Franklin BSP Realty Trust : Q1 2025 Press Release

Published: 2025-04-28 16:36:27 ET FBRT

Investor Relations Contact:

(214) 874-2339

Reported GAAP net income of $23.7 million for the three months ended March 31, 2025, compared to $30.2 million for the three months ended December 31, 2024. Reported diluted earnings per share ("EPS") to common stockholders of $0.20 for the three months ended March 31, 2025, compared to $0.29 for the three months ended December 31, 2024.

Reported Distributable Earnings (a non-GAAP financial measure) of $(6.2) million, or $(0.12) per diluted common share on a fully converted basis(1), for the three months ended March 31, 2025, compared to $31.2 million, or $0.30 per diluted common share on a fully converted basis(1), for the three months ended December 31, 2024, respectively.

Core portfolio principal balance as of March 31, 2025 of $4.8 billion:

Portfolio consisted of 152 loans with an average loan size of $31.6 million

99.0% of the Company's portfolio is in senior mortgage loans and approximately 89.3% is floating rate loans

71.3% of the portfolio is collateralized by multifamily properties and only 2.9% is collateralized by office properties

Closed $341.0 million of new loan commitments at a weighted average spread of 325 basis points

Funded $320.8 million of principal balance including future funding on existing loans and received loan repayments of $353.4 million

Total liquidity of $912.8 million, which includes $215.4 million in cash and cash equivalents

Produced GAAP and Distributable Earnings ROE (a non-GAAP financial measure) of 5.7% and (3.3)%, respectively

Declared a common stock cash dividend of $0.355, representing an annualized 9.5% yield on book value

Book value of $14.95 per diluted common share on a fully converted basis(1)

Entered into a definitive agreement to acquire NewPoint Holdings JV LLC ("NewPoint"), a privately held commercial real estate finance company headquartered in Plano, Texas

Michael Comparato, President of FBRT, said, "Periods of enhanced market volatility often present unique opportunities. We have consistently been open for business and continue to make steady progress on recycling our legacy portfolio."

Core portfolio: For the quarter ended March 31, 2025, the Company closed $341.0 million of new loan commitments, funded $320.8 million of principal balance on new and existing loans, and received loan repayments of $353.4 million. As of March 31, 2025, the Company had six loans on its watch list, one of which was risk rated a five and five of which were risk rated a four.

Conduit: For the quarter ended March 31, 2025, the Company originated $24.2 million of fixed rate conduit loans and sold $106.4 million of conduit loans for a gain of $5.0 million, gross of related derivatives.

Real estate owned: The Company ended the quarter with twelve foreclosure real estate owned positions totaling

$270.8 million, one investment real estate owned position of $121.7 million and one equity investment position of

$13.4 million.

Allowance for credit losses: The Company recognized a benefit for credit losses of $1.9 million, comprised of a $0.3 million specific allowance benefit and a $1.6 million general allowance benefit. In addition, the Company recognized

$38.6 million of allowance charges within the first quarter's distributable earnings, which relate to allowances taken on office properties prior to foreclosure. These charges have already been recognized in GAAP earnings in previous quarters.

As of March 31, 2025, book value was $14.95 per diluted common share on a fully converted basis(1).

As of April 23, 2025, $31.1 million remains available under the $65.0 million share repurchase program, which extends through December 31, 2025.

Investment Activity: On April 1, 2025 we obtained, through foreclosure, a multifamily property located in Texas with an amortized cost basis of $36.8 million as of March 31, 2025.

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 (x) perpetual preferred stock dividend payments and (y) 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.

Please refer to the financial statements and reconciliation of GAAP Net Income to Distributable Earnings and Distributable Earnings to Common included at the end of this release for further information.

The Company published a supplemental earnings presentation for the quarter ended March 31, 2025 on its website to provide additional disclosure and financial information. These materials can be found on the Company's website at https://http://www.fbrtreit.com under the Presentations tab.

The Company will host a conference call and live audio webcast to discuss its financial results on Tuesday, April 29, 2025 at 9:00 a.m. ET. Participants are encouraged to pre-register for the call and webcast at https://dpregister.com/ sreg/10198253/fed0d82a37. If you are unable to pre-register, the conference call may be accessed by dialing (844) 701-1166 (Domestic) or (412) 317-5795 (International). Ask to join the Franklin BSP Realty Trust conference call. Participants should call in at least five minutes prior to the start of the call.

The call will also be accessible via live webcast at https://ccmediaframe.com?id=r746ANJ0. Please allow extra time prior to the call to download and install audio software, if needed. A slide presentation containing supplemental information may also be accessed through the Company's website in advance of the call.

An audio replay of the live broadcast will be available approximately one hour after the end of the conference call on FBRT's website. The replay will be available for 90 days on the Company's website.

Franklin BSP Realty Trust, Inc. (NYSE: FBRT) is a real estate investment trust that originates, acquires and manages a diversified portfolio of commercial real estate debt secured by properties located in the United States. As of March 31, 2025, FBRT had approximately $5.7 billion of assets. FBRT is externally managed by Benefit Street Partners L.L.C., a wholly owned subsidiary of Franklin Resources, Inc. For further information, please visit https://www.fbrtreit.com.

Certain statements included in this press release are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The Company's forward-looking statements are subject to various risks and uncertainties. Factors that could cause actual outcomes to differ materially from our forward-looking statements include macroeconomic factors in the United States including inflation, tariffs, changing interest rates and economic contraction, the extent of any recoveries on delinquent loans, the financial stability of our borrowers and the other, risks and important factors contained and identified in the Company's filings with the Securities and Exchange Commission ("SEC"), including its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and its subsequent filings with the SEC, any of which could cause actual results to differ materially from the forward-looking statements. The forward-looking statements included in this communication are made only as of the date hereof.

March 31, 2025

December 31, 2024

ASSETS

Cash and cash equivalents

$ 215,368

$ 184,443

Restricted cash

8,736

12,421

Commercial mortgage loans, held for investment, net of allowance for credit losses of $46,604

4,739,876

4,908,667

Commercial mortgage loans, held for sale, measured at fair value(2)

4,992

87,270

Real estate securities, available for sale, measured at fair value, amortized cost of $167,511 and

167,192

202,973

Receivable for loan repayment(4)

54,297

157,582

Accrued interest receivable

36,834

42,225

Prepaid expenses and other assets

18,358

17,526

Intangible lease asset, net of amortization

39,114

39,834

Real estate owned, net of depreciation

112,499

113,160

Real estate owned, held for sale

243,390

222,890

Equity method investment

13,395

Total assets

$ 5,654,051

$ 6,002,386

LIABILITIES AND STOCKHOLDERS' EQUITY

Collateralized loan obligations

$ 3,226,710

$ 3,628,270

Repurchase agreements and revolving credit facilities - commercial mortgage loans

429,314

329,811

Repurchase agreements - real estate securities

206,164

236,608

Mortgage note payable

23,998

Other financings

12,865

Unsecured debt

81,420

81,395

Derivative instruments, measured at fair value

713

Interest payable

11,386

12,844

Distributions payable

36,444

36,237

Accounts payable and accrued expenses

17,567

14,443

Due to affiliates

12,156

14,106

Intangible lease liability, held for sale

880

1,291

Total liabilities

$ 4,058,992

$ 4,392,581

Commitments and Contingencies

Redeemable convertible preferred stock:

Redeemable convertible preferred stock Series H, $0.01 par value, 20,000 authorized and 17,950 issued and outstanding as of March 31, 2025 and December 31, 2024

$ 89,748

Total redeemable convertible preferred stock

$ 89,748

Equity:

Preferred stock, $0.01 par value; 100,000,000 shares authorized, 7.5% Cumulative Redeemable Preferred Stock, Series E, 10,329,039 shares issued and outstanding as of March 31, 2025 and December 31, 2024

$ 258,742

Common stock, $0.01 par value, 900,000,000 shares authorized, 82,870,769 and 83,066,789 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

822

818

Additional paid-in capital

1,600,846

1,600,997

Accumulated other comprehensive income/(loss)

(318)

Accumulated deficit

(360,456)

(348,074)

Total stockholders' equity

$ 1,499,636

$ 1,512,562

Non-controlling interest

7,495

Total equity

$ 1,505,311

$ 1,520,057

Total liabilities, redeemable convertible preferred stock and equity

$ 5,654,051

$ 6,002,386

and $78,083 as of March 31, 2025 and December 31, 2024, respectively(1)

$202,894 as of March 31, 2025 and December 31, 2024, respectively(3)

(1)Includes pledged assets of $429.3 million and $268.7 million as of March 31, 2025 and December 31, 2024, respectively.

(2)There were no pledged assets of March 31, 2025 and $61.1 million pledged assets as of December 31, 2024.

(3)Includes pledged assets of $167.2 million and $180.7 million as of March 31, 2025 and December 31, 2024, respectively.

(4)Includes $54.0 million and $157.0 million of cash held by servicer related to the CLOs as of March 31, 2025 and December 31, 2024, respectively.

2025

2024

Income

Interest income

$ 113,908

$ 130,558

Less: Interest expense

70,593

81,318

Net interest income

43,315

49,240

Revenue from real estate owned

6,797

4,712

Total income

$ 50,112

$ 53,952

Expenses

Asset management and subordinated performance fee

$ 6,555

$ 7,865

Acquisition expenses

299

238

Administrative services expenses

3,348

2,860

Professional fees

6,576

4,084

Share-based compensation

2,246

1,799

Depreciation and amortization

1,380

1,417

Other expenses

9,936

2,363

Total expenses

$ 30,340

$ 20,626

Other income/(loss)

(Provision)/benefit for credit losses

$ 1,898

$ (2,880)

Realized gain/(loss) on real estate securities, available for sale

Realized gain/(loss) on sale of commercial mortgage loans, held for sale, measured at fair value

5,039

5,513

Unrealized gain/(loss) on commercial mortgage loans, held for sale, measured at fair value

457

Gain/(loss) on other real estate investments

(2,232)

Unrealized gain/(loss) on derivatives

(1,056)

(138)

Realized gain/(loss) on derivatives

938

290

Total other income/(loss)

$ 4,587

$ 3,336

Income/(loss) before taxes

24,359

36,662

(Provision)/benefit for income tax

(654)

(835)

Net income/(loss)

$ 23,705

$ 35,827

Net (income)/loss attributable to non-controlling interest

353

Net income/(loss) attributable to Franklin BSP Realty Trust, Inc.

$ 24,058

$ 35,920

Less: Preferred stock dividends

6,748

Net income/(loss) applicable to common stock

$ 17,310

$ 29,172

Basic earnings per share

$ 0.20

$ 0.35

Diluted earnings per share

$ 0.20

$ 0.35

Basic weighted average shares outstanding

82,053,686

81,994,096

Diluted weighted average shares outstanding

82,053,686

81,994,096

Disclaimer

Franklin BSP Realty Trust Inc. published this content on April 28, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 28, 2025 at 20:35 UTC.