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Franklin BSP Realty Trust: Near 14% Dividend Yield As Discount To Book Swells
Seeking Alpha· 2025-08-05 09:10
Group 1 - The equity market serves as a significant mechanism for wealth creation or destruction over the long term through daily price fluctuations [1] - Pacifica Yield focuses on long-term wealth creation by targeting undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1]
Franklin BSP Realty Trust(FBRT) - 2025 Q2 - Earnings Call Transcript
2025-07-31 14:00
Financial Data and Key Metrics Changes - FBRT reported GAAP earnings of $24.4 million or $0.21 per fully converted common share for Q2 2025, with distributable earnings of $29 million or $0.27 per fully converted share [16] - The average risk rating at quarter end was 2.3, with 137 of 145 positions rated two or three, and watch list loans represented only 5% of the total portfolio [9][12] - The company's liquidity position was $5.1 billion, including $77 million in unrestricted cash [11] Business Line Data and Key Metrics Changes - The company originated $61 million in new loan commitments, primarily in multifamily assets, which was a deliberate reduction to maintain a higher cash balance ahead of the NewPoint acquisition [6][7] - FBRT sold three multifamily assets totaling $56 million, which was above the principal basis at the time of foreclosure [10] - The core portfolio ended the quarter at $4.5 billion across 145 loans, with multifamily making up 74% of the portfolio [24] Market Data and Key Metrics Changes - The multifamily fundamentals are improving, with new supply slowing and rent growth reemerging in certain markets [28] - The company noted that credit markets are flush with liquidity, indicating a strong demand for shorter duration credit [26] - The average cost of debt on the core portfolio is SOFR plus 2.3%, with 77% of financing coming from CLOs [19][20] Company Strategy and Development Direction - The acquisition of NewPoint is seen as a significant milestone, expanding FBRT's platform within multifamily lending and enhancing income stability [12] - The company aims to grow distributable earnings through calling CLOs, reinvesting equity from the REO portfolio, and contributions from NewPoint [17][18] - FBRT's stock is trading at a discount to book value, attributed to concerns over dividend coverage and asset quality [13][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the legacy portfolio, stating that losses near the implied $450 million level are highly unlikely [38] - The company anticipates a period of acceptance in the market, where investors will recognize the need to mark loans appropriately [78] - Management expects NewPoint's earnings contribution to grow significantly over time, correlating with agency and FHA origination volume [22][23] Other Important Information - The company has made significant progress on its REO portfolio, with 10 out of 19 properties sold above the principal balance at the time of foreclosure [33] - The migration of servicing for FBRT's loans to NewPoint is expected to yield savings and additional servicing revenue [81] Q&A Session Summary Question: Have you resumed originations and at what pace since the closing of NewPoint? - Management confirmed that originations have resumed and are expected to grow quarter over quarter, targeting a portfolio size of around $5 billion to maximize dividend coverage [41][44] Question: What are you seeing in terms of spreads compared to a year ago? - Management noted that spreads are tighter by 100 to 125 basis points compared to a year ago and 25 to 50 basis points tighter than 60 to 90 days ago [46] Question: Do the CLOs need to be replaced with other debt? - Management indicated that calling the CLOs would allow for leveraging back up to optimal levels, freeing up cash for more originations [50][52] Question: What is needed for NewPoint to ramp origination activity? - Management stated that expanding the net spread across the country and increasing the origination staff would drive volume growth [75] Question: Is there a savings related to migrating FBRT's loans over to NewPoint's servicer? - Yes, management confirmed that there would be savings from cutting out markups and benefiting from float on cash reserves [81][84]
Franklin BSP Realty Trust(FBRT) - 2025 Q2 - Earnings Call Presentation
2025-07-31 13:00
Franklin BSP Realty Trust Second Quarter 2025 Supplemental Information Important Information The information herein relates to the Company's business and financial information as of June 30, 2025 and does not reflect subsequent developments. Risk Factors Investing in and owning our common stock involves a high degree of risk. For a discussion of these risks, see the section entitled "Risk Factors" in our Annual Report on Form 10- K filed with the SEC on February 26, 2025, and the risk disclosures in our sub ...
Franklin BSP (FBRT) Q2 Earnings and Revenues Lag Estimates
ZACKS· 2025-07-30 23:16
Core Viewpoint - Franklin BSP (FBRT) reported quarterly earnings of $0.27 per share, missing the Zacks Consensus Estimate of $0.31 per share, and showing a decline from $0.31 per share a year ago, indicating an earnings surprise of -12.90% [1][2] Financial Performance - The company posted revenues of $49.29 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 11.97%, and down from $50.88 million year-over-year [2] - Over the last four quarters, Franklin BSP has surpassed consensus EPS estimates only once [2] Stock Performance - Franklin BSP shares have declined approximately 18.5% since the beginning of the year, contrasting with the S&P 500's gain of 8.3% [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.32 for the coming quarter and $0.85 for the current fiscal year, alongside revenues of $56.67 million and $220.56 million respectively [7] - The estimate revisions trend for Franklin BSP was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The REIT and Equity Trust industry, to which Franklin BSP belongs, is currently ranked in the top 22% of over 250 Zacks industries, suggesting that stocks in the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]
Franklin BSP Realty Trust(FBRT) - 2025 Q2 - Quarterly Results
2025-07-30 20:51
[Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) This section details the company's Q2 2025 financial performance, including key highlights, portfolio activities, capital management, and subsequent strategic events [Financial Highlights](index=1&type=section&id=Financial%20Highlights) For the second quarter of 2025, Franklin BSP Realty Trust reported a slight increase in GAAP net income to $24.4 million, though diluted EPS decreased to $0.19, with Distributable Earnings reaching $29.0 million, or $0.27 per share, recovering from a loss in the previous quarter Financial Performance Overview | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | **GAAP Net Income** | $24.4 million | $23.7 million | | **Diluted EPS** | $0.19 | $0.20 | | **Distributable Earnings** | $29.0 million | $(6.2) million | | **Distributable EPS** | $0.27 | $(0.12) | Key Financial Ratios | Metric | Value | | :--- | :--- | | **GAAP ROE** | 5.5% | | **Distributable Earnings ROE** | 7.3% | | **Book Value per Diluted Share** | $14.82 | [Portfolio and Investment Activity](index=1&type=section&id=Portfolio%20and%20Investment%20Activity) During the quarter, the company's core portfolio principal balance stood at $4.5 billion across 145 loans, with loan repayments significantly outpacing new loan commitments, and a $1.5 million benefit for credit losses recognized - The core portfolio consists of **145** loans with a principal balance of **$4.5 billion**, primarily composed of senior mortgage loans (**99.1%**) and floating-rate loans (**88.1%**), with a strong concentration in multifamily properties (**74.0%**)[7](index=7&type=chunk) - Investment activity included closing **$60.8 million** in new loan commitments, funding **$90.6 million** on new and existing loans, and receiving **$316.8 million** in loan repayments[4](index=4&type=chunk) - As of June 30, 2025, the company had **eight** loans on its watch list (**one** rated 5, **seven** rated 4) and held **ten** foreclosure REO positions valued at **$246.2 million**[4](index=4&type=chunk)[5](index=5&type=chunk) - A benefit for credit losses of **$1.5 million** was recognized, resulting from a **$2.6 million** general allowance benefit partially offset by a **$1.1 million** specific allowance provision[6](index=6&type=chunk) [Capital and Shareholder Returns](index=1&type=section&id=Capital%20and%20Shareholder%20Returns) The company maintained strong shareholder returns, declaring a common stock cash dividend of $0.355, which translates to an annualized 9.6% yield on its book value of $14.82 per share, with $31.1 million remaining under its share repurchase program - Declared a common stock cash dividend of **$0.355**, representing an annualized **9.6%** yield on book value[7](index=7&type=chunk) - Book value was **$14.82** per diluted common share on a fully converted basis as of June 30, 2025[9](index=9&type=chunk) - As of July 28, 2025, **$31.1 million** remains available under the company's **$65.0 million** share repurchase program[9](index=9&type=chunk) [Subsequent Events](index=3&type=section&id=Subsequent%20Events) On July 1, 2025, after the quarter's end, the company finalized its acquisition of NewPoint Holdings JV LLC for a total consideration of $428.2 million, paid through a combination of cash and equity units - Completed the acquisition of NewPoint Holdings JV LLC on July 1, 2025[10](index=10&type=chunk) - The total consideration was **$428.2 million**, comprised of **$337.3 million** in cash and **8,385,951** Class A Units of FBRT OP LLC[10](index=10&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes "Distributable Earnings," a non-GAAP metric that adjusts GAAP net income for certain non-cash items, providing a clearer view of operational performance and dividend capacity for a REIT - Distributable Earnings is defined as GAAP net income adjusted for items including non-cash CLO amortization, unrealized gains/losses on loans and derivatives (including CECL reserves), non-cash equity compensation, and depreciation[11](index=11&type=chunk) - The company believes Distributable Earnings is a useful metric for investors as it has historically been an indicator of common dividends per share and helps evaluate performance by excluding certain non-cash GAAP adjustments[13](index=13&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's detailed balance sheets, statements of operations, and reconciliation of GAAP net income to distributable earnings for the reported periods [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets decreased to $5.63 billion from $6.00 billion, primarily due to a reduction in commercial mortgage loans, while total liabilities also decreased to $4.04 billion from $4.39 billion, largely due to a decline in collateralized loan obligations Balance Sheet Summary | Balance Sheet Item (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$5,630,218** | **$6,002,386** | | Commercial mortgage loans, net | $4,482,201 | $4,908,667 | | Cash and cash equivalents | $414,085 | $184,443 | | **Total Liabilities** | **$4,044,832** | **$4,392,581** | | Collateralized loan obligations | $3,043,604 | $3,628,270 | | **Total Equity** | **$1,495,638** | **$1,520,057** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For the second quarter of 2025, the company reported net income of $24.4 million, a significant improvement from a net loss of $3.8 million in Q2 2024, primarily driven by a $1.5 million benefit for credit losses compared to a $32.2 million provision in the prior year Income Statement Summary | Income Statement Item (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $40,958 | $46,813 | | Total Expenses | $29,560 | $17,721 | | (Provision)/benefit for credit losses | $1,487 | $(32,178) | | **Net Income/(Loss)** | **$24,384** | **$(3,765)** | | **Net Income/(Loss) Applicable to Common Stock** | **$16,453** | **$(8,923)** | | **Diluted EPS** | **$0.19** | **$(0.11)** | [Reconciliation of GAAP Net Income to Distributable Earnings](index=7&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Distributable%20Earnings) The company reconciled its Q2 2025 GAAP Net Income of $24.4 million to Distributable Earnings of $29.0 million, primarily by adding back non-cash compensation and reversing the provision for credit losses, resulting in Distributable Earnings per share of $0.27 Distributable Earnings Reconciliation | Reconciliation Item (in thousands) | Q2 2025 | | :--- | :--- | | **GAAP Net Income (Loss)** | **$24,384** | | (Reversal of)/provision for credit losses | $(1,487) | | Non-cash compensation expense | $2,316 | | Unrealized (gain)/loss on financial instruments | $(2,531) | | Realized gain/(loss) adjustment on loans and REO | $3,886 | | **Distributable Earnings** | **$29,005** |
Franklin BSP Realty Trust(FBRT) - 2025 Q2 - Quarterly Report
2025-07-30 20:28
PART I - FINANCIAL INFORMATION [Consolidated Financial Statements and Notes (unaudited)](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20and%20Notes%20(unaudited)) The unaudited consolidated financial statements for Franklin BSP Realty Trust, Inc. as of June 30, 2025, show a decrease in total assets to $5.63 billion from $6.00 billion at year-end 2024, primarily due to a reduction in commercial mortgage loans, with net income for the six months ended June 30, 2025, significantly increasing to $48.1 million from $32.1 million in the prior-year period, driven by a benefit for credit losses [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to $5.63 billion from $6.00 billion at December 31, 2024, primarily due to a reduction in commercial mortgage loans, while total liabilities also decreased to $4.04 billion from $4.39 billion, mainly from lower collateralized loan obligations Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$5,630,218** | **$6,002,386** | | Commercial mortgage loans, held for investment, net | $4,482,201 | $4,908,667 | | Cash and cash equivalents | $414,085 | $184,443 | | **Total Liabilities** | **$4,044,832** | **$4,392,581** | | Collateralized loan obligations | $3,043,604 | $3,628,270 | | **Total Stockholders' Equity** | **$1,488,720** | **$1,512,562** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, the company reported a net income of $24.4 million, a significant turnaround from a net loss of $3.8 million in the same period of 2024, primarily due to a $1.5 million benefit for credit losses versus a $32.2 million provision in the prior year, resulting in diluted earnings per share of **$0.40** for the six-month period Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $40,958 | $46,813 | $84,273 | $96,053 | | Total Income | $49,294 | $50,885 | $99,406 | $104,837 | | (Provision)/Benefit for Credit Losses | $1,487 | $(32,178) | $3,385 | $(35,059) | | **Net Income/(Loss)** | **$24,384** | **$(3,765)** | **$48,089** | **$32,062** | | Net Income/(Loss) Applicable to Common Stock | $16,453 | $(8,923) | $33,763 | $20,248 | | **Diluted Earnings Per Share** | **$0.19** | **$(0.11)** | **$0.40** | **$0.24** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to **$128.1 million** from $14.9 million in the prior year, while net cash provided by investing activities reversed to **$525.8 million** from a $529.2 million use of cash, primarily due to higher principal repayments on loans Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $128,057 | $14,884 | | Net cash provided by/(used in) investing activities | $525,814 | $(529,245) | | Net cash (used in)/provided by financing activities | $(427,955) | $276,410 | | **Net change in cash, cash equivalents and restricted cash** | **$225,916** | **$(237,951)** | | Cash, cash equivalents and restricted cash, end of period | $422,780 | $105,736 | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, commercial mortgage loan portfolio composition, debt structure, fair value measurements, related party transactions, segment reporting, and the significant subsequent acquisition of NewPoint Holdings JV LLC - The company primarily originates, acquires, and manages a diversified portfolio of commercial real estate debt investments and is externally managed by Benefit Street Partners L.L.C., a subsidiary of Franklin Templeton[25](index=25&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) - The commercial mortgage loan portfolio, held for investment, decreased to a carrying value of **$4.48 billion** as of June 30, 2025, from **$4.91 billion** at year-end 2024, consisting of **145 loans**, down from 155[47](index=47&type=chunk) - The allowance for credit losses decreased to **$43.2 million** from **$78.1 million**, primarily due to a decrease in the overall portfolio size and charge-offs related to foreclosed properties[47](index=47&type=chunk)[53](index=53&type=chunk)[60](index=60&type=chunk) - Total debt is primarily composed of **$3.04 billion** in Collateralized Loan Obligations (CLOs) and **$573.1 million** in repurchase agreements for commercial mortgage loans as of June 30, 2025[8](index=8&type=chunk)[102](index=102&type=chunk) - On July 1, 2025, subsequent to the quarter-end, the company completed the acquisition of NewPoint Holdings JV LLC for approximately **$428.2 million**, consisting of cash and Class A Units of a subsidiary[175](index=175&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights a decrease in the commercial mortgage loan portfolio to $4.48 billion and a book value per share of $14.70 as of June 30, 2025, with the acquisition of NewPoint on July 1, 2025, expected to add an agency mortgage origination and servicing business segment, while net interest income decreased due to lower SOFR rates and a smaller portfolio, offset by a significant benefit for credit losses - The company completed the acquisition of NewPoint, a commercial real estate finance company focused on originating and servicing agency mortgage loans, on July 1, 2025, which will add a new business segment and is expected to be complimentary to the existing bridge loan business[189](index=189&type=chunk)[191](index=191&type=chunk) Book Value Per Share | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Book value per share | $14.70 | $15.09 | | Fully-converted book value per share | $14.82 | $15.19 | - The commercial mortgage loan portfolio held for investment had a carrying value of **$4.48 billion** as of June 30, 2025, down from **$4.91 billion** at year-end 2024, primarily composed of multifamily (**74.0%**) and hospitality (**13.7%**) properties[196](index=196&type=chunk)[50](index=50&type=chunk) - For the six months ended June 30, 2025, net interest income decreased by **$11.8 million** year-over-year, primarily due to a **~100 basis point** decrease in average SOFR rates and a smaller average loan portfolio[218](index=218&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) Leverage Ratios | Ratio | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net debt-to-equity ratio | 2.2x | 2.6x | | Total leverage ratio | 2.5x | 2.7x | - The company reported Distributable Earnings to Common of **$0.15** per fully converted share for the six months ended June 30, 2025, a decrease from **$0.72** in the prior-year period, primarily due to a significant realized loss adjustment on loans and REO[298](index=298&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=77&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to credit, capital market, and real estate risks, with interest rate risk being primary due to its variable-rate portfolio, where a 50 basis point increase in rates would increase net interest income by an estimated 1.42%, while the NewPoint acquisition introduces additional credit risk through risk-sharing obligations and market risk related to Mortgage Servicing Rights - The company's primary market risk is interest rate risk, as its portfolio is predominantly composed of variable-rate loans indexed to SOFR[304](index=304&type=chunk)[305](index=305&type=chunk) Interest Rate Sensitivity Analysis | Change in Interest Rates | Estimated % Change in Net Interest Income (June 30, 2025) | | :--- | :--- | | (-) 100 Basis Points | 0.93% | | (-) 50 Basis Points | (0.56)% | | (+) 50 Basis Points | 1.42% | - The acquisition of NewPoint introduces new risks, including credit risk from risk-sharing requirements on agency mortgage loans and market risk affecting the fair value of Mortgage Servicing Rights (MSRs)[301](index=301&type=chunk)[307](index=307&type=chunk) - The company faces capital market risk due to its reliance on debt financing and the potential for margin calls on its repurchase agreements if the market value of pledged collateral declines[302](index=302&type=chunk)[303](index=303&type=chunk) [Controls and Procedures](index=78&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report (June 30, 2025)[309](index=309&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended June 30, 2025[310](index=310&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=79&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation not expected to have a material impact, while actively pursuing civil remedies related to a 2022 loan involving sponsor fraud that led to the foreclosure of 24 Walgreens-net-leased properties, with the collectability of any judgments currently undeterminable - The company is pursuing civil remedies related to loan fraud from a 2022 origination secured by a portfolio of Walgreens properties, on which it has since foreclosed, with the outcome and potential recovery uncertain[314](index=314&type=chunk) - Other than the Walgreens-related matter, the company states that its ongoing legal proceedings are routine and not expected to have a material impact on its financial condition or results[313](index=313&type=chunk) [Risk Factors](index=79&type=section&id=Item%201A.%20Risk%20Factors) The company identifies additional risks resulting from the acquisition of NewPoint, including those related to its relationships with government-sponsored entities (GSEs), risk-sharing requirements on agency loans, GSE-imposed liquidity requirements, potential changes in GSE policies, and the tax implications of operating the new business through a taxable REIT subsidiary (TRS) - The acquisition of NewPoint introduces new risk factors, primarily related to the agency mortgage business[316](index=316&type=chunk) - Key new risks include dependency on relationships with GSEs (Fannie Mae, Freddie Mac), potential losses from risk-sharing agreements on agency loans, and adverse impacts from changes in GSE regulations or pricing[320](index=320&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=79&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares during the three months ended June 30, 2025, with $31.1 million remaining available under its $65 million share repurchase program, and on July 1, 2025, issued 8,385,951 Class A Units of its subsidiary in an unregistered sale as part of the NewPoint acquisition - No shares were repurchased under the company's share repurchase program during the three months ended June 30, 2025, with **$31.1 million** remaining available under the program[317](index=317&type=chunk)[318](index=318&type=chunk) - On July 1, 2025, the company issued **8,385,951** Class A Units of a subsidiary in a private placement as part of the NewPoint acquisition consideration, which are redeemable for cash or common stock after 12 months[321](index=321&type=chunk) [Defaults Upon Senior Securities](index=80&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - There were no defaults upon senior securities during the reporting period[322](index=322&type=chunk) [Mine Safety Disclosures](index=80&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - The company has no mine safety disclosures to report[323](index=323&type=chunk) [Other Information](index=80&type=section&id=Item%205.%20Other%20Information) During the quarter ended June 30, 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter[324](index=324&type=chunk) [Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Second Amended and Restated Limited Liability Company Agreement of FBRT OP LLC, the Purchase and Sale Agreement for the NewPoint acquisition, officer certifications, and XBRL data files - Key exhibits filed include the updated LLC agreement for the operating partnership (FBRT OP LLC) and the purchase agreement for the NewPoint acquisition[327](index=327&type=chunk)
How To Lock In Yields Up To 17.1% In Historically Cheap Small Caps
Forbes· 2025-06-08 14:05
Core Viewpoint - Small-cap stocks are currently undervalued, presenting potential investment opportunities, especially those offering high dividend yields ranging from 8.3% to 17.1% [2] Group 1: Small-Cap Stocks Overview - The valuation gap between the S&P 500 and S&P 600 is at its widest since the late 1990s, suggesting small-cap stocks are significantly cheaper [2] - The article discusses five small-cap stocks with attractive dividend yields, indicating a potential for high returns despite their current low valuations [2] Group 2: Playtika Holding (PLTK) - Playtika, a mobile game developer, has a dividend yield exceeding 8% but has not raised its payout recently, indicating a decline in earnings and sales [4][5] - Analysts project a 32% increase in profits for 2024, despite the company's struggles in the competitive mobile gaming market [6] - Playtika's valuation is low at 6 times forward earnings, but there are concerns about its growth prospects [7] Group 3: Carlyle Secured Lending (CGBD) - CGBD is a business development company focused on U.S. middle-market companies, primarily investing in first-lien debt [8][9] - Recent earnings reports have shown disappointing results, with an increase in non-accrual loans and a stagnant base dividend of 40 cents per share [10][11] - CGBD shares are trading at a 16% discount to net asset value, but operational challenges raise concerns about future dividend sustainability [12] Group 4: Bain Capital Specialty Finance (BCSF) - BCSF provides financing solutions to a diverse range of companies, with a significant portion of its investments in first-lien debt [13][14] - The company has maintained its regular dividend but has introduced special dividends, raising concerns about future dividend coverage due to declining net investment income projections [16][17] - Analysts expect BCSF's dividend ratios to be high, leaving little room for error in case of operational difficulties [17] Group 5: Two Harbors Investment Corp. (TWO) - TWO operates in the mortgage REIT sector, focusing on mortgage servicing rights and agency residential mortgage-backed securities [19][22] - The company has faced significant share price declines, resulting in a high yield of over 17%, but recent litigation charges could impact its book value and dividend sustainability [24][25] - TWO's current dividend rate of 45 cents per share is at risk due to the potential impact of litigation on earnings available for distribution [25] Group 6: Franklin BSP Realty Trust (FBRT) - FBRT is a mortgage REIT focused on commercial mortgage-backed securities, with a significant portion of its portfolio in multifamily properties [26][27] - The company is trading at a 28% discount to book value, with a low P/E ratio based on 2026 earnings estimates, indicating potential value [28] - Concerns exist regarding the stability of its dividend, as the payout has not changed since 2021, and market conditions could necessitate a review of the dividend policy [29][30]
Franklin BSP Realty Trust(FBRT) - 2025 Q1 - Earnings Call Transcript
2025-04-29 17:47
Financial Data and Key Metrics Changes - FBRT reported GAAP earnings of $23.7 million or $0.20 per diluted common share for Q1 2025, while distributable earnings were negative $6.2 million or negative $0.12 per fully converted share [15] - Distributable earnings before realized losses were $31.9 million or $0.31 per fully converted common share [15] - The book value per fully converted common share at the end of the quarter stood at $14.95, reflecting a decrease primarily due to dividend payouts exceeding earnings [18] Business Line Data and Key Metrics Changes - The company originated $341 million in new loan commitments during Q1 2025, with multifamily loans accounting for 79% of total origination volume [18] - Loan repayments totaled $353 million, predominantly from loans originated in 2021 and 2022 [18] - The average cost of debt on the core portfolio was SOFR plus 2.18% [19] Market Data and Key Metrics Changes - The core portfolio totaled $4.8 billion at quarter end, comprised of 152 loans, with multifamily securing 71% of the portfolio [23] - The average risk rating at quarter end was 2.2, with 146 of 152 positions risk-weighted at two or three [12] Company Strategy and Development Direction - The pending acquisition of NewPoint is expected to provide meaningful synergies and aligns with the strategic focus on the multifamily sector, enhancing earnings quality and consistency [13] - The company aims to recycle the bulk of its legacy book into current vintage loans, positioning itself for sustained growth [13] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the NewPoint acquisition, viewing it as a catalyst for long-term value creation [13] - The company anticipates challenges in dividend coverage in the near term due to REO and non-performing loan portfolios, but believes in its long-term earning power [17] Other Important Information - The company has a liquidity position of $913 million, including $215 million in unrestricted cash [12] - The REO portfolio stood at 12 positions at quarter end, with plans to liquidate assets for optimal recovery [28] Q&A Session Summary Question: Plans for loan portfolio and REO proceeds - Management indicated that any new capital from REO sales would be proactively reinvested into new originations as soon as possible [35] Question: Impact of NewPoint acquisition on expenses - Expenses in Q1 included transaction costs related to NewPoint and REO expenses, which elevated overall costs [36] Question: Dividend sustainability and REO impact - Management is monitoring how quickly REO assets can be turned over and the potential impact of market volatility on dividend coverage [46][47] Question: Originations and deal flow - Management noted that while originations were paused for cash gathering for NewPoint, they expect to resume soon with a consistent deal flow available [55][58] Question: Changes at Fannie, Freddie, and HUD - Management expressed uncertainty about government actions but highlighted the unique opportunity presented by the NewPoint acquisition to build a competitive multifamily lending platform [62] Question: Agency business revenue contribution - Management did not disclose specific percentages for agency business revenue at close but indicated more details would be provided in the future [79]
Franklin BSP Realty Trust(FBRT) - 2025 Q1 - Earnings Call Transcript
2025-04-29 14:02
Financial Data and Key Metrics Changes - FBRT reported GAAP earnings of $23.7 million or $0.20 per diluted common share for Q1 2025, while distributable earnings were negative $6.2 million or negative $0.12 per fully converted share [16] - Distributable earnings before realized losses were $31.9 million or $0.31 per fully converted common share [16] - The book value per fully converted common share at the end of the quarter stood at $14.95, reflecting a decrease primarily due to dividend payouts exceeding earnings [20] Business Line Data and Key Metrics Changes - The company originated $341 million in new loan commitments during Q1 2025, with multifamily loans accounting for 79% of total origination volume [20] - Loan repayments totaled $353 million, predominantly from loans originated in 2021 and 2022, with multifamily loans making up the majority of pay downs [20] - The average cost of debt on the core portfolio was SOFR plus 2.18%, with 81% of financing through CLOs [21] Market Data and Key Metrics Changes - The company’s liquidity stood at $913 million at quarter end, including $215 million in unrestricted cash [13] - The average risk rating at quarter end was 2.2, with 146 of 152 positions risk-weighted at two or three [13] - Watch list loans represented 4% of the total portfolio, comprising six names at the end of the quarter [13] Company Strategy and Development Direction - The pending acquisition of NewPoint is expected to provide meaningful synergies and aligns with the strategic focus on the multifamily sector, enhancing earnings quality and consistency [14] - The company aims to recycle the bulk of its legacy book into current vintage loans, positioning itself for sustained growth and potential premium trading to book value [14] Management Comments on Operating Environment and Future Outlook - Management acknowledged that the REO portfolio has created a near-term drag on earnings but emphasized a proactive approach to recover invested capital [10] - The company anticipates potential shortfalls in dividend coverage in the near term due to REO and non-performing loan portfolios [12] - Management expressed confidence in the long-term earning power of the company to cover dividends, contingent on the pace of REO sales and market conditions [19] Other Important Information - The company has moved four loans to watch list status, bringing the total to six, with ongoing discussions regarding loan modifications [26] - The foreclosure REO portfolio stood at 12 positions at quarter end, with plans to liquidate assets for the best possible outcome [29] - The integration of NewPoint is expected to create book value growth and enhanced earning powers over time [31] Q&A Session Summary Question: Plans for loan portfolio and REO proceeds - Management indicated that any new capital from REO sales would be proactively reinvested into new originations, although cash is being held for the NewPoint acquisition [35] Question: Impact of NewPoint acquisition on expenses - Expenses in Q1 were elevated due to transaction costs related to NewPoint and ongoing REO expenses, which are expected to normalize post-acquisition [38] Question: Balancing REO asset sales versus holding for potential gains - Management stated that each asset is evaluated on a case-by-case basis, prioritizing the liquidation of REO to redeploy capital into earning loans [43] Question: Dividend sustainability and potential adjustments - Management noted that the ability to cover dividends will be monitored closely, particularly in relation to the pace of REO turnover and market volatility [48] Question: Changes in originations and market conditions - Management confirmed that originations have been consistent, with a temporary pause for cash gathering for the NewPoint acquisition, but expect to resume soon [57] Question: Insights on agency lending and regulatory changes - Management expressed uncertainty regarding future government actions but highlighted the unique opportunity presented by the NewPoint acquisition to enhance their multifamily lending platform [64]
Franklin BSP Realty Trust(FBRT) - 2025 Q1 - Earnings Call Presentation
2025-04-29 01:27
Franklin BSP Realty Trust First Quarter 2025 Supplemental Information Important Information The information herein relates to the Company's business and financial information as of March 31, 2025 and does not reflect subsequent developments. Risk Factors Investing in and owning our common stock involves a high degree of risk. See the section entitled "Risk Factors" in our Annual Report on Form 10-K filed with the SEC on February 26, 2025, and the risk disclosures in our subsequent periodic reports filed wit ...