Franklin BSP Realty Trust Inc (FBRT, Financial) announced its financial results for the quarter ended September 30, 2023, on October 30, 2023. The company reported a GAAP net income of $31.0 million, or $0.30 per diluted common share, a decrease from $39.6 million, or $0.39 per diluted common share, for the three months ended June 30, 2023. Distributable Earnings, a non-GAAP financial measure, also saw a decrease to $42.0 million, or $0.43 per diluted common share, from $63.5 million, or $0.66 per diluted common share, in the previous quarter.
Financial Highlights
FBRT produced a third quarter GAAP and Distributable Earnings ROE of 7.7% and 10.7%, respectively. The book value was $15.82 per diluted common share, a decrease of $0.03 from the prior quarter. The company declared a third quarter common stock cash dividend of $0.355, representing a 9.0% yield on book value. The GAAP and Distributable Earnings dividend coverage were 86% and 120%, respectively.
FBRT closed $153 million of new loan commitments at a weighted average spread of 398 basis points. The company also closed a $897 million managed Commercial Real Estate Collateralized Loan Obligation (CLO) with an advance rate of 76%, a weighted average interest rate of SOFR+229, and an 18-month reinvestment period. The total liquidity of the company was $1.8 billion, which includes $411 million in cash and cash equivalents.
Management's Commentary
Richard Byrne, Chairman and Chief Executive Officer of FBRT, commented on the company's performance, stating,
FBRT is generating a double-digit Distributable Earnings ROE while maintaining a substantial liquidity position. We continue to view our asset allocation of nearly 80% multifamily credits as industry-leading, and that allocation should assist us in successfully navigating what are clearly difficult market conditions."
Michael Comparato, President of FBRT, added,
We strengthened our balance sheet this quarter, issuing our tenth CRE CLO. We believe that liability structure and liquidity are paramount in times of choppy markets. Also, we continue to actively pursue new originations as the credit quality of our underwriting is currently among the best we've seen in recent years."
Future Outlook
Despite the decrease in net income and distributable earnings, FBRT remains optimistic about its future performance. The company's asset allocation strategy, strong liquidity position, and focus on credit quality are expected to help it navigate through the challenging market conditions.
Explore the complete 8-K earnings release (here) from Franklin BSP Realty Trust Inc for further details.
