Franklin BSP Realty Trust (NYSE:FBRT) FY Conference November 20, 2025 10:55 AM ET Company ParticipantsLindsey Crabbe - Director of Investor RelationsConference Call ParticipantsNone - AnalystNone - Analyst 1ModeratorAll right, everybody. Thank you, guys, for joining us and for your patience. Our next presenting company is Franklin BSP Realty Trust, traded on the New York Stock Exchange under the ticker symbol FBRT. Presenting for the company today is Lindsey Crabbe, Director of Investor Relations.Lindsey Cr ...

Financial Data and Key Metrics Changes - For the quarter ended September 30, 2025, the company generated distributable earnings of $0.31 per share, covering the dividend of $0.30 per share [5][13] - The net interest income for the same quarter was reported at $6.1 million, with GAAP net income of $4.05 million [13][14] - As of September 30, 2025, total assets were $258.8 million, and total shareholder equity was $184.6 million, resulting in a book value of $13.76 per share [14] Business Line Data and Key Metrics Changes - The company’s portfolio had $367 million in commitments, with $253 million funded across 13 loans as of September 30, 2025 [14] - Subsequent to the quarter end, the company closed on $56 million of loan commitments, including a $30 million senior bridge loan for a retail property refinancing [12] Market Data and Key Metrics Changes - The company noted a significant increase in financing requests compared to the first half of the year, attributed to borrowers' confidence in declining short-term interest rates [8][9] - Traditional commercial banks are gradually re-entering the market, focusing on lower leverage lending, which is seen as a positive sign for liquidity in the commercial real estate financing ecosystem [9][10] Company Strategy and Development Direction - The company focuses on originating transitional loans primarily in the southern United States, leveraging local expertise for attractive risk-adjusted returns [5][6] - The long-term goal is to achieve an investment-grade rating within the next three to five years, with a current leverage of approximately 0.4 times, significantly below the peer average [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current market environment, noting a healthy increase in transaction volume and a narrowing bid-ask spread [9][10] - The company remains focused on transitional real estate projects, which are believed to provide the strongest risk-adjusted returns [10] Other Important Information - The weighted average loan-to-cost at closing is reported at 56%, contributing to strong credit performance [6] - Approximately 95% of the company’s loans are floating rate, with an average SOFR floor of about 4%, which is expected to enhance net interest margins as SOFR decreases [6] Q&A Session Summary Question: What new geographies within the southern U.S. are being seen in the pipeline? - The company is focusing on Florida, Texas, North Carolina, Georgia, and Tennessee, with ongoing deal flow in these areas [16][17] Question: Are there any geographies that stand out as the most attractive for investment? - Texas and Florida continue to present interesting opportunities, with the Carolinas and Tennessee also being areas of focus [18][19] Question: How is the debt side of the business strategy progressing? - The company is not pursuing a repo line and aims for an investment-grade rating, focusing on expanding bank lines and considering preferred or unsecured debt offerings [24][25] Question: How is the portfolio performing and what trends are being observed? - The portfolio is performing as expected, with steady progress in construction activities and a recent pickup in for-sale projects due to migration trends [30][31]

Financial Data and Key Metrics Changes - For Q3 2025, the company generated distributable earnings of $0.31 per share, covering the dividend of $0.30 per share [5][13] - Net interest income for the quarter was $6.1 million, with GAAP net income at $4.05 million [13][14] - The company ended the quarter with total assets of $258.8 million and total shareholder equity of $184.6 million, resulting in a book value of $13.76 per share [14] Business Line Data and Key Metrics Changes - The portfolio had $367 million in commitments and $253 million in principal outstanding across 13 loans as of September 30, 2025 [14] - The weighted average loan-to-cost at closing was 56%, indicating conservative positioning [6] - Approximately 95% of the loans are floating rate, with an average SOFR floor of about 4% [6] Market Data and Key Metrics Changes - There has been a notable increase in financing requests, indicating a recovery in the real estate market [8][9] - The bid-ask spread between buyers and sellers is narrowing, which is increasing transaction volume [9] - Most new financing activity is concentrated in the bridge lending space, particularly in multifamily and industrial properties [10] Company Strategy and Development Direction - The company focuses on originating transitional loans primarily in the southern United States, aiming for attractive risk-adjusted returns [5][6] - The long-term goal is to achieve an investment-grade rating within the next three to five years [6] - The company is expanding its real estate pipeline, with two signed non-binding term sheets totaling approximately $170 million [11] Management's Comments on Operating Environment and Future Outlook - Management noted a renewed sense of interest rate stability, encouraging more sponsors to engage in capital planning [8] - The company remains confident in its ability to capitalize on attractive opportunities in the current market environment [12] - The underlying performance of the portfolio is progressing as expected, with no significant issues reported [30][31] Other Important Information - The company has a CESL reserve of approximately $400,000, or 17 basis points for loans at carrying value [14] - The board declared a dividend of $0.30 per share, paid on October 15, 2025 [13] Q&A Session Summary Question: What new geographies within the southern U.S. are being seen in the pipeline? - The company is focusing on Florida, Texas, North Carolina, Georgia, and Tennessee for new deals [17][18] Question: Are there any geographies that stand out as the most attractive for investment? - Texas and Florida continue to present interesting opportunities, with the Carolinas and Tennessee also being areas of focus [18][19] Question: How is the debt side of the business strategy progressing? - The company is not pursuing a repo line and is focused on obtaining an investment-grade rating while expanding bank lines [24][25] Question: How is the portfolio performing and what trends are being observed? - The portfolio is performing as expected, with steady progress in construction and sales [30][31]

Company Overview - Advanced Flower Capital (AFCG) is a Nasdaq-listed commercial mortgage REIT providing institutional loans to state law-compliant cannabis operators in the United States[12] - The company aims for attractive risk-adjusted returns with a target average portfolio gross yield of 12%-20%[12][13] - Shareholders approved the plan to convert from a REIT to a BDC, with over 61% of outstanding shares voted and approximately 94% of those votes cast in favor[12] Market Opportunity - The U S legal cannabis market is expected to reach $63 billion by 2030, with a total economic impact surpassing $200 billion[25] - Cannabis market is projected to grow at a CAGR of approximately 12% from 2025 to 2030, outpacing growth projections for wine, spirits, tobacco, and beer[28][31] - 42 states and DC have legalized medical cannabis, with 24 states and DC legalizing adult-use cannabis[32] Portfolio and Deal Flow - AFC's loan portfolio includes 14 loans to borrowers across 16 states[19] - The company has a deal selectivity of 34% since inception[42] - Total closed deals since inception amount to $930 million[42] - The company has sourced $261 billion in total deals since inception[42] - Current commitments stand at $340 million, with a principal balance of $328 million[42] Financial Performance - For the three months ended September 30, 2025, the company reported a net loss of $1249 million[54] - Distributable earnings for the three months ended September 30, 2025, were $354 million, or $016 per basic weighted average share[55] - For the nine months ended September 30, 2025, the company reported a net loss of $2159 million[54] - Distributable earnings for the nine months ended September 30, 2025, were $1147 million, or $052 per basic weighted average share[55]

Company Overview - Chicago Atlantic Real Estate Finance is a commercial mortgage REIT and institutional lender focused on state-licensed cannabis operators[10] - The company has closed over $3.2 billion in loans since its platform inception[8, 10] - The company's outstanding loan principal is $399.9 million with a gross portfolio yield of 16.5%[8] - The real estate collateral coverage in the current portfolio is 1.2x[8] Portfolio Diversification - The top 10 loans account for 65.7% of the outstanding loan principal[23] - The portfolio is diversified by rate type, with 36.7% in fixed-rate loans and 63.3% in floating-rate loans[23, 67] - The portfolio is diversified across various states, with Illinois at 19%, Ohio at 16%, Florida at 8%, Michigan at 14%, and California at 7%[26] - Loans with Retail/Industrial collateral are 31.6% and 47.1% of the portfolio respectively[28, 32] Financial Performance - For the three months ended September 30, 2025, net income was $8.93 million, or $0.42 per basic share[68] - Distributable Earnings for the three months ended September 30, 2025, were $10.52 million, or $0.50 per basic share[69]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported a net income of $1.12 per diluted share, an increase from $0.74 per diluted share in Q3 2024, attributed to unrealized gains on preferred stock and stock warrant investments [4] - Earnings available for distribution decreased to $0.51 per diluted share in Q3 2025 from $0.75 per diluted share in Q3 2024 [4] - Cash available for distribution also declined to $0.53 per diluted share in Q3 2025 from $0.67 per diluted share in Q3 2024 [5] - The company declared a regular dividend of $0.50 per share for Q3 2025, which was 1.06 times covered by cash available for distribution [5] - Book value per share increased by 8% from Q2 2025 to $18.79 per diluted share, primarily due to unrealized gains on preferred stock investments and stock warrants [5] Business Line Data and Key Metrics Changes - The portfolio consists of 88 investments with a total outstanding balance of $1.1 billion, allocated as follows: 47.3% multifamily, 33.9% life sciences, 15.9% single-family rental, 1.8% storage, and 1.1% marina [6] - The fixed income portfolio is allocated as follows: 27% CMBS B pieces, 26.5% mezzanine loans, 18.6% preferred equity investments, 12.4% revolving credit facilities, 10% senior loans, 4.2% IO strips, and 1.3% promissory notes [6] Market Data and Key Metrics Changes - The assets collateralizing investments are geographically allocated with 28.1% in Massachusetts, 15.5% in Texas, 8% in Georgia, and smaller percentages in California, Maryland, and Florida, reflecting a preference for Sunbelt markets [7] - The collateral on the portfolio is 87.4% stabilized, with a loan-to-value ratio of 54.9% and a weighted average debt service coverage ratio (DSCR) of 1.41 times [8] Company Strategy and Development Direction - The company is launching a Series C Preferred offering of $200 million at an 8% coupon, continuing to deploy capital at spreads of 400 basis points plus the cost of this capital [9] - The company is focused on maintaining a low leverage profile, which allows for various capital options to pursue growth opportunities [18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the rental market outlook, anticipating positive revenue growth in 2026 for the first time in several years [12] - The life sciences sector is showing signs of stabilization with a significant lease signed with Lila Sciences, which is expected to drive leasing momentum [17][22] - The multifamily sector is expected to see new lease growth inflecting in major markets, with optimism for transaction volumes to increase dramatically in 2026 [36] Other Important Information - The company funded $42.5 million on a life sciences preferred and $6.5 million on a loan with a monthly coupon of SOFR +900 basis points during the quarter [5] - The company sold a multifamily property for $60 million, resulting in a $3.7 million gain [6] Q&A Session Summary Question: Updated view on the life sciences sector - Management noted that distress in the life sciences sector primarily affects projects capitalized shortly after COVID, while their investments are focused on first-to-fill assets in strong markets [21][22] Question: Thoughts on multifamily supply and bridge lending - Management acknowledged softness in the bridge lending space due to floating-rate loans originated in 2021-2022 but expressed optimism for new lease growth in constrained supply markets [35][36]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported GAAP net income of $0.37 per share and distributable earnings (DE) of $0.24 per share, with DE prior to charge-offs at $0.48 per share, an increase of $0.03 from the prior quarter [4][15] - The book value remained stable at $20.99 per share, reflecting strong credit performance and loan resolutions executed above carrying values [16][17] - The company repurchased $16 million of common stock in Q3 at an average price of $18.69, and an additional $61 million in Q4, totaling nearly $140 million since the buyback program began in 2024 [16][18] Business Line Data and Key Metrics Changes - The company closed $1 billion in total investments during Q3, with 75% concentrated in multifamily and diversified industrial portfolios, and over 60% in international markets [9][10] - The loan portfolio is now 96% performing, with the impaired loan balance down 71% from last year's peak [13] - The company expects to close over $7 billion in new investments this year, diversifying the portfolio and enhancing credit composition [12] Market Data and Key Metrics Changes - Real estate fundamentals remain strong, with stable or improving demand and constrained new supply [6] - The company collected $1.6 billion in repayments during Q3, including significant repayments from large loans [12] - The San Francisco market is showing signs of recovery, with multifamily rents up 10% and office demand growing [13][14] Company Strategy and Development Direction - The company is focused on optimizing its balance sheet and enhancing competitiveness through improved cost of capital [5][7] - The strategy includes a deliberate rotation into sectors and markets best positioned in the current environment, leveraging a robust investment pipeline [12] - The company aims to capitalize on the recovery in market conditions and the return of liquidity to the CRE markets [6][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing recovery of the real estate credit market, noting improved credit quality and a robust pipeline of opportunities [36][42] - The company is not seeing spillover effects from broader economic weaknesses into the CRE market, indicating a more battle-tested environment [36] - Management remains optimistic about the potential for earnings uplift from the REO and impaired loan portfolios [47] Other Important Information - The company has a strong liquidity position of $1.3 billion and over $7 billion of available financing capacity [17] - The company has been active in refinancing and extending corporate debt, taking advantage of favorable capital market conditions [14][18] Q&A Session Summary Question: Can you provide more color on the recovery in transaction activity and liquidity in the CRE markets? - Management noted that liquidity has returned to both the U.S. and Europe, with a stronger recovery in the U.S. driven by a more established CMBS market [24] Question: What is the potential earnings uplift from the REO portfolio? - Management indicated that while specific numbers were not provided, there is significant opportunity to drive additional earnings as the portfolio is turned over [26] Question: How do you see the balance between originating new loans versus share buybacks? - Management stated that they continuously evaluate both options and have been active in buybacks when stock is trading at attractive levels [30] Question: What are the current fundamentals in the office market? - Management reported stability and improvement in the office market, with several upgrades in their office loans driven by increased leasing activity [54]

Financial Data and Key Metrics Changes - The company reported GAAP net income of $0.37 per share and distributable earnings (DE) of $0.24 per share for Q3 2025, with DE prior to charge-offs at $0.48 per share, an increase of $0.03 from the prior quarter [4][15][16] - Book value remained stable at $20.99 per share, reflecting strong credit performance and loan resolutions executed above carrying values [16][17] - The company repurchased $16 million of common stock in Q3 at an average price of $18.69, with an additional $61 million repurchased in Q4 [16][17] Business Line Data and Key Metrics Changes - Total investments in Q3 amounted to $1 billion, with loan originations concentrated in multifamily and diversified industrial portfolios, making up 75% of the total [9][10] - The net lease portfolio grew to $222 million, with $90 million invested across 60 properties in Q3 [10] - The loan portfolio is now 96% performing, with impaired loan balance down 71% from last year's peak [13] Market Data and Key Metrics Changes - The company collected $1.6 billion in repayments during Q3, including significant loans secured by multifamily assets and international properties [12] - Real estate fundamentals remain strong, with stable or improving demand and constrained new supply [6] - The company expects to close over $7 billion in new investments this year, diversifying its portfolio and enhancing credit composition [12] Company Strategy and Development Direction - The company is focused on capitalizing on the recovery in market conditions and optimizing its balance sheet [5][6] - There is a strong emphasis on maintaining a competitive cost of capital and enhancing investment activity across various channels and geographies [5][6] - The leadership transition is expected to continue the momentum of the business, with a focus on capturing opportunities in the current investment environment [21][22] Management's Comments on Operating Environment and Future Outlook - Management noted that the real estate credit market is in recovery mode, with improved credit quality and no new impairments [38] - The company is optimistic about the ongoing recovery in the office market, with stability and improvement observed [55] - Management expressed confidence in the ability to unlock earnings potential from the REO and impaired loan portfolios [49][51] Other Important Information - The company has a strong liquidity position of $1.3 billion and over $7 billion in available financing capacity [17] - The company has been actively optimizing its cost of capital, reducing spreads on corporate term loans and taking advantage of favorable market conditions [19] Q&A Session Summary Question: Can you provide more color on the recovery in transaction activity and liquidity in the CRE markets? - Management indicated that liquidity has returned to both the U.S. and Europe, with a stronger recovery observed in the U.S. due to a more established CMBS market [25][26] Question: What is the potential earnings uplift from the REO portfolio? - Management stated that while specific numbers were not provided, there is significant potential to drive additional earnings as the REO assets are turned over [27] Question: How do you see the balance between originating new loans versus share buybacks? - Management emphasized a dynamic analysis of capital deployment, considering both new loans and share buybacks based on market conditions [30][31] Question: Are there any spillover effects into the CRE market from broader economic weaknesses? - Management noted that the real estate credit market has already been tested and is currently in recovery, with no significant deterioration observed [38] Question: How do you view the pace of net deployment and target leverage levels? - Management expressed confidence in maintaining a healthy pace of repayments and new investments, with current leverage at 3.5 times, which is within their target range [44][46] Question: What are the key levers to cover the dividend? - Management highlighted the importance of unlocking earnings from the REO and impaired loan portfolios as a key driver for covering the dividend [49][51]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported GAAP net income of $0.37 per share and distributable earnings (DE) of $0.24 per share, with DE prior to charge-offs at $0.48 per share, an increase of $0.03 from the prior quarter [15][3][4] - The book value remained stable at $20.99 per share, reflecting strong credit performance and loan resolutions executed above carrying values [16][17] - The company provided an 8% annualized economic return to stockholders this quarter, covering the $0.47 dividend [16] Business Line Data and Key Metrics Changes - The company closed $1 billion in total investments during Q3, with 75% concentrated in multifamily and diversified industrial portfolios, and over 60% in international markets [9][10] - The loan portfolio is now 96% performing, with impaired loan balance down 71% from last year's peak [13] - The company collected $1.6 billion in repayments this quarter, including significant loans secured by multifamily assets and international properties [12] Market Data and Key Metrics Changes - Real estate fundamentals remain strong, with stable or improving demand and constrained new supply [5] - The company noted increasing liquidity and transaction activity, with SASB CMBS on track for a record issuance year [5] - The San Francisco market is showing signs of recovery, with multifamily rents up 10% and office demand growing [13] Company Strategy and Development Direction - The company is focused on optimizing its balance sheet and enhancing competitiveness through improved terms on financing [4] - The strategy includes diversifying the portfolio and enhancing credit composition by rotating into sectors best positioned in the current environment [12] - The company aims to capitalize on the recovery in market conditions and has a robust investment pipeline of $1.7 billion [5][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing recovery of the real estate credit market, indicating that it has been battle-tested and is now in recovery mode [36] - The company expects earnings to benefit from capital redeployment and resolutions of impaired loans [15] - Management highlighted the importance of maintaining a long-term view on dividends and unlocking earnings potential from the REO and impaired loan portfolio [45] Other Important Information - The company repurchased $16 million of common stock in Q3 at an average price of $18.69, significantly below book value, and has accelerated buybacks in Q4 [16][18] - The company has a strong liquidity position of $1.3 billion and over $7 billion of available financing capacity [17] Q&A Session Summary Question: Can you provide more color on the recovery in transaction activity and liquidity in the CRE markets? - Management noted that liquidity has returned to both U.S. and European markets, with a stronger recovery in the U.S. due to a more established CMBS market [25][26] Question: What is the potential earnings uplift from the REO portfolio? - Management indicated that while specific numbers were not provided, there is significant opportunity to drive additional earnings as the REO assets are turned over [27] Question: How do you see the balance between originating new loans versus share buybacks? - Management stated that they continuously evaluate both options and have been active in buybacks when stock is trading at attractive levels [30] Question: What are the current fundamentals in the office market? - Management reported stability and improvement in the office market, with six office loans upgraded this quarter, driven by increased leasing activity [49]

Financial Data and Key Metrics Changes - The company generated distributable earnings of $32.1 million or $0.25 per share, achieving a return on equity of 8.3% with adjusted leverage of 1.7x [3][10] - The loan portfolio grew by approximately $354 million to $1.9 billion, representing 40% of total assets [4][15] - The securities portfolio totaled $1.9 billion, also representing 40% of total assets, with a weighted average yield of 5.7% [16] Business Line Data and Key Metrics Changes - Loan origination activity accelerated with $511 million of new loans across 17 transactions, marking the highest quarterly origination volume in over three years [3][4] - The real estate portfolio generated $15.1 million in net operating income during the third quarter, primarily consisting of net lease properties with long-term leases [6][16] - The company closed its inaugural $500 million investment-grade bond offering at a rate of 5.5%, which was the tightest new issuance spread in its history [7][10] Market Data and Key Metrics Changes - The company reduced office loan exposure to $652 million, or 14% of total assets, following the full payoff of its third-largest office loan [4][15] - Approximately 50% of the remaining office loan portfolio consists of two well-performing loans secured by prime properties in Miami [4] Company Strategy and Development Direction - The company aims to capitalize on investment opportunities while maintaining prudent credit risk management, expecting fourth-quarter loan originations to exceed third-quarter production [8][20] - The management plans to position the company alongside high-quality peers, including equity REITs, rather than solely within the commercial mortgage REIT space [8][19] - The focus will be on organic growth of the loan portfolio, with expectations of adding $1 billion to $2 billion of assets net on the balance sheet [40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of credit performance and the potential for continued earnings growth [3][8] - The company anticipates favorable market conditions as it heads into 2026, with expectations of a steeper yield curve and more regular contributions to securitizations [20][21] - The management highlighted the importance of maintaining or improving investment-grade ratings to optimize capital management [18][19] Other Important Information - The company maintains $879 million in liquidity, including $49 million in cash and $830 million of undrawn capacity on its unsecured revolver [7][11] - The undepreciated book value per share was $13.71, net of a $0.41 per share CFO reserve [12] - The company declared a $0.23 per share dividend, with a current dividend yield of approximately 8.5% [13][14] Q&A Session Summary Question: Are there any changes in loan origination since obtaining the investment-grade rating? - Management noted a focus on slightly larger transactions and improved stability in financing, leading to more profitable lending opportunities [24] Question: Were there any construction loans or large CapEx projects in the recent origination? - Management clarified that they generally do not write construction loans and that the portfolio remains focused on industrial and multifamily assets [27][28] Question: What is the outlook for growth in the loan portfolio? - Management expects the loan portfolio to grow by approximately $1 billion, driven by a strong origination pipeline and favorable market conditions [34][35] Question: Is improving ROE part of the strategy for the next one to two years? - Management confirmed that the plan includes writing more loans and optimizing the cost of funds, which should positively impact ROE [38] Question: Will the company consider launching a securities fund? - Management indicated that while they have explored this option in the past, their current focus remains on the commercial mortgage business [58][59] Question: How is the New York office equity investment performing? - Management expressed satisfaction with the investment, noting significant leasing progress and plans for potential future involvement in the debt side of the project [61][63]