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Franklin BSP Realty Trust, Inc. (FBRT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 GAAP EPS was $0.29 and Distributable EPS was $0.30; book value per fully converted share was $15.19 and dividend was maintained at $0.355, implying ~9.3% yield on book value .
  • Origination activity remained solid ($441M at 344 bps spread) while repayments ($641M) kept the core portfolio broadly flat at $5.0B; liquidity ended at $535M (unrestricted cash $184M) and net leverage was 2.6x (recourse 0.3x) .
  • Multifamily concentration and loan seasoning continued: 71% of the portfolio is multifamily; 52% of the book has been originated post rate hikes; office exposure is down to 3.7% collateralized, with multi‑tenant office at 2.3% (ex‑large triple‑net asset) .
  • Management highlighted earnings power tailwinds from REO resolution (+$0.25–$0.30 per share annually) and indicated a likely return to the CRE CLO market in 2025 as spreads have tightened and liability costs are attractive .

What Went Well and What Went Wrong

What Went Well

  • Robust origination despite market competition: $441M of new commitments in Q4 at a 344 bps spread; $2.0B for FY24, with 52% of the portfolio now post‑rate hike vintage .
  • Accelerating cleanup of legacy exposures: office payoffs at par, watch list reduced to three positions post‑Q1 asset sale, and REO dispositions at or above basis, with confidence in multifamily liquidity .
  • Clear earnings power path: “we believe we could generate an additional $0.25 to $0.30 to our distributable earnings on an annual basis” as REO is resolved and equity redeployed .

What Went Wrong

  • Dividend coverage below 100% in Q4 as nonaccrual loans and REO costs weighed on earnings; DE per share declined YoY from $0.39 in Q4 2023 to $0.30 in Q4 2024 .
  • Borrower behavior remains unpredictable, complicating cash forecasting and timing of repayments/REO sales, which in turn limits precise visibility on portfolio growth trajectory .
  • Office remains the most illiquid asset class; despite markdowns and proactive management, outcomes on assets like the Denver building are harder to predict and require stabilization and price discovery .

Financial Results

Quarterly EPS, Distributable EPS, Net Interest Income, ROE (oldest → newest)

MetricQ4 2023Q2 2024Q3 2024Q4 2024
GAAP EPS ($/share)$0.28 ($0.11) $0.30 $0.29
Distributable EPS ($/share, fully converted)$0.39 $0.31 ($0.10) $0.30
Net Interest Income ($USD Millions)N/A$46.8 $44.3 $47.3
GAAP ROE (%)N/A(2.0)% 7.9% 7.6%
DE ROE (%)N/A8.0% (2.6)% 7.8%

Q4 2024 Portfolio and KPI Snapshot

KPIQ4 2024
Core Portfolio Principal Balance ($B)$5.0
Loans (count)155
Senior Mortgage (% of portfolio)99%
Floating Rate (% of portfolio)~93%
Multifamily (% of portfolio)71%
Office (% of portfolio)3.7%
Multi‑tenant Office (% of total; excl large triple‑net)2.3%
Originations ($M, commitments)$441 at 344 bps spread
Repayments ($M)$641
Liquidity ($M)$535 (Unrestricted cash $184M)
Net Leverage (x)2.6x
Recourse Net Leverage (x)0.3x
Book Value ($/share, fully converted)$15.19
Dividend ($/share)$0.355

Segment Breakdown (Q4 2024)

Collateral TypeMix
Multifamily71%
Hospitality15%
Industrial7%
Office4%
Retail1%
Other2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/CommentaryChange
Common Dividend ($/share)Q4 2024$0.355$0.355 declared (payable ~Jan 10, 2025) Maintained
Earnings Power (DE per share, annual)Medium‑termN/A+$0.25–$0.30 annually potential from REO resolution/redeployment New commentary
CRE CLO Issuance2025N/AAnticipate returning to CLO market in 2025; liability costs attractive New commentary
Office Exposure TargetOngoingN/AGoal to reduce multi‑tenant office exposure to 0% as soon as possible Reaffirmed focus

Earnings Call Themes & Trends

TopicQ2 2024 (prior-2)Q3 2024 (prior-1)Q4 2024 (current)Trend
Multifamily strength/liquidity74% portfolio; active originations; Walgreens REO sales started 74% portfolio; continued paydowns; Walgreens REO sale progressed 71% portfolio; rapid bid depth (Dallas REO sold above basis in 16 days) Strong, highly liquid
Office exposure reductionOffice ~4.7%; watch list includes office; specific CECL taken Office ~4%; continued markdowns; watch list small Office 3.7% collateral; multi‑tenant at 2.3%; two office loans repaid; target 0% Improving
Origination pipeline & spreads$622M Q2 commitments; spreads ~318 bps; strong pipeline $380M Q3 commitments; spreads ~421 bps; FL11 CLO closed $441M Q4 commitments; 344 bps; moderate competition; still compelling Tightening spreads; steady originations
CLO/liability strategyNon‑MTM financing 80%; exploring CLOs; avg debt cost 7.8% FL11 $1.024B, SOFR+199; non‑MTM 89%; liquidity $1.1B Non‑MTM 89%; plan to issue in 2025; avg debt cost down to 7.4% Favorable
REO disposition & earningsREO sales (Walgreens); realized losses ran through DE Continued REO sales; gains/losses reflected; watch list down to 3 Four REOs sold near basis in Q4; post‑quarter sales above basis; +$0.25–$0.30 DE annual uplift expected upon resolution Resolution accelerating
Borrower behavior & repaymentsUnpredictable borrower actions; CECL increased Repayments $510M; borrower behavior still variable Borrower behavior remains difficult; repayments lumpy; growth timing hard to forecast Persistent challenge

Management Commentary

  • “Including January 2025 originations, 52% of our book was originated post the Fed’s interest rate hikes.” — Richard Byrne .
  • “We believe we could generate an additional $0.25 to $0.30 to our distributable earnings on an annual basis” as REO is resolved and equity redeployed. — Jerome Baglien .
  • “Our traditional multi‑tenant office portfolio is down to 2.3%… our goal is to get to 0 as soon as possible.” — Michael Comparato .
  • Multifamily liquidity example: 376‑unit Dallas foreclosure drew a dozen offers within 72 hours; buyer went non‑refundable with $1M deposit, closing 16 days after PSA. — Michael Comparato .
  • Liability markets: “If markets stay even close to where they are right now, [CRE CLO] would be a very accretive liability for us to add.” — Michael Comparato .

Q&A Highlights

  • Spread trajectory: floating‑rate credit spreads have tightened and are near their floor; liability spreads tightening in lockstep (warehouse, CRE CLO, CMBS) .
  • Other expenses run‑rate: largely REO prep costs; these offset real estate income and are near net neutral; pace depends on asset sale timing .
  • Origination run‑rate: capacity for $400–$500M per quarter with demand far higher; balancing with legacy book resolution and cash forecasting given unpredictable borrower behavior .
  • Office watch list actions: Georgia office modified with paydown but remains 5‑rated; Denver office expected to move to REO; plan to stabilize then liquidate amid illiquidity and price discovery .
  • Liquidity mix change: driven by amortization dynamics across CLOs (reinvest vs amortizing deals), with a likely new CLO later in 2025 to recapture equity .

Estimates Context

  • S&P Global consensus estimates were unavailable at the time of retrieval due to API limits; as such, we cannot provide a quantitative “vs. consensus” comparison for Q4 2024. We will update this section once SPGI data access is restored.
  • Internal reference points: Q4 2024 GAAP EPS $0.29 and Distributable EPS $0.30; in Q3 2024 GAAP EPS was $0.30 and Distributable EPS was ($0.10); in Q2 2024 GAAP EPS was ($0.11) and Distributable EPS $0.31 .

Key Takeaways for Investors

  • Earnings quality is improving sequentially (GAAP ROE 7.6%; DE ROE 7.8%), with clear medium‑term uplift from REO resolution (+$0.25–$0.30 DE/share annually) .
  • Multifamily remains the core moat—high liquidity and bid depth support recoveries and new originations; office exposure is small and shrinking, with proactive resolution .
  • Liability side is favorable: 89% non‑mark‑to‑market financing, declining average debt cost (7.4% in Q4), and management intent to issue new CLOs in 2025 .
  • Portfolio recycling continues: repayments of legacy (2021–2022) vintage loans and post‑hike originations (52% of book) should gradually improve dividend coverage .
  • Watch list is contained (reduced to ~3 positions post‑Q1 asset sale), with recent asset sale above debt basis; however, borrower behavior and office illiquidity remain key execution risks .
  • Dividend maintained at $0.355; book value stable at $15.19; near‑term distributions likely supported by liability optimization and disciplined originations .
  • Trading lens: Stock catalysts include progress on REO sales at/above basis, CLO issuance at tight spreads, and evidence of out‑origination vs repayments (portfolio growth inflection) .

Appendix: Source Documents

  • Q4 2024 Earnings Press Release and 8‑K exhibits
  • Q4 2024 Earnings Call Transcript – –
  • Other relevant Q4 press releases (Dividend)
  • Prior quarter references: Q3 2024 press release –; Q2 2024 8‑K and press release –