FBRT: Transaction Overview
FBRT
March 2025
Franklin BSP
Realty Trust
NewPoint Real Estate Capital Transaction Overview
Transaction Overview
The Acquisition of NewPoint Adds a Scaled CRE Agency Loan Origination and Servicing
Platform to FBRT
Transaction
‒ Franklin BSP Realty Trust, Inc. ("FBRT" or the "Company") has entered into a definitive
Summary
agreement to acquire NewPoint Holdings JV LLC ("NewPoint") for $425 million
‒ Consideration will be comprised of 75% cash and 25% common units of FBRT's
operating company ("OP Units")1
‒ NewPoint is a vertically integrated lending and servicing platform that holds all three
agency licenses (FNMA, FHLMC, and FHA/HUD) (collectively, the "Agencies"). In
addition, NewPoint is a GNMA-issuer
Anticipated
‒
Expected to be accretive to GAAP EPS in the first half of 2026
Financial
‒
Expected to be accretive to fully converted2 distributable EPS in the second half of 2026
Impact and
Timing
‒
Expected to increase fully converted2 Book Value per Share ("BVPS") in the first half of
2026. At close, the transaction is expected to reduce fully converted2 BVPS by $0.26 to
$0.28
‒ Expected to close in the third quarter of 2025, subject to customary closing conditions, including regulatory approvals
1. Consideration is $318,750,000 in cash and 8,385,951 of OP Units (valued at $12.67, the FBRT common stock opening price as of 1/31/25, the date the parties agreed on consideration). Cash amount is subject to closing adjustments
2. Fully converted per share information assumes applicable conversion of our OP units and outstanding series of convertible preferred stock into common stock and the full vesting
of our outstanding equity compensation awards.
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NewPoint at-a-Glance
NewPoint's vertically integrated lending and servicing platform will transform FBRT
Key Stats
One of Only 19
Agency Originators Approved
by All 3 Agencies
2024 Agency Originations
237 Employees
$54.7bn
Servicing Portfolio
$2.9bn
Top 20 MBA Ranked
Agency Volume in 2024
Commercial/Multifamily Servicer
#3
S&P
HUD LEAN Lender in 2024
Above Average Primary Servicer
Total Servicing Portfolio as of December 31, 2024
$0.4
$2.9bn
Total
Volume
$1.4
$1.1
$17.8 (32%) Agency
957 (57%) Agency
$6.2
412
708
$6.8
1,665
$54.7bn
Total
Total
$4.8
Loan Count
178
UPB
$36.9
367
Fannie Freddie FHA/HUD
Fannie
Freddie
Ginnie (FHA/HUD)
Third Party
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B E N E F I T S T R E E T P A R T N E R S | A L C E N T R A
Strategic Rationale
This Transaction Adds Capital-Light Businesses and Long-Term Assets to FBRT
1
Agency Licenses
2
CRE Servicing
Provides highly sought-after Agency licenses allowing FBRT to directly originate Agency loans
Enhances income stability, predictability and duration through a scaled servicer.
Enables FBRT to service Agency loans, third party CRE loans and FBRT originated loans
3
Strategic Growth
4
Book Value per Share Growth
Creates a natural expansion of FBRT's core competency in multifamily lending.
Strategically positions FBRT to grow and diversify product lines within this high conviction sector
Adds mortgage servicing rights ("MSR") as a long-term asset on FBRT's balance sheet.
Provides a potential avenue for recurring BVPS growth, delivering long-term value to FBRT's stockholders
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Embedded Synergies
Long-Term Stockholder Value is Driven Through Embedded Synergies
Increased
Presence
BSP has 90 CRE employees in five states.
NewPoint has
237 employees in
20 states.
This broad national coverage
expands FBRT's
geographic footprint and on-the-ground expertise
Deal Flow
Multifamily
Servicing
Scale
NewPoint and
Over the past
NewPoint will
FBRT are each
four years, BSP
be able to
expected to
and NewPoint
service loans
leverage their
have originated
across the
sponsor and
approximately $9
platform
origination
billion and $12
relationships to
billion,
increase deal flow
respectively, in
at FBRT for Bridge
multifamily loans
and Agency loans
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Expanding FBRT's Multifamily Lending Capabilities
FBRT will be a One Stop Shop Supporting the Entire Multifamily Lending Lifecycle
FBRT Capabilities
Loan Type
Pre-Acquisition
Post-Acquisition
Originations
Servicing
Originations
Servicing
Construction Loans (2-3 years)
Transitional Loans (2-3 years)
Lease Up
Value Add
Stabilized Bridge
CMBS Loans (5-10 years)
Agency Loans (5-10 years)
Fannie Mae
Freddie Mac
Ginnie Mae (HUD)
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Expanding FBRT's Business Lines Relative to Select Peers
FBRT will now have a Full Suite of CRE Products
Capital Light
FBRT
FBRT
Peer
Peer
Pre
Post
Peer 1
Peer 2
Peer 3
Peer 4
Peer 5
Peer 6
Peer 7
Peer 8
Peer 9
10
11
Acq.
Acq.
Senior Lending
Junior Lending
Conduit
Agency
Servicing
REO
B-Pieces
Securities
Source: Public filings.
1. Select peers include ABR, ACRE, ARI, BRSP, BXMT, CMTG, GPMT, KREF, LADR, STWD, and TRTX.
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Definitions
Distributable Earnings and Distributable Earnings to Common
Distributable Earnings is a non-GAAP measure, which the Company defines as GAAP net income (loss), adjusted for (i) non-cash CLO amortization acceleration and amortization over the expected useful life of the Company's CLOs, (ii) unrealized gains and losses on loans and derivatives, including CECL reserves and impairments, net of realized gains and losses, as described further below, (iii) non-cash equity compensation expense, (iv) depreciation and amortization, (v) subordinated performance fee accruals/(reversal), (vi) realized gains and losses on debt extinguishment and CLO calls, and (vii) certain other non-cash items. Further, Distributable Earnings to Common, a non-GAAP measure, presents Distributable Earnings net of (i) perpetual preferred stock dividend payments and (ii) non-controlling interests in joint ventures.
As noted above, we exclude unrealized gains and losses on loans and other investments, including CECL reserves and impairments, from our calculation of Distributable Earnings and include realized gains and losses. The nature of these adjustments is described more fully in the footnotes to our reconciliation tables. GAAP loan loss reserves and any property impairment losses have been excluded from Distributable Earnings consistent with other unrealized losses pursuant to our existing definition of Distributable Earnings. We expect to only recognize such potential credit or property impairment losses in Distributable Earnings if and when such amounts are deemed nonrecoverable upon a realization event. This is generally at the time a loan is repaid, or in the case of a foreclosure or other property, when the underlying asset is sold. Amounts may also be deemed non-recoverable if, in our determination, it is nearly certain the carrying amounts will not be collected or realized. The realized loss amount reflected in Distributable Earnings will generally equal the difference between the cash received and the Distributable Earnings basis of the asset. The timing of any such loss realization in our Distributable Earnings may differ materially from the timing of the corresponding loss reserves, charge-offs or impairments in our consolidated financial statements prepared in accordance with GAAP.
The Company believes that Distributable Earnings and Distributable Earnings to Common provide meaningful information to consider in addition to the disclosed GAAP results. The Company believes Distributable Earnings and Distributable Earnings to Common are useful financial metrics for existing and potential future holders of its common stock as historically, over time, Distributable Earnings to Common has been an indicator of common dividends per share. As a REIT, the Company generally must distribute annually at least 90% of its taxable income, subject to certain adjustments, and therefore believes dividends are one of the principal reasons stockholders may invest in its common stock. Further, Distributable Earnings to Common helps investors evaluate performance excluding the effects of certain transactions and GAAP adjustments that the Company does not believe are necessarily indicative of current loan portfolio performance and the Company's operations and is one of the performance metrics the Company's board of directors considers when dividends are declared.
Distributable Earnings and Distributable Earnings to Common do not represent net income (loss) and should not be considered as an alternative to GAAP net income (loss). The methodology for calculating Distributable Earnings and Distributable Earnings to Common may differ from the methodologies employed by other companies and thus may not be comparable to the Distributable Earnings reported by other companies.
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Disclaimer
Franklin BSP Realty Trust Inc. published this content on March 10, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on March 10, 2025 at 21:03:37.355.