly 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 this fall was 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):