10q10k10q10k.net

What changed in Franklin BSP Realty Trust, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Franklin BSP Realty Trust, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+320 added−347 removedSource: 10-K (2024-02-26) vs 10-K (2023-03-16)

Top changes in Franklin BSP Realty Trust, Inc.'s 2023 10-K

320 paragraphs added · 347 removed · 219 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

3 edited+1 added−1 removed72 unchanged
Biggest changeOne or more of our wholly-owned subsidiaries are treated as taxable REIT subsidiaries (each a “TRS”), and are subject to U.S. federal, state and local income taxes. The Company has no employees. Benefit Street Partners L.L.C. serves as our advisor ("Advisor") pursuant to an advisory agreement (the "Advisory Agreement").
Biggest changeOne or more of our wholly-owned subsidiaries are treated as taxable REIT subsidiaries (each a “TRS”), and are subject to U.S. federal, state and local income taxes. The Company has no employees. Benefit Street Partners L.L.C. serves as our advisor ("Advisor") pursuant to an advisory agreement, as amended on August 18, 2021 (the "Advisory Agreement").
Real Estate Securities In addition to our focus on origination of and investments in commercial real estate debt, we may also acquire real estate securities, such as CMBS, CRE CLO Bonds, RMBS, CDO notes, and equity investments in entities that own commercial real estate.
Real Estate Securities In addition to our focus on origination of and investments in commercial real estate debt, we may also acquire real estate securities, such as CMBS, CRE CLO Bonds, CDO notes, and equity investments in entities that own commercial real estate.
Although we believe that we are well positioned to compete effectively in each facet of our business, there is enormous competition in our market sector and there can be no assurance that we will compete effectively or that we will not encounter increased competition in the future that could limit our ability to conduct our business effectively. 4 Table of Contents Employees As of December 31, 2022, we had no employees.
Although we believe that we are well positioned to compete effectively in each facet of our business, there is enormous competition in our market sector and there can be no assurance that we will compete effectively or that we will not encounter increased competition in the future that could limit our ability to conduct our business effectively. 4 Table of Contents Human Capital Resources As of December 31, 2023, we had no employees.
Removed
Although the Company continues to hold a small portion of this portfolio it does not intend to do so long-term and intends to reinvest proceeds from the remaining portion of the portfolio in its other businesses.
Added
As of December 31, 2023, the Company has fully disposed of all of its ARM Agency Securities and is continuing to reinvest the proceeds from the sale of these securities in its other businesses.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

91 edited+28 added−41 removed151 unchanged
Biggest changeIf the Subsidiary REIT were to fail to qualify as a REIT, then (i) it would become subject to regular U.S. federal corporate income tax, (ii) our interest in such Subsidiary REIT would cease to be a qualifying asset for purposes of the REIT asset tests, and (iii) it is possible that we would fail certain of the REIT asset tests, in which event we also would fail to qualify as a REIT unless we could avail ourselves of relief provisions.
Biggest changeIf the Subsidiary REIT were to fail to qualify as a REIT, then (i) it would become subject to regular U.S. federal corporate income tax, (ii) our interest in such Subsidiary REIT would cease to be a qualifying asset for purposes of the REIT asset tests, and (iii) it is possible that we would fail certain of the REIT asset tests, in which event we also would fail to qualify as a REIT unless we could avail ourselves of relief provisions. 15 Table of Contents If we were to fail to qualify as a REIT in any taxable year and are unable to avail ourselves of certain savings provisions set forth in the Internal Revenue Code, we would be subject to U.S federal and applicable state and local income tax on our taxable income at regular corporate rates.
Interest rate hedging may fail to protect or could adversely affect us because, among other things: • interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates; • available interest rate hedging may not correspond directly with the interest rate risk for which protection is sought; • the duration of the hedge may not match the duration of the related liability or asset; • our hedging opportunities may be limited by the treatment of income from hedging transactions under the rules determining REIT qualification; • the credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction; • the party owing money in the hedging transaction may default on its obligation to pay; and • we may purchase a hedge that turns out not to be necessary.
Interest rate hedging may fail to protect or could adversely affect us because, among other things: • interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates; • available interest rate hedging may not correspond directly with the interest rate risk for which protection is sought; • the duration of the hedge may not match the duration of the related liability or asset; • our hedging opportunities may be limited by the treatment of income from hedging transactions under the rules determining REIT qualification; • the credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transactions; • the party owing money in the hedging transaction may default on its obligation to pay; and • we may purchase a hedge that turns out not to be necessary.
We have significant competition with respect to our origination and acquisition of assets with many other companies, including other REITs, insurance companies, commercial banks, private investment funds, hedge funds, specialty finance companies and other investors, many of which have greater resources than us. We may not be able to compete successfully for investments.
We have significant competition with respect to our origination and acquisition of assets with many other companies, including other REITs, insurance companies, commercial banks, private investment funds, hedge funds, specialty finance companies and other investors, many of which have greater resources than us, and may not be able to compete successfully for investments.
Additionally, upon such a termination, or if we materially breach the Advisory Agreement and our Advisor terminates our Advisory Agreement, the Advisory Agreement provides that we will pay our Advisory a termination fee equal to three times the sum of the average annual base management fee and the average annual incentive fee paid or payable to the Advisor during the 24-month period immediately preceding the most recently completed calendar quarter prior to the termination.
Additionally, upon such a termination, or if we materially breach the Advisory Agreement and our Advisor terminates our Advisory Agreement, the Advisory Agreement provides that we will pay our Advisor a termination fee equal to three times the sum of the average annual base management fee and the average annual incentive fee paid or payable to the Advisor during the 24-month period immediately preceding the most recently completed calendar quarter prior to the termination.
Under these provisions, any income that we generate from hedging transactions will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if the instrument hedges: (i) interest rate risk on liabilities incurred to carry or acquire real estate assets; or (ii) risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the REIT 75% or 95% gross income tests, and such instrument is properly identified under applicable U.S.
Under the REIT provisions, any income that we generate from hedging transactions will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if the instrument hedges: (i) interest rate risk on liabilities incurred to carry or acquire real estate assets; or (ii) risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the REIT 75% or 95% gross income tests, and such instrument is properly identified under applicable U.S.
We generally require that each of the borrowers under our commercial real estate debt investments obtain comprehensive insurance covering the mortgaged property, including liability, fire and extended coverage. However, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, floods and hurricanes that may be uninsurable or not economically insurable.
We generally require that the borrowers under our commercial real estate debt investments obtain comprehensive insurance covering the mortgaged property, including liability, fire and extended coverage. However, there are certain types of losses, generally of a catastrophic nature, such as earthquakes, floods and hurricanes that may be uninsurable or not economically insurable.
Even if we conduct extensive due diligence on a particular investment, there can be no assurance that this diligence will uncover all material issues relating to such investment, that the information provided by the borrower is truthful or accurate, or that factors outside of our control will not later arise.
However, even if we conduct extensive due diligence on a particular investment, there can be no assurance that this diligence will uncover all material issues relating to such investment, that the information provided by the borrower is truthful or accurate, or that factors outside of our control will not later arise.
If alternative financing is not available, we may have to liquidate assets at unfavorable prices to pay off our short-term borrowings or pay significant fees to extend these financing arrangements. Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions.
If alternative financing is not available, we may have to liquidate assets at unfavorable prices to pay off our short-term borrowings or pay significant fees to extend these financing arrangements. Lenders often require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions.
Furthermore, if the rental and leasing markets deteriorate, it could reduce cash flow from the loan pools underlying our CMBS and CRE CLO Bonds investments. The CMBS and CRE CLO Bonds market is dependent upon liquidity for refinancing and will be negatively impacted by a slowdown in the new issue CMBS and CRE CLO Bonds market.
Furthermore, if the rental and leasing markets deteriorate, it could reduce cash flow from the loan pools underlying our CMBS and CRE CLO Bonds investments. The CMBS and CRE CLO Bonds market is dependent upon liquidity for refinancing and could be negatively impacted by a slowdown in the new issue CMBS and CRE CLO Bonds market.
Certain provisions of the Maryland General Corporation Law (“MGCL”) may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including: • “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of our then outstanding voting power of our shares or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of our then outstanding voting shares) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes special appraisal rights and special stockholder voting requirements on these combinations; and • “control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Certain provisions of Maryland law could inhibit a change in control of our Company. 14 Table of Contents Certain provisions of the Maryland General Corporation Law (“MGCL”) may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including: • “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of our then outstanding voting power of our shares or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of our then outstanding voting shares) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes special appraisal rights and special stockholder voting requirements on these combinations; and • “control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
The incentive fee may create an incentive for our Advisor to invest in assets with higher yield potential, which are generally riskier or more speculative, or sell an asset prematurely for a gain, in an effort to increase our short-term net income and thereby increase the incentive fees to which it is entitled. 14 Table of Contents Our Advisor manages our portfolio pursuant to broad investment guidelines and is not required to seek the approval of our board of directors for each investment, financing, asset allocation or hedging decision made by it, which may result in our making riskier loans and other investments and which could materially and adversely affect us.
The incentive fee may create an incentive for our Advisor to invest in assets with higher yield potential, which are generally riskier or more speculative, or sell an asset prematurely for a gain, in an effort to increase our short-term net income and thereby increase the incentive fees to which it is entitled. 13 Table of Contents Our Advisor manages our portfolio pursuant to broad investment guidelines and is not required to seek the approval of our board of directors for each investment, financing, asset allocation or hedging decision made by it, which may result in our making riskier loans and other investments and which could materially and adversely affect us.
For example, the COVID-19 pandemic resulted in many governmental authorities imposing significant restrictions on businesses and individuals that triggered economic consequences, including high unemployment, later, then high inflation, that resulted in challenging operating conditions for many businesses, particularly in the retail (including restaurants) and hospitality sectors.
For example, the COVID-19 pandemic resulted in many governmental authorities imposing significant restrictions on businesses and individuals that triggered economic consequences, including high unemployment, later, then high inflation, that resulted in challenging operating conditions for many businesses, particularly in the retail (including restaurants), office and hospitality sectors.
Instead, certain categories of the REIT’s stockholders, such as foreign stockholders eligible for treaty or sovereign benefits, stockholders with net operating losses, and generally tax-exempt stockholders that are subject to unrelated business income tax, may be subject to taxation, or to increased taxes, on any portion, known as “excess inclusions”, of their dividend income from the REIT that is attributable to the TMP, but only to the extent that the REIT actually distributes “excess inclusions” to them.
Instead, certain categories of the REIT’s stockholders, such as foreign stockholders eligible for treaty or sovereign benefits, stockholders with net operating losses, and generally tax-exempt stockholders that are subject to unrelated business income tax, may be subject to taxation, or to increased taxes, on any portion, known as “excess inclusions,” of their dividend income from the REIT that is attributable to the TMP, but only to the extent that the REIT actually distributes “excess inclusions” to them.
If we fail to appropriately employ match-funded structures, our exposure to interest rate volatility and exposure to matching liabilities prior to the maturity of the corresponding asset may increase substantially which could harm our operating results, liquidity and financial condition. Provision for credit losses is difficult to estimate. O ur provision for credit losses is evaluated on a quarterly basis.
If we fail to appropriately employ match-funded structures, our exposure to interest rate volatility and exposure to matching liabilities prior to the maturity of the corresponding asset may increase substantially which could harm our operating results, liquidity and financial condition. Provision for credit losses is difficult to estimate. Our provision for credit losses is evaluated on a quarterly basis.
In some states, foreclosure actions can take several years or more to resolve. At any time during the foreclosure proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure action and further delaying the foreclosure process. The resulting time delay could reduce the value of our assets in the defaulted loans.
In some states, foreclosure actions can take several years or more to resolve. At any time during the foreclosure proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure action and further delaying the foreclosure process. The resulting time delay could reduce the value of the assets under the defaulted loans.
CMBS and CRE CLO Bonds entitle the holders thereof to receive payments that depend primarily on the cash flow from a specified pool of commercial or multifamily mortgage loans. Consequently, CMBS and CRE CLO Bonds will be adversely affected by payment defaults, delinquencies and losses on the underlying commercial real estate loans.
CMBS and CRE CLO Bonds entitle the holders thereof to receive payments that depend primarily on the cash flow from a specified pool of commercial or multifamily mortgage loans. Consequently, CMBS and CRE CLO Bonds may be adversely affected by payment defaults, delinquencies and losses on the underlying commercial real estate loans.
Additionally, CMBS and CRE CLO Bonds is subject to particular risks, including lack of standardized terms and payment of all or substantially all of the principal only at maturity rather than regular amortization of principal. Additional risks may be presented by the type and use of a particular commercial property.
Additionally, CMBS and CRE CLO Bonds are subject to particular risks, including lack of standardized terms and payment of all or substantially all of the principal only at maturity rather than regular amortization of principal. Additional risks may be presented by the type and use of a particular commercial property.
In general, under applicable Treasury Regulations if a loan is secured by real property and other property and the highest principal amount of the loan outstanding during a taxable year exceeds the fair market value of the real property securing the loan determined as of the date we agreed to acquire the loan or the date we significantly modified the loan, a portion of the interest income from such loan will not be qualifying income for purposes of the REIT 75% gross income test, but will be qualifying income for purposes of the REIT 95% gross income test.
In general, under applicable Treasury Regulations if a loan is secured by real property and other property and the highest principal amount 17 Table of Contents of the loan outstanding during a taxable year exceeds the fair market value of the real property securing the loan determined as of the date we agreed to acquire the loan or the date we significantly modified the loan, a portion of the interest income from such loan will not be qualifying income for purposes of the REIT 75% gross income test, but will be qualifying income for purposes of the REIT 95% gross income test.
We may also rely on short-term financing that would be especially exposed to changes in availability.
We also rely on short-term financing that would be especially exposed to changes in availability.
We intend not to distribute “excess inclusions”, but to pay the tax on “excess inclusions” ourselves. Notwithstanding our intention to try to avoid distributions to our stockholders of “excess inclusions”, it is possible that some portion of our dividends to our stockholders may be so characterized.
We intend not to distribute “excess inclusions,” but to pay the tax on “excess inclusions” ourselves. Notwithstanding our intention to try to avoid distributions to our stockholders of “excess inclusions”, it is possible that some portion of our dividends to our stockholders may be so characterized.
We may be unable to obtain additional financing on favorable terms or, with respect to our debt and other investments, on terms that parallel the maturities of the debt originated or other investments acquired, if we are able to obtain additional financing at all.
We may be unable to obtain additional financing on favorable terms or, with respect to our debt and other investments, on terms that match the maturities of the debt originated or other investments acquired, if we are able to obtain additional financing at all.
In addition, real properties with subordinate debt may have higher loan-to-value ratios than conventional debt, resulting in less equity in the real property and increasing the risk of loss of principal and interest. We may be subject to risks associated with construction lending, such as declining real estate values, cost overruns and delays in completion.
In addition, real properties with subordinate debt may have higher loan-to-value ratios than conventional debt, resulting in less equity in the real property and increasing the risk of loss of principal and interest. 8 Table of Contents We may be subject to risks associated with construction lending, such as declining real estate values, cost overruns and delays in completion.
We might be subject to this tax if we were to dispose of or securitize loans in a manner that is treated as a sale of loans for U.S. federal income tax purposes that is subject to the prohibited transaction tax. 17 Table of Contents • Any TRS of ours will be subject to U.S. federal corporate income tax on its taxable income, and non-arm’s length transactions between us and any TRS, could be subject to a 100% tax. • We could, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Internal Revenue Code to maintain our qualification as a REIT.
We might be subject to this tax if we were to dispose of or securitize loans in a manner that is treated as a sale of loans for U.S. federal income tax purposes that is subject to the prohibited transaction tax. • Any taxable REIT subsidiary (“TRS”) of ours will be subject to U.S. federal corporate income tax on its taxable income, and non-arm’s length transactions between us and any TRS could be subject to a 100% tax. • We could, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Internal Revenue Code to maintain our qualification as a REIT.
The “taxable mortgage pool” rules may increase the taxes that we or our stockholders incur, and may limit the manner in which we effect future securitizations . Securitizations in the form of bonds or notes secured principally by mortgage loans generally result in the creation of taxable mortgage pools (“TMPs”) for U.S. federal income tax purposes.
The “taxable mortgage pool” rules may increase the taxes that we or our stockholders incur, and may limit the manner in which we effect future securitizations . 16 Table of Contents Securitizations in the form of bonds or notes secured principally by mortgage loans generally result in the creation of taxable mortgage pools (“TMPs”) for U.S. federal income tax purposes.
Risks Related to Our Investments Our commercial real estate debt investments are subject to the risks typically associated with commercial real estate. Our commercial real estate debt and real estate securities generally are directly or indirectly secured by a lien on real property.
Risks Related to Our Investments Our commercial real estate debt investments are subject to the risks typically associated with ownership of commercial real estate. Our commercial real estate debt and real estate securities generally are directly or indirectly secured by a lien on real property.
The amount of such indebtedness could have material adverse consequences, including: • hindering our ability to adjust to changing market, industry or economic conditions; • limiting our ability to access the capital markets to raise additional equity or refinance maturing debt on favorable terms or to fund acquisitions or emerging businesses; • limiting the amount of cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses; • making us more vulnerable to economic or industry downturns, including interest rate increases; and • placing us at a competitive disadvantage compared to less leveraged competitors.
The amount of such indebtedness could have material adverse consequences, including: • hindering our ability to adjust to changing market, industry or economic conditions; • limiting our ability to access the capital markets to raise additional equity or refinance maturing debt on favorable terms or to fund acquisitions; • limiting the amount of cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses; • making us more vulnerable to economic or industry downturns, including interest rate increases or sustained high interest rate environments; and • placing us at a competitive disadvantage compared to less leveraged competitors.
In certain prior periods, including in 2022, distributions have been in excess of our earnings. Distributions in excess of earnings will decrease the book value per share of common stock. The Company cannot give any assurance that returns from the investments will be sufficient to maintain or increase cash available for distributions to stockholders.
In certain prior periods, quarterly distributions have been in excess of our quarterly earnings. Distributions in excess of earnings will decrease the book value per share of common stock. The Company cannot give any assurance that returns from the investments will be sufficient to maintain or increase cash available for distributions to stockholders.
This could subject us to more restrictive recourse borrowings and subject us to a cost of capital that could significantly reduce or eliminate the spread between our cost of capital and the returns on our investments.
This could subject us to more restrictive recourse borrowings and subject us to capital costs that significantly reduce or eliminate the spread between our cost of capital and the returns on our investments.
In addition, we have in the past and we may in the future be forced to operate any foreclosed properties for a substantial period of time, which could be a distraction for our management team and may require us to pay significant costs associated with such property.
We have in the past and we may in the future be forced to operate any foreclosed properties for a substantial period of time, which can be a distraction for our management team and may require us to pay significant costs associated with such property.
These economic losses will be reflected in our results of operations, and our ability to fund these obligations will depend on the liquidity of our assets and access to capital at the time, and the need to fund these obligations could adversely impact our financial condition.
These economic 12 Table of Contents losses will be reflected in our results of operations, and our ability to fund these obligations will depend on the liquidity of our assets and access to capital at the time, and the need to fund these obligations could adversely impact our financial condition.
In addition, the risk of a cyber-incident, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
In addition, the risk of a cyber- 18 Table of Contents incident, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
If we are unable to provide such collateral or cash repayments, the lender may accelerate the loan or we would be required to liquidate the collateral.
If we are unable to provide such collateral or cash repayments, the lender may accelerate the loan and we may be required to liquidate the collateral.
In making the assessment and otherwise conducting customary due diligence, we rely on the resources available to us and, in some cases, an investigation by third parties. This process is particularly important and subjective with respect to newly organized or private entities because there may be little or no information publicly available about the entity.
In making the assessment and otherwise conducting customary due diligence, we rely on the resources available to us and, in some cases, an investigation by third parties. This process is particularly important with respect to newly organized or private entities because there may be 10 Table of Contents little or no information publicly available about the entity.
Our operating results may be adversely affected by a number of risks generally incident to holding real estate debt, including, without limitation: • natural disasters, such as hurricanes, earthquakes and floods, which we expect to increase in strength and frequency due to climate change; • acts of war or terrorism, or criminal violence, including the consequences of terrorist attacks; • adverse changes in national and local economic and real estate conditions; • adverse changes in economic and market conditions related to pandemics and health crises, such as COVID-19; • an oversupply of (or a reduction in demand for) space in the areas where particular properties securing our loans are located and the attractiveness of particular properties to prospective tenants; 7 Table of Contents • changes in interest rates and availability of permanent mortgage funds that my render the sale of property difficult or unattractive; • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance therewith and the potential for liability under applicable laws; • costs of remediation and liabilities associated with environmental conditions affecting properties; • the potential for uninsured or underinsured property losses; and • periods of high interest rates and tight money supply.
Our operating results may be adversely affected by a number of risks generally incident to holding real estate debt, including, without limitation: • natural disasters, such as hurricanes, earthquakes and floods, which we expect to increase in strength and frequency due to climate change; • acts of war or terrorism, or criminal violence, including the consequences of terrorist attacks; • adverse changes in national and local economic and real estate conditions; • adverse changes in economic and market conditions related to pandemics and health crises, such as COVID-19; • an oversupply of (or a reduction in demand for) space in the areas where particular properties securing our loans are located and the attractiveness of particular properties to prospective tenants; • changes in interest rates and availability of permanent mortgage funds that my render the sale of property difficult or unattractive; • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance therewith and the potential for liability under applicable laws; • costs of remediation and liabilities associated with environmental conditions affecting properties; • reduced demand for office space, including as a result of changes in work habits, including remote or hybrid work schedules which allow work from remote locations other than the employer’s office premises; 7 Table of Contents • the potential for uninsured or underinsured property losses; and • periods of high interest rates and tight money supply.
Our estimates and judgments are based on a number of factors, including projected cash flows from the collateral securing our commercial real estate debt, debt structure, including the availability of reserves and recourse guarantees, likelihood of repayment in full at the maturity of a loan, loan-to-value ("LTV"), potential for refinancing and expected market discount rates for varying property types.
Our estimates and judgments are based on a number of factors, including projected cash flows from the collateral securing our commercial real estate debt, debt structure, including the availability of reserves and recourse guarantees, likelihood of repayment in full at the maturity of a loan, potential for refinancing and expected market discount rates for varying property types, loan-to-value ("LTV"), and reasonable and supportable forecasts that affect the collectability of the reported amount.
We utilize short-term borrowings to finance many of our investments and subsequently rely on the availability of collateralized debt and loan obligation securitization markets to provide long-term financing. We rely on short-term borrowings, such as repurchase agreements and our secured revolving credit facilities, to initially fund our investments.
We rely on the availability of collateralized debt and loan obligation securitization markets to provide long-term financing for our loans and investments. We rely on short-term borrowings, such as repurchase agreements and our secured revolving credit facilities, to initially fund our investments.
If such events occur, our investors may experience a lower return on their investment. Our due diligence may not reveal all material issues relating to our origination or acquisition of a particular investment.
If this occurs, our investors may experience a lower return on their investment. Our due diligence may not reveal all material issues relating to our origination or acquisition of a particular investment.
In addition, our borrowers could engage in fraudulent efforts to inflate the values of the underlying properties. If the values of the properties drop or are fraudulently inflated, our risk will increase because of the lower value of the security and reduction in borrower equity associated with such loans.
In addition, our borrowers could fraudulently inflate the values of the underlying properties. If the values of the properties drop or are discovered to have been fraudulently inflated, the lower value of the security and reduction in borrower equity associated with such loans will increase our risk.
We may not be able to access financing sources on attractive terms, if at all, which could dilute our existing stockholders and adversely affect our ability to grow our business.
We may not be able to access financing sources on attractive terms, if at all, which could adversely affect our ability to fund and grow our business, or result in dilution to our existing stockholders.
In connection with the servicing of the specially serviced mortgage loans, the related special servicer may, at the direction of the directing certificate holder, take actions that could adversely affect our interests. 10 Table of Contents We invest in collateralized debt obligations ("CDOs") and such investments involve significant risks.
We ordinarily do not have the right to appoint the directing certificate holder. In connection with the servicing of the specially serviced mortgage loans, the related special servicer may, at the direction of the directing certificate holder, take actions that could adversely affect our interests. We invest in collateralized debt obligations ("CDOs") and such investments involve significant risks.
This restriction may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might provide a premium price for holders of our common stock. 15 Table of Contents Certain provisions of Maryland law could inhibit a change in control of our Company.
This restriction may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might provide a premium price for holders of our common stock.
Changes in the level of interest rates and credit spreads also may affect our ability to make loans or investments, the value of our loans and investments and our ability to realize gains from the disposition of assets. Increases in interest rates and credit spreads may also negatively affect demand for loans and could result in higher borrower default rates.
Changes in the level of interest rates and credit spreads also may affect our ability to make new loans or investments and may decrease the value of our existing loans and investments. Increases in interest rates and credit spreads may also negatively affect demand for loans and could result in higher borrower default rates.
Even an inadvertent or technical mistake could jeopardize our REIT status. 16 Table of Contents Our qualification as a REIT depends on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis: • Our compliance depends upon the characterization of our assets and income for REIT purposes, as well as the relative values of our assets, some of which are not susceptible to a precise determination and for which we typically do not obtain independent appraisals.
Our qualification as a REIT depends on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis: • Our compliance depends upon the characterization of our assets and income for REIT purposes, as well as the relative values of our assets, some of which are not susceptible to a precise determination and for which we typically do not obtain independent appraisals.
Some of our investments will be in the form of securities that are recorded at fair value but have limited liquidity or are not publicly-traded. The fair value of these securities and potentially other investments that have limited liquidity or are not publicly-traded may not be readily determinable. We estimate the fair value of these investments on a quarterly basis.
The fair value of these securities and potentially other investments that have limited liquidity or are not publicly-traded may not be readily determinable. We estimate the fair value of these investments on a quarterly basis.
In the event a borrower declares bankruptcy, we may not have full recourse to the assets of the borrower or the assets of the borrower may not be sufficient to satisfy the first mortgage loan and our subordinate debt investment.
In the event a borrower declares bankruptcy, we may not be able to fully realize on the assets of the borrower, or the assets of the borrower may not be sufficient to fully satisfy both the first mortgage loan and our subordinate debt investment.
Our general financing strategy will include the use of “match-funded” structures. This means that we will seek to align the maturities of our liabilities with the maturities on our assets in order to manage the risks of being forced to refinance our liabilities prior to the maturities of our assets.
This means that we will seek to align the maturities of our liabilities with the maturities on our assets in order to manage the risks of being forced to refinance our liabilities prior to the maturities of our assets.
Our determination of provision for credit losses requires us to make certain estimates and judgments.
Our determination of provision for credit losses requires us to make certain estimates and judgments, which may be difficult to determine.
The inability to consummate securitizations of our portfolio investments to finance our investments on a long‑term basis could require us to seek other forms of potentially less attractive financing or to liquidate assets at an inopportune time or price, which could adversely affect our performance and our ability to continue to grow our business. 13 Table of Contents The securitization market is subject to a regulatory environment that may affect certain aspects of these activities.
The inability to consummate securitizations of our portfolio investments to finance our investments on a long‑term basis could require us to seek other forms of potentially less attractive financing or to liquidate assets at an inopportune time or price, which could adversely affect our performance and our ability to continue to grow our business.
If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of FBRT’s investments in the future, the value and liquidity of our investments could significantly decline, which would adversely affect the value of our investment portfolio and could result in losses upon disposition or the failure of borrowers to satisfy their debt service obligations to us.
If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of FBRT’s investments in the future, the value and liquidity of those investments could significantly decline, which would adversely affect the value of our investment portfolio.
Our access to sources of financing will depend upon a number of factors, over which we have little or no control, including: • general economic or market conditions; • the market’s view of the quality of our assets; • the market’s perception of our growth potential; • our current and potential future earnings and cash distributions; and • the market price of the shares of our common stock and preferred stock. 6 Table of Contents We may need to periodically access the capital markets to, among other things, raise cash to fund new loans and investments.
Our access to sources of financing will depend upon a number of factors, over which we have little or no control, including: • general economic or market conditions; • the market’s view of the quality of our assets; • the market’s perception of our growth potential; • our current and potential future earnings and cash distributions; and • the market price of the shares of our common stock and preferred stock.
In this manner, real estate values could impact the values of our debt and security investments. Therefore, our commercial real estate debt and securities investments are subject to the risks typically associated with real estate.
In this manner, reduced real estate values could impact the values of our debt and security investments, making them subject to the risks typically associated with real estate ownership.
Increases in these rates will tend to decrease our net income and the market value of our assets. Interest rate fluctuations resulting in our interest expense exceeding the income from our assets would result in operating losses for us and may limit our ability to make distributions to our stockholders.
Interest rate fluctuations resulting in our interest expense exceeding the income from our assets would result in operating losses for us and may limit our ability to make distributions to our stockholders.
Risks Related to Conflicts of Interest The Advisor faces conflicts of interest relating to purchasing commercial real estate-related investments, and such conflicts may not be resolved in our favor, which could adversely affect our investment opportunities.
Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. Risks Related to Conflicts of Interest The Advisor faces conflicts of interest relating to purchasing commercial real estate-related investments, and such conflicts may not be resolved in our favor, which could adversely affect our investment opportunities.
We may enter into interest rate swap agreements or pursue other interest rate hedging strategies. Our hedging activity will vary in scope based on interest rate levels, the type of investments held, and other changing market conditions.
Our hedging activity will vary in scope based on interest rate levels, the type of investments held, and other changing market conditions.
These types of investments could constitute a significant portion of our portfolio and may involve a higher degree of risk than the type of assets that will constitute the majority of our commercial real estate debt investments, namely first mortgage loans secured by real property.
We acquire and originate subordinate commercial real estate debt, including subordinate mortgage and mezzanine loans and participations in such loans. These types of investments may involve a higher degree of risk than the type of assets that will constitute the majority of our commercial real estate debt investments, namely first mortgage loans secured by real property.
As reliance on technology in our industry has increased, so have the risks posed to the systems of our Advisor and other parties that provide us with services essential to our operations, both internal and outsourced.
Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. As reliance on technology in our industry has increased, so have the risks posed to the systems of our Advisor and other parties that provide us with services essential to our operations, both internal and outsourced.
As a result of the dislocation of the credit markets in prior years, the securitization industry has become subject to additional regulation. In particular, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, various federal agencies have promulgated a rule that generally requires issuers in securitizations to retain 5% of the risk associated with the securities.
In particular, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, various federal agencies have promulgated a rule that generally requires issuers in securitizations to retain 5% of the risk associated with the securities.
Unless we qualified for relief under certain Internal Revenue Code cure provisions, such failures could cause us to fail to continue to qualify as a REIT. Risks Related to an Investment in Franklin BSP Realty Trust, Inc.
Unless we qualified for relief under certain Internal Revenue Code cure provisions, such failures could cause us to fail to continue to qualify as a REIT. Risks Related to an Investment in Franklin BSP Realty Trust, Inc. Public health crises have, and may in the future, adversely impact our business and the business of many of our borrowers.
The value of CMBS and CRE CLO Bonds may change due to shifts in the market’s perception of issuers and regulatory or tax changes adversely affecting the mortgage securities market as a whole. Due to our investment in subordinate CMBS, we are also subject to several risks created through the securitization process.
In addition, the value of CMBS and CRE CLO Bonds may change due to shifts in the market’s perception of issuers and regulatory or tax changes adversely affecting the mortgage securities market as a whole.
To the extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed income. • We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. • If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we must pay a tax on that income at the highest corporate income tax rate. • If we sell an asset, other than a foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax.
These requirements could cause us to distribute amounts that otherwise would be spent on investments in real estate assets, and it is possible that we might be required to borrow funds or sell assets to fund these distributions. • We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of (i) 85% of our ordinary income, (ii) 95% of our capital gain net income and (iii) 100% of our undistributed income from prior years. • If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we must pay a tax on that income at the highest corporate income tax rate. • If we sell an asset, other than a foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax.
Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. Most of our investments are illiquid and we may not be able to vary our portfolio in response to changes in economic and other conditions, which may result in losses to us. Most of our investments are illiquid.
Most of our investments are illiquid and we may not be able to vary our portfolio in response to changes in economic and other conditions, which may result in losses to us. Most of our investments are illiquid.
Our success depends on the availability of attractive investment opportunities and the Advisor’s ability to identify, structure, consummate, leverage, manage and realize returns on our investments. Our operating results are dependent upon the availability of, as well as the Advisor’s ability to identify, structure, consummate, leverage, manage and realize returns on, our loans and other investments.
Our operating results are dependent upon our ability to identify, structure, consummate, leverage, manage and realize attractive returns on, new loans and other investments.
Unfavorable economic conditions or capital market conditions may increase our funding costs, limit our access to the capital markets or could result in a decision by our potential lenders not to extend credit.
We may need to periodically access the capital markets to, among other things, raise cash to fund new loans and investments. Unfavorable economic conditions or capital market conditions may increase our funding costs, limit our access to the capital markets or result in a decision by our potential lenders not to extend credit.
The REIT provisions of the Internal Revenue Code may limit our ability to hedge our assets and operations.
Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities. The REIT provisions of the Internal Revenue Code may limit our ability to effectively hedge our assets and operations.
We may not control the special servicing of the mortgage loans underlying the CMBS and CRE CLO Bonds in which we invest and, in such cases, the special servicer may take actions that could adversely affect our interests.
We may not control the special servicing of the mortgage loans underlying the CMBS and CRE CLO Bonds in which we invest and, in such cases, the special servicer may take actions that could adversely affect our interests. 9 Table of Contents Overall control over the special servicing of the underlying mortgage loans of the CMBS and CRE CLO Bonds may be held by a directing certificate holder, which is appointed by the holders of the most subordinate class of such CMBS and CRE CLO Bonds.
We cannot assure you that the Advisor will be successful in identifying and consummating attractive investments or that such investments, once made, will perform as anticipated.
We cannot assure you that we will be successful in identifying and consummating attractive investments or that such investments, once made, will perform as anticipated. Delays in liquidating defaulted commercial real estate debt investments could reduce our investment returns.
Declines in fair value may ultimately reduce income or result in losses to us, which may negatively affect cash available for distribution. Hedging against interest rate exposure may adversely affect our income, limit our gains or result in losses, which could adversely affect cash available for distribution to our stockholders.
Hedging against interest rate exposure may adversely affect our income, limit our gains or result in losses, which could adversely affect cash available for distribution to our stockholders. We enter into interest rate swap agreements and pursue other interest rate hedging strategies.
These actions directly and indirectly adversely effected the financing markets as well and resulted in margin calls from our lenders, which we satisfied. 19 Table of Contents The extent to which the COVID-19 pandemic and similar health crises impact our or our borrowers’ operations will depend on future developments which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the events, treatment developments and government responses to the events.
The extent to which pandemics and similar health crises impact our or our borrowers’ operations will depend on future developments which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the events, treatment developments and government responses to the events.
If we are unable to obtain additional financing, our credit ratings could be further adversely affected, which could further raise our borrowing costs and further limit our future access to capital and our ability to satisfy our obligations under our indebtedness. 5 Table of Contents Our business strategy depends on us being able to earn returns on loans we make in excess of the interest we pay on our borrowings.
If we are unable to obtain additional financing, our credit ratings could be further adversely affected, which could further raise our borrowing costs and further limit our future access to capital and our ability to satisfy our obligations under our indebtedness.
If our due diligence fails to identify material issues, we may have to write-down or write-off assets, restructure our investment or incur impairment or other charges that could result in our reporting losses. Charges of this nature could contribute to negative market perceptions about us or our shares of common stock. Refer to "Part I, Item 3.
If our due diligence fails to identify material issues, we have in the past and may in the future have to write-down or write-off assets, restructure our investment or incur impairment or other charges that could result in our reporting losses.
We believe that we have qualified as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2013. We intend to continue to meet the requirements for qualification and taxation as a REIT, but we cannot assure stockholders that we qualify as a REIT.
Risks Related to Taxation Our failure to qualify as a REIT could have significant adverse consequences to us and the value of our common stock. We believe that we have qualified as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2013.
In the current environment, in order to maximize value we may be more likely to extend and work out a loan, rather than pursue foreclosure.
We may be unable to restructure loans in a manner that we believe maximizes value, particularly if we are one of multiple creditors in large capital structures. In the current environment, in order to maximize value we may be more likely to extend and work out a loan, rather than pursue foreclosure.
These considerations could make it difficult for us to dispose of any of our assets even if a disposition were in the best interests of our stockholders.
These considerations could make it difficult for us to dispose of any of our assets even if a disposition were in the best interests of our stockholders. As a result, our ability to vary our portfolio in response to further changes in economic and other conditions may be relatively limited, which may result in losses to us.
An inability to successfully access the capital markets could limit our ability to grow our business and fully execute our business strategy and could decrease our earnings and liquidity.
An inability to successfully access the capital markets could limit our ability to grow our business and fully execute our business strategy and could decrease our earnings and liquidity. Additional equity issuances in the capital markets on unfavorable terms could also be dilutive to our 6 Table of Contents existing stockholders.
It may be possible to reduce the impact of the prohibited transaction tax by conducting certain activities through a TRS.
It may be possible to reduce the impact of the prohibited transaction tax by conducting certain activities through a TRS. However, to the extent that we engage in such activities through a TRS, the income associated with such activities may be subject to U.S. federal corporate income tax.
Climate change may exacerbate the frequency and severity of these types of events. We may not require borrowers to obtain certain types of insurance if it is deemed commercially unreasonable.
Climate change may exacerbate the frequency and severity of these types of events. We may not require borrowers to obtain certain types of insurance if it is deemed commercially unreasonable. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might result in insurance proceeds being inadequate to replace a property if it is damaged or destroyed.
Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only a limited number of judicial and administrative interpretations exist. Moreover, new tax legislation, administrative guidance or court decisions, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT.
Moreover, new tax legislation, administrative guidance or court decisions, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT. Even an inadvertent or technical mistake could jeopardize our REIT status.
We could determine that we need to fund more money than we originally anticipated in order to maximize the value of our investment even though there is no assurance additional funding would be the best course of action. 12 Table of Contents While we attempt to align the maturities of our liabilities with the maturities on our assets, we may not be successful in that regard which could harm our operating results and financial condition.
We could determine that we need to fund more money than we originally anticipated in order to maximize the value of our investment even though there is no assurance that such determination would, in fact, be the best course of action.
If this occurs, we might be required to borrow or liquidate some investments in order to pay the applicable tax. We would not be able to elect to be taxed as a REIT for four years following the year we first failed to qualify unless the IRS were to grant us relief under certain statutory provisions.
We would not be able to elect to be taxed as a REIT for four years following the year we first failed to qualify unless the IRS were to grant us relief under certain statutory provisions. The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to qualify as a REIT.
When providing financing, a lender may impose restrictions on us that affect our distribution and operating policies, and our ability to incur additional borrowings. Financing agreements that we may enter into may contain covenants that limit our ability to further incur borrowings, restrict distributions or that prohibit us from discontinuing insurance coverage or replacing our Advisor.
Financing agreements that we enter into often contain covenants that limit our ability to further incur borrowings, restrict distributions or restrict our operations, such as prohibiting us from discontinuing insurance coverage or replacing our Advisor. These limitations decrease our operating flexibility and may impact our ability to achieve our operating objectives, including making distributions.

… 80 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeSummary of Significant Accounting Policies" to our consolidated financial statements included in this Annual Report on Form 10-K for additional disclosures on the classification of these assets and "Note 5. Real Estate Owned" for a summary of the Company's real estate owned, held for investment assets as of December 31, 2022 .
Biggest changeSummary of Significant Accounting Policies" to our consolidated financial statements included in this Annual Report on Form 10-K for additional disclosures on the classification of these assets and "Note 5. Real Estate Owned" for a summary of the Company's real estate owned, held for investment assets as of December 31, 2023 . 21

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+1 added−11 removed0 unchanged
Biggest changeItem 3. Legal Proceedings. For a description of the Company’s legal proceedings, see “Note 10. Commitments and Contingencies” to our consolidated financial statements included in this Annual Report on Form 10-K. In addition, the Company is party to the legal proceedings set forth below.
Biggest changeItem 3. Legal Proceedings. Please refer to “Litigation and Regulatory Matters” in “Note 10 - Commitments and Contingencies” to the consolidated financial statements included in this report. The Company believes that these proceedings, individually or in the aggregate, will not have a material impact on the Company’s financial condition, operating results or cash flows.
The collectability, if any, of amounts of legal judgments we have achieved to date and that we may achieve in the future is not currently determinable.
The Company is marketing the Collateral Properties for sale and is actively pursuing its civil remedies. Note that the collectability, if any, of legal judgments we have achieved to date and that we may achieve in the future is not currently determinable. Item 4. Mine Safety Disclosures. Not applicable. 22 Table of Contents PART II
The original principal balance of the Company’s loan is $113.2 million. The loan is secured by a portfolio of twenty-four properties that are net leased to Walgreens (the “Collateral Properties”).
Loan Fraud Lawsuit The Company originated a loan in April 2022 secured by a portfolio of 24 properties net leased to Walgreens (the “Collateral Properties”).
Removed
Loan Fraud Lawsuit On July 26, 2022, the Company (through a subsidiary) filed a lawsuit in the District Court of Dallas County, Texas, against, among others, the borrower, the individual sponsor of the borrower, and the guarantors under a first priority mortgage loan that the Company, along with a separate fund affiliated with the Company's external manager, originated in April 2022.
Added
As described in more detail in Part I, Item 3, "Legal Proceedings" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, due to the sponsor’s fraud and default under the loan the Company foreclosed on all of the Collateral Properties in 2022 and 2023.
Removed
As described in more detail in the complaint filed in Dallas County, in July 2022, the Company determined that the borrower had provided the Company with numerous falsified and forged documents in connection with the underwriting of the loan.
Removed
Such documentation significantly and fraudulently inflated the purported value of the Collateral Properties by misrepresenting the rent rates and maturity dates of the Walgreens leases at the Collateral Properties, among other things.
Removed
On July 27, 2022, the court issued a temporary restraining order freezing the assets of the borrower, the borrower’s sponsor and his parents, and any proceeds from our loan, pending the next scheduled legal proceeding in August 2022. The Company also reported the fraud to criminal authorities and is assisting such authorities with their consideration of the matter.
Removed
On October 10, 2022, the District Court of Dallas County entered a judgment in favor of the Company and its affiliated fund against the Borrower, the sponsor and certain of his family members, and certain related companies involved in the fraud, in the amount of $158.6 million, with $1.0 million of additional exemplary damages against the Borrower and $3 million of additional exemplary damages against the sponsor.
Removed
In addition, the Company has commenced foreclosure proceedings against its collateral properties. As of the date of this filing, the Company has taken title to fourteen collateral properties in Alabama, Tennessee, Mississippi, Nebraska, North Carolina, Missouri and Maryland.
Removed
The Company has also commenced and intends to continue to pursue all available legal remedies as set forth in the complaint against any party determined to have been involved in, or that improperly benefited from, the scheme.
Removed
Williamsburg Hotel Bankruptcy Case The Chapter 11 bankruptcy case of 96 Wythe Acquisition LLC, the entity that owns The Williamsburg Hotel in Brooklyn, New York, remains pending in the United States Bankruptcy Court for the Southern District of New York.
Removed
On March 28, 2022, the Company (through a subsidiary) filed a motion to replace management with a Chapter 11 Trustee based on, among other things, fraud and mismanagement of the bankruptcy estate. On May 27, 2022, after a trial, the Bankruptcy Court granted the Company’s motion and installed a Chapter 11 trustee.
Removed
On January 26, 2023, the Bankruptcy Court entered an order approving the sale of the hotel for $96 million; provided that an expected net distribution to the Company’s subordinate participant, the payment of certain transaction and administrative expenses, and external events outside the Company’s control including timing of closing of the sale, currently expected in 2023, would reduce the Company’s recovery.
Removed
Item 4. Mine Safety Disclosures. Not applicable. 21 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+2 added−2 removed7 unchanged
Biggest changeThe following table sets forth purchases of the Company's common stock under the Company's share repurchase program for the year ended December 31, 2022: Total number of shares purchased Average price paid per share (1) Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under the plans or programs (2) October 1, 2022 - October 31, 2022 485,316 11.42 485,316 $ 48,421,138 November 1, 2022 - November 30, 2022 — — — — December 1, 2022 - December 31, 2022 — — — — Total 485,316 $ 11.42 485,316 $ 48,421,138 _______________________ (1) The average price paid per share represents the average of the gross purchase price per share, inclusive of any broker’s fees or commissions.
Biggest changeRepurchases under the share repurchase program may be suspended from time to time at the Company’s discretion without prior notice. 24 Table of Contents The following table sets forth purchases of the Company's common stock under the share repurchase program for the three months ended December 31, 2023 (in thousands, except share and per share amounts): Total number of shares purchased Average price paid per share (1) Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under the plans or programs (2) October 1, 2023 - October 31, 2023 251,397 $ 12.46 251,397 36,128 November 1, 2023 - November 30, 2023 16,571 12.69 16,571 35,917 December 1, 2023 - December 31, 2023 — — — 35,917 Total 267,968 $ 12.47 267,968 $ 35,917 _______________________ (1) The average price paid per share represents the average purchase price per share, inclusive of any broker’s fees or commissions.
The following graph is a comparison of the cumulative total stockholder return on shares of our common stock, the Standard & Poor's 1500 (the "S&P 1500"), and the Bloomberg REIT Mortgage Index (the "Bloomberg Mortgage Index"), a published industry index, from October 19, 2021 to December 31, 2022.
The following graph is a comparison of the cumulative total stockholder return on shares of our common stock, the Standard & Poor's 1500 (the "S&P 1500"), and the FTSE NAREIT Mortgage REITS Index (the "FTSE Mortgage REIT Index"), a published industry index, from October 19, 2021 to December 31, 2023.
Holders As of February 15, 2023, we had 4,029 registered holders of our common stock. The 4,029 holders of record include Cede & Co., which holds shares as nominee for The Depository Trust Company, which itself holds shares on behalf of the beneficial owners of our common stock. Such information was obtained through our registrar and transfer agent.
Holders As of February 7, 2024, we had 3,104 registered holders of our common stock. The 3,104 holders of record include Cede & Co., which holds shares as nominee for The Depository Trust Company, which itself holds shares on behalf of the beneficial owners of our common stock. Such information was obtained through our registrar and transfer agent.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the New York Stock Exchange ("NYSE"), under the symbol "FBRT." On February 15, 2023, the last sales price for our common stock on the NYSE was $14.64 per share.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the New York Stock Exchange ("NYSE"), under the symbol "FBRT." On February 7, 2024, the last sales price for our common stock on the NYSE was $12.26 per share.
The Company's share repurchase program does not obligate the Company to acquire any particular amount of common stock. The Company’s share repurchase program will remain open until at least December 31, 2023 or until the capital committed to the applicable repurchase program has been exhausted, whichever is sooner.
The Company's share repurchase program does not obligate the Company to acquire any particular amount of common stock. The Company’s share repurchase program has been extended until at least December 31, 2024, or until the capital committed to the repurchase program has been exhausted, whichever is sooner.
The graph assumes that $100 was invested on October 19, 2021 in our common stock, the S&P 1500 and the Bloomberg Mortgage Index and that all dividends were reinvested without the payment of any commissions.
The graph assumes that $100 was invested on October 19, 2021 in our common stock, the S&P 1500 and the FTSE Mortgage REIT Index and that all dividends were reinvested without the payment of any commissions. The graph also includes a comparison against the Bloomberg Mortgage Index for reference.
The information required by Item 5 with respect to securities authorized for issuance under equity compensation plans is incorporated herein by reference to Part III, Item 12 of this Form 10-K. Item 6. [Reserved] 23 Table of Contents
As of February 7, 2024, $35.2 million remains available under the Company’s share repurchase program. The information required by Item 5 with respect to securities authorized for issuance under equity compensation plans is incorporated herein by reference to Part III, Item 12 of this Form 10-K. Item 6. [Reserved] 25 Table of Contents
The Company’s share repurchase program authorizes share repurchases at prices below the most recently reported book value per share as determined in accordance with GAAP. Purchases made under the Company’s program may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, as permitted by securities laws and other legal requirements.
Purchases made under the Company’s program may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, as permitted by securities laws and other legal requirements.
There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below. 22 Table of Contents Period Ending Index 10/19/2021 12/31/2021 12/31/2022 FBRT $ 100.00 $ 89.91 $ 85.93 Bloomberg Mortgage Index $ 100.00 $ 94.80 $ 71.69 S&P 1500 $ 100.00 $ 105.52 $ 85.11 Purchases of Equity Securities by the Issuer and Affiliated Purchasers In connection with our merger with Capstead, our Advisor committed to a $35 million open market share purchase program.
There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below. 23 Table of Contents Period Ending Index 10/19/2021 12/31/2021 12/31/2022 12/31/2023 FBRT $ 100.00 $ 89.91 $ 85.93 $ 100.10 FTSE Mortgage REIT Index $ 100.00 $ 94.70 $ 69.74 $ 80.34 S&P 1500 $ 100.00 $ 105.52 $ 85.11 $ 108.79 Bloomberg Mortgage Index $ 100.00 $ 94.80 $ 71.69 $ 82.07 Purchases of Equity Securities by the Issuer and Affiliated Purchasers The Company’s board of directors has authorized a $65 million share repurchase program that permits share repurchases at prices below the most recently reported book value per share as determined in accordance with GAAP.
(2) All of the purchases listed in the table above were made in the open market under the Company's share purchase program announced on July 26, 2021, including under a Rule 10b5-1 plan adopted by the Company. As of March 1, 2023, $48.4 million remains available under the Company’s share repurchase program.
(2) All of the purchases listed in the table above were made in the open market under the Company's share purchase program announced on July 26, 2021, including under a Rule 10b5-1 plan adopted by the Company. Subsequent to December 31, 2023, the Company repurchased 56,323 shares of common stock at a weighted average cost of $12.52 per share.
Removed
As of July 8, 2022, the Advisor had purchased its entire $35 million commitment under the program. In addition, the Company’s board of directors authorized a $65 million share repurchase program that became operative following the conclusion of the Advisor's purchase program.
Added
In prior years, the Company compared its stockholder return to the Bloomberg REIT Mortgage Index (the "Bloomberg Mortgage Index"), a published industry index , but has decided to discontinue the use of the Bloomberg Mortgage Index as a comparison tool as Bloomberg has announced that the Bloomberg Mortgage Index should no longer be used for financial benchmarking purposes.
Removed
Repurchases under the Company’s share repurchase program may be suspended from time to time at the Company’s discretion without prior notice.
Added
The FTSE Mortgage REIT Index is comprised of companies that are similar to us in size with large market capitalizations and is historically comparable to the Bloomberg Mortgage Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

105 edited+69 added−71 removed37 unchanged
Biggest changeThe reduction in the value of this portfolio during the twelve months ended December 31, 2022, is due in part to (i) $480.2 million of principal paydowns, (ii) $3.8 billion of sales and (iii) $119.2 million of trading losses related to principal paydowns, changes in market values, and sales of these securities. 34 Table of Contents The following charts summarize our commercial mortgage loans, held for investment, by coupon rate type, collateral type and geographical region as of December 31, 2022 and 2021: 35 Table of Contents 36 Table of Contents (1) Regions included: New England, Plains, Rocky Mountain An investments region classification is defined according to the below map based on the location of investments secured property. 37 Table of Contents The following charts show the par value by contractual maturity year for the investments in our portfolio as of December 31, 2022 and 2021: 38 Table of Contents The following table shows selected data from our commercial mortgage loans, held for investment in our portfolio as of December 31, 2022 (dollars in thousands): Loan Type Property Type Par Value Interest Rate (1) Effective Yield (5) Loan to Value (2) Senior Debt 1 Hospitality $4,822 1 month LIBOR + 4.00% 8.39% 77.0% Senior Debt 2 Hospitality 57,075 1 month LIBOR + 5.19% 9.58% 51.8% Senior Debt 3 Multifamily 34,668 1 month SOFR + 3.03% 7.39% 63.7% Senior Debt 4 Multifamily 34,731 1 month LIBOR + 3.00% 7.39% 83.6% Senior Debt 5 Hospitality 22,116 1 month LIBOR + 3.50% 7.89% 68.8% Senior Debt 6 Office 18,683 1 month SOFR + 4.75% 9.11% 70.0% Senior Debt 7 Office 7,035 1 month LIBOR + 3.90% 8.29% 67.6% Senior Debt 8 Office 43,886 1 month SOFR + 3.56% 7.92% 71.0% Senior Debt 9 Hospitality 9,531 1 month SOFR + 5.57% 9.93% 68.7% Senior Debt 10 Hospitality 19,352 1 month SOFR + 3.84% 8.20% 62.6% Senior Debt 11 Hospitality 12,980 1 month SOFR + 3.02% 7.38% 56.4% Senior Debt 12 Hospitality 4,988 1 month LIBOR + 4.25% 8.64% 47.7% Senior Debt 13 Hospitality 31,597 1 month SOFR + 5.25% 9.61% 31.0% Senior Debt 14 Office 15,188 1 month SOFR + 4.00% 8.36% 70.9% Senior Debt 15 Office 25,802 1 month LIBOR + 4.35% 8.74% 64.9% Senior Debt 16 Office 63,811 1 month LIBOR + 3.70% 8.09% 65.7% Senior Debt 17 Multifamily 10,807 1 month SOFR + 4.25% 8.61% 72.4% Senior Debt 18 Office 36,362 1 month LIBOR + 2.70% 7.09% 71.4% Senior Debt 19 Manufactured Housing 1,331 5.50% 5.50% 62.8% Senior Debt 20 Manufactured Housing 7,680 1 month LIBOR + 4.50% 8.89% 66.7% Senior Debt 21 Self Storage 29,895 1 month LIBOR + 5.00% 9.39% 58.8% Senior Debt 22 Multifamily 14,550 1 month SOFR + 4.83% 9.19% 70.0% Senior Debt 23 Manufactured Housing 5,020 1 month LIBOR + 5.25% 9.64% 65.9% Senior Debt 24 Office 18,203 1 month LIBOR + 4.50% 8.89% 47.9% Senior Debt 25 Office 65,519 5.15% 5.15% 52.5% Senior Debt 26 Office 35,000 1 month LIBOR + 5.21% 9.60% 66.0% Senior Debt 27 Office 12,750 1 month LIBOR + 5.00% 9.39% 67.8% Senior Debt 28 Multifamily 38,927 1 month LIBOR + 4.45% 8.84% 66.5% Senior Debt 29 Industrial 14,985 1 month LIBOR + 4.50% 8.89% 66.3% Senior Debt 30 Multifamily 12,280 1 month LIBOR + 4.55% 8.94% 73.0% Senior Debt 31 Multifamily 21,000 1 month LIBOR + 4.60% 8.99% 66.7% Senior Debt 32 Office 12,971 1 month LIBOR + 5.00% 9.39% 63.9% Senior Debt 33 Office 43,751 1 month LIBOR + 3.94% 8.34% 53.9% Senior Debt 34 (2) Multifamily 12,892 1 month LIBOR + 7.25% 11.64% —% Senior Debt 35 Multifamily 5,400 1 month LIBOR + 5.25% 9.64% 83.1% Senior Debt 36 Hospitality 23,000 1 month LIBOR + 5.79% 10.18% 57.2% Senior Debt 37 Multifamily 34,750 1 month LIBOR + 6.75% 11.14% 78.2% Senior Debt 38 Multifamily 12,325 1 month LIBOR + 4.50% 8.89% 83.3% Senior Debt 39 Multifamily 5,575 1 month LIBOR + 4.50% 8.89% 83.6% Senior Debt 40 Multifamily 55,000 1 month LIBOR + 3.00% 7.39% 71.6% Senior Debt 41 Multifamily 14,465 1 month LIBOR + 3.39% 7.78% 70.6% Senior Debt 42 Multifamily 8,676 1 month LIBOR + 3.80% 8.19% 69.9% Senior Debt 43 Multifamily 13,582 1 month LIBOR + 4.50% 8.89% 76.7% Senior Debt 44 Multifamily 18,653 1 month LIBOR + 6.25% 10.64% 67.0% Senior Debt 45 Multifamily 19,536 1 month LIBOR + 3.60% 7.99% 70.8% Senior Debt 46 Multifamily 43,096 1 month LIBOR + 2.95% 7.34% 71.6% 39 Table of Contents Loan Type Property Type Par Value Interest Rate (1) Effective Yield (5) Loan to Value (2) Senior Debt 47 Hospitality 25,785 1 month LIBOR + 5.60% 9.99% 61.0% Senior Debt 48 Mixed Use 32,500 1 month LIBOR + 3.70% 8.09% 69.7% Senior Debt 49 Multifamily 75,591 1 month LIBOR + 2.95% 7.34% 72.6% Senior Debt 50 Multifamily 20,960 1 month LIBOR + 3.35% 7.74% 67.7% Senior Debt 51 Multifamily 30,231 1 month LIBOR + 2.95% 7.34% 70.4% Senior Debt 52 Multifamily 35,466 1 month LIBOR + 2.95% 7.34% 71.7% Senior Debt 53 Multifamily 33,588 1 month LIBOR + 2.95% 7.34% 72.2% Senior Debt 54 Hospitality 25,771 1 month LIBOR + 9.00% 13.39% 74.2% Senior Debt 55 Self Storage 15,000 1 month LIBOR + 4.26% 8.65% 74.6% Senior Debt 56 Multifamily 25,198 1 month LIBOR + 3.25% 7.64% 70.8% Senior Debt 57 Office 6,742 1 month LIBOR + 5.25% 9.64% 67.3% Senior Debt 58 (2) Multifamily 111,226 1 month LIBOR + 6.50% 10.89% —% Senior Debt 59 Multifamily 11,069 1 month LIBOR + 3.15% 7.54% 75.6% Senior Debt 60 Hospitality 19,640 1 month LIBOR + 5.35% 9.74% 56.8% Senior Debt 61 Hospitality 33,000 1 month LIBOR + 6.25% 10.64% 59.2% Senior Debt 62 (2) Multifamily 27,202 1 month LIBOR + 8.00% 12.39% —% Senior Debt 63 Multifamily 15,874 1 month LIBOR + 3.75% 8.14% 76.9% Senior Debt 64 Multifamily 30,420 1 month LIBOR + 3.00% 7.39% 73.5% Senior Debt 65 Multifamily 40,046 1 month LIBOR + 3.15% 7.54% 71.0% Senior Debt 66 Multifamily 42,850 1 month LIBOR + 3.40% 7.79% 79.9% Senior Debt 67 Multifamily 36,760 1 month LIBOR + 3.64% 8.03% 66.0% Senior Debt 68 Multifamily 8,500 1 month LIBOR + 3.75% 8.14% 79.4% Senior Debt 69 Multifamily 14,200 1 month LIBOR + 3.15% 7.54% 79.8% Senior Debt 70 Multifamily 13,667 1 month LIBOR + 3.75% 8.14% 64.2% Senior Debt 71 Multifamily 67,138 1 month LIBOR + 3.25% 7.64% 77.1% Senior Debt 72 Multifamily 10,268 1 month LIBOR + 3.75% 8.14% 70.0% Senior Debt 73 Hospitality 32,527 1 month SOFR + 6.73% 11.09% 55.8% Senior Debt 74 Multifamily 26,698 1 month LIBOR + 3.20% 7.59% 77.3% Senior Debt 75 Hospitality 17,122 1 month LIBOR + 5.25% 9.64% 61.0% Senior Debt 76 Hospitality 16,500 1 month LIBOR + 7.10% 11.49% 73.0% Senior Debt 77 Multifamily 88,500 1 month LIBOR + 2.75% 7.14% 50.3% Senior Debt 78 Multifamily 56,150 1 month LIBOR + 3.10% 7.49% 78.9% Senior Debt 79 Multifamily 37,882 1 month LIBOR + 2.90% 7.29% 72.2% Senior Debt 80 Multifamily 54,151 1 month LIBOR + 3.10% 7.49% 67.2% Senior Debt 81 Multifamily 37,886 1 month LIBOR + 2.90% 7.29% 72.0% Senior Debt 82 Multifamily 65,741 1 month LIBOR + 2.85% 7.24% 70.6% Senior Debt 83 Multifamily 30,600 1 month LIBOR + 2.65% 7.04% 59.1% Senior Debt 84 Multifamily 31,662 1 month LIBOR + 3.25% 7.64% 80.0% Senior Debt 85 Multifamily 62,850 1 month LIBOR + 3.35% 7.74% 78.0% Senior Debt 86 Multifamily 43,745 1 month LIBOR + 3.00% 7.39% 74.8% Senior Debt 87 Multifamily 46,221 1 month LIBOR + 2.75% 7.14% 68.1% Senior Debt 88 Multifamily 86,000 1 month SOFR + 3.24% 7.59% 60.0% Senior Debt 89 Multifamily 29,821 1 month LIBOR + 2.90% 7.29% 74.2% Senior Debt 90 Manufactured Housing 6,700 1 month LIBOR + 4.50% 8.89% 77.9% Senior Debt 91 Multifamily 58,680 1 month LIBOR + 3.45% 7.84% 74.8% Senior Debt 92 Multifamily 26,966 1 month LIBOR + 2.90% 7.29% 72.1% Senior Debt 93 Multifamily 13,535 1 month LIBOR + 3.20% 7.59% 62.4% Senior Debt 94 Multifamily 37,133 1 month LIBOR + 3.00% 7.39% 73.3% 40 Table of Contents Loan Type Property Type Par Value Interest Rate (1) Effective Yield (5) Loan to Value (2) Senior Debt 95 Multifamily 33,581 1 month LIBOR + 3.20% 7.59% 74.5% Senior Debt 96 Multifamily 40,231 1 month LIBOR + 2.90% 7.29% 71.7% Senior Debt 97 Multifamily 66,202 1 month LIBOR + 2.88% 7.27% 74.8% Senior Debt 98 Multifamily 63,722 1 month LIBOR + 2.88% 7.27% 75.5% Senior Debt 99 Multifamily 16,909 1 month SOFR + 3.50% 7.86% 71.7% Senior Debt 100 Multifamily 57,660 1 month LIBOR + 2.75% 7.14% 73.9% Senior Debt 101 Multifamily 65,953 1 month SOFR + 6.03% 10.39% 74.7% Senior Debt 102 Multifamily 22,240 1 month SOFR + 2.96% 7.32% 79.4% Senior Debt 103 Multifamily 25,746 1 month SOFR + 2.96% 7.32% 72.9% Senior Debt 104 Multifamily 31,678 1 month SOFR + 3.20% 7.56% 74.2% Senior Debt 105 Multifamily 78,050 1 month SOFR + 3.45% 7.81% 78.8% Senior Debt 106 Multifamily 80,714 1 month SOFR + 3.21% 7.57% 76.1% Senior Debt 107 Multifamily 24,000 1 month SOFR + 3.10% 7.46% 72.7% Senior Debt 108 Retail 31,000 1 month SOFR + 3.29% 7.65% 42.5% Senior Debt 109 Multifamily 37,793 1 month SOFR + 3.55% 7.91% 66.2% Senior Debt 110 Multifamily 22,965 1 month SOFR + 2.95% 7.31% 65.6% Senior Debt 111 Multifamily 10,669 1 month SOFR + 3.30% 7.66% 75.7% Senior Debt 112 Multifamily 47,444 1 month SOFR + 2.86% 7.22% 68.2% Senior Debt 113 Multifamily 36,824 1 month SOFR + 2.86% 7.22% 69.7% Senior Debt 114 Hospitality 10,493 1 month SOFR + 5.30% 9.66% 68.2% Senior Debt 115 Retail 22,377 1 month SOFR + 4.95% 9.31% 63.3% Senior Debt 116 Multifamily 82,000 1 month SOFR + 3.20% 7.56% 74.5% Senior Debt 117 Industrial 55,000 1 month SOFR + 3.50% 7.86% 70.1% Senior Debt 118 Multifamily 39,004 1 month SOFR + 3.10% 7.46% 74.1% Senior Debt 119 Multifamily 34,823 1 month SOFR + 2.95% 7.31% 63.1% Senior Debt 120 Mixed Use 19,000 1 month SOFR + 3.42% 7.78% 65.1% Senior Debt 121 Multifamily 85,500 1 month SOFR + 3.15% 7.51% 69.6% Senior Debt 122 Multifamily 31,282 1 month SOFR + 3.30% 7.66% 76.9% Senior Debt 123 (2)(4) Hospitality — 1 month SOFR + 7.05% 11.41% —% Senior Debt 124 (2)(4) Multifamily — 1 month SOFR + 6.75% 11.11% —% Senior Debt 125 Hospitality 43,344 1 month SOFR + 4.90% 9.26% 61.1% Senior Debt 126 Hospitality 11,250 1 month SOFR + 5.22% 9.58% 57.7% Senior Debt 127 Multifamily 5,132 1 month SOFR + 7.02% 11.38% 15.9% Senior Debt 128 Multifamily 27,722 1 month SOFR + 6.05% 10.41% 62.4% Senior Debt 129 Multifamily 56,616 1 month SOFR + 3.95% 8.31% 73.2% Senior Debt 130 Multifamily 28,650 1 month SOFR + 4.00% 8.36% 70.9% Senior Debt 131 Multifamily 50,137 1 month SOFR + 6.70% 11.06% 46.5% Senior Debt 132 Multifamily 12,242 1 month SOFR + 3.55% 7.91% 67.7% Senior Debt 133 (3) Retail 63,640 1 month SOFR + 4.50% 8.86% N/A Senior Debt 134 Industrial 23,050 1 month SOFR + 4.90% 9.26% 64.6% Senior Debt 135 Multifamily 19,441 1 month SOFR + 3.50% 7.86% 64.5% Senior Debt 136 Multifamily 17,600 1 month SOFR + 4.55% 8.91% 67.2% Senior Debt 137 Multifamily 28,640 1 month SOFR + 3.65% 8.01% 71.0% Senior Debt 138 Multifamily 16,843 1 month SOFR + 3.65% 8.01% 73.9% Senior Debt 139 Multifamily 70,750 1 month SOFR + 3.80% 8.16% 77.9% Senior Debt 140 Multifamily 81,271 1 month SOFR + 3.95% 8.31% 71.8% Senior Debt 141 Multifamily 43,651 1 month SOFR + 3.95% 8.31% 75.9% Senior Debt 142 Multifamily 56,547 1 month SOFR + 3.95% 8.31% 73.7% 41 Table of Contents Loan Type Property Type Par Value Interest Rate (1) Effective Yield (5) Loan to Value (2) Senior Debt 143 Multifamily 20,325 1 month SOFR + 3.95% 8.31% 75.1% Senior Debt 144 Multifamily 128,324 1 month SOFR + 3.95% 8.31% 67.8% Senior Debt 145 Multifamily 56,000 1 month SOFR + 3.80% 8.16% 73.8% Senior Debt 146 Multifamily 11,675 1 month SOFR + 4.45% 8.81% 74.8% Senior Debt 147 Multifamily 69,200 1 month SOFR + 3.45% 7.81% 71.6% Senior Debt 148 Multifamily 173,389 1 month SOFR + 6.52% 10.88% 50.1% Senior Debt 149 Hospitality 29,644 1 month SOFR + 6.94% 11.30% 71.2% Senior Debt 150 Hospitality 13,410 1 month SOFR + 5.75% 10.11% 62.1% Senior Debt 151 Manufactured Housing 10,550 1 month SOFR + 4.75% 9.11% 53.8% Senior Debt 152 Multifamily 47,293 1 month SOFR + 4.20% 8.56% 70.1% Senior Debt 153 Multifamily 51,000 1 month SOFR + 3.75% 8.11% 64.6% Senior Debt 154 Multifamily 15,150 1 month SOFR + 4.25% 8.61% 68.1% Senior Debt 155 Hospitality 28,300 1 month SOFR + 5.25% 9.61% 54.9% Senior Debt 156 Hospitality 16,970 5.99% 5.99% 52.9% Mezzanine Loan 1 Multifamily 3,000 1 month SOFR + 9.23% 13.59% 62.2% Mezzanine Loan 2 Multifamily 10,000 1 month SOFR + 16.29% 20.65% 86.2% Mezzanine Loan 3 Retail 3,000 1 month SOFR + 12.00% 16.36% 46.6% Mezzanine Loan 4 Mixed Use 1,000 1 month SOFR + 11.00% 15.36% 68.5% Mezzanine Loan 5 Hospitality 1,350 1 month SOFR + 9.25% 13.61% 64.6% $5,288,974 8.34% 66.4% _______________________ (1) Our floating rate loan agreements contain the contractual obligation for the borrower to maintain an interest rate cap to protect against rising interest rates.
Biggest changeAs of December 31, 2023 and 2022, our commercial mortgage loans, held for investment, excluding commercial mortgage loans on non-performing status, had a weighted average coupon of 9.2% and 8.3% and a weighted average remaining life of 0.9 years and 1.4 years, respectively. 37 Table of Contents The following charts summarize our commercial mortgage loans, held for investment, by coupon rate type, collateral type geographical region and state as of December 31, 2023 and 2022: 38 Table of Contents (1) Regions included: New England, Plains, Rocky Mountain An investments region classification is defined according to the below map based on the location of investments secured property. 39 Table of Contents 40 Table of Contents The following charts show the par value by contractual maturity year for the investments in our portfolio as of December 31, 2023 and 2022: 41 Table of Contents The following table shows selected data from our commercial mortgage loans, held for investment in our portfolio as of December 31, 2023 (dollars in thousands): Loan Type Risk Rating (1) Property Type State Par Value Amortized Cost Origination Date (2) Fully Extended Maturity (3) Interest Rate (4) (5) Effective Yield (6) Loan to Value (7) Senior Debt 1 3 Hospitality Wisconsin $4,586 $4,586 11/30/2017 3/9/2024 Adj. 1M SOFR Term + 4.00% 9.47% 77.0% Senior Debt 2 3 Multifamily Ohio 35,212 35,212 4/23/2018 9/9/2025 1M SOFR Term + 4.50% 9.85% 83.6% Senior Debt 3 2 Hospitality Louisiana 21,796 21,796 6/28/2018 3/9/2025 1M SOFR Term + 4.25% 9.60% 68.8% Senior Debt 4 2 Office New Jersey 13,937 13,937 8/28/2018 9/9/2024 1M SOFR Term + 5.50% 10.85% 70.0% Senior Debt 5 2 Office Maryland 41,185 41,185 4/30/2019 5/9/2025 1M SOFR Term + 3.56% 8.91% 71.0% Senior Debt 6 4 Hospitality Texas 18,398 18,398 7/18/2019 1/9/2024 1M SOFR Term + 3.84% 9.19% 62.6% Senior Debt 7 2 Hospitality Michigan 12,900 12,900 9/17/2019 10/9/2025 1M SOFR Term + 4.41% 9.76% 56.4% Senior Debt 8 2 Hospitality New York 4,805 4,805 7/9/2019 7/9/2025 1M SOFR Term + 5.25% 10.60% 47.7% Senior Debt 9 2 Office Arizona 14,852 14,852 11/22/2019 12/9/2024 1M SOFR Term + 4.00% 9.35% 70.9% Senior Debt 10 4 Office Georgia 24,444 24,442 12/17/2019 1/9/2025 Adj. 1M SOFR Term + 4.35% 9.82% 64.9% Senior Debt 11 2 Manufactured Housing Arkansas 1,301 1,301 4/22/2020 5/9/2025 5.50% 5.50% 62.8% Senior Debt 12 3 Self Storage New York 27,440 27,440 9/3/2020 1/9/2026 Adj. 1M SOFR Term + 5.00% 10.47% 58.8% Senior Debt 13 3 Office Texas 17,103 17,103 10/6/2020 10/9/2025 Adj. 1M SOFR Term + 4.50% 9.97% 47.9% Senior Debt 14 2 Office Massachusetts 63,274 63,146 10/8/2020 10/9/2025 5.15% 5.15% 52.5% Senior Debt 15 3 Office Michigan 30,186 30,186 10/14/2020 7/9/2025 1M SOFR Term + 2.81% 8.16% 66.0% Senior Debt 16 2 Office Texas 9,175 9,175 11/6/2020 11/9/2025 Adj. 1M SOFR Term + 5.00% 10.47% 67.8% Senior Debt 17 2 Multifamily Texas 12,550 12,547 1/22/2021 2/9/2026 Adj. 1M SOFR Term + 4.55% 10.02% 73.0% Senior Debt 18 2 Multifamily Florida 21,000 21,000 12/31/2020 1/9/2025 Adj. 1M SOFR Term + 4.60% 10.07% 66.7% Senior Debt 19 2 Office California 10,855 10,855 12/31/2020 1/9/2024 1M SOFR Term + 5.56% 10.91% 63.9% Senior Debt 20 4 Office Colorado 44,913 44,892 3/1/2021 3/9/2026 Adj. 1M SOFR Term + 3.97% 9.43% 53.9% Senior Debt 21 3 Multifamily Arizona 34,476 34,457 2/2/2021 2/9/2026 1M SOFR Term + 8.00% 13.35% N/A Senior Debt 22 2 Hospitality North Carolina 23,000 22,992 2/24/2021 3/9/2024 Adj. 1M SOFR Term + 5.79% 11.26% 57.2% Senior Debt 23 2 Multifamily Texas 34,750 34,750 3/5/2021 3/9/2024 1M SOFR Term + 4.10% 9.45% 78.2% Senior Debt 24 3 Multifamily Texas 55,000 55,000 3/16/2021 5/9/2026 1M SOFR Term + 4.00% 9.35% 71.6% Senior Debt 25 2 Multifamily Texas 14,700 14,696 3/15/2021 4/9/2026 Adj. 1M SOFR Term + 3.39% 8.86% 70.6% Senior Debt 26 2 Multifamily Pennsylvania 8,898 8,893 3/23/2021 4/9/2026 Adj. 1M SOFR Term + 3.80% 9.27% 69.9% Senior Debt 27 2 Multifamily Texas 19,804 19,798 3/25/2021 4/9/2026 Adj. 1M SOFR Term + 3.60% 9.07% 70.8% Senior Debt 28 2 Multifamily Texas 43,246 43,237 4/1/2021 4/9/2026 Adj. 1M SOFR Term + 2.95% 8.42% 71.6% Senior Debt 29 2 Hospitality Louisiana 25,700 25,700 4/15/2021 5/9/2026 Adj. 1M SOFR Term + 5.60% 11.07% 61.0% Senior Debt 30 2 Mixed Use Washington 32,500 32,500 6/30/2021 1/9/2026 Adj. 1M SOFR Term + 3.70% 9.17% 69.7% Senior Debt 31 2 Multifamily Texas 75,927 75,901 3/31/2021 4/9/2026 Adj. 1M SOFR Term + 2.95% 8.42% 72.6% Senior Debt 32 3 Multifamily Texas 20,450 20,426 4/22/2021 5/9/2026 Adj. 1M SOFR Term + 3.60% 9.07% 67.7% Senior Debt 33 2 Multifamily Texas 30,320 30,310 3/31/2021 4/9/2026 Adj. 1M SOFR Term + 2.95% 8.42% 70.4% Senior Debt 34 2 Multifamily Texas 35,466 35,459 4/1/2021 4/9/2026 Adj. 1M SOFR Term + 2.95% 8.42% 71.7% 42 Table of Contents Loan Type Risk Rating (1) Property Type State Par Value Amortized Cost Origination Date (2) Fully Extended Maturity (3) Interest Rate (4) (5) Effective Yield (6) Loan to Value (7) Senior Debt 35 2 Multifamily Texas 33,588 33,582 4/1/2021 4/9/2026 Adj. 1M SOFR Term + 2.95% 8.42% 72.2% Senior Debt 36 2 Multifamily Florida 152,112 151,644 5/26/2021 6/9/2026 1M SOFR Term + 4.55% 9.90% 47.8% Senior Debt 37 2 Hospitality Florida 36,750 36,713 5/20/2021 6/9/2026 Adj. 1M SOFR Term + 6.25% 11.72% 59.2% Senior Debt 38 2 Multifamily North Carolina 35,116 34,990 7/22/2021 3/9/2027 Adj. 1M SOFR Term + 8.00% 13.47% N/A Senior Debt 39 2 Multifamily Texas 16,453 16,453 10/6/2021 10/9/2026 Adj. 1M SOFR Term + 3.75% 9.22% 76.9% Senior Debt 40 2 Multifamily Pennsylvania 47,984 47,901 9/10/2021 10/9/2026 Adj. 1M SOFR Term + 3.15% 8.62% 71.0% Senior Debt 41 2 Multifamily South Carolina 41,650 41,650 9/2/2021 9/9/2025 Adj. 1M SOFR Term + 3.40% 8.87% 79.9% Senior Debt 42 3 Multifamily Texas 34,760 34,713 9/20/2021 10/9/2024 Adj. 1M SOFR Term + 3.64% 9.11% 66.0% Senior Debt 43 2 Multifamily Oregon 8,500 8,489 9/8/2021 9/9/2026 Adj. 1M SOFR Term + 3.75% 9.22% 79.4% Senior Debt 44 2 Multifamily Texas 14,890 14,890 9/9/2021 9/9/2026 Adj. 1M SOFR Term + 3.15% 8.62% 79.8% Senior Debt 45 2 Multifamily South Carolina 69,500 69,312 9/20/2021 10/9/2026 Adj. 1M SOFR Term + 3.25% 8.72% 77.1% Senior Debt 46 2 Multifamily Georgia 11,325 11,306 9/22/2021 10/9/2026 Adj. 1M SOFR Term + 3.75% 9.22% 70.0% Senior Debt 47 2 Multifamily Texas 27,199 27,160 9/30/2021 10/9/2026 Adj. 1M SOFR Term + 3.20% 8.67% 77.3% Senior Debt 48 2 Hospitality Texas 17,122 17,122 9/30/2021 10/9/2026 Adj. 1M SOFR Term + 5.25% 10.72% 61.0% Senior Debt 49 2 Multifamily Texas 56,150 56,071 9/30/2021 10/9/2026 Adj. 1M SOFR Term + 3.10% 8.57% 78.9% Senior Debt 50 2 Multifamily Texas 38,242 38,116 10/14/2021 11/9/2026 Adj. 1M SOFR Term + 2.90% 8.37% 72.2% Senior Debt 51 3 Multifamily Texas 55,394 55,394 11/23/2021 1/9/2027 Adj. 1M SOFR Term + 3.10% 8.57% 67.2% Senior Debt 52 3 Multifamily Arizona 38,153 38,101 11/16/2021 12/9/2026 Adj. 1M SOFR Term + 2.90% 8.37% 72.0% Senior Debt 53 2 Multifamily Texas 68,165 68,165 10/29/2021 11/9/2026 Adj. 1M SOFR Term + 2.85% 8.32% 70.6% Senior Debt 54 2 Multifamily Texas 32,567 32,510 11/23/2021 12/9/2026 Adj. 1M SOFR Term + 3.25% 8.72% 80.0% Senior Debt 55 2 Multifamily South Carolina 61,600 61,600 11/10/2021 11/9/2026 Adj. 1M SOFR Term + 3.35% 8.82% 78.0% Senior Debt 56 2 Multifamily Texas 44,987 44,987 11/16/2021 12/9/2026 Adj. 1M SOFR Term + 3.00% 8.47% 74.8% Senior Debt 57 2 Multifamily Texas 47,147 47,019 11/9/2021 11/9/2026 Adj. 1M SOFR Term + 2.75% 8.22% 68.1% Senior Debt 58 2 Multifamily New Jersey 86,000 85,959 2/25/2022 3/9/2026 1M SOFR Term + 3.24% 8.59% 60.0% Senior Debt 59 3 Manufactured Housing Georgia 6,700 6,688 12/13/2021 12/9/2026 Adj. 1M SOFR Term + 4.50% 9.97% 77.9% Senior Debt 60 2 Multifamily Texas 58,680 58,677 12/10/2021 1/9/2027 Adj. 1M SOFR Term + 3.45% 8.92% 74.8% Senior Debt 61 2 Multifamily Georgia 26,068 26,068 11/30/2021 3/9/2024 Adj. 1M SOFR Term + 2.90% 8.37% 72.1% Senior Debt 62 2 Multifamily Kentucky 14,933 14,905 11/19/2021 12/9/2026 Adj. 1M SOFR Term + 3.20% 8.67% 62.4% Senior Debt 63 2 Multifamily Texas 38,283 38,219 11/22/2021 12/9/2026 Adj. 1M SOFR Term + 3.00% 8.47% 73.3% Senior Debt 64 4 Multifamily Texas 42,235 42,234 11/18/2021 1/9/2027 Adj. 1M SOFR Term + 2.90% 8.37% 71.7% Senior Debt 65 3 Multifamily Texas 69,415 69,415 11/30/2021 12/9/2026 Adj. 1M SOFR Term + 2.88% 8.35% 74.8% Senior Debt 66 2 Multifamily Texas 66,742 66,742 11/30/2021 12/9/2026 Adj. 1M SOFR Term + 2.88% 8.35% 75.5% Senior Debt 67 2 Multifamily Texas 17,145 17,144 12/30/2021 1/9/2027 1M SOFR Term + 3.50% 8.85% 71.7% Senior Debt 68 3 Multifamily Michigan 59,232 59,175 12/9/2021 12/9/2026 Adj. 1M SOFR Term + 2.75% 8.22% 73.9% Senior Debt 69 3 Multifamily Pennsylvania 22,240 22,239 12/16/2021 1/9/2027 1M SOFR Term + 2.96% 8.31% 79.4% Senior Debt 70 3 Multifamily Texas 25,241 25,195 12/16/2021 1/9/2027 1M SOFR Term + 2.96% 8.31% 72.9% 43 Table of Contents Loan Type Risk Rating (1) Property Type State Par Value Amortized Cost Origination Date (2) Fully Extended Maturity (3) Interest Rate (4) (5) Effective Yield (6) Loan to Value (7) Senior Debt 71 2 Multifamily Texas 32,428 32,425 12/16/2021 1/9/2027 1M SOFR Term + 3.20% 8.55% 74.2% Senior Debt 72 2 Multifamily Florida 78,416 78,167 12/21/2021 1/9/2027 1M SOFR Term + 3.45% 8.80% 78.8% Senior Debt 73 2 Multifamily North Carolina 81,247 81,164 12/15/2021 1/9/2027 1M SOFR Term + 3.21% 8.56% 76.1% Senior Debt 74 2 Multifamily North Carolina 24,000 23,999 12/17/2021 1/9/2027 1M SOFR Term + 3.10% 8.45% 72.7% Senior Debt 75 2 Retail New York 31,000 30,946 12/23/2021 1/9/2027 1M SOFR Term + 3.29% 8.64% 42.5% Senior Debt 76 3 Multifamily Texas 38,511 38,511 5/12/2022 8/9/2027 1M SOFR Term + 3.55% 8.90% 66.2% Senior Debt 77 2 Multifamily Georgia 23,855 23,848 1/28/2022 2/9/2027 1M SOFR Term + 2.95% 8.30% 65.6% Senior Debt 78 2 Multifamily North Carolina 11,100 11,097 1/14/2022 2/9/2027 1M SOFR Term + 3.30% 8.65% 75.7% Senior Debt 79 3 Multifamily Texas 47,444 47,442 12/21/2021 1/9/2027 1M SOFR Term + 2.86% 8.21% 68.2% Senior Debt 80 2 Multifamily Texas 36,824 36,821 12/22/2021 1/9/2027 1M SOFR Term + 2.86% 8.21% 69.7% Senior Debt 81 2 Hospitality North Carolina 10,504 10,481 1/19/2022 2/9/2027 1M SOFR Term + 5.30% 10.65% 68.2% Senior Debt 82 2 Multifamily Florida 82,000 81,989 2/10/2022 2/9/2027 1M SOFR Term + 3.20% 8.55% 74.5% Senior Debt 83 2 Industrial Arizona 55,000 54,973 3/15/2022 3/9/2027 1M SOFR Term + 3.50% 8.85% 70.1% Senior Debt 84 2 Multifamily Texas 39,864 39,843 3/14/2022 3/9/2027 1M SOFR Term + 3.10% 8.45% 74.1% Senior Debt 85 2 Multifamily Arizona 35,220 35,202 3/2/2022 3/9/2027 1M SOFR Term + 2.95% 8.30% 63.1% Senior Debt 86 2 Mixed Use New York 19,000 18,991 3/7/2022 3/9/2026 1M SOFR Term + 3.42% 8.78% 65.1% Senior Debt 87 2 Multifamily North Carolina 85,500 85,480 2/24/2022 3/9/2027 1M SOFR Term + 3.15% 8.50% 69.6% Senior Debt 88 2 Multifamily North Carolina 31,900 31,888 3/29/2022 4/9/2027 1M SOFR Term + 3.30% 8.65% 76.9% Senior Debt 89 2 Hospitality Colorado 30,021 29,741 5/20/2022 6/9/2027 1M SOFR Term + 7.05% 12.40% N/A Senior Debt 90 2 Multifamily Texas 13,558 12,691 7/20/2022 4/9/2027 1M SOFR Term + 6.75% 12.10% N/A Senior Debt 91 2 Hospitality Georgia 43,457 43,457 3/30/2022 4/9/2027 1M SOFR Term + 4.90% 10.25% 61.1% Senior Debt 92 2 Hospitality New York 15,634 15,568 11/8/2022 11/9/2027 1M SOFR Term + 5.34% 10.69% 57.7% Senior Debt 93 3 Multifamily Nevada 35,949 35,949 6/3/2022 6/9/2027 1M SOFR Term + 6.05% 11.40% 62.4% Senior Debt 94 3 Multifamily Virginia 56,616 56,479 4/29/2022 5/9/2027 1M SOFR Term + 3.95% 9.30% 73.2% Senior Debt 95 3 Multifamily Texas 29,905 29,816 10/21/2022 11/9/2027 1M SOFR Term + 4.00% 9.35% 70.9% Senior Debt 96 2 Multifamily North Carolina 56,859 56,806 8/23/2022 9/9/2027 1M SOFR Term + 6.70% 12.05% 46.5% Senior Debt 97 2 Multifamily Texas 12,536 12,523 5/2/2022 5/9/2027 1M SOFR Term + 3.55% 8.90% 67.7% Senior Debt 98 2 Industrial Florida 18,724 18,673 9/13/2022 9/9/2027 1M SOFR Term + 4.90% 10.25% 64.6% Senior Debt 99 2 Multifamily Tennessee 19,899 19,875 5/18/2022 6/9/2027 1M SOFR Term + 3.50% 8.85% 64.5% Senior Debt 100 3 Multifamily Texas 28,979 28,936 5/26/2022 6/9/2027 1M SOFR Term + 3.65% 9.00% 71.0% Senior Debt 101 3 Multifamily Texas 17,330 17,303 5/26/2022 6/9/2027 1M SOFR Term + 3.65% 9.00% 73.9% Senior Debt 102 2 Multifamily Georgia 70,750 70,673 5/18/2022 6/9/2027 1M SOFR Term + 3.80% 9.15% 77.9% Senior Debt 103 4 Multifamily North Carolina 83,914 83,810 6/1/2022 6/9/2027 1M SOFR Term + 3.95% 9.30% 71.8% Senior Debt 104 3 Multifamily North Carolina 45,469 45,414 6/1/2022 6/9/2027 1M SOFR Term + 3.95% 9.30% 75.9% Senior Debt 105 4 Multifamily North Carolina 58,003 57,930 6/1/2022 6/9/2027 1M SOFR Term + 3.95% 9.30% 73.7% Senior Debt 106 3 Multifamily North Carolina 20,716 20,688 6/1/2022 6/9/2027 1M SOFR Term + 3.95% 9.30% 75.1% 44 Table of Contents Loan Type Risk Rating (1) Property Type State Par Value Amortized Cost Origination Date (2) Fully Extended Maturity (3) Interest Rate (4) (5) Effective Yield (6) Loan to Value (7) Senior Debt 107 2 Multifamily Various 146,810 146,608 6/1/2022 6/9/2027 1M SOFR Term + 3.95% 9.30% 67.8% Senior Debt 108 2 Multifamily Kentucky 56,000 55,938 6/1/2022 6/9/2027 1M SOFR Term + 3.80% 9.15% 73.8% Senior Debt 109 2 Multifamily North Carolina 11,675 11,661 11/3/2022 11/9/2027 1M SOFR Term + 4.45% 9.80% 74.8% Senior Debt 110 2 Multifamily Georgia 70,750 70,569 6/14/2022 6/9/2027 1M SOFR Term + 3.45% 8.80% 71.6% Senior Debt 111 2 Hospitality District of Columbia 39,525 39,346 8/2/2022 8/9/2027 1M SOFR Term + 6.94% 12.29% 71.2% Senior Debt 112 (8) 2 Multifamily Pennsylvania — — 2/17/2023 9/9/2026 1M SOFR Term + 6.31% 11.66% N/A Senior Debt 113 2 Hospitality Alabama 16,270 16,249 9/20/2022 10/9/2027 1M SOFR Term + 5.75% 11.10% 62.1% Senior Debt 114 2 Manufactured Housing Florida 11,617 11,587 9/13/2022 9/9/2027 1M SOFR Term + 4.75% 10.10% 53.8% Senior Debt 115 (8) 2 Hospitality Texas — — 1/31/2023 11/9/2027 1M SOFR Term + 7.50% 12.85% 6.2% Senior Debt 116 2 Multifamily North Carolina 48,764 48,684 12/29/2022 1/9/2028 1M SOFR Term + 4.20% 9.55% 70.1% Senior Debt 117 2 Multifamily South Carolina 51,000 50,875 12/2/2022 12/9/2027 1M SOFR Term + 3.75% 9.10% 64.6% Senior Debt 118 2 Multifamily South Carolina 14,635 14,594 12/16/2022 1/9/2027 1M SOFR Term + 4.25% 9.60% 68.1% Senior Debt 119 2 Hospitality North Carolina 28,300 28,297 12/15/2022 1/9/2025 1M SOFR Term + 5.25% 10.60% 54.9% Senior Debt 120 2 Multifamily Arizona 55,500 55,353 4/10/2023 4/9/2026 1M SOFR Term + 3.85% 9.20% 44.7% Senior Debt 121 2 Hospitality Florida 10,500 10,465 4/4/2023 4/9/2028 1M SOFR Term + 5.50% 10.85% 39.6% Senior Debt 122 2 Hospitality Various 120,000 119,559 2/9/2023 2/9/2028 1M SOFR Term + 4.90% 10.25% 53.6% Senior Debt 123 2 Multifamily Florida 64,500 64,388 4/19/2023 5/9/2025 1M SOFR Term + 5.00% 10.35% 62.3% Senior Debt 124 2 Hospitality New York 39,549 39,661 4/17/2023 12/27/2024 1M SOFR Term + 3.75% 9.10% 39.1% Senior Debt 125 2 Multifamily District of Columbia 21,700 21,616 6/30/2023 7/9/2027 1M SOFR Term + 3.95% 9.30% 29.4% Senior Debt 126 2 Manufactured Housing Florida 21,449 21,296 7/28/2023 8/9/2028 1M SOFR Term + 4.25% 9.60% 43.2% Senior Debt 127 2 Multifamily New York 19,793 19,881 6/28/2023 7/9/2028 4.75% 4.75% 85.7% Senior Debt 128 2 Multifamily Texas 78,996 78,664 8/1/2023 8/9/2028 1M SOFR Term + 3.20% 8.55% 58.7% Senior Debt 129 2 Hospitality Florida 23,000 22,861 8/10/2023 8/9/2028 1M SOFR Term + 5.45% 10.80% 72.8% Senior Debt 130 2 Hospitality Georgia 12,420 12,322 8/17/2023 9/9/2028 1M SOFR Term + 4.85% 10.20% 53.5% Senior Debt 131 2 Multifamily Texas 38,750 38,572 10/18/2023 11/9/2026 1M SOFR Term + 4.50% 9.85% 62.4% Senior Debt 132 2 Hospitality Florida 31,300 31,078 10/17/2023 11/9/2028 1M SOFR Term + 4.25% 9.60% 48.9% Senior Debt 133 2 Multifamily Texas 42,750 42,555 10/17/2023 11/9/2026 1M SOFR Term + 3.85% 9.20% 61.4% Senior Debt 134 2 Multifamily Texas 17,119 16,966 10/12/2023 10/9/2028 1M SOFR Term + 3.20% 8.55% 55.1% Senior Debt 135 2 Multifamily Texas 21,000 20,887 12/6/2023 12/9/2026 1M SOFR Term + 3.75% 9.10% 63.6% Senior Debt 136 2 Hospitality Tennessee 41,071 40,855 11/14/2023 12/9/2028 1M SOFR Term + 3.65% 9.00% 50.0% Senior Debt 137 2 Hospitality Nevada 25,750 25,595 12/15/2023 1/9/2028 1M SOFR Term + 3.95% 9.30% 42.4% Senior Debt 138 3 Hospitality Illinois 16,566 16,563 12/4/2017 10/6/2025 5.99% 5.99% 52.9% Mezzanine Loan 1 2 Retail New York 3,000 2,994 12/23/2021 1/9/2027 1M SOFR Term + 12.00% 17.35% 46.6% Mezzanine Loan 2 2 Mixed Use New York 1,000 1,000 3/7/2022 3/9/2026 1M SOFR Term + 11.00% 16.35% 68.5% Mezzanine Loan 3 2 Hospitality New York 1,350 1,346 11/8/2022 11/9/2027 1M SOFR Term + 9.25% 14.60% 64.6% Mezzanine Loan 4 (8) 2 Hospitality Texas — — 1/31/2023 11/9/2027 1M SOFR Term + 10.00% 15.35% 6.2% Mezzanine Loan 5 3 Multifamily Ohio 2,378 2,378 3/9/2023 9/9/2025 1M SOFR Term + 4.50% 9.85% 58.2% 45 Table of Contents Loan Type Risk Rating (1) Property Type State Par Value Amortized Cost Origination Date (2) Fully Extended Maturity (3) Interest Rate (4) (5) Effective Yield (6) Loan to Value (7) Mezzanine Loan 6 2 Multifamily District of Columbia 11,700 11,655 6/30/2023 7/9/2027 1M SOFR Term + 3.95% 9.30% 45.2% $5,045,036 $5,036,942 9.18% 65.4% _______________________ (1) For a discussion of risk ratings, see Note 3 - Commercial Mortgage Loans in our Consolidated Financial Statements included in this Form 10-K.
In developing the provision for credit losses for its loans held for investment, the Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability, using similar factors as those in developing the provision for credit losses.
Risk Rating In developing the provision for credit losses for its loans held for investment, the Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability, using similar factors as those in developing the provision for credit losses.
The non-credit loss component of the unrealized loss within the Company’s AFS portfolio is recognized as an adjustment to the individual security’s asset balance with an offsetting entry to other comprehensive income in the consolidated balance sheets.
The non-credit loss component of the unrealized loss within the Company’s AFS portfolio is recognized as an adjustment to the individual security’s asset balance with an offsetting entry to Accumulated other comprehensive income/(loss) in the consolidated balance sheets.
Any impairment that is not credit-related is recognized in other comprehensive income, while credit-related impairment is recognized as an allowance on the consolidated balance sheets with a corresponding adjustment on the consolidated statements of operations.
Any impairment that is not credit-related is recognized in other comprehensive income, while credit-related impairment is recognized as an allowance in the consolidated balance sheets with a corresponding adjustment in the consolidated statements of operations.
(2) These are related to reimbursable costs incurred for the increase in loan origination activities and are included in Other expenses in the Company's consolidated statements of operations.
(2) These are related to reimbursable costs incurred for the increase in loan origination activities and are included in Other expenses in the consolidated statements of operations.
Real estate owned assets are depreciated using the straight-line method over estimated useful lives of up to 40 years for buildings and improvements and up to 15 years for furniture, fixtures and equipment. Renovations and/or replacements that improve or extend the life of the real estate owned assets are capitalized and depreciated over their estimated useful lives.
Real estate owned assets, held for investment are depreciated using the straight-line method over estimated useful lives of up to 40 years for buildings and improvements and up to 15 years for furniture, fixtures and equipment. Renovations and/or replacements that improve or extend the life of the real estate owned assets are capitalized and depreciated over their estimated useful lives.
As a result of the October 2021 acquisition of Capstead Mortgage Corporation ("Capstead"), the Company acquired a portfolio of residential mortgage-backed securities ("RMBS") in the form of residential adjustable-rate mortgage pass-through securities ("ARM Agency Securities" or "ARMs") issued and guaranteed by government-sponsored enterprises or by an agency of the federal government.
As a result of the October 2021 acquisition of Capstead Mortgage Corporation ("Capstead"), the Company acquired a portfolio of residential mortgage backed securities (“RMBS”) in the form of residential adjustable-rate mortgage pass-through securities ("ARM Agency Securities" or "ARMs") issued and guaranteed by government-sponsored enterprises or by an agency of the federal government.
However, we may elect to transfer these assets to trading securities, and as a result, any unrealized gains or losses on such real estate securities will be recorded as unrealized gains or losses on investments in our consolidated statements of operations.
However, we may elect to transfer these assets to trading securities, and as a result, any unrealized gains or losses on such real estate securities will be recorded as unrealized gains or losses on investments in the consolidated statements of operations.
The initial term of the amended Advisory Agreement was three-years and was automatically renewed for an additional one-year period on January 19, 2023 and will continue to automatically renew for additional one-year periods unless either party elects not to renew.
The initial term of the amended Advisory Agreement was three-years and was automatically renewed for an additional one-year period on January 19, 2024 and will continue to automatically renew for additional one-year periods unless either party elects not to renew.
For financial instruments where the borrower is experiencing financial difficulty based on the Company’s assessment at the reporting date and the repayment is expected to be provided substantially through the operation or sale of the collateral, the Company may elect to use as a practical expedient the fair value of the collateral at the reporting date when determining the provision for credit losses.
Specific Allowance for credit losses For financial instruments where the borrower is experiencing financial difficulty based on the Company’s assessment at the reporting date and the repayment is expected to be provided substantially through the operation or sale of the collateral, the Company may elect to use as a practical expedient the fair value of the collateral at the reporting date when determining the specific allowance for credit losses.
The Company also originates conduit loans which the Company intends to sell through its TRS into commercial mortgage-backed securities ("CMBS") securitization transactions at a profit. Historically this business has focused primarily on CMBS, commercial real estate collateralized loan obligation bonds ("CRE CLO bonds"), collateralized debt obligations ("CDOs") and other securities.
The Company also originates conduit loans which the Company intends to sell through its TRS into commercial mortgage-backed securities ("CMBS") securitization transactions. Historically this business has focused primarily on CMBS, commercial real estate collateralized loan obligation bonds ("CRE CLO bonds"), collateralized debt obligations ("CDOs") and other securities.
The Company’s significant accounting policies, including recently issued accounting pronouncements, are more fully described in Note 2 – Summary of Critical Accounting Policies to the accompanying consolidated financial statements included in this Annual Report on Form 10-K. 25 Table of Contents Credit Losses - Estimating Credit Losses The provision for credit losses for the Company’s financial instruments carried at amortized cost and off-balance sheet credit exposures, such as loans held for investment and unfunded loan commitments represents a lifetime estimate of expected credit losses.
The Company’s significant accounting policies, including recently issued accounting pronouncements, are more fully described in Note 2 – Summary of Critical Accounting Policies to the accompanying consolidated financial statements included in this Annual Report on Form 10-K. 27 Table of Contents Credit Losses - Estimating Credit Losses General allowance for credit losses The general allowance for credit losses for the Company’s financial instruments carried at amortized cost and off-balance sheet credit exposures, such as loans held for investment and unfunded loan commitments represents a lifetime estimate of expected credit losses.
In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. Set forth below is a summary of the critical accounting estimates and critical accounting policies that management believes are important to the preparation of our financial statements.
In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. Set forth below is a summary of the critical accounting estimates that management believes are important to the preparation of our financial statements and require complex management judgment.
Cash inflows were primarily driven by proceeds from principal repayments of $1,258.4 million received on commercial mortgage loans, held for investment, proceeds received from the sale of real estate securities of $3,731.7 million, $545.4 million received from principal collateral on mortgage investments and proceeds from sale of commercial mortgage loans, held for sale, of $9.3 million.
During the year ended December 31, 2022, cash inflows were primarily driven by proceeds from principal repayments of $1,258.4 million received on commercial mortgage loans, held for investment, proceeds received from the sale of real estate securities of $3,731.7 million, $545.4 million received from principal collateral on mortgage investments and proceeds from sale of commercial mortgage loans, held for sale, of $9.3 million.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 25, 2022, for a discussion of the comparison of the year ended December 31, 2021 to the year ended December 31, 2020.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 16, 2023, for a discussion of the comparison of the year ended December 31, 2022 to the year ended December 31, 2021.
In measuring the provision for credit losses for financial instruments including our unfunded loan commitments that share similar risk characteristics, the Company primarily applies a probability of default (“PD”)/loss given default (“LGD”) model for instruments that are collectively assessed, whereby the provision for credit losses is calculated as the product of PD, LGD and exposure at default (“EAD”).
In measuring the general allowance for credit losses for financial instruments such as loans held for investment and unfunded loan commitments that share similar risk characteristics, the Company primarily applies a probability of default (“PD”)/loss given default (“LGD”) model for instruments that are collectively assessed, whereby the provision for credit losses is calculated as the product of PD, LGD and exposure at default (“EAD”).
Further, Run-Rate Distributable Earnings, a non-GAAP measure, presents Distributable Earnings before trading and derivative gain/loss on ARMs. The Company believes that Distributable Earnings and Run-Rate Distributable Earnings provide meaningful information to consider in addition to the disclosed GAAP results.
Further, Run-Rate Distributable Earnings, a non-GAAP measure, presents Distributable Earnings before (i) trading and derivative gain/loss on ARMs and (ii) realized cash gain/loss adjustments on REO. The Company believes that Distributable Earnings and Run-Rate Distributable Earnings provide meaningful information to consider in addition to the disclosed GAAP results.
Non-GAAP Financial Measures Distributable Earnings and Run-Rate Distributable Earnings Distributable Earnings is a non-GAAP measure, which the Company defines as GAAP net income (loss), adjusted for (i) non-cash CLO amortization acceleration and amortization over the expected useful life of the Company's CLOs, (ii) unrealized gains and losses on loans, derivatives and ARMs, including CECL reserves and impairments, (iii) non-cash equity compensation expense, (iv) depreciation and amortization, (v) non-cash subordinated performance fee accruals, (vi) loan workout charges, (vii) certain other non-cash items, and (viii) impairments of acquisition assets related to the Capstead merger.
Non-GAAP Financial Measures Distributable Earnings and Run-Rate Distributable Earnings Distributable Earnings is a non-GAAP measure, which the Company defines as GAAP net income (loss), adjusted for (i) non-cash CLO amortization acceleration and amortization over the expected useful life of the Company's CLOs, (ii) unrealized gains and losses on loans, derivatives and ARMs, including CECL reserves and impairments, (iii) non-cash equity compensation expense, (iv) depreciation and amortization, (v) subordinated performance fee accruals/(reversal), (vi) loan workout charges, (vii) realized gains and losses on debt extinguishment and CLO calls, (viii) actual realized cash loss on a specific real estate owned ("REO") investment, (ix) impairments of acquisition assets related to the Capstead merger and (x) certain other non-cash items.
Factors considered by the Company when determining the provision for credit losses reserve include loan-specific characteristics such as loan-to-value (“LTV”) ratio, vintage year, loan term, property type, occupancy and geographic location, financial performance of the borrower, expected payments of principal and interest, as well as internal or external information relating to past events, current conditions and reasonable and supportable forecasts.
Factors considered by the Company when determining the general allowance for credit losses reserve include loan-specific characteristics such as loan-to-value (“LTV”) ratio, vintage year, loan term, property type, occupancy and geographic location, financial performance of the borrower, expected payments of principal and interest, as well as internal or external information relating to past events, current conditions and forward looking information through the use of projected macroeconomic scenarios over the reasonable and supportable forecasts.
Cash outflows were primarily driven by net repayments on repurchase agreements for real estate securities and commercial mortgage loans of $3,738.8 million and $338.7 million, respectively, $139.4 million in cash distributions to stockholders and $16.6 million of common stock repurchases.
During the year ended December 31, 2022, cash outflows were primarily driven by net payments on repurchase agreements for real estate securities and commercial mortgage loans of $3,738.8 million and $$338.7 million, respectively, $139.4 million in cash distributions to stockholders and $16.6 million of common stock repurchases.
Net Result from Derivative Transactions Net result from derivative transactions for our ARMs portfolio for the year ended December 31, 2022 of $44.2 million is composed of a realized gain of $60.0 million partially offset by an unrealized loss of $15.8 million primarily due to termination and settlement of our interest rate swap positions throughout the year.
This is compared to a net gain on our derivative portfolio of $44.2 million composed of a realized gain of $60.0 million due primarily to the termination and settlement of interest rate swap positions specifically designed to hedge the ARMs portfolio partially offset by an unrealized loss of $15.8 million for the year ended December 31, 2022.
Amounts are calculated based on daily averages for the three months ended December 31, 2022 and September 30, 2022, respectively. (2) Includes the effect of amortization of premium or accretion of discount and deferred fees. (3) Calculated as interest income or expense divided by average carrying value. (4) Annualized.
Amounts are calculated based on daily averages for the three months ended December 31, 2023 and September 30, 2023, respectively. (2) Includes the effect of amortization of premium or accretion of discount and deferred fees. (3) Excludes other income on the real estate owned business segment. (4) Calculated as interest income or expense divided by average carrying value. (5) Annualized.
The Repo Facilities are financing sources through which the Company may pledge one or more mortgage loans to the financing entity in exchange for funds typically at an advance rate of between 65% to 75% of the principal amount of the mortgage loan being pledged.
Repurchase Agreements and Revolving Credit Facilities ("Repo and Revolving Credit Facilities") The Repo and Revolving Credit Facilities are financing sources through which the Company may pledge one or more mortgage loans to the financing entity in exchange for funds typically at an advance rate that typically range between 60% to 75% of the principal amount of the mortgage loan being pledged.
(2) Excludes $453.4 million of CLO notes, held by the Company, which are eliminated within the collateralized loan obligation line of the consolidated balance sheets as of December 31, 2022. In addition to its cash requirements, the Company pays a quarterly dividend and has an existing share repurchase authorization.
(2) Excludes $495.0 million of CLO notes, held by the Company, which are eliminated in Collateralized loan obligations in the consolidated balance sheets as of December 31, 2023. In addition to its cash requirements, the Company pays a quarterly dividend and has an existing share repurchase authorization.
During the twelve months ended December 31, 2021, the maximum monthly average outstanding balance was $5.84 billion , of which $0.68 billion was related to repurchase agreements on our commercial mortgage loans and $0.04 billion for repurchase agreements on our real estate securities and $5.12 billion for repurchase agreements on our real estate securities held for trading.
During the twelve months ended December 31, 2021, the maximum monthly average outstanding balance was $5.8 billion , of which $0.7 billion was related to repurchase agreements on our commercial mortgage loans and $5.1 billion for repurchase agreements on our real estate securities.
Cash inflows were primarily driven by net income of $14.2 million, net proceeds of $18.1 million related to originations and sales of commercial mortgage loans, measured at fair value and $119.2 million related to trading losses on real estate securities. Net cash provided by investing activities for the year ended December 31, 2022 was $3,097.3 million.
During the year ended December 31, 2022, cash flows from operating activities were primarily driven by net income of $14.2 million, net proceeds of $18.1 million related to originations and sales of commercial mortgage loans, measured at fair value and $119.2 million related to trading losses on real estate securities.
During the term of the amended Advisory Agreement, the Advisor shall not, directly or indirectly, manage or advise another REIT that is engaged in the business of the Company in any geographical region in which the Company has a significant investment, or provide any services related to fixed-rate conduit lending to any other person, subject to certain conditions. 50 Table of Contents Advisory Agreement Fees and Reimbursements Pursuant to the Advisory Agreement, the Company is or was required to make the following payments and reimbursements to the Advisor: • The Company reimburses the Advisor’s costs of providing services pursuant to the Advisory Agreement, except the salaries and benefits paid by the Advisor to the Company's executive officers. • The Company pays the Advisor, or its affiliates, a monthly asset management fee equal to one-twelfth of 1.5% of stockholders' equity as calculated pursuant to the Advisory Agreement. • The Company will pay the Advisor an annual subordinated performance fee calculated on the basis of total return to stockholders, payable monthly in arrears, such that for any year in which total return on stockholders’ capital (as defined in the Advisory Agreement) exceeds 6.0% per annum, the Advisor will be entitled to 15.0% of the excess total return; provided that in no event will the annual subordinated performance fee payable to the Advisor exceed 10.0% of the aggregate total return for such year. • The Company reimburses the Advisor for insourced expenses incurred by the Advisor on the Company's behalf related to selecting, evaluating, originating and acquiring investments in an amount up to 0.5% of the principal amount funded by the Company to originate or acquire commercial mortgage loans and up to 0.5% of the anticipated net equity funded by the Company to acquire real estate securities investments.
Advisory Agreement Fees and Reimbursements Pursuant to the Advisory Agreement, the Company is or was required to make the following payments and reimbursements to the Advisor: • The Company reimburses the Advisor’s costs of providing services pursuant to the Advisory Agreement, except the salaries and benefits paid by the Advisor to the Company's executive officers. • The Company pays the Advisor, or its affiliates, a monthly asset management fee equal to one-twelfth of 1.5% of stockholders' equity as calculated pursuant to the Advisory Agreement. • The Company will pay the Advisor an annual subordinated performance fee calculated on the basis of total return to stockholders, payable monthly in arrears, such that for any year in which total return on stockholders’ capital (as defined in the Advisory Agreement) exceeds 6.0% per annum, the Advisor will be entitled to 15.0% of the excess total return; provided that in no event will the annual subordinated performance fee payable to the Advisor exceed 10.0% of the aggregate total return for such year. • The Company reimburses the Advisor for insourced expenses incurred by the Advisor on the Company's behalf related to selecting, evaluating, originating and acquiring investments in an amount up to 0.5% of the principal amount funded by the Company to originate or acquire commercial mortgage loans and up to 0.5% of the anticipated net equity funded by the Company to acquire real estate securities investments.
The Company’s model principally utilizes historical loss rates derived from a commercial mortgage backed securities database with historical losses from 1998 to 2018 provided by a reputable third party, forecasting the loss parameters using a scenario-based statistical approach over a reasonable and supportable forecast period of twelve months, followed by an immediate reversion to average historical losses.
The Company’s model to determine the general allowance for credit losses principally utilizes historical loss rates derived from a commercial mortgage backed securities database with historical losses from 2002 to 2021 provided by a reputable third party, forecasting the loss parameters based on a projected macroeconomic scenario using a probability-based statistical approach over a reasonable and supportable forecast period of twelve months, followed by an immediate reversion to average historical losses.
(2) Excluding the amounts for accumulated depreciation and amortization of real property of $5.2 million and $1.0 million as of December 31, 2022 and 2021, respectively, would result in a fully-converted book value per share of $15.84 and $17.26 as of December 31, 2022 and 2021, respectively.
(2) Excluding the amounts for accumulated depreciation and amortization of real property of $9.4 million and $5.2 million as of December 31, 2023 and 2022, respectively, would result in a fully-converted book value per share of $15.88 and $15.84 as of December 31, 2023 and 2022, respectively.
As of December 31, 2022, our commercial mortgage loans, held for investment, includes an aggregate of $122.9 million carrying value of loans to affiliates of our Advisor.
As of December 31, 2023, our commercial mortgage loans, held for investment, includes an aggregate of $124.1 million carrying value of loans to affiliates of our Advisor.
This is compared to a realized loss of $1.6 million offset by an unrealized gain of $1.6 million for the three months ended September 30, 2022 primarily due to termination and settlement of our interest rate swap positions despite increasing values on our interest rate swap portfolio.
This is compared to a net loss on our derivative portfolio of $0.1 million composed of a realized gain of $0.1 million due primarily to the termination and settlement of interest rate swap positions offset by an unrealized loss of $0.2 million for the three months ended September 30, 2023 .
The payment of future dividends is subject to declaration by the Board of Directors. The Company’s Board of Directors also has authorized a $65.0 million share repurchase program, of which $48.4 million remained available as of December 31, 2022. The authorization does not obligate the Company to acquire any specific number of shares. Related Party Arrangements Benefit Street Partners L.L.C.
The Company’s Board of Directors also has authorized a $65.0 million share repurchase program, of which $35.9 million remained available as of December 31, 2023. The authorization does not obligate the Company to acquire any specific number of shares. Related Party Arrangements Benefit Street Partners L.L.C.
Provision/Benefit for Income Tax Benefit for income tax for the year ended December 31, 2022 was $0.4 million compared to provision for income tax of $3.6 million for the year ended December 31, 2021. The difference is due to change in taxable income/(loss) at our TRS.
(Provision)/Benefit for Income Tax Benefit for income tax for the year ended December 31, 2023 was $2.8 million compared to a benefit of $0.4 million for the year ended December 31, 2022. The difference is due to change in taxable income/loss in our TRS segment.
Provision/Benefit for Income Tax Benefit for income tax for the three months ended December 31, 2022 was $0.7 million compared to provision for income tax of $0.4 million for the three months ended September 30, 2022. The difference is due to change in taxable income/(loss) at our TRS.
(Provision)/Benefit for Income Tax Benefit for income tax for the three months ended December 31, 2023 was $0.3 million compared to a benefit of $1.8 million for the three months ended September 30, 2023. The difference is due to change in taxable income/loss in our TRS segment.
If a financial asset’s risk characteristics change, the Company evaluates whether it is appropriate to continue to keep the financial instrument in its existing pool or evaluate it individually.
The determination of whether a particular financial instrument should be included in a pool can change over time. If a financial asset’s risk characteristics change, the Company evaluates whether it is appropriate to continue to keep the financial instrument in its existing pool or evaluate it individually.
Year Ended December 31, Payable as of December 31, 2022 2021 2020 2022 2021 Acquisition expenses (1) $ 1,360 $ 1,203 $ 696 $ — $ — Administrative services expenses 12,928 7,658 13,120 3,526 — Asset management and subordinated performance fee 26,157 28,110 15,178 8,843 15,595 Other related party expenses (2)(3) 875 355 703 3,060 1,943 Total related party fees and reimbursements $ 41,320 $ 37,326 $ 29,697 $ 15,429 $ 17,538 ______________________ (1) Total acquisition fees and expenses paid during the years ended December 31, 2022, 2021 and 2020 were $11.7 million, $15 million and $7.1 million respectively, of which $10.3 million, $13.8 million and $6.4 million were capitalized within the commercial mortgage loans, held for investment and real estate securities, available for sale, measured at fair value lines of the consolidated balance sheets for the years ended December 31, 2022, 2021 and 2020.
Year Ended December 31, Payable as of December 31, 2023 2022 2021 2023 2022 Acquisition expenses (1) $ 1,241 $ 1,360 $ 1,203 $ — $ — Administrative services expenses 14,440 12,928 7,658 3,447 3,526 Asset management and subordinated performance fee 33,847 26,157 28,110 15,014 8,843 Other related party expenses (2)(3) 1,192 875 355 855 3,060 Total related party fees and reimbursements $ 50,720 $ 41,320 $ 37,326 $ 19,316 $ 15,429 ______________________ (1) Total acquisition fees and expenses paid during the years ended December 31, 2023, 2022 and 2021 were $5.8 million, $11.7 million and $15.0 million respectively, of which $4.6 million, $10.3 million and $13.8 million were capitalized in Commercial mortgage loans, held for investment and Real estate securities, available for sale, measured at fair value in the consolidated balance sheets for the years ended December 31, 2023, 2022 and 2021.
Net proceeds received are net of direct selling costs associated with the disposition of the real estate owned asset. 26 Table of Contents Real Estate Securities - Estimating Fair Value On the acquisition date, all of our real estate securities will be classified as available for sale ("AFS") and will be carried at fair value, with any unrealized gains or losses reported as a component of accumulated other comprehensive income or loss.
Real Estate Securities - Estimating Fair Value On the acquisition date, all of our real estate securities will be classified as available for sale ("AFS") and will be carried at fair value, with any unrealized gains or losses reported as a component of accumulated other comprehensive income or loss.
The commercial mortgage loans held for investment as of December 31, 2022 and December 31, 2021 had a total carrying value, net of allowance for credit losses, of $5,228.9 million and $4,211.1 million, respectively.
Portfolio As of December 31, 2023 and 2022, our portfolio consisted of 144 and 161 commercial mortgage loans, held for investment, respectively. The commercial mortgage loans held for investment, net of allowance for credit losses, as of December 31, 2023 and 2022 had a total carrying value of $4,989.8 million and $5,228.9 million, respectively.
Our board of directors currently intends to operate at a leverage level of between one to three times book value of equity. However, our board of directors may change this target without shareholder approval. We anticipate that our debt and equity financing sources and our anticipated cash generated from operations will be adequate to fund our anticipated uses of capital.
However, our board of directors may change this target without shareholder approval. We anticipate that our debt and equity financing sources and our anticipated cash generated from operations will be adequate to fund our anticipated uses of capital.
As of December 31, 2022, our portfolio consisted of (i) 161 commercial mortgage loans, held for investment, (ii) two commercial mortgage loans, held for sale, measured at fair value, (iii) seven investments in CRE CLO bonds and (iv) 202 RMBS investments.
As of December 31, 2022, our portfolio consisted of (i) 161 commercial mortgage loans, held for investment, (ii) two commercial mortgage loans, held for sale, measured at fair value, (iii) seven real estate securities, available for sale, measured at fair value and (iv) ARMs.
Outflows were partially offset by $38.5 million of proceeds received from borrowings on other financing and loan participation for commercial mortgage loans and net proceeds of $968.2 million received from repurchase agreements on CLOs. Cash Flows for the Year Ended December 31, 2021 Net cash provided by operating activities for the year ended December 31, 2021 was $146.5 million.
Outflows were partially offset by $38.5 million of proceeds received from borrowings on other financing and loan participation for commercial mortgage loans and net proceeds of $968.2 million received from repurchase agreements on CLOs.
The methodology for calculating Distributable Earnings and Run-Rate Distributable Earnings may differ from the methodologies employed by other companies and thus may not be comparable to the Distributable Earnings reported by other companies. 52 Table of Contents The following table provides a reconciliation of GAAP net income to Distributable Earnings for the years ended December 31, 2022, December 31, 2021 and December 31, 2020 (dollars in thousands): Year Ended December 31, 2022 2021 2020 GAAP Net Income $ 14,215 $ 25,702 $ 54,746 Adjustments: Depreciation and amortization 5,408 2,107 2,234 Impairment of Acquired Assets — 88,282 — CLO amortization acceleration (1) (438) 250 264 Unrealized (gain)/loss on financial instruments (2) 17,010 (7,853) 1,102 Unrealized (gain)/loss - ARMs 43,557 20,670 — Subordinated performance fee (8,380) 9,846 — Non-Cash Compensation Expense 3,485 — — Increase/(decrease) in provision for credit losses 36,115 (5,192) 13,296 Loan Workout Charges (3) 5,104 — — Impairment losses on real estate owned assets — — 398 Realized trading and derivatives (gain)/loss on ARMs 21,726 13,600 — Run Rate Distributable Earnings (4) $ 137,802 $ 147,412 $ 72,040 Realized trading and derivatives gain/(loss) on ARMs (21,726) (13,600) — Distributable Earnings $ 116,076 $ 133,812 $ 72,040 7.5% Cumulative Redeemable Preferred Stock, Series E Dividend $ (19,367) $ (4,842) $ — Noncontrolling interests in joint ventures net (income)/loss 216 — — Depreciation and amortization attributed to noncontrolling interests of joint ventures (1,415) — — Distributable Earnings attributable to stockholders and noncontrolling interests 95,510 128,970 72,040 Average Common Stock and Common Stock Equivalents 1,456,871 1,146,009 974,184 GAAP Net Income/(Loss) ROE (0.3) % 1.8 % 5.6 % Run-Rate Distributable Earnings ROE 8.0 % 12.4 % 7.4 % Distributable Earnings ROE 6.6 % 11.3 % 7.4 % GAAP Net Income/(Loss) Per Share, Diluted $ (0.38) $ (0.18) $ 0.90 GAAP Net Income/(Loss) Per Share, Fully Converted (5) $ (0.06) $ 0.33 $ 0.96 Run-Rate Distributable Earnings Per Share, Fully Converted (5) $ 1.31 $ 2.23 $ 1.27 Distributable Earnings Per Share, Fully Converted (5) $ 1.07 $ 2.02 $ 1.27 ________________________ (1) Adjusted for non-cash CLO amortization acceleration to effectively amortize issuance costs of our CLOs over the expected lifetime of the CLOs.
The following table provides a reconciliation of GAAP net income to Distributable Earnings for the years ended December 31, 2023, 2022, and 2021 (dollars in thousands): Year Ended December 31, 2023 2022 2021 GAAP Net Income $ 144,509 $ 14,215 $ 25,702 Adjustments: Depreciation and amortization 7,128 5,408 2,107 Impairment of Acquired Assets — — 88,282 CLO amortization acceleration (1) (5,521) (438) 250 Unrealized (gain)/loss on financial instruments (2) 7,185 17,010 (7,853) Unrealized (gain)/loss - ARMs 415 43,557 20,670 Subordinated performance fee (3) 6,171 (8,380) 9,846 Non-Cash Compensation Expense 4,762 3,485 — (Reversal of)/Provision for credit losses 33,738 36,115 (5,192) Loan workout charges/(loan workout recoveries) (4) (5,105) 5,104 — Realized (gain)/loss on debt extinguishment / CLO call (2,201) — — Realized trading and derivatives (gain)/loss on ARMs 677 21,726 13,600 Run Rate Distributable Earnings (5) $ 191,758 $ 137,802 $ 147,412 Realized trading and derivatives gain/(loss) on ARMs (677) (21,726) (13,600) Realized cash gain/(loss) adjustment on REO (6) (1,571) — — Distributable Earnings $ 189,510 $ 116,076 $ 133,812 7.5% Cumulative Redeemable Preferred Stock, Series E Dividend $ (19,367) $ (19,367) (4,842) Non-controlling interests in joint ventures net (income)/loss (602) 216 — Depreciation and amortization attributed to non-controlling interests of joint ventures (31) (1,415) — Distributable Earnings to Common 169,510 95,510 128,970 Average Common Stock and Common Stock Equivalents 1,403,558 1,456,871 1,146,009 GAAP Net Income/(Loss) ROE 8.9 % (0.3) % 1.8 % Run-Rate Distributable Earnings ROE 12.2 % 8.0 % 12.4 % Distributable Earnings ROE 12.1 % 6.6 % 11.3 % GAAP Net Income/(Loss) Per Share, Diluted $ 1.42 $ (0.38) $ (0.18) GAAP Net Income/(Loss) Per Share, Fully Converted (7) $ 1.42 $ (0.06) $ 0.33 Run-Rate Distributable Earnings Per Share, Fully Converted (7) $ 1.94 $ 1.31 $ 2.23 Distributable Earnings Per Share, Fully Converted (7) $ 1.92 $ 1.07 $ 2.02 ________________________ (1) Adjusted for non-cash CLO amortization acceleration to effectively amortize issuance costs of our CLOs over the expected lifetime of the CLOs.
The Company designates loans as non-performing when (i) full payment of principal and coupon interest components become 90-days past due ("non-accrual status"); or (ii) the Company has reasonable doubt as to whether the collection of contractual components can be satisfied ("cost recovery status").
Risk rating categories range from "1" to "5" with "1" representing the lowest risk of loss and "5" representing the highest risk of loss with the ratings updated quarterly. 28 Table of Contents The Company designates loans as non-performing when (i) full payment of principal and coupon interest components become 90-days past due ("non-accrual status"); or (ii) the Company has reasonable doubt as to whether the collection of contractual components can be satisfied ("cost recovery status").
The Company has a 79% interest in the Jeffersonville JV, while the affiliated fund has a 21% interest. The Company invested a total of $109.8 million, made up of $88.7 million in debt and $21.1 million in equity, representing 79% of the ownership interest in the Jeffersonville JV.
The Company invested a total of $109.8 million, made up of $88.7 million in debt and $21.1 million in equity, representing 79% of the ownership interest in the Jeffersonville JV. The affiliated fund made up the remaining $29.8 million composed of a $24.0 million mortgage note payable and $5.8 million in non-controlling interest.
This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss. Risk rating categories range from "1" to "5" with "1" representing the lowest risk of loss and "5" representing the highest risk of loss with the ratings updated quarterly.
This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss.
Should the value of our collateral decrease as a result of deteriorating credit quality, resulting margin calls may cause an adverse change in our liquidity position.
The Repo and Revolving Credit Facilities generally provide that in the event of a decrease in the value of our collateral, the lenders can demand additional collateral. Should the value of our collateral decrease as a result of deteriorating credit quality, resulting margin calls may cause an adverse change in our liquidity position.
Net Result from Derivative Transactions Net result from derivative transactions for three months ended December 31, 2022 of a $0.6 million loss is composed of a realized gain of $2.4 million offset by an unrealized loss of $3.0 million primarily due to termination and settlement of our interest rate swap positions throughout the quarter.
Net Result from Derivative Transactions Net result from derivative transactions for the year ended December 31, 2023 of a $0.9 million gain was composed of a realized gain of $1.0 million due primarily to the termination and settlement of interest rate swap positions partially offset by an unrealized loss of $0.1 million.
The provision for credit losses is measured on a collective (pool) basis when similar risk characteristics exist for multiple financial instruments. If similar risk characteristics do not exist, the Company measures the provision for credit losses on an individual instrument basis. The determination of whether a particular financial instrument should be included in a pool can change over time.
The general allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist for multiple financial instruments. If similar risk characteristics do not exist, the Company measures the general allowance for credit losses on an individual instrument basis.
As of December 31, 2022, the Company does not hold any derivative positions related to the trading securities. 47 Table of Contents Repurchase Agreements The following tables summarize our Repurchase Agreements, Commercial Mortgage Loans, Trading Securities and our MRAs for the years ended December 31, 2022, 2021 and 2020 respectively: As of December 31, 2022 Amount Outstanding Average Outstanding Balance Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Repurchase Agreements, Commercial Mortgage Loans $ 522,890 $ 832,034 $ 699,408 $ 680,859 $ 813,144 $ 834,337 $ 709,679 $ 729,329 Repurchase Agreements, Real Estate Securities $ 54,610 $ 53,288 $ 112,613 $ 222,864 $ 44,744 $ 54,033 $ 53,688 $ 174,389 Repurchase Agreements, Real Estate Securities Classified As Trading $ 1,659,931 $ 240,000 $ 225,000 $ 217,144 $ 3,055,413 $ 1,818,495 $ 230,010 $ 220,102 Total $ 2,237,431 $ 1,125,322 $ 1,037,021 $ 1,120,867 As of December 31, 2021 Amount Outstanding Average Outstanding Balance Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Repurchase Agreements, Commercial Mortgage Loans $ 152,925 $ 287,462 $ 550,156 $ 1,019,600 $ 340,485 $ 282,891 $ 331,871 $ 959,729 Repurchase Agreements, Real Estate Securities $ 88,272 $ 46,510 $ 46,531 $ 34,311 $ 123,322 $ 57,301 $ 46,527 $ 37,735 Repurchase Agreements, Real Estate Securities Classified As Trading $ — $ — $ — $ 4,144,473 $ — $ — $ — $ 4,266,556 Total $ 241,197 $ 333,972 $ 596,687 $ 5,198,384 As of December 31, 2020 Amount Outstanding Average Outstanding Balance Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Repurchase Agreements, Commercial Mortgage Loans $ 234,524 $ 226,224 $ 183,033 $ 276,340 $ 282,282 $ 238,280 $ 197,632 $ 279,187 Repurchase Agreements, Real Estate Securities $ 496,880 $ 335,256 $ 177,541 $ 186,828 $ 412,809 $ 351,202 $ 316,229 $ 183,632 Total $ 731,404 $ 561,480 $ 360,574 $ 463,168 The use of our repurchase facilities is dependent upon a number of factors including but not limited to: origination volume, loan repayments and prepayments, our use of other financing sources such as collateralized loan obligations, our liquidity needs and types of loan assets and underlying collateral that we hold.
The following tables summarize our Repo and Revolving Credit Facilities and our master repurchase agreements ("MRAs") for the years ended December 31, 2023, 2022, and 2021, respectively: 48 Table of Contents As of December 31, 2023 Amount Outstanding Average Outstanding Balance Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Repurchase Agreements, Commercial Mortgage Loans $ 604,421 $ 695,039 $ 249,345 $ 299,707 $ 725,300 $ 796,659 $ 816,929 $ 278,168 Repurchase Agreements, Real Estate Securities 107,934 176,993 240,010 174,055 217,389 209,025 349,878 263,769 Repurchase Agreements, Real Estate Securities held as trading 121,000 113,000 — — 149,387 117,159 57 — Total $ 833,355 $ 985,032 $ 489,355 $ 473,762 $ 1,092,076 $ 1,122,843 $ 1,166,864 $ 541,937 As of December 31, 2022 Amount Outstanding Average Outstanding Balance Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Repurchase Agreements, Commercial Mortgage Loans $ 522,890 $ 832,034 $ 699,408 $ 680,859 $ 813,144 $ 834,337 $ 709,679 $ 729,329 Repurchase Agreements, Real Estate Securities 54,610 53,288 112,613 222,864 44,744 54,033 53,688 174,389 Repurchase Agreements, Real Estate Securities held as trading 1,659,931 240,000 225,000 217,144 3,055,413 1,818,495 230,011 220,102 Total $ 2,237,431 $ 1,125,322 $ 1,037,021 $ 1,120,867 $ 3,913,301 $ 2,706,865 $ 993,378 $ 1,123,820 As of December 31, 2021 Amount Outstanding Average Outstanding Balance Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Repurchase Agreements, Commercial Mortgage Loans $ 152,925 $ 287,462 $ 550,156 $ 1,019,600 $ 340,485 $ 282,891 $ 331,871 $ 959,729 Repurchase Agreements, Real Estate Securities 88,272 46,510 46,531 34,311 123,322 57,301 46,527 37,735 Repurchase Agreements, Real Estate Securities held as trading — — — 4,144,473 — — — 4,266,556 Total $ 241,197 $ 333,972 $ 596,687 $ 5,198,384 $ 463,807 $ 340,192 $ 378,398 $ 5,264,020 The use of our warehouse lines is dependent upon a number of factors including but not limited to: origination volume, loan repayments and prepayments, our use of other financing sources such as collateralized loan obligations, our liquidity needs and types of loan assets and underlying collateral that we hold.
Results of Operations Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 The Company conducts its business through the following segments: • The real estate debt business focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgages, subordinate mortgages, mezzanine loans and participations in such loans. • The real estate securities business focuses on investing in and asset managing real estate securities.
Real estate securities for which the fair value option has been elected are not evaluated for other-than-temporary impairment as changes in fair value are recorded in the consolidated statement of operations. 29 Table of Contents Results of Operations Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 The Company conducts its business through the following segments: • The real estate debt business focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgages, subordinate mortgages, mezzanine loans and participations in such loans. • The real estate securities business focuses on investing in and asset managing real estate securities.
We expect to use the advances from these Repo Facilities to finance the acquisition or origination of eligible loans, including first mortgage loans, subordinated mortgage loans, mezzanine loans and participation interests therein. The Repo Facilities generally provide that in the event of a decrease in the value of our collateral, the lenders can demand additional collateral.
We expect to use the advances from these Repo and Revolving Credit Facilities to finance the acquisition or origination of eligible loans, including first mortgage loans, subordinated mortgage loans, mezzanine loans and participation interests therein.
(3) As of December 31, 2022 and December 31, 2021, the related party payable includes $2.9 million and $1.9 million, respectively, of payments made by the Advisor to third party vendors on behalf of the Company.
(3) As of December 31, 2023 and December 31, 2022, the related party payable includes $0.7 million and $2.9 million, respectively, of payments made by the Advisor to third party vendors on behalf of the Company. The payables as of December 31, 2023 and 2022 in the table above are included in Due to affiliates in the consolidated balance sheets.
As of December 31, 2022, the Company’s quarterly cash dividend was $0.355 per share of common stock (which was paid on an as-converted basis on the Company’s shares of Series H convertible preferred stock ("Series H Preferred Stock") and Series I convertible preferred stock ("Series I Preferred Stock"), and $0.46875 per share on the Company’s shares of 7.50% Series E Cumulative Redeemable Preferred Stock ("Series E Preferred Stock").
As of December 31, 2023, the Company’s quarterly cash dividend was $0.355 per share of common stock (which was paid on an as-converted basis on the Company’s shares of Series H Preferred Stock), and $0.46875 per share on the Company’s shares of Series E Preferred Stock. The payment of future dividends is subject to declaration by the Board of Directors.
As discussed below, in the first quarter of 2022, pursuant to the Franklin BSP Realty Trust, Inc. 2021 Equity Incentive Plan, the Company issued awards of restricted stock units to its officers and certain other personnel of the Advisor who provide services to the Company under the Advisory Agreement (see Note 12 - Share-Based Compensation).
Pursuant to the Company's 2021 Incentive Plan, in the first quarter of 2023, the Company issued awards of restricted stock units to its officers and certain other personnel of the Advisor who provide services to the Company under the Advisory Agreement.
Other Transactions In August 2021 the Company and an affiliate of the Company entered into a joint venture agreement and formed a joint venture entity, Jeffersonville Member, LLC (the "Jeffersonville JV") to acquire a $139.5 million triple net lease property in Jeffersonville, GA.
Other Transactions In the third quarter of 2021, the Company and an affiliate of the Company entered into the Jeffersonville JV to acquire a $139.5 million triple net lease property in Jeffersonville, GA. The Company has a 79% interest in the Jeffersonville JV, while the affiliated fund has a 21% interest.
The Company believes Run-Rate Distributable Earnings is a useful financial metric because it presents the Distributable Earnings of its core businesses, net of the impacts of the realized trading and derivative gain/loss on the residential adjustable-rate mortgage securities acquired from Capstead, which the Company is actively in the process of liquidating from its portfolio.
The Company believes Run-Rate Distributable Earnings is a useful financial metric because it presents the Distributable Earnings of its core businesses, net of the impacts of realized cash gain/loss adjustments on REO as well as the realized trading and derivative gain/loss on the residential adjustable-rate mortgage securities acquired from Capstead Mortgage Corporation, which the Company has liquidated from its portfolio. 53 Table of Contents Distributable Earnings and Run-Rate Distributable Earnings do not represent net income (loss) and should not be considered as an alternative to GAAP net income (loss).
As a result of the October 2021 acquisition of Capstead, the Company acquired a portfolio of ARM Agency Securities. • The conduit business operated through the Company's TRS, which is focused on generating risk-adjusted returns by originating and subsequently selling fixed-rate commercial real estate loans into the CMBS securitization market at a profit. • The real estate owned business represents real estate acquired by the Company through foreclosure, deed in lieu of foreclosure, or purchase.
The portfolio was completely divested by the third quarter of 2023. • The commercial real estate conduit business operated through the Company's TRS, which is focused on generating risk-adjusted returns by originating and subsequently selling fixed-rate commercial real estate loans into the CMBS securitization market at a profit.
Amended Advisory Agreement Refer to “Note 11 - Related Party Transactions and Arrangements” for a summary of the Company’s Advisory Agreement with the Advisor and amounts paid to the Advisor pursuant to the Advisory Agreement for the years ended December 31, 2022 and December 31, 2021.
Amended Advisory Agreement Refer to “Note 11 - Related Party Transactions and Arrangements” for a summary of the Company’s Advisory Agreement with the Advisor and amounts paid to the Advisor pursuant to the Advisory Agreement for the years ended December 31, 2023 and December 31, 2022. 51 Table of Contents The Nominating and Corporate Governance Committee (the “Committee”) of the Company's board of directors, which consists solely of the Company’s independent directors, negotiated, approved and recommended that the board of directors approve, the amended Advisory Agreement.
In addition to our current mix of financing sources, we may also access additional forms of financings, including credit facilities, securitizations, public and private, secured and unsecured debt issuances by us or our subsidiaries, or through capital recycling initiatives whereby we sell certain assets in our portfolio and reinvest the proceeds in assets with more attractive risk-adjusted returns. 43 Table of Contents Collateralized Loan Obligations During the twelve months ended December 31, 2022, the Company raised $960.0 million of capital through the issuance of BSPRT 2022-FL8 Issuer, Ltd. and $670.6 million of capital through the issuance of BSPRT 2022-FL9 Issuer, LLC.
We also may access liquidity through our dividend reinvestment and stock purchase plan ("DRIP"), which includes a direct stock purchase option. 47 Table of Contents In addition to our current mix of financing sources, we may also access additional forms of financings, including credit facilities, securitizations, public and private, secured and unsecured debt issuances by the Company or its subsidiaries, or through capital recycling initiatives whereby we sell certain assets in our portfolio and reinvest the proceeds in assets with more attractive risk-adjusted returns.
During the twelve months ended December 31, 2020, the maximum monthly average outstanding balance was $721.0 million, of which $268.2 million was related to repurchase agreements on our commercial mortgage loans and $452.8 million for repurchase agreements on our real estate securities. 48 Table of Contents Cash Flows Cash Flows for the Year Ended December 31, 2022 Net cash provided by operating activities for the year ended December 31, 2022 was $152.5 million.
During the twelve months ended December 31, 2023, the maximum monthly average outstanding balance was $1.2 billion, of which $0.9 billion was related to repurchase agreements on our commercial mortgage loans and $0.3 billion for repurchase agreements on our real estate securities.
The amounts payable as of December 31, 2022 and 2021 in the table above are included in Due to affiliates on the Company's consolidated balance sheets. Off Balance Sheet Arrangements We currently have no off balance sheet arrangements as of December 31, 2022 and through the date of the filing of this Form 10-K.
Off Balance Sheet Arrangements We currently have no off balance sheet arrangements as of December 31, 2023 and through the date of the filing of this Form 10-K.
As of December 31, 2022, our portfolio consisted of (i) 161 commercial mortgage loans, held for investment, (ii) two commercial mortgage loans, held for sale, measured at fair value, (iii) seven investments in CRE CLO bonds and (iv) 202 RMBS investments.
As of December 31, 2023, our portfolio consisted of (i) 144 commercial mortgage loans, held for investment and (ii) seven real estate securities, available for sale, measured at fair value.
Amounts are calculated based on daily averages for the years ended December 31, 2022 and 2021, respectively. (2) Includes the effect of amortization of premium or accretion of discount and deferred fees. (3) Calculated as interest income or expense divided by average carrying value. (4) Calculated by dividing total average interest-bearing liabilities by total average interest-earning assets.
Amounts are calculated based on daily averages for the years ended December 31, 2023 and 2022, respectively. (2) Includes the effect of amortization of premium or accretion of discount and deferred fees. (3) Excludes other income on the real estate owned business segment.
The Company recognized $5.5 million interest income from these loans for the year ended December 31, 2022, in the Company’s consolidated statements of operations. 51 Table of Contents The table below shows the costs incurred due to arrangements with our Advisor and its affiliates during the years ended December 31, 2022, 2021 and 2020 and the associated amounts payable as of December 31, 2022 and 2021 (dollars in thousands).
The table below shows the costs incurred due to arrangements with our Advisor and its affiliates during the years ended December 31, 2023, 2022 and 2021 and the associated amounts payable as of December 31, 2023 and 2022 (dollars in thousands). See Note 11 - Related Party Transactions and Arrangements for further detail.
In a simple interest rate cap, the borrower pays a premium for a notional principal amount based on a capped interest rate (the “cap rate”).
(4) Our floating rate loan agreements generally contain the contractual obligation for the borrower to maintain an interest rate cap to protect against rising interest rates. In a simple interest rate cap, the borrower pays a premium for a notional principal amount based on a capped interest rate (the “cap rate”).
The affiliate made up the remaining $29.8 million composed of a $24.0 million mortgage note payable and $5.7 million in equity. The Company has control of Jeffersonville JV with 79% ownership and, therefore, consolidates Jeffersonville JV on its consolidated balance sheet. The Company's $88.7 million mortgage note payable to Jeffersonville JV is eliminated in consolidation (see Note 7 - Debt).
The Company has majority control of Jeffersonville JV and, therefore, consolidates the accounts of Jeffersonville JV in its consolidated financial statements. The Company's $88.7 million mortgage note payable to Jeffersonville JV is eliminated in consolidation (see Note 7 - Debt).
Net Interest Income Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securities and TRS segments. 27 Table of Contents The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the years ended December 31, 2022 and 2021 (dollars in thousands): Year Ended December 31, 2022 2021 Average Carrying Value (1) Interest Income / Expense (2) WA Yield / Financing Cost (3) Average Carrying Value (1) Interest Income / Expense (2) WA Yield / Financing Cost (3) Interest-earning assets: Real estate debt $ 4,917,287 $ 320,546 6.5 % $ 3,156,492 $ 189,090 6.0 % Real estate conduit 97,556 6,956 7.1 % 75,633 3,060 4.0 % Real estate securities 1,203,242 30,203 2.5 % 899,033 24,740 2.8 % Total $ 6,218,085 $ 357,705 5.8 % $ 4,131,158 $ 216,890 5.3 % Interest-bearing liabilities: Repurchase agreements - commercial mortgage loans $ 771,223 $ 40,162 5.2 % $ 477,138 $ 17,299 3.6 % Other financing and loan participation- commercial mortgage loans 47,216 1,487 3.1 % 36,045 1,874 5.2 % Repurchase agreements - real estate securities 1,097,874 8,850 0.8 % 871,466 3,639 0.4 % Collateralized loan obligations 2,909,513 108,926 3.7 % 1,821,993 35,920 2.0 % Unsecured debt 101,659 6,283 6.2 % 35,268 2,103 6.0 % Total $ 4,927,485 $ 165,708 3.4 % $ 3,241,910 $ 60,835 1.9 % Net interest income/spread $ 191,997 2.4 % $ 156,055 3.4 % Average leverage % (4) 79.2 % 78.5 % Weighted average levered yield (5) 14.9 % 17.5 % __ ______________________ (1) Based on amortized cost for real estate debt and real estate securities and principal amount for interest-bearing liabilities.
The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the years ended December 31, 2023 and 2022 (dollars in thousands): Year Ended December 31, 2023 2022 Average Carrying Value (1) Interest Income/Expense (2)(3) Avg Yield/Financing Cost (4) Average Carrying Value (1) Interest Income/Expense (2) Avg Yield/Financing Cost (4) Interest-earning assets: Real estate debt (5) $ 5,038,267 $ 530,116 10.5 % $ 4,917,287 $ 320,546 6.5 % Real estate conduit 16,408 2,244 13.7 % 97,556 6,956 7.1 % Real estate securities 260,425 17,323 6.7 % 1,203,242 30,203 2.5 % Total $ 5,315,100 $ 549,683 10.3 % $ 6,218,085 $ 357,705 5.8 % Interest-bearing liabilities: Repurchase Agreements - commercial mortgage loans $ 573,530 $ 54,564 9.5 % $ 771,223 $ 40,162 5.2 % Other financing and loan participation - commercial mortgage loans 59,519 5,478 9.2 % 47,216 1,487 3.1 % Repurchase Agreements - real estate securities 244,469 14,118 5.8 % 1,097,874 8,850 0.8 % Collateralized loan obligations 3,165,612 223,686 7.1 % 2,909,513 103,744 3.6 % Unsecured debt 85,613 7,731 9.0 % 101,659 6,283 6.2 % Total $ 4,128,743 $ 305,577 7.4 % $ 4,927,485 $ 160,526 3.3 % Net interest income/spread $ 244,106 2.9 % $ 197,179 2.5 % Average leverage % (6) 77.7 % 79.2 % Weighted average levered yield (7) 20.6 % 15.3 % __ ______________________ (1) Based on amortized cost for real estate debt and real estate securities and principal amount for interest-bearing liabilities.
Historically this business has focused primarily on CMBS, CRE CLO bonds, CDO notes and other securities.
Historically this business has focused primarily on CMBS, CRE CLO bonds, CDO notes, and other securities. As a result of the October 2021 acquisition of Capstead, the Company acquired a portfolio of ARM Agency Securities.
As of December 31, 2021, our other real estate investments, measured at fair value, was composed of one investment with a total fair value of $2.1 million. As of December 31, 2022 and 2021, our real estate owned, held for investment composed of eleven and one investments, respectively with carrying values of $127.8 million and $90.0 million, respectively.
As of December 31, 2023 and 2022, we had $242.6 million and $221.0 million, respectively, of real estate securities, available for sale, measured at fair value. As of December 31, 2023 and 2022, our real estate owned, held for investment portfolio was composed of three and 11 properties, respectively, with carrying values of $115.8 million and $127.8 million, respectively.
(2) Represents unrealized gains and losses on (i) commercial mortgage loans, held for sale, measured at fair value, (ii) other real estate investments, measured at fair value and (iii) derivatives. (3) Represents loan workout expenses the Company incurred, which the Company deems likely to be recovered.
(2) Represents unrealized gains and losses on (i) commercial mortgage loans, held for sale, measured at fair value, (ii) other real estate investments, measured at fair value and (iii) derivatives. (3) Represents accrued and unpaid subordinated performance fee. In addition, reversal of subordinated performance fee represents cash payments of the subordinated performance fee made during the period.
Inflows were partially offset by the origination and acquisition of $2,227.7 million of commercial mortgage loans, held for investment, and the purchase of real estate securities for $220.6 million. Net cash used in financing activities for the year ended December 31, 2022 was $3,227.5 million.
Inflows were partially offset by the origination and acquisition of $936.3 million of commercial mortgage loans, held for investment and the purchase of real estate securities for $223.8 million.
Realized Gain/Loss on Commercial Mortgage Loans, Held for Sale, measured at Fair Value Realized gain on commercial mortgage loans held for sale, measured at fair value at the TRS for the year ended December 31, 2022 was $2.4 million compared to $24.2 million for the year ended December 31, 2021.
Realized gain on commercial mortgage loans, held for sale, 31 Table of Contents measured at fair value for the year ended December 31, 2022 of $2.4 million was related to the sale of $368.9 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $370.2 million.
Our contractually obligated expenditures primarily consist of payment obligations under the debt financing arrangements which are set forth below, including in the table under “Contractual Obligations and Commitments.” We expect to use additional debt and equity financing as a source of capital.
Our contractually obligated payments primarily consist of payment obligations under the debt financing arrangements which are set forth below, and included in the table under Contractual Obligations and Commitments . We may from time to time purchase or retire outstanding debt securities and repurchase or redeem our equity securities.
Unrealized Gain/Loss on Commercial Mortgage, Loans Held for Sale, measured at Fair Value Unrealized loss on commercial mortgage loans, held for sale, measured at fair value, at the TRS for the year ended December 31, 2022 was $0.5 million compared to an unrealized gain of $0.5 million for the year ended December 31, 2021.
Comparatively, unrealized gain for the year ended December 31, 2022 was $0.5 million related to changes in fair market values on loans held in the Company's TRS coupled with the reversal of unrealized gain/loss on a sale of commercial real estate loans into the CMBS securitization market.
Additionally, as of December 31, 2022, the Company had $16.0 million of reinvestment capital available across all outstanding collateralized loan obligations.
Collateralized Loan Obligations During the year ended December 31, 2023, the Company raised $896.6 million through the issuance of BSPRT 2023-FL10 Issuer, LLC. Additionally, as of December 31, 2023, the Company had $54.5 million of reinvestment capital available across all outstanding collateralized loan obligations.
Cash inflows were primarily driven by proceeds from principal repayments of $1,225.6 million received on commercial mortgage loans, held for investment, proceeds received from the sale/repayment of real estate securities of $2,059.4 million, $541.3 million received from principal collateral on mortgage investments and cash acquired of $174.1 million related to the merger with Capstead.
Cash Flows from Investing Activities Our cash flows from investing activities consisted of cash inflows primarily driven by proceeds from principal repayments of $1,065.5 million received on commercial mortgage loans, held for investment, proceeds received from the sale of real estate securities of $418.8 million, proceeds from the sale of other real estate investments of $39.8 million and $17.7 million received from principal collateral on mortgage investments.
Realized Gain/Loss on Commercial Mortgage Loans, Held for Sale, measured at Fair Value Realized loss on commercial mortgage loans held for sale, measured at fair value at the TRS for the three months ended December 31, 2022 was $2.5 million compared to a realized gain of $4.8 million for the three months ended September 30, 2022.
Realized Gain/(Loss) on Sale of Commercial Mortgage Loans, Held for Sale, Measured at Fair Value Realized gain on commercial mortgage loans, held for sale, measured at fair value for the three months ended December 31, 2023 of $0.8 million was related to the sale of $26.3 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $27.0 million.
Lastly, the increase in our other operating expenses is primarily due to an increase in our equity base size of our investment vehicles. 30 Table of Contents Comparison of the Three Months Ended December 31, 2022 to the Three Months Ended September 30, 2022 Net Interest Income Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securities and TRS segments.
Net Interest Income Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securities and TRS segments.
(5) Calculated by dividing total average interest-bearing liabilities by total average interest-earning assets. (6) Calculated by dividing net interest income/spread by the average interest-earning assets less average interest-bearing liabilities. Interest Income Interest income for the three months ended December 31, 2022 and September 30, 2022 totaled $118.1 million and $94.1 million, respectively.
(6) Calculated by dividing total average interest-bearing liabilities by total average interest-earning assets. (7) Calculated by dividing net interest income/spread by the average interest-earning assets less average interest-bearing liabilities.
(5) Calculated by dividing net interest income/spread by the average interest-earning assets less average interest-bearing liabilities. Interest Income Interest income for the years ended December 31, 2022 and 2021 totaled $357.7 million and $216.9 million, respectively.
(6) Calculated by dividing total average interest-bearing liabilities by total average interest-earning assets. (7) Calculated by dividing net interest income/spread by the average interest-earning assets less average interest-bearing liabilities.

… 165 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−2 removed11 unchanged
Biggest changeMany factors including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control contribute to interest rate risk. To meet our short and long-term liquidity requirements, we may borrow funds at fixed and variable rates.
Biggest changeInterest Rate Risk Our market risk arises primarily from interest rate risk relating to interest rate fluctuations. Many factors including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control contribute to interest rate risk.
The following table quantifies the potential changes in interest income net of interest expense should interest rates increase by 50 or 100 basis points or decrease by 25 basis points, assuming that our current balance sheet was to remain constant and no actions were taken to alter our existing interest rate sensitivity.
The following table quantifies the potential changes in interest income net of interest expense should interest rates increase by 50 or 100 basis points or decrease by 25 or 50 basis points, assuming that our current balance sheet was to remain constant and no actions were taken to alter our existing interest rate sensitivity.
In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses. Item 8. Financial Statements and Supplementary Data.
In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses. 55 Table of Contents Item 8. Financial Statements and Supplementary Data.
As of December 31, 2022 and 2021, our portfolio included 157 and 161 variable rate investments, respectively, based on LIBOR and SOFR (or "indexing rates") for various terms. Borrowings under our financing arrangements are also based on LIBOR and SOFR.
As of December 31, 2023 and 2022, our portfolio included 141 and 157 variable rate investments, respectively, based on LIBOR and SOFR (or "indexing rates") for various terms. Borrowings under our financing arrangements are also based on LIBOR and SOFR.
Estimated Percentage Change in Interest Income Net of Interest Expense Change in Indexing Rates December 31, 2022 December 31, 2021 (-) 25 Basis Points (1.78) % 2.08 % Base Interest Rate — % — % (+) 50 Basis Points 3.49 % (1.74) % (+) 100 Basis Points 6.98 % (1.64) % 54 Table of Contents Real Estate Risk The market values of commercial mortgage assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, the impacts of the COVID-19 pandemic, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; and demographic factors.
Estimated Percentage Change in Interest Income Net of Interest Expense Change in Indexing Rates December 31, 2023 December 31, 2022 (-) 25 Basis Points (1.49) % (1.78) % Base Interest Rate — % — % (+) 50 Basis Points 3.01 % 3.49 % (+) 100 Basis Points 6.03 % 6.98 % Real Estate Risk The market values of commercial mortgage assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; and demographic factors.
Our interest rate risk management objectives are to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs.
To meet our short and long-term liquidity requirements, we may borrow funds at fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs.
Removed
Market Risk As a result of the closing of the Capstead merger on October 19, 2021 we hold ARM Agency securities. Changes in the level of interest rates and spreads can significantly impact the value of these assets. We may utilize a variety of financial instruments in order to limit the adverse effects of interest rates on our results.
Removed
During the year ended December 31, 2022, we have made significant strides in unwinding our ARMs portfolio and continue to mitigate our market exposure as part of our business strategy. Interest Rate Risk Our market risk arises primarily from interest rate risk relating to interest rate fluctuations.

Other FBRT 10-K year-over-year comparisons