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NEW YORK--(BUSINESS WIRE)--Franklin BSP Realty Trust, Inc. (NYSE: FBRT) ("FBRT†) today announced the pricing of BSPRT 2025-FL12 ("FL12†), a $1.076 billion managed Commercial Real Estate Collateralized Loan Obligation. FL12 features a 30-month reinvestment period. The transaction has an initial advance rate of 88% and a weighted average interest cost of 1M CME Term SOFR+1.61% before accounting for discount and transaction costs. The transaction is expected to settle on October 15, 2025. Concurre. ...

Core Insights - The acquisition of Newpoint by FBRT was completed on July 1, enhancing FBRT's capabilities in commercial real estate finance [3] - Newpoint is recognized as a leading vertically integrated company in the sector, providing various services including loan origination and asset management [3] - This acquisition positions FBRT to improve income stability and supports long-term growth in book value per share [3] Company Overview - FBRT's leadership includes CEO Rich Byrne, President Mike Comparato, and CFO Jerry Baglien, who participated in the recent webinar [1] - The company aims to leverage the acquisition to strengthen its agency origination and servicing platform [3] Industry Context - Newpoint is one of only 19 multifamily originators in the U.S. approved by all three Government-Sponsored Enterprises (GSEs): Fannie Mae, Freddie Mac, and FHA/HUD [3] - The acquisition reflects a strategic move within the commercial real estate finance industry to consolidate services and enhance operational capabilities [3]

Summary of Franklin BSP Realty Trust (FBRT) Conference Call Company Overview - **Company**: Franklin BSP Realty Trust (NYSE:FBRT) - **Acquisition**: NewPoint Holdings JV LLC, a vertically integrated commercial real estate finance company, closed on July 1, 2025 [3][4] Key Points and Arguments Acquisition Details - NewPoint Holdings provides loan origination, servicing, asset management, and agency lending products, enhancing FBRT's income stability and long-term book value growth [3][4] - The acquisition allows FBRT to offer a full range of debt capital services, including construction, bridge, and agency loans, making it a comprehensive provider in the market [5][6] Strategic Advantages - The agency business is capital-light, financed entirely by warehouse lines, which reduces the need for upfront capital [6][16] - Internal servicing capabilities will lead to cost savings and the potential for third-party servicing growth [6][28] - Cross-selling opportunities have already begun, with transactions occurring with clients who previously had no reason to engage with FBRT due to the lack of agency licenses [8][10] Financial Insights - Pro forma financials published on August 1 indicate that NewPoint's integration will not require significant additional equity, as the agency business is financed through existing resources [14][16] - The servicing business is expected to contribute to book value growth, with MSRs (Mortgage Servicing Rights) adding real assets to the balance sheet [23][24] Market Position and Competitive Edge - FBRT differentiates itself in the agency lending space by offering a broader range of products and superior service, which is expected to help win business over competitors [12][13] - The integration of NewPoint is seen as a transformative moment for FBRT, allowing for growth in book value and stability in earnings [34] GSE Reform Risk - Concerns regarding GSE (Government-Sponsored Enterprises) reform are acknowledged, but the company believes that any changes will not uniquely disadvantage FBRT and that the market will remain stable [36][38] Additional Important Content - The integration process of NewPoint is expected to take several quarters, with efficiencies and synergies becoming more apparent over time [30][32] - The company is optimistic about its pipeline and growth potential, indicating a strong outlook for the remainder of the year [34] This summary encapsulates the key aspects of the conference call, highlighting the strategic importance of the NewPoint acquisition, the financial implications, and the competitive positioning of Franklin BSP Realty Trust in the market.

Core Points - Franklin BSP Realty Trust, Inc. has declared a third quarter 2025 dividend of $0.355 per common share [1] - The dividend is scheduled to be payable on or about October 10, 2025, to stockholders of record as of September 30, 2025 [1] - The Board of Directors also declared a third quarter 2025 dividend on its convertible Series H Preferred Stock, equal to the common dividend amount [1]

Core Viewpoint - Franklin BSP Realty Trust (FBRT) reported results that were largely as expected, with a notable decline in adjusted core earnings/EAD, which may improve over time due to the acquisition of NewPoint [1][4][15] Financial Performance - FBRT experienced a minor quarterly book value (BV) decrease of 1.1%, which was in line with expectations, while adjusted core earnings/EAD showed a significant underperformance with a decline of 20.35% compared to projections [9][11] - The company recorded a net decrease in CECL reserves of $4 million, attributed to a smaller investment portfolio size and a minor net realized loss/write-off [2][3] - The investment portfolio size decreased by 6.5%, which was greater than the projected 2% decline, and the effective coupon rate was slightly lower at 7.85% compared to the expected 7.90% [3][4] Acquisition Impact - The acquisition of NewPoint Holdings, which closed on July 1, 2025, is expected to positively impact FBRT's adjusted core earnings/EAD, although management acknowledges the challenge of returning to previous dividend levels [5][15] - The financial impacts of the NewPoint acquisition will begin to reflect in Q3 2025, with management expressing confidence in the acquisition's benefits [15][16] Market Position and Valuation - FBRT is currently viewed as modestly undervalued, with a recommendation range downgrade of 2.5% due to poor adjusted core earnings performance, but the risk/performance rating remains unchanged at 4.5 [10][12][16] - The current dividend yield stands at 12.56%, with a payout ratio of 97%, indicating a high return relative to the stock price of $11.31 [12] Credit Risk and Loan Performance - Credit risk remains a concern, with an uptick in non-accrual loans anticipated in 2025-2026, as FBRT added three new loans to its watch list during Q2 2025 [7][14] - The company had significant loan prepayments and amortizations, totaling $353 million in Q1 2025 and $317 million in Q2 2025, which were higher than projected [3][4]

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]

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]

Financial Performance - GAAP Net Income was $24.4 million, or $0.19 per diluted common share and $0.21 per fully converted share[12] - Distributable Earnings reached $29.0 million, translating to $0.27 per fully converted share[12] - A cash dividend of $0.355 per share was declared, representing an annualized yield of 9.6% on fully-converted book value per share[12] - Dividend coverage from GAAP and Distributable Earnings was 58% and 76%, respectively[12] Capitalization and Liquidity - Fully-converted book value per share stood at $14.82, compared to $14.95 in Q1 2025[12] - Net debt to equity ratio was 2.2x, while recourse net debt to equity was 0.3x[12] - 79% of financing sources are non-mark-to-market on the core book[12] - Liquidity amounted to $501 million, including $77 million in cash and $79 million available for CLO reinvestment/ramp[12] Portfolio and Investments - The Core Portfolio's principal balance decreased by $263 million during the quarter[12] - New loan commitments of $61 million were closed, and $91 million of principal balance was funded, including future funding on existing loans[12] - Loan repayments totaled $317 million, and $37 million was transferred to real estate owned (REO)[12]

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]