Franklin BSP Realty Trust(US:FBRT)2024-04-30 15:34Financial Data and Key Metrics Changes - The company reported GAAP earnings of $35.8 million or $0.35 per diluted common share, an increase of $0.07 from the prior quarter, representing an 8.9% return on common equity [23][29] - Distributable earnings increased to $41 million in the first quarter, with a distributable earnings return on common equity of 10.4% [29] - The CECL reserve increased by $2.9 million during the quarter, impacting GAAP earnings by $0.03 per share and resulting in a book value of $15.68 per share at quarter-end [11][23] Business Line Data and Key Metrics Changes - The core portfolio ended the quarter at $5.2 billion, with a net increase of $199 million from the last quarter due to strong originations [19][28] - The company added $591 million in new loan commitments during the quarter, marking Q1 as the fourth largest origination quarter since inception [19] - The multifamily sector continues to dominate, representing 75% of the commercial real estate loan portfolio [34][91] Market Data and Key Metrics Changes - The average cost of debt during the quarter was 7.8%, with 87% of financing on the core book being nonrecourse and non-mark-to-market [35] - The company closed five transactions in its conduit program, securitizing $101 million of loans with a weighted average profit margin of 5.5 points [95] Company Strategy and Development Direction - The company remains cautiously optimistic about conduit revenues benefiting future earnings, with a focus on capitalizing on attractive new investment opportunities [6][7] - The management emphasized the importance of maintaining a low-risk profile, with 95% of loans rated three or better [21] - The company is strategically concentrated on the southeast and southwest U.S. due to positive macroeconomic trends in those areas [92] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the multifamily-focused portfolio despite challenges in the commercial real estate environment [22] - The company is actively working through problem loans and achieving positive outcomes, with a focus on resolving legacy portfolio issues [55][105] - Management indicated that while the current market presents challenges, they are optimistic about the opportunities for new originations [97] Other Important Information - The company repurchased 1.9 million shares of common stock in Q1 and an additional 2.0 million shares through April 19, 2024, totaling 3.8 million year-to-date [32] - The foreclosure REO positions at quarter-end totaled $122 million, representing approximately 2.2% of total assets [104] Q&A Session Summary Question: Can you discuss the non-performing loans and the stress among sponsors? - Management noted that conversations with sponsors have been positive, with new originations being well-received and reflecting strong credit quality [110] Question: What are the spreads generated on recent originations? - The company indicated that Q1 originations had a weighted average spread of 464 basis points, with ongoing discussions about the spreads on recent transactions [111]