The following is a summary of the Franklin BSP Realty Trust, Inc. (FBRT) Q3 2024 Earnings Call Transcript:

Financial Performance:

• FBRT reported GAAP earnings of $0.30 per diluted common share and distributable earnings of a negative $0.10 per diluted common share for Q3 2024.

• Net Interest Income was slightly lower quarter-over-quarter as the loan portfolio size decreased.

• Repayments on legacy portfolio amounted to $1 billion year-to-date, with $510 million in the third quarter alone.

Business Progress:

• FBRT's strong focus on high-quality, low loan-to-value loans originated post rate hikes, representing 40% of the portfolio.

• Significant progress in resolving watch list loans and REO assets, with a reduction in watch list loans from 7 to 3 this quarter.

• Newly originated loans are set at higher interest rates with robust spreads, mainly in the multifamily sectors across the Southeast and Southwest.

Opportunities:

• Continued strength in originating new loans, especially in multifamily sectors, with $1.6 billion in new loan commitments year-to-date.

• Expected positive changes in multifamily supply-demand dynamics, likely leading to increased rents and reduced concessions in future years.

Risks:

• Legacy loans, particularly in the office sector, continue to present challenges with expected deterioration over the next 2 to 5 years.

• Operating in a highly volatile interest rate environment, impacting investment and borrowing costs.

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