[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** |

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)

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]

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]

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 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 ...

Core Viewpoint - Franklin BSP (FBRT) reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.30 per share, but down from $0.41 per share a year ago, indicating a 24.39% year-over-year decline in earnings [1][2] Financial Performance - The company posted revenues of $50.11 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 9.76% and down from $53.95 million year-over-year, reflecting a 5.43% decline [2] - Over the last four quarters, Franklin BSP has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] Stock Performance - Franklin BSP shares have declined approximately 7.3% since the beginning of the year, compared to a decline of 6.1% for the S&P 500 [3] - The current Zacks Rank for Franklin BSP is 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.33 on revenues of $57.12 million, and for the current fiscal year, it is $1.35 on revenues of $229.69 million [7] - The trend for estimate revisions ahead of the earnings release has been unfavorable, which may impact future stock performance [6] Industry Context - The REIT and Equity Trust industry, to which Franklin BSP belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, suggesting potential challenges for stocks in this sector [8]

Investor Relations Contact: Lindsey Crabbe l.crabbe@benefitstreetpartners.com (214) 874-2339 Franklin BSP Realty Trust, Inc. Announces First Quarter 2025 Results New York City, NY – April 28, 2025 – Franklin BSP Realty Trust, Inc. (NYSE: FBRT) ("FBRT" or the "Company") today announced financial results for the quarter ended March 31, 2025. 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 dilu ...

PART I - Financial Information [Consolidated Financial Statements and Notes (Unaudited)](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20and%20Notes%20(unaudited)) This section presents the unaudited consolidated financial statements for Q1 2025, including balance sheets, statements of operations, cash flows, and related notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $5.65 billion from $6.00 billion, while total liabilities decreased to $4.06 billion from $4.39 billion, primarily due to changes in commercial mortgage loans and CLOs Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $215,368 | $184,443 | | Commercial mortgage loans, held for investment, net | $4,739,876 | $4,908,667 | | Real estate securities, available for sale, net | $167,192 | $202,973 | | Real estate owned, net | $112,499 | $113,160 | | **Total Assets** | **$5,654,051** | **$6,002,386** | | **Liabilities & Equity** | | | | Collateralized loan obligations | $3,226,710 | $3,628,270 | | Repurchase agreements and revolving credit facilities | $635,478 | $566,419 | | **Total Liabilities** | **$4,058,992** | **$4,392,581** | | **Total Equity** | **$1,505,311** | **$1,520,057** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net income for Q1 2025 decreased to $23.7 million from $35.8 million in Q1 2024, driven by lower net interest income and higher total expenses Consolidated Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Interest Income | $43,315 | $49,240 | | Total Income | $50,112 | $53,952 | | Total Expenses | $30,340 | $20,626 | | Net Income | $23,705 | $35,827 | | Net Income Applicable to Common Stock | $17,310 | $29,172 | | Basic Earnings Per Share | $0.20 | $0.35 | | Diluted Earnings Per Share | $0.20 | $0.35 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to $116.2 million, while investing activities provided $286.9 million, leading to an overall cash increase of $27.2 million Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $116,238 | $12,970 | | Net cash provided by/(used in) investing activities | $286,943 | $(139,334) | | Net cash (used in)/provided by financing activities | $(375,941) | $30,799 | | **Net change in cash, cash equivalents and restricted cash** | **$27,240** | **$(95,565)** | [Note 3 - Commercial Mortgage Loans](index=13&type=section&id=Note%203%20-%20Commercial%20Mortgage%20Loans) The commercial mortgage loan portfolio decreased to $4.74 billion, with improved risk ratings and reduced allowance for credit losses Commercial Mortgage Loans, Held for Investment (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Gross Carrying Value | $4,786,480 | $4,986,750 | | Allowance for Credit Losses | ($46,604) | ($78,083) | | **Net Carrying Value** | **$4,739,876** | **$4,908,667** | - The loan portfolio's collateral is primarily composed of **Multifamily (71.3%)** and **Hospitality (14.9%)** properties[50](index=50&type=chunk) - The weighted average risk rating of the loan portfolio improved to **2.2** as of March 31, 2025, from 2.3 at the end of 2024, with **79.9%** of the portfolio rated '2 - Low Risk'[64](index=64&type=chunk)[67](index=67&type=chunk) - Non-performing loans had an amortized cost of **$94.0 million** as of Q1 2025, down from $133.2 million at year-end 2024[63](index=63&type=chunk) [Note 7 - Debt](index=22&type=section&id=Note%207%20-%20Debt) Total debt included $3.23 billion in CLOs and various repurchase agreements, with CLO principal outstanding decreasing and the Barclays Repo Facility maturity extended Debt Summary (in thousands) | Debt Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Collateralized loan obligations | $3,226,710 | $3,628,270 | | Repurchase agreements - commercial mortgage loans | $429,314 | $329,811 | | Repurchase agreements - real estate securities | $206,164 | $236,608 | | Unsecured debt | $81,420 | $81,395 | - The company extended the maturity date of the **$500 million Barclays Repo Facility** to March 14, 2028[91](index=91&type=chunk) - The total principal balance of collateralized mortgage assets in the CLOs was **$4.15 billion** as of March 31, 2025, down from $4.49 billion at the end of 2024[98](index=98&type=chunk)[100](index=100&type=chunk) [Note 10 - Commitments and Contingencies](index=30&type=section&id=Note%2010%20-%20Commitments%20and%20Contingencies) Unfunded loan commitments increased to $380.6 million, and the company entered an agreement to acquire NewPoint Holdings JV LLC for $318.8 million cash and equity units - Unfunded loan commitments to borrowers totaled **$380.6 million** as of March 31, 2025[116](index=116&type=chunk) - The company entered into a definitive agreement to acquire NewPoint Holdings JV LLC for **$318.8 million** in cash and the issuance of **8,385,951 Class A Units** of its operating partnership[118](index=118&type=chunk) [Note 15 - Segment Reporting](index=39&type=section&id=Note%2015%20-%20Segment%20Reporting) The Real Estate Debt segment generated the majority of Q1 2025 net income at $26.6 million, while the Real Estate Owned segment recorded a net loss - The company conducts its business through four segments: Real Estate Debt, Real Estate Securities, Commercial Real Estate Conduit (TRS), and Real Estate Owned[164](index=164&type=chunk) Net Income/(Loss) by Segment (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Real Estate Debt and Other | $26,571 | $28,214 | | Real Estate Securities | $267 | $1,684 | | TRS | $2,840 | $4,232 | | Real Estate Owned | $(5,973) | $1,697 | | **Total Net Income** | **$23,705** | **$35,827** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial performance, highlighting decreased net interest income, portfolio composition, $913 million in near-term liquidity, and a negative Distributable Earnings [Portfolio Overview](index=44&type=section&id=Portfolio) The portfolio's carrying value was primarily $4.74 billion in commercial mortgage loans, with a decrease in non-performing loans and continued concentration in multifamily and hospitality properties Portfolio Composition (Carrying Value, in millions) | Asset Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial mortgage loans, held for investment, net | $4,739.9 | $4,908.7 | | Commercial mortgage loans, held for sale | $5.0 | $87.3 | | Real estate securities, available for sale | $167.2 | $203.0 | | Real estate owned, held for investment | $112.5 | $113.2 | | Real estate owned, held for sale | $243.4 | $222.9 | - As of March 31, 2025, there were **three non-performing loans** with a total amortized cost of **$94.0 million**, down from $133.2 million at the end of 2024[184](index=184&type=chunk)[63](index=63&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) Net interest income decreased to $43.3 million due to lower SOFR rates and a smaller portfolio, while total operating expenses increased due to acquisition-related fees and REO costs - Net interest income decreased by **$5.9 million** YoY, primarily due to a **~99 basis point decrease** in average SOFR rates and a **$177.9 million decrease** in the average balance of real estate debt[204](index=204&type=chunk)[205](index=205&type=chunk) - Total expenses from operations increased by **$9.7 million** YoY, driven by higher professional fees for the NewPoint acquisition and increased other expenses for the REO portfolio[221](index=221&type=chunk)[222](index=222&type=chunk) - A benefit for credit losses of **$1.9 million** was recorded in Q1 2025, compared to a provision of $2.9 million in Q1 2024, mainly due to portfolio turnover and a partial paydown on a non-performing loan[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) - A loss on other real estate investments of **$2.2 million** was recognized in Q1 2025, primarily from the onboarding and sale of REO properties[217](index=217&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) Near-term liquidity significantly increased to $913 million, driven by higher unrestricted cash and available financing, while the net debt-to-equity ratio improved to 2.4x Near-Term Liquidity (in millions) | Source | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Unrestricted cash | $215 | $184 | | CLO reinvestment available | $34 | $12 | | Financings available & in progress | $664 | $339 | | **Total** | **$913** | **$535** | Leverage Ratios | Ratio | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net debt-to-equity ratio | 2.4x | 2.6x | | Total leverage ratio | 2.5x | 2.7x | - The board of directors declared a Q1 2025 dividend of **$0.355 per common share**, **$106.216 per Series H preferred share**, and **$0.46875 per Series E preferred share**[259](index=259&type=chunk) [Non-GAAP Financial Measures](index=68&type=section&id=Non-GAAP%20Financial%20Measures) The company reported a Distributable Earnings loss of $6.2 million for Q1 2025, primarily due to a $38.2 million realized loss adjustment on loans and REO Reconciliation of GAAP Net Income to Distributable Earnings (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | GAAP Net Income (Loss) | $23,705 | $35,827 | | Adjustments (Net) | $8,241 | $5,217 | | Distributable Earnings before realized loss | $31,946 | $41,044 | | Realized gain/(loss) adjustment on loans and REO | $(38,180) | $— | | **Distributable Earnings** | **$(6,234)** | **$41,044** | | **Distributable Earnings to Common** | **$(11,073)** | **$36,019** | Per Share Metrics (Fully Converted) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | GAAP net income/(loss) per share | $0.22 | $0.35 | | Distributable earnings per share | $(0.12) | $0.41 | [Quantitative and Qualitative Disclosures about Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces credit, capital market, interest rate, and real estate risks, with interest rate fluctuations being the primary market risk impacting net interest income - The company faces significant credit risk, capital market risk, interest rate risk, and real estate risk[281](index=281&type=chunk)[282](index=282&type=chunk)[284](index=284&type=chunk)[287](index=287&type=chunk) Interest Rate Sensitivity Analysis | Change in Interest Rates | Estimated % Change in Net Interest Income (Mar 31, 2025) | | :--- | :--- | | (+) 50 Basis Points | 2.06% | | (-) 50 Basis Points | (1.36)% | | (-) 100 Basis Points | (0.88)% | [Controls and Procedures](index=71&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[288](index=288&type=chunk) - No material changes were made to the internal control over financial reporting during the quarter ended March 31, 2025[289](index=289&type=chunk) PART II - Other Information [Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation, including a loan fraud lawsuit related to foreclosed Walgreens properties, but management expects no material financial impact - The company is pursuing civil remedies in a loan fraud lawsuit related to a portfolio of **24 properties** net-leased to Walgreens, on which it has foreclosed[293](index=293&type=chunk) - Management believes that ongoing legal proceedings, in aggregate, will not have a material impact on the company's financial condition, operating results, or cash flows[292](index=292&type=chunk) [Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported for the quarter ended March 31, 2025 - No material changes to risk factors were reported for the quarter[294](index=294&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No common stock was repurchased in Q1 2025, and the company plans to issue 8,385,951 unregistered Class A Units for the NewPoint acquisition - No shares were repurchased in Q1 2025. The company has **$31.1 million** remaining under its authorized share repurchase program, which runs until December 31, 2025[108](index=108&type=chunk)[295](index=295&type=chunk) - As part of the NewPoint acquisition, the company will issue **8,385,951 unregistered Class A Units** of FBRT OP LLC, which are redeemable for cash or common stock after 12 months[297](index=297&type=chunk) [Other Information](index=73&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the first quarter of 2025[300](index=300&type=chunk) [Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the NewPoint acquisition agreement, CEO/CFO certifications, and XBRL data files - Key exhibits filed include the Purchase and Sale Agreement for NewPoint Holdings JV LLC, CEO/CFO certifications (Sections 302 and 906), and XBRL interactive data files[303](index=303&type=chunk)

Group 1 - The article discusses the perspective of an amateur value investor focused on finding bargains in emerging markets, influenced by renowned investors like Li Lu and Peter Lynch [1] - The investor emphasizes the importance of maintaining an investment journal to track past successes and learn from failures, adopting an owner-mindset while largely ignoring macroeconomic noise [1] - The investor's economic thinking is heavily influenced by the works of Henry Hazlitt, Friedrich Hayek, and Ludwig Von Mises, with a recent appreciation for the book 'Economics in One Lesson' [1] Group 2 - The article does not contain any disclosures regarding stock positions or plans to initiate positions in the mentioned companies [2] - It clarifies that the opinions expressed are personal and not influenced by any business relationships with the companies mentioned [2] - The article also notes that past performance is not indicative of future results and does not provide specific investment recommendations [3]