Franklin BSP Realty Trust reported a third-quarter net loss, while its distributable earnings were substantially higher before realized losses. The commercial real estate lender also repurchased shares, expanded its agency mortgage business and reported a modest increase in fully converted book value per share.
Key details
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Earnings: FBRT recorded a GAAP net loss of $27.0 million, or $0.41 per diluted common share. Distributable Earnings, a non-GAAP measure, were $3.3 million, equivalent to a loss of $0.02 per diluted common share on a fully converted basis. Distributable Earnings before realized losses were $25.8 million, or $0.24 per share on that basis.
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Share repurchases and book value: The trust bought back 7.43 million common shares for $60.5 million, paying an average of $8.14 per share. FBRT said the repurchases added $0.55 per diluted common share to fully converted book value. Fully converted book value ended the quarter at $14.26 per share, up $0.02 from the prior quarter. An adjusted measure of fully converted book value was $15.13 per share, up $0.39.
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Core lending portfolio: The portfolio comprised 175 loans with a total principal balance of $4.1 billion and an average loan size of $23.2 million. Multifamily properties secured 83% of the portfolio. During the quarter, FBRT closed $249.3 million in new loan commitments, funded $284.8 million on new and existing loans, and received $405.5 million in repayments. The average portfolio risk rating was 2.4, unchanged from the prior quarter.
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Agency business: The servicing portfolio grew by $1.4 billion to $61.3 billion. FBRT originated $670.4 million in new loan commitments through programs associated with Fannie Mae, Freddie Mac and HUD. Mortgage servicing rights had a reported book value of $201.2 million, with another $8.1 million tied to agency loan commitments and funded loans.
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Dividend and liquidity: FBRT declared a third-quarter common dividend of $0.20 per share. The company described that as an annualized yield of 5.6% against fully converted book value, or 12.8% based on its current trading price. Total liquidity was $407.2 million, including $100.8 million in cash and cash equivalents.
What the figures show
The repurchases were a significant capital-allocation move: FBRT spent $60.5 million buying shares and said that helped increase book value per share. Meanwhile, the gap between distributable earnings before realized losses and the reported distributable-earnings figure highlights the effect of realized losses on the quarter’s result. The agency business also continued to grow, with a larger servicing portfolio and new loan commitments.