Franklin BSP Realty Trust, Inc. Announces Fourth Quarter and Full Year 2023 Results
Reported GAAP net income of
Reported Distributable Earnings (a non-GAAP financial measure) of
Fourth Quarter 2023 Summary
- Produced a fourth quarter GAAP and Distributable Earnings ROE (a non-GAAP financial measure) of 7.2% and 9.8%, respectively
-
Book value of
$15.77 per diluted common share on a fully converted basis(1) -
Declared fourth quarter common stock cash dividend of
$0.355 , representing an annualized 9.0% yield on book value - GAAP and Distributable Earnings dividend coverage of 80% and 109%, respectively
-
Closed
$231 million of new loan commitments at a weighted average spread of 391 basis points -
Total liquidity of
$1.5 billion , which includes$338 million in cash and cash equivalents and$55 million in CLO reinvest available -
Repurchased 267,968 shares of common stock at a net average price of
$12.47 per share for an aggregate of$3.3 million , which represents a$0.01 per share increase to book value
Full Year 2023 Summary
- Produced a full year GAAP and Distributable Earnings ROE of 8.9% and 12.1%, respectively
- GAAP and Distributable Earnings dividend coverage of 100% and 135%, respectively
-
Closed
$818 million of new loan commitments at a weighted average spread of 450 basis points, ending the year with a core portfolio aggregate principal balance of approximately$5.0 billion -
Closed BSPRT 2023-FL10 ("FL10
CRE CLO "), a$897 million managed Commercial Real Estate Collateralized Loan Obligation ("CLO") with an 18-month reinvestment period -
Received proceeds of
$96 million on theBrooklyn hotel loan, representing the full principal amount of the loan and approximately$20 million in additional proceeds after payment of all related closing expenses -
Repurchased 1,026,105 shares of common stock at an average price of
$12.19 per share for an aggregate of$12.5 million , which represents a$0.05 per share increase to book value
Further commenting on the Company's results,
Core portfolio: For the quarter ended
Allowance for credit losses: During the quarter, the Company recognized an incremental provision for credit losses of approximately
Book Value
As of
Share Repurchase Program
During the quarter, the Company repurchased 267,968 shares of the Company's common stock under the Company's
Subsequent Event
Subsequent to year end, the Company obtained, through deed-in-lieu of foreclosure, a multifamily property located in
Distributable Earnings and Run-Rate Distributable Earnings
Distributable Earnings is a non-GAAP measure, which the Company defines as GAAP net income (loss), adjusted for (i) non-cash CLO amortization acceleration and amortization over the expected useful life of the Company's CLOs, (ii) unrealized gains and losses on loans, derivatives and ARMs, including CECL reserves and impairments, (iii) non-cash equity compensation expense, (iv) depreciation and amortization, (v) subordinated performance fee accruals/(reversal), (vi) loan workout charges, (vii) realized gains and losses on debt extinguishment and CLO calls, (viii) actual realized cash loss on a specific real estate owned ("REO") investment, (ix) impairments of acquisition assets related to the Capstead merger and (x) certain other non-cash items. Further, Run-Rate Distributable Earnings, a non-GAAP measure, presents Distributable Earnings before (i) trading and derivative gain/loss on ARMs and (ii) realized cash gain/loss adjustments on REO.
The Company believes that Distributable Earnings and Run-Rate Distributable Earnings provide meaningful information to consider in addition to the disclosed GAAP results. The Company believes Distributable Earnings is a useful financial metric for existing and potential future holders of its common stock as historically, over time, Distributable Earnings has been an indicator of dividends per share. As a REIT, the Company generally must distribute annually at least 90% of its taxable income, subject to certain adjustments, and therefore believes dividends are one of the principal reasons stockholders may invest in its common stock. Further, Distributable Earnings helps investors evaluate performance excluding the effects of certain transactions and GAAP adjustments that the Company does not believe are necessarily indicative of current loan portfolio performance and the Company's operations and is one of the performance metrics the Company's board of directors considers when dividends are declared. The Company believes Run-Rate Distributable Earnings is a useful financial metric because it presents the Distributable Earnings of its core businesses, net of the impacts of realized cash gain/loss adjustments on REO as well as the realized trading and derivative gain/loss on the residential adjustable-rate mortgage securities acquired from
Distributable Earnings and Run-Rate Distributable Earnings do not represent net income (loss) and should not be considered as an alternative to GAAP net income (loss). The methodology for calculating Distributable Earnings and Run-Rate Distributable Earnings may differ from the methodologies employed by other companies and thus may not be comparable to the Distributable Earnings reported by other companies
Please refer to the financial statements and reconciliation of GAAP Net Income to Distributable Earnings and Run-Rate Distributable Earnings included at the end of this release for further information.
1 Fully converted per share information in this press release assumes applicable conversion of our series of outstanding convertible preferred stock into common stock and the vesting of our outstanding equity compensation awards. |
Supplemental Information
The Company published a supplemental earnings presentation for the quarter ended
Conference Call and Webcast
The Company will host a conference call and live audio webcast to discuss its financial results on
The call will also be accessible via live webcast at https://ccmediaframe.com?id=IGbENPjX. Please allow extra time prior to the call to download and install audio software, if needed. A slide presentation containing supplemental information may also be accessed through the Company’s website in advance of the call.
An audio replay of the live broadcast will be available approximately one hour after the end of the conference call on FBRT’s website. The replay will be available for 90 days on the Company’s website.
About
Forward-Looking Statements
Certain statements included in this press release are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
The Company's forward-looking statements are subject to various risks and uncertainties. Factors that could cause actual outcomes to differ materially from our forward-looking statements include macroeconomic factors in
CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) |
||||||||
|
|
|
|
|
||||
ASSETS |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
337,595 |
|
|
$ |
179,314 |
|
Restricted cash |
|
|
6,092 |
|
|
|
11,173 |
|
Commercial mortgage loans, held for investment, net of allowance for credit losses of |
|
|
4,989,767 |
|
|
|
5,228,928 |
|
Commercial mortgage loans, held for sale, measured at fair value |
|
|
— |
|
|
|
15,559 |
|
Real estate securities, trading, measured at fair value (includes pledged assets of |
|
|
— |
|
|
|
235,728 |
|
Real estate securities, available for sale, measured at fair value, amortized cost of |
|
|
242,569 |
|
|
|
221,025 |
|
Derivative instruments, measured at fair value |
|
|
— |
|
|
|
415 |
|
Receivable for loan repayment (1) |
|
|
55,174 |
|
|
|
42,557 |
|
Accrued interest receivable |
|
|
42,490 |
|
|
|
34,007 |
|
Prepaid expenses and other assets |
|
|
19,213 |
|
|
|
15,795 |
|
Intangible lease asset, net of amortization |
|
|
42,793 |
|
|
|
54,831 |
|
Real estate owned, net of depreciation |
|
|
115,830 |
|
|
|
127,772 |
|
Real estate owned, held for sale |
|
|
103,657 |
|
|
|
36,497 |
|
Total assets |
|
$ |
5,955,180 |
|
|
$ |
6,203,601 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
||||
Collateralized loan obligations |
|
$ |
3,567,166 |
|
|
$ |
3,121,983 |
|
Repurchase agreements and revolving credit facilities - commercial mortgage loans |
|
|
299,707 |
|
|
|
680,859 |
|
Repurchase agreements - real estate securities |
|
|
174,055 |
|
|
|
440,008 |
|
Mortgage note payable |
|
|
23,998 |
|
|
|
23,998 |
|
Other financings |
|
|
36,534 |
|
|
|
76,301 |
|
Unsecured debt |
|
|
81,295 |
|
|
|
98,695 |
|
Derivative instruments, measured at fair value |
|
|
— |
|
|
|
64 |
|
Interest payable |
|
|
15,383 |
|
|
|
12,715 |
|
Distributions payable |
|
|
36,133 |
|
|
|
36,317 |
|
Accounts payable and accrued expenses |
|
|
13,339 |
|
|
|
17,668 |
|
Due to affiliates |
|
|
19,316 |
|
|
|
15,429 |
|
Intangible lease liability, held for sale |
|
|
12,297 |
|
|
|
— |
|
Intangible lease liability, net of depreciation |
|
|
— |
|
|
|
6,428 |
|
Total liabilities |
|
$ |
4,279,223 |
|
|
$ |
4,530,465 |
|
Commitments and Contingencies |
|
|
|
|
||||
Redeemable convertible preferred stock: |
|
|
|
|
||||
Redeemable convertible preferred stock Series H, |
|
$ |
89,748 |
|
|
$ |
89,748 |
|
Redeemable convertible preferred stock Series I, |
|
|
— |
|
|
|
5,000 |
|
Total redeemable convertible preferred stock |
|
$ |
89,748 |
|
|
$ |
94,748 |
|
Equity: |
|
|
|
|
||||
Preferred stock, |
|
$ |
258,742 |
|
|
$ |
258,742 |
|
Common stock, |
|
|
820 |
|
|
|
826 |
|
Additional paid-in capital |
|
|
1,599,197 |
|
|
|
1,602,247 |
|
Accumulated other comprehensive income (loss) |
|
|
(703 |
) |
|
|
390 |
|
Accumulated deficit |
|
|
(298,942 |
) |
|
|
(299,225 |
) |
Total stockholders' equity |
|
$ |
1,559,114 |
|
|
$ |
1,562,980 |
|
Non-controlling interest |
|
|
27,095 |
|
|
|
15,408 |
|
Total equity |
|
$ |
1,586,209 |
|
|
$ |
1,578,388 |
|
Total liabilities, redeemable convertible preferred stock and equity |
|
$ |
5,955,180 |
|
|
$ |
6,203,601 |
|
_______________ | ||
(1) |
Includes |
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) |
|||||||||||
|
Year Ended |
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|
2023 |
|
2022 |
|
2021 |
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Income |
|
|
|
|
|
||||||
Interest income |
$ |
552,506 |
|
|
$ |
357,705 |
|
|
$ |
216,890 |
|
Less: Interest expense |
|
305,577 |
|
|
|
160,526 |
|
|
|
56,193 |
|
Net interest income |
|
246,929 |
|
|
|
197,179 |
|
|
|
160,697 |
|
Revenue from real estate owned |
|
17,021 |
|
|
|
9,655 |
|
|
|
4,759 |
|
Total income |
$ |
263,950 |
|
|
$ |
206,834 |
|
|
$ |
165,456 |
|
Expenses |
|
|
|
|
|
||||||
Asset management and subordinated performance fee |
$ |
33,847 |
|
|
$ |
26,157 |
|
|
$ |
28,110 |
|
Acquisition expenses |
|
1,241 |
|
|
|
1,360 |
|
|
|
1,203 |
|
Administrative services expenses |
|
14,440 |
|
|
|
12,928 |
|
|
|
7,658 |
|
Impairment of acquired assets |
|
— |
|
|
|
— |
|
|
|
88,282 |
|
Professional fees |
|
15,270 |
|
|
|
22,566 |
|
|
|
11,650 |
|
Share-based compensation |
|
4,761 |
|
|
|
2,519 |
|
|
|
— |
|
Depreciation and amortization |
|
7,128 |
|
|
|
5,408 |
|
|
|
2,107 |
|
Other expenses |
|
11,135 |
|
|
|
6,572 |
|
|
|
3,946 |
|
Total expenses |
$ |
87,822 |
|
|
$ |
77,510 |
|
|
$ |
142,956 |
|
Other income/(loss) |
|
|
|
|
|
||||||
(Provision)/benefit for credit losses |
|
(33,738 |
) |
|
|
(36,115 |
) |
|
|
5,192 |
|
Realized gain/(loss) on extinguishment of debt |
|
2,201 |
|
|
|
(5,167 |
) |
|
|
(4,642 |
) |
Realized gain/(loss) on sale of available for sale trading securities |
|
80 |
|
|
|
— |
|
|
|
— |
|
Realized gain/(loss) on sale of commercial mortgage loans, held for sale |
|
— |
|
|
|
(354 |
) |
|
|
26 |
|
Realized gain/(loss) on sale of commercial mortgage loans, held for sale, measured at fair value |
|
3,873 |
|
|
|
2,358 |
|
|
|
24,208 |
|
Gain/(loss) on other real estate investments |
|
(7,089 |
) |
|
|
(692 |
) |
|
|
9,790 |
|
Unrealized gain/(loss) on commercial mortgage loans, held for sale, measured at fair value |
|
44 |
|
|
|
(511 |
) |
|
|
469 |
|
Trading gain/(loss) |
|
(605 |
) |
|
|
(119,220 |
) |
|
|
(36,128 |
) |
Unrealized gain/(loss) on derivatives |
|
(140 |
) |
|
|
(15,840 |
) |
|
|
7,402 |
|
Realized gain/(loss) on derivatives |
|
998 |
|
|
|
60,033 |
|
|
|
484 |
|
Total other income/(loss) |
$ |
(34,376 |
) |
|
$ |
(115,508 |
) |
|
$ |
6,801 |
|
Income/(loss) before taxes |
|
141,752 |
|
|
|
13,816 |
|
|
|
29,301 |
|
(Provision)/benefit for income tax |
|
2,757 |
|
|
|
399 |
|
|
|
(3,599 |
) |
Net income/(loss) |
$ |
144,509 |
|
|
$ |
14,215 |
|
|
$ |
25,702 |
|
Net (income)/loss attributable to non-controlling interest |
|
706 |
|
|
|
216 |
|
|
|
— |
|
Net income/(loss) attributable to |
$ |
145,215 |
|
|
$ |
14,431 |
|
|
$ |
25,702 |
|
Less: Preferred stock dividends |
|
26,993 |
|
|
|
41,741 |
|
|
|
33,587 |
|
Net income/(loss) attributable to common stock |
$ |
118,222 |
|
|
$ |
(27,310 |
) |
|
$ |
(7,885 |
) |
|
|
|
|
|
|
||||||
Basic earnings per share |
$ |
1.42 |
|
|
$ |
(0.38 |
) |
|
$ |
(0.18 |
) |
Diluted earnings per share |
$ |
1.42 |
|
|
$ |
(0.38 |
) |
|
$ |
(0.18 |
) |
Basic weighted average shares outstanding |
|
82,307,970 |
|
|
|
71,628,365 |
|
|
|
43,419,209 |
|
Diluted weighted average shares outstanding |
|
82,307,970 |
|
|
|
71,628,365 |
|
|
|
43,434,731 |
|
RECONCILIATION OF GAAP NET INCOME TO DISTRIBUTABLE EARNINGS (In thousands, except share and per share data) (Unaudited) |
||||||||||||
The following table provides a reconciliation of GAAP net income to Distributable Earnings for the years ended |
||||||||||||
|
|
Year Ended |
||||||||||
|
|
2023 |
|
2022 |
|
2021 |
||||||
GAAP Net Income |
|
$ |
144,509 |
|
|
$ |
14,215 |
|
|
$ |
25,702 |
|
Adjustments: |
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
7,128 |
|
|
|
5,408 |
|
|
|
2,107 |
|
Impairment of Acquired Assets |
|
|
— |
|
|
|
— |
|
|
|
88,282 |
|
CLO amortization acceleration (1) |
|
|
(5,521 |
) |
|
|
(438 |
) |
|
|
250 |
|
Unrealized (gain)/loss on financial instruments (2) |
|
|
7,185 |
|
|
|
17,010 |
|
|
|
(7,853 |
) |
Unrealized (gain)/loss - ARMs |
|
|
415 |
|
|
|
43,557 |
|
|
|
20,670 |
|
Subordinated performance fee (3) |
|
|
6,171 |
|
|
|
(8,380 |
) |
|
|
9,846 |
|
Non-Cash Compensation Expense |
|
|
4,762 |
|
|
|
3,485 |
|
|
|
— |
|
(Reversal of)/Provision for credit losses |
|
|
33,738 |
|
|
|
36,115 |
|
|
|
(5,192 |
) |
Loan workout charges/(loan workout recoveries) (4) |
|
|
(5,105 |
) |
|
|
5,104 |
|
|
|
— |
|
Realized (gain)/loss on debt extinguishment / CLO call |
|
|
(2,201 |
) |
|
|
— |
|
|
|
— |
|
Realized trading and derivatives (gain)/loss on ARMs |
|
|
677 |
|
|
|
21,726 |
|
|
|
13,600 |
|
Run Rate Distributable Earnings (5) |
|
$ |
191,758 |
|
|
$ |
137,802 |
|
|
$ |
147,412 |
|
Realized trading and derivatives gain/(loss) on ARMs |
|
|
(677 |
) |
|
|
(21,726 |
) |
|
|
(13,600 |
) |
Realized cash gain/(loss) adjustment on REO (6) |
|
|
(1,571 |
) |
|
|
— |
|
|
|
— |
|
Distributable Earnings |
|
$ |
189,510 |
|
|
$ |
116,076 |
|
|
$ |
133,812 |
|
7.5% Cumulative Redeemable Preferred Stock, Series E Dividend |
|
$ |
(19,367 |
) |
|
$ |
(19,367 |
) |
|
|
(4,842 |
) |
Non-controlling interests in joint ventures net (income)/loss |
|
|
(602 |
) |
|
|
216 |
|
|
|
— |
|
Depreciation and amortization attributed to non-controlling interests of joint ventures |
|
|
(31 |
) |
|
|
(1,415 |
) |
|
|
— |
|
Distributable Earnings to Common |
|
|
169,510 |
|
|
|
95,510 |
|
|
|
128,970 |
|
Average Common Stock and Common Stock Equivalents |
|
|
1,403,558 |
|
|
|
1,456,871 |
|
|
|
1,146,009 |
|
GAAP Net Income/(Loss) ROE |
|
|
8.9 |
% |
|
|
(0.3 |
)% |
|
|
1.8 |
% |
Run-Rate Distributable Earnings ROE |
|
|
12.2 |
% |
|
|
8.0 |
% |
|
|
12.4 |
% |
Distributable Earnings ROE |
|
|
12.1 |
% |
|
|
6.6 |
% |
|
|
11.3 |
% |
GAAP Net Income/(Loss) Per Share, Diluted |
|
$ |
1.42 |
|
|
$ |
(0.38 |
) |
|
$ |
(0.18 |
) |
GAAP Net Income/(Loss) Per Share, Fully Converted (7) |
|
$ |
1.42 |
|
|
$ |
(0.06 |
) |
|
$ |
0.33 |
|
Run-Rate Distributable Earnings Per Share, Fully Converted (7) |
|
$ |
1.94 |
|
|
$ |
1.31 |
|
|
$ |
2.23 |
|
Distributable Earnings Per Share, Fully Converted (7) |
|
$ |
1.92 |
|
|
$ |
1.07 |
|
|
$ |
2.02 |
|
_______________ | ||
(1) |
Adjusted for non-cash CLO amortization acceleration to effectively amortize issuance costs of our CLOs over the expected lifetime of the CLOs. We assume our CLOs will be outstanding for four years and amortized the financing costs over four years in our distributable earnings as compared to effective yield methodology in our GAAP earnings. |
|
(2) |
Represents unrealized gains and losses on (i) commercial mortgage loans, held for sale, measured at fair value, (ii) other real estate investments, measured at fair value and (iii) derivatives. |
|
(3) |
Represents accrued and unpaid subordinated performance fee. In addition, reversal of subordinated performance fee represents cash payments of the subordinated performance fee made during the period. |
|
(4) |
Represents loan workout charges the Company incurred, which the Company deemed likely to be recovered. Reversal of loan workout charges represent recoveries received. During the second quarter of 2023, the Company recovered |
|
(5) |
Distributable Earnings before realized trading and derivative gain/loss on residential adjustable-rate mortgage securities (“Run-Rate Distributable Earnings”) (a non-GAAP financial measure). |
|
(6) |
Represents the actual realized cash loss on a specific REO investment. |
|
(7) |
Fully Converted assumes conversion of our series of convertible preferred stock and full vesting of our outstanding equity compensation awards. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240214874974/en/
Investor Relations Contact:
l.crabbe@benefitstreetpartners.com
(214) 874-2339
Source: