Franklin BSP Realty Trust, Inc. (NYSE:FBRT) ranks among the most undervalued REIT stocks to buy right now. Following Franklin BSP Realty Trust, Inc. (NYSE:FBRT)’s third-quarter 2025 results, Citizens reaffirmed its Market Outperform rating and $13.50 price target on the company’s shares. The firm underlined Franklin BSP’s strong credit performance, which allows the company to utilize capital aggressively as it moves through 2026. Franklin BSP Realty Trust, Inc. (NYSE:FBRT) reported revenues of $90.12 mil ...

Core Viewpoint - Franklin BSP Realty Trust, Inc. (FBRT) will release its fourth quarter 2025 results on February 11, 2026, after market close, followed by a conference call on February 12, 2026, at 9:00 a.m. ET [1] Group 1: Financial Results Announcement - The fourth quarter 2025 results will be announced after the close of trading on February 11, 2026 [1] - A conference call to discuss the financial results will take place on February 12, 2026, at 9:00 a.m. ET [1] Group 2: Conference Call Details - Participants can pre-register for the conference call and webcast on the company's website [2] - The conference call can be accessed by dialing (844) 701-1166 for domestic calls or (412) 317-5795 for international calls [2] - Participants are advised to join the call at least five minutes early [2] Group 3: Webcast and Replay Information - The call will be available via live webcast on the company's website [3] - A slide presentation with supplemental information will be accessible prior to the call [3] - An audio replay of the conference call will be available approximately one hour after the call and will remain accessible for 90 days [3] Group 4: Company Overview - Franklin BSP Realty Trust, Inc. is a real estate investment trust that manages a diversified portfolio of commercial real estate debt in the U.S. [4] - As of September 30, 2025, the company had approximately $6.2 billion in assets [4] - FBRT is externally managed by Benefit Street Partners L.L.C., a subsidiary of Franklin Resources, Inc. [4]

Core Points - Franklin BSP Realty Trust, Inc. has declared a fourth quarter 2025 dividend of $0.355 per common share [1] - The dividend is scheduled to be payable on or about January 12, 2026, to common stockholders of record as of December 31, 2025 [1] - The Board of Directors also declared a fourth quarter 2025 dividend on its convertible Series H Preferred Stock, equal to the as-converted common dividend amount [1]

Core Insights - Small-cap stocks are showing signs of recovery, which may indicate a bullish trend as the market approaches 2026 [3][4] - The article discusses four small-cap stocks with dividend yields ranging from 7.1% to 13.3% [5] Small-Cap Market Overview - Small-cap stocks have underperformed compared to larger stocks over the past decade, with a brief rally during the COVID reopening in 2020 [3] - Factors such as rising interest rates and a shift towards safer mega-cap stocks have contributed to the underperformance of small caps [3][4] - The recent focus on potential Federal Reserve rate cuts has led to increased interest in small-cap stocks [3][4] Featured Small-Cap Stocks - **Nuveen Churchill Direct Lending (NCDL)**: Offers a 13.0% dividend yield and is part of the business development companies (BDCs) sector, which is required to distribute at least 90% of earnings as dividends [5][6] - **UWM Holdings (UWMC)**: Provides a 7.1% dividend yield and is the largest home mortgage lender in the U.S., focusing on wholesale lending [11][12] - **Redwood Trust (RWT)**: Has a 12.7% dividend yield and is involved in jumbo residential mortgages and single-family rental loans, with a focus on improving earnings in the coming years [15][16] - **Franklin BSP Realty Trust (FBRT)**: Offers a 13.3% dividend yield and primarily deals in commercial mortgage-backed securities, with a recent acquisition expected to enhance its earnings potential [19][21] Financial Performance and Outlook - NCDL's high yield is supported by regular and supplemental dividends, although the latter have been replaced with a traditional payout schedule [6][10] - UWMC is positioned to benefit from lower mortgage rates, with plans to scale operations as rates decline [12][13] - Redwood Trust has been repurchasing shares and is on "dividend growth watch," indicating potential for future dividend increases [18] - FBRT's recent acquisition of NewPoint Holdings is expected to contribute positively to its distributable earnings, despite concerns over dividend coverage [21][22]

Summary of Franklin BSP Realty Trust (FBRT) FY Conference Call Company Overview - **Company Name**: Franklin BSP Realty Trust (FBRT) - **Ticker Symbol**: FBRT - **Type**: Commercial Mortgage REIT - **Public Since**: 2021 via a reverse merger with Capstead Mortgage - **External Manager**: Benefit Street Partners, owned by Franklin Templeton - **Assets Under Management (AUM)**: $90 billion, with $13 billion in commercial real estate [2][3] Financial Performance - **Core Portfolio Size**: $4.4 billion, aiming for a target of around $5 billion [4] - **Net Leverage**: Approximately 2.5 times as of September 30 [4] - **Dividend Yield**: Currently at 14%, significantly high compared to the book value [5][15] - **Stock Price**: Trading at about 70% of book value [5] Portfolio Composition - **Asset Focus**: 75% of the portfolio is in multifamily assets, with the remainder in hospitality and industrial [4][5] - **Geographic Focus**: Primarily in the Southwest, Southeast, and Sunbelt areas, with significant exposure to Texas and the Carolinas [6] - **Office Assets**: Only about 2% of the portfolio is in office assets, with no new loans originated in this category since 2020 [7] Recent Developments - **CLO Issuance**: Issued a $1.1 billion CLO to recapitalize and free up cash for reinvestment into the core loan portfolio [9] - **Acquisition of NewPoint**: Closed on July 1, 2025, acquiring agency licenses and a bridge loan portfolio, which is expected to enhance origination capabilities [10][11] - **NewPoint's Performance**: Achieved record agency originations of $2.1 billion in the latest quarter [10] - **Mortgage Servicing Rights (MSRs)**: Integration of MSRs expected to contribute to book value growth over time [12] Future Outlook - **Dividend Coverage**: Management is focused on achieving dividend coverage by the second half of 2026, with a path outlined for improvement [15][19] - **Earnings Growth**: Expected contributions from CLO issuance, REO asset management, and NewPoint integration to enhance earnings per share [16][18] - **REO Management**: Strategy to stabilize and sell multifamily REO assets rather than liquidating immediately, with expectations of adding 8-12 cents to earnings per share [17][18] Key Risks and Considerations - **Market Conditions**: The company is navigating a challenging environment with legacy portfolio issues but has maintained a focus on multifamily assets to mitigate risks [7] - **Interest Rate Impact**: Portfolio is divided between loans originated before and after interest rate hikes, with 40% of the portfolio in pre-hike loans [6] Conclusion Franklin BSP Realty Trust is strategically positioned within the commercial mortgage REIT sector, focusing on multifamily assets and leveraging recent acquisitions to enhance growth and dividend coverage. The company is actively managing its portfolio and capital structure to navigate current market challenges and capitalize on future opportunities.

Financial Performance - As of September 30, 2025, the book value per share decreased to $14.51 from $15.09 as of December 31, 2024, primarily due to dividends paid exceeding net income and dilution from the issuance of Class A Units related to the NewPoint acquisition [299]. - The fully-converted book value per share as of September 30, 2025, was $14.29, down from $15.19 as of December 31, 2024, reflecting the impact of the NewPoint acquisition and the issuance of additional shares [300]. - Interest income for the nine months ended September 30, 2025, totaled $331.2 million, a decrease of $67.1 million compared to $398.3 million for the same period in 2024 [336]. - Interest expense for the nine months ended September 30, 2025, was $217.3 million, down from $257.9 million in 2024, reflecting a decrease of $40.6 million [338]. - GAAP net income for Q3 2025 was $17,616,000, a decrease from $30,173,000 in Q3 2024, while for the nine months ended September 30, 2025, it was $65,705,000 compared to $62,235,000 in 2024 [418]. - Distributable Earnings for Q3 2025 were $26,701,000, significantly improving from a loss of $3,959,000 in Q3 2024, and for the nine months ended September 30, 2025, it was $49,472,000 compared to $69,438,000 in 2024 [418]. Acquisition and Business Expansion - The Company acquired NewPoint Holdings JV LLC on July 1, 2025, which added a servicing portfolio of $47.3 billion as of September 30, 2025, enhancing the Company's agency mortgage loan capabilities [305]. - The NewPoint acquisition is expected to complement the Company's existing business by providing bridge loan borrowers with refinancing options through agency mortgage loans [305]. - The Company issued 8,385,951 Class A Units to NewPoint equity holders during the acquisition, with potential cash distributions to Class A Unit holders aligned with common stock distributions [309]. - The company acquired NewPoint Holdings JV LLC for $297.3 million during the nine months ended September 30, 2025 [402]. Loan Portfolio and Risk Management - The total fair value of commercial mortgage loans held for sale increased to $619.0 million as of September 30, 2025, compared to $87.3 million as of December 31, 2024 [312]. - The company had four non-performing loans with a total amortized cost of $100.7 million as of September 30, 2025 [313]. - The company is exposed to credit risk due to loan defaults, which are influenced by various factors including borrower financial condition and regional economics [421]. - The company’s agency business, following the NewPoint acquisition, focuses on the origination and servicing of agency mortgages, which may increase credit risk due to risk-sharing obligations [422]. - Interest rate risk management includes entering into hedge contracts to mitigate the impact of interest rate fluctuations on earnings and cash flows [425]. Employee and Management Structure - The Company had 218 employees as of September 30, 2025, all of whom are employees of NewPoint [298]. - The Company is externally managed by Benefit Street Partners L.L.C., which provides investment and management services [296]. - The Company operates primarily through two business units: Commercial Real Estate Financing and Agency Business, focusing on various debt investments and agency mortgage products [294]. Financial Obligations and Capital Management - As of September 30, 2025, the company had a total of $4.81 billion in contractual obligations and commitments [408]. - The company must distribute at least 90% of its taxable income to maintain its REIT status, which includes distributions to avoid federal income taxes [393][406]. - The company has a share repurchase program authorized for $65 million, with $31.1 million remaining available as of September 30, 2025 [409]. - The company expects to utilize additional debt and equity financing as a source of capital, with a target leverage level of between one to three times book value of equity [381]. Market and Economic Conditions - New tax legislation effective July 4, 2025, includes a permanent extension of the 20% deduction for qualified REIT dividends and increases the REIT asset test limit for taxable REIT subsidiaries from 20% to 25% [310]. - The company is actively monitoring the SOFR (Secured Overnight Financing Rate) trends, as many loans are indexed to this rate, impacting overall interest expenses [327].

Core Viewpoint - Franklin BSP Realty Trust (FBRT) is trading at a significant double-digit discount to its book value while offering a double-digit dividend yield that is not fully supported by its commercial real estate (CRE) credit portfolio [1] Group 1: Company Overview - FBRT is currently experiencing a deep discount in its trading price relative to its book value [1] - The company has declared a quarterly cash dividend, contributing to its appeal for income-focused investors [1] Group 2: Market Context - The equity market serves as a mechanism for wealth creation or destruction over the long term, influenced by daily price fluctuations [1] - Pacifica Yield is focused on long-term wealth creation by targeting undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1]

Financial Data and Key Metrics Changes - The company reported GAAP net income of $17.6 million, or $0.13 per fully converted common share, with distributable earnings of $26.7 million, or $0.22 per fully converted share [11] - Distributable earnings included $1.7 million of realized losses related to a REO sale, which adjusted the distributable earnings to $0.23 per fully converted share when excluding this loss [11] - Book value at quarter end was $14.29 per fully converted share, with a decrease attributed to dividend undercoverage and the NewPoint acquisition [11] Business Line Data and Key Metrics Changes - NewPoint contributed $9.3 million to distributable earnings in its first full quarter, with a record volume of $2.2 billion in originations [6][13] - The core portfolio size declined slightly, ending the quarter at $4.4 billion across 147 loans, with multifamily assets making up 75% of the portfolio [18] - The company originated approximately $304 million in new loan commitments during the quarter, funding $196 million primarily in multifamily [6] Market Data and Key Metrics Changes - The CRE market is seeing a reset, with borrowers and lenders adjusting asset valuations, particularly outside of the office sector [18] - The average cost of debt on the core portfolio was SOFR +231 basis points, with net leverage at 2.55 times and recourse leverage at 0.84 times [14] - The company expects to return its core portfolio to a target size of at least $5 billion over the next few quarters [7] Company Strategy and Development Direction - The company is focused on integrating NewPoint, redeploying liquidity, and leveraging expanded capabilities to grow earnings and book value [10] - The integration of NewPoint is expected to generate $0.04 to $0.06 per fully converted share annually to earnings once the migration of loan servicing is complete [16] - The company is exploring additional investment opportunities outside of whole loans, including CMBS B-pieces and CRE CLO bond investments [19] Management's Comments on Operating Environment and Future Outlook - Management views the third quarter as transitional but believes it sets the stage for stronger results ahead [9] - The company is optimistic about the contribution from NewPoint growing over time, with expectations for it to be accretive to GAAP earnings and book value per share in the first half of 2026 [17] - Management noted that while the market is competitive, they continue to find attractive opportunities for risk-adjusted returns [19] Other Important Information - The company has resumed share repurchases, buying back 540,000 shares for approximately $6 million, with $25.6 million remaining on the buyback allocation [9] - The company sold two properties from its REO portfolio during the quarter and has more slated to close in Q4 [8] Q&A Session Summary Question: What led to the higher origination volumes and expectations for Q4? - Management indicated that they cultivated the balance sheet and converted loans from floating rates into CMBS products, leading to a strong Q4 outlook [29] Question: What should be expected regarding the compensation and benefits expense line item? - Management stated that expenses will trend with volume and will be variable, making it difficult to extrapolate from Q3 alone [32] Question: Are repayments expected to remain elevated in Q4? - Management expects repayments to be in line with previous quarters, noting variability as year-end approaches [38] Question: What is the target size for the core portfolio? - The company is targeting a stabilized portfolio size of between $5 billion and $5.5 billion [40] Question: Is the record quarter for NewPoint a sustainable run rate? - Management cautioned that while it was a great quarter, it may not be repeatable every quarter and advised looking at overall annual guidance [43]

Core Insights - The company successfully closed the acquisition of NewPoint, which contributed significantly to its earnings and loan origination capacity [3][25][23] - The third quarter was characterized as a transitional period, with a focus on integrating NewPoint and managing legacy portfolio issues [4][25] - The company expects to return its core portfolio size to at least $5 billion in the coming quarters [2][34] Financial Performance - The company reported GAAP net income of $17.6 million, or $0.13 per fully converted common share, with distributable earnings of $26.7 million, or $0.22 per share [7][8] - The average risk rating of the loan portfolio remained stable at 2.3, with a slight decline in the core portfolio size due to liquidity management for acquisitions [1][2] - Book value at quarter end was $14.29 per fully converted share, impacted by dividend under coverage and the NewPoint acquisition [8] Loan Origination and Portfolio Management - The company originated approximately $304 million in new loan commitments during the quarter, primarily in multifamily, and funded $196 million of those [2][18] - The average cost of debt on the core portfolio was SOFR plus 2.31, with 75% of the core book financed through non-recourse structures [11][12] - The company has resumed share repurchases, buying back 540,000 shares for approximately $6 million, with $25.6 million remaining on the buyback allocation [5] NewPoint Integration and Contributions - NewPoint achieved a record volume quarter with $2.2 billion in originations, contributing $9.3 million to distributable earnings in its first full quarter [3][10] - The integration of NewPoint is progressing well, with expectations for increased earnings contributions linked to agency and FHA origination volume [14][23] - The migration of Franklin BSP Realty Trust's loan servicing is underway, expected to enhance earnings by $0.04 to $0.06 per share annually once completed [13][14] Market Conditions and Future Outlook - The company is observing a healthier CRE market with improved borrower-lender dynamics, particularly in multifamily assets [15][17] - The fourth quarter pipeline is strong, with approximately $120 million in new loan commitments already closed [18] - The company anticipates that the recent CLO transactions will generate additional cash and reduce financing costs, contributing to future earnings growth [9][10]

Financial Performance - GAAP Net Income was $176 million, or $012 per diluted common share[12] - Distributable Earnings reached $267 million, or $022 per fully converted share, including $17 million of realized losses[12] - Distributable Earnings before realized losses amounted to $284 million, or $023 per fully converted share[12] - A Q3 2025 cash dividend of $0355 per share was declared, representing an annualized yield of 100% on fully-converted book value per share[12] Capitalization and Liquidity - Fully-converted book value per share stood at $1429, compared to $1482 in Q2 2025[12] - Net debt to equity ratio was 25x, while recourse net debt to equity was 08x[12] - 77% of financing sources are non-mark-to-market on the core book[12] - Liquidity totaled $522 million, including $117 million in cash and $21 million available for CLO reinvestment/ramp[12] Portfolio and Investments - The Core Portfolio's principal balance decreased by $113 million during the quarter, closing $304 million of new loan commitments and funding $196 million of principal balance[12] - Loan repayments of $275 million were received[12] - Agency originated $22 billion of new loan commitments under programs with Fannie Mae, Freddie Mac, and HUD[12]