On February 14, 2024, Franklin BSP Realty Trust Inc (FBRT, Financial) released its 8-K filing, announcing its financial results for the fourth quarter and full year ended December 31, 2023. The company, a private real estate investment trust that originates, acquires, and manages a diversified portfolio of commercial real estate debt and first mortgage loans secured by properties in the United States, reported a significant increase in GAAP net income and distributable earnings.
Financial Performance Highlights
FBRT's financial results for the fourth quarter and full year of 2023 reflect a strong performance. The company's GAAP net income for the three months ended December 31, 2023, was $30.0 million, and $144.5 million for the twelve months, representing a marked increase from $27.2 million and $14.2 million in the same periods of the previous year. This growth in net income is a testament to the company's robust operational efficiency and strategic financial management.
Diluted earnings per share (EPS) to common stockholders also saw a positive trajectory, with Q4 EPS rising to $0.28 and full-year EPS to $1.42, compared to $0.25 and $(0.38) for the respective periods in the prior year. The increase in EPS is particularly notable given the negative EPS reported in the previous year, indicating a strong turnaround in profitability.
Strategic Achievements and Liquidity
FBRT's financial achievements include a solid dividend coverage ratio, with GAAP and Distributable Earnings dividend coverage of 80% and 109% for the fourth quarter, and 100% and 135% for the full year, respectively. The company also reported closing $231 million of new loan commitments in the fourth quarter at a weighted average spread of 391 basis points, contributing to a core portfolio aggregate principal balance of approximately $5.0 billion.
The company's liquidity remained robust, with total liquidity of $1.5 billion, including $338 million in cash and cash equivalents and $55 million in CLO reinvestment available. This strong liquidity position is crucial for FBRT as it provides the flexibility to manage and grow its loan portfolio effectively.
Management Commentary
Richard Byrne, Chairman and Chief Executive Officer of FBRT, commented on the results, stating, "FBRT achieved strong results in the fourth quarter, comfortably covering our common stock dividend on a distributable earnings basis. For the year, FBRT delivered a 12.1% distributable earnings return on common equity, reflecting the stability of our multifamily-focused portfolio. We remain committed to delivering long-term stockholder value."
Michael Comparato, President of FBRT, added, "We are defensively positioned and ended the year with a liquidity position totaling $1.5 billion. We also have been actively originating new loans throughout 2023. As our pipeline grows and origination volumes improve, we expect to grow our portfolio and put this capital to work at attractive levels in 2024."
FBRT's management team's comments underscore the company's strategic positioning and optimistic outlook for portfolio growth and capital deployment in the coming year.
Balance Sheet and Income Statement Analysis
The balance sheet as of December 31, 2023, shows a strong cash position with cash and cash equivalents totaling $337.6 million. The company's total assets were valued at $5.95 billion, with the majority in commercial mortgage loans, held for investment, net of allowance for credit losses. The total liabilities stood at $4.28 billion, with collateralized loan obligations being the largest liability at $3.57 billion.
FBRT's income statement for the year ended December 31, 2023, reported total income of $263.95 million, with net interest income contributing $246.93 million. The company managed to keep its expenses under control, totaling $87.82 million, leading to a net income before taxes of $141.75 million.
Forward-Looking Statements and Additional Information
While the company's forward-looking statements provide insights into future expectations, they are subject to various risks and uncertainties that could cause actual results to differ materially. Investors are encouraged to review the company's filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for a more comprehensive understanding of these risks.
For further details on FBRT's financial performance, including the reconciliation of GAAP Net Income to Distributable Earnings and Run-Rate Distributable Earnings, investors can refer to the supplemental information published on the company's website.
In conclusion, Franklin BSP Realty Trust Inc's Q4 and full-year 2023 financial results demonstrate a strong performance with significant increases in net income and distributable earnings. The company's strategic financial management and robust liquidity position bode well for its future growth and ability to deliver long-term shareholder value.
Explore the complete 8-K earnings release (here) from Franklin BSP Realty Trust Inc for further details.
