Franklin BSP Realty Trust Inc
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
FBRT$6.20-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-29.
0001562528-24-000016
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001562528-24-000025
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 206 previous paragraphs and 206 current paragraphs.
120 unchanged; 49 reworded; 33 added; 31 removed; 6 previous and 4 current paragraphs rearranged.
Tables are not compared: 20 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
•impairment in the value of real estate property securing our loans or that we own;
Current report
Interest income for the three months ended June 30, 2024 and 2023 totaled $133.6 million and $152.9 million, respectively, a decrease of $19.3 million. This decrease was primarily due to an increase in non-accrual loans, which totaled $225.4 million in principal as of June 30, 2024 partially offset by an increase in the average carrying value of our real estate debt, coupled with the recognition of $20.4 million of interest income in the sale of a Brooklyn hotel asset in the second quarter of 2023. As of June 30, 2024, our portfolio consisted of (i) 153 commercial mortgage loans, held for investment, (ii) four commercial mortgage loans, held for sale, measured at fair value and (iii) nine real estate securities, available for sale, measured at fair value. As of June 30, 2023, our portfolio consisted of (i) 156 commercial mortgage loans, held for investment, (ii) one commercial mortgage loan, held for sale, measured at fair value and (iii) nine real estate securities, available for sale, measured at fair value and (iv) ARMs (as defined below).
Current report
For the three months ended June 30, 2024 and 2023, revenue from real estate owned was $4.1 million and $6.4 million, respectively. The $2.3 million decrease was primarily the result of a one-time catch up of revenue related to property operations on an office asset in Missouri that occurred during the three months ended June 30, 2023.
Current report
Provision for credit losses was $32.2 million during the three months ended June 30, 2024 compared to a provision of $21.6 million during the three months ended June 30, 2023.
Current report
For the three months ended June 30, 2024 and 2023, specific provision for credit losses was $33.0 million and $11.9 million, respectively. For the three months ended June 30, 2024, the increase in specific reserve was primarily related to a non-performing office loan secured by one property in Colorado placed on cost recovery status. For the three months ended June 30, 2023, the increase in specific reserve was related to one office loan located in Oregon.
Current report
The Company did not realize a gain or loss on extinguishment of debt for the three months ended June 30, 2024. Realized gain on extinguishment of debt for the three months ended June 30, 2023 was $0.3 million related to the repurchase of the Class E notes in our BSPRT 2021-FL7 CLO.
Current report
Realized gain on commercial mortgage loans, held for sale, measured at fair value for the three months ended June 30, 2024 of $1.4 million was related to the sale of $38.9 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $40.3 million. Realized gain on commercial mortgage loans, held for sale, measured at fair value for the three months ended June 30, 2023 of $2.1 million was related to $57.6 million sales of commercial real estate loans into the CMBS securitization market resulting in proceeds of $59.7 million.
Current report
Loss on other real estate investments for the three months ended June 30, 2024 was $6.2 million primarily due to sales and write offs related to the Walgreens Portfolio coupled with the onboarding of real estate owned, held for sale multifamily properties. This is compared to a loss of $1.7 million for the three months ended June 30, 2023 related to the decreased fair value of our one real estate owned, held for sale asset.
Current report
The Company did not hold any trading securities as of June 30, 2024. Trading loss for the three months ended June 30, 2023 of $0.9 million was attributable to principal paydowns, and changes in market values on our former portfolio of
Current report
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.
Current report
Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023
Current report
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 six months ended June 30, 2024 and 2023 (dollars in thousands):
Current report
(1) Based on amortized cost for real estate debt and real estate securities and principal amount for interest-bearing liabilities. Amounts are calculated based on daily averages for the six months ended June 30, 2024 and 2023, respectively.
Current report
For the six months ended June 30, 2024 and 2023, revenue from real estate owned was $8.8 million and $9.8 million, respectively. The $1.0 million decrease was primarily the result of less rental revenue from real estate owned properties.
Current report
Provision for credit losses was $35.1 million during the six months ended June 30, 2024 compared to a provision of $26.0 million during the six months ended June 30, 2023.
Current report
Realized gain on commercial mortgage loans, held for sale, measured at fair value for the six months ended June 30, 2024 of $6.9 million was related to the sale of $139.6 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $146.5 million. Realized gain on commercial mortgage loans, held for sale, measured at fair value for the six months ended June 30, 2023 of $2.1 million was related to the sale of $57.6 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $59.7 million.
Current report
Unrealized gain on commercial mortgage loans, held for sale, measured at fair value for the six months ended June 30, 2024 was $0.6 million compared to $44.0 thousand for the six months ended June 30, 2023. The $0.6 million increase was primarily related to the reversal of unrealized gain/loss on sales of commercial real estate loans into the CMBS securitization market.
Current report
Loss on other real estate investments for the six months ended June 30, 2024 was $6.2 million primarily due to sales and write offs related to the Walgreens properties coupled with the onboarding of real estate owned, held for sale multifamily properties. This is compared to a loss of $3.0 million for the six months ended June 30, 2023 related to a sale of one real estate owned, held for sale property resulting in a loss of $1.2 million in addition to a write-down to fair value of one property of $1.9 million.
Current report
Trading Gain/(Loss)
Current report
Net result from derivative transactions for the six months ended June 30, 2024 was composed of a realized gain of $0.3 million primarily related to the termination and settlement of credit default swaps and treasury note futures offset by an unrealized loss of $0.3 million. This is compared to a net gain on our derivative portfolio of $0.7 million composed of a realized gain of $0.6 million primarily due to the termination and settlement of $72.3 million notional amount of our interest rate swap positions primarily designed to hedge the ARMs portfolio coupled with an unrealized gain of $0.1 million for the six months ended June 30, 2023.
Current report
Expenses from operations for the six months ended June 30, 2024 and 2023 consisted of the following (dollars in thousands):
Current report
Net Interest Income
Current report
Interest expense for the three months ended June 30, 2024 and March 31, 2024 totaled $86.7 million and $81.3 million, respectively, an increase of $5.4 million. The increase was primarily due to an increase of $332.8 million in the average carrying value of repurchase agreements - commercial mortgage loans.
Current report
(Provision)/Benefit for Credit losses
Current report
Provision for credit losses was $32.2 million during the three months ended June 30, 2024 compared to a provision of $2.9 million during the three months ended March 31, 2024.
Current report
For the three months ended June 30, 2024, general benefit for credit losses was $0.1 million compared to a general provision of $2.1 million for the three months ended March 31, 2024. General benefit for the three months ended June 30, 2024 was attributable to the portfolio turnover of older vintage loans with new originated loans.
Current report
Benefit for income tax for the three months ended June 30, 2024 was $0.1 million compared to a provision of $0.8 million for the three months ended March 31, 2024. The difference is related to changes in taxable income/loss in our TRS segment.
Current report
Expenses from operations
Current report
The decrease in operating expense was primarily related to (i) a decrease in incentive fees due to the provision for specific credit losses recognized during the three months ended June 30, 2024 coupled with (ii) a decrease in administrative services expenses due to less time spent on asset workout during the three months ended June 30, 2024 compared to three months ended March 31, 2024.
Current report
During the six months ended June 30, 2024, the maximum average outstanding balance was $1.0 billion, of which $0.8 billion was related to repurchase agreements on our commercial mortgage loans and $0.2 billion for repurchase agreements on our real estate securities.
Current report
As noted in (ii) above, we exclude unrealized gains and losses on loans and other investments, including CECL reserves and impairments, from our calculation of Distributable Earnings and include realized gains and losses. The nature of these adjustments is described more fully in the footnotes to our reconciliation tables. GAAP loan loss reserves and any property impairment losses have been excluded from Distributable Earnings consistent with other unrealized losses pursuant to our existing definition of Distributable Earnings. We expect to only recognize such potential credit or property impairment losses in Distributable Earnings if and when such amounts are deemed nonrecoverable upon a realization event. This is generally at the time a loan is repaid, or in the case of a foreclosure or other property, when the underlying asset is sold. The realized loss amount reflected in Distributable Earnings will generally equal the difference between the cash received and the Distributable Earnings basis of the asset. The timing of any such loss realization in our Distributable Earnings may differ materially from the timing of the corresponding loss reserves, charge-offs or impairments in our consolidated financial statements prepared in accordance with GAAP.
Current report
(4) Represents the actual realized cash loss upon the sale of REO investments, which may be different than the GAAP basis. As of June 30, 2024, the Company has $42.8 million of GAAP loss adjustments that would run through distributable earnings if and when cash losses are realized upon asset sales.
Current report
(5)Represents loan workout charges the Company incurred, which the Company deemed likely to be recovered. Reversal of loan workout charges represent recoveries received. During the second quarter of 2023, the Company recovered $5.1 million of loan workout charges, in aggregate, related to the loan workout charges incurred in the first, second, and third quarters of 2022 amounting to $1.9 million, $3.0 million, and $0.2 million, respectively.
Removed paragraphs (31)
Previous report
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.
Previous report
(2) Includes the effect of amortization of premium or accretion of discount and deferred fees.
Previous report
(3)Excludes other income on the real estate owned business segment.
Previous report
(4) Calculated as interest income or expense divided by average carrying value.
Previous report
(5) Annualized.
Previous report
(6) Calculated by dividing total average interest-bearing liabilities by total average interest-earning assets.
Previous report
(7) Calculated by dividing net interest income/spread by the average interest-earning assets less average interest-bearing liabilities.
Previous report
Interest Income
Previous report
Interest Expense
Previous report
Revenue from Real Estate Owned
Previous report
For the three months ended March 31, 2024 and 2023, revenue from real estate owned was $4.7 million and $3.3 million, respectively. The $1.4 million increase was primarily the result of rental income obtained from additional retail properties in our real estate owned portfolio.
Previous report
Provision for credit losses was $2.9 million during the three months ended March 31, 2024 compared to a provision of $4.4 million during the three months ended March 31, 2023. The following paragraphs set forth explanations for changes in the general and specific reserves for the three months ended March 31, 2024 and 2023.
Previous report
Net Result from Derivative Transactions
Previous report
(Provision)/Benefit for Income Tax
Previous report
Net (Income)/Loss Attributable to Non-controlling Interest
Previous report
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.
Previous report
(2) Includes the effect of amortization of premium or accretion of discount and deferred fees.
Previous report
(3)Excludes other income on the real estate owned business segment.
Previous report
(4) Calculated as interest income or expense divided by average carrying value.
Previous report
(5) Annualized.
Previous report
(6) Calculated by dividing total average interest-bearing liabilities by total average interest-earning assets.
Previous report
(7) Calculated by dividing net interest income/spread by the average interest-earning assets less average interest-bearing liabilities.
Previous report
Interest Income
Previous report
Interest Expense
Previous report
Interest expense for the three months ended March 31, 2024 and December 31, 2023 was $81.3 million and $81.2 million, respectively, an increase of $0.1 million. The increase was primarily due to an increase of $83.0 million in the average carrying value of our collateralized loan obligations partially offset by lower borrowing rates on our repurchase agreements - commercial mortgage loans.
Previous report
Revenue from Real Estate Owned
Previous report
Provision for credit losses was $2.9 million during the three months ended March 31, 2024 compared to a provision of $5.4 million during the three months ended December 31, 2023. The following paragraphs set forth explanations for changes in the general and specific reserves for the three months ended March 31, 2024 and December 31, 2023.
Previous report
Net Result from Derivative Transactions
Previous report
(Provision)/Benefit for Income Tax
Previous report
Net (Income)/Loss Attributable to Non-controlling Interest
Previous report
During the three months ended March 31, 2024, the maximum average outstanding balance was $569.8 million, of which $378.3 million was related to repurchase agreements on our commercial mortgage loans and $191.5 million for repurchase agreements on our real estate securities.
Reworded paragraphs (49)
Previous wording
The Company has no employees. We are managed by the Advisor pursuant to the Advisory Agreement (the "Advisory Agreement"). The Advisor manages our affairs on a day-to-day basis. The Advisor receives compensation and fees for services related to the investment and management of our assets and our operations.
Current wording
The Company has no employees. We are managed by the Advisor pursuant to an advisory agreement, as amended on August 18, 2021 (the "Advisory Agreement") with the Advisor. The Advisor manages our affairs on a day-to-day basis. The Advisor receives compensation and fees for services related to the investment and management of our assets and our operations.
Previous wording
(1) Fully-converted book value per share reflects full conversion of our outstanding series of convertible preferred stock and vesting of our outstanding equity compensation awards.
Current wording
(1) Fully-converted book value per share reflects full conversion of our outstanding series of convertible preferred stock and full vesting of our outstanding equity compensation awards.
Previous wording
(2) Excluding the amounts for accumulated depreciation and amortization of real property of $10.4 million and $9.4 million as of March 31, 2024 and December 31, 2023, respectively, would result in a fully-converted book value per share of $15.79 and $15.88 as of March 31, 2024 and December 31, 2023, respectively.
Current wording
Book value as of June 30, 2024 and December 31, 2023 excluding the impact for accumulated depreciation and amortization of real property of $11.5 million and $9.4 million, respectively, was $15.40 and $15.88.
Previous wording
During the three months ended March 31, 2024, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
During the six months ended June 30, 2024, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
As of March 31, 2024 and December 31, 2023, our portfolio consisted of 145 and 144 commercial mortgage loans, held for investment, respectively. The commercial mortgage loans, held for investment, net of allowance for credit losses, as of March 31, 2024 and December 31, 2023 had a total carrying value of $5,184.2 million and $4,989.8 million, respectively. As of March 31, 2024 the contractual principal balance outstanding of commercial mortgage loans, held for sale, measured at fair value was $30.0 million, comprised of one loans, which was not in default or greater than ninety days past due. As of December 31, 2023 the Company did not hold any commercial mortgage loans, held for sale. As of March 31, 2024 and December 31, 2023, we had $217.9 million and $242.6 million, respectively, of real estate securities, available for sale, measured at fair value. As of March 31, 2024 and December 31, 2023, our real estate owned, held for investment portfolio was composed of three investments with carrying values of $115.2 million and $115.8 million, respectively. As of March 31, 2024 and December 31, 2023, we had 23 properties classified as real estate owned, held for sale with combined carrying values of $103.7 million.
Current wording
As of June 30, 2024 and December 31, 2023, our portfolio consisted of 153 and 144 commercial mortgage loans, held for investment, respectively. The commercial mortgage loans, held for investment, net of allowance for credit losses, as of June 30, 2024 and December 31, 2023 had a total carrying value of $5,347.4 million and $4,989.8 million, respectively. As of June 30, 2024 the contractual principal balance outstanding of commercial mortgage loans, held for sale, measured at fair value was $61.6 million, comprised of four loans, which were not in default or greater than ninety days past due. As of December 31, 2023 the Company did not hold any commercial mortgage loans, held for sale. As of June 30, 2024 and December 31, 2023, we had $215.3 million and $242.6 million, respectively, of real estate securities, available for sale, measured at fair value. As of June 30, 2024 and December 31, 2023, our real estate owned, held for investment portfolio was composed of three investments with carrying values of $114.5 million and $115.8 million, respectively. As of June 30, 2024 and December 31, 2023, we had 25 and 23 properties classified as real estate owned, held for sale with combined carrying values of $271.3 million and $103.7 million, respectively.
Previous wording
As of March 31, 2024, we had 4 loans (all secured by multifamily properties) designated as non-performing status with a total amortized cost of $307.5 million. As of March 31, 2024, one loan designated as non-performing and put on cost recovery method was determined to have a $0.7 million specific allowance for credit losses. During the quarter ended March 31, 2024, one multifamily loan which was designated as non-performing as of December 31, 2023 was assumed by the Company through a deed-in-lieu of foreclosure, and subsequently sold (see "Note 3 - Commercial Mortgage Loans").
Current wording
As of June 30, 2024, we had four loans (two secured by multifamily properties and two secured by office properties) designated as non-performing status with a total amortized cost of $225.0 million. As of June 30, 2024, two loans designated as non-performing and put on cost recovery status were determined to have a combined $29.7 million specific allowance for credit losses. During the first quarter of 2024, one multifamily loan which was designated as non-performing as of December 31, 2023, was assumed by the Company through a deed-in-lieu of foreclosure, and subsequently sold (see "Note 3 - Commercial Mortgage Loans").
Previous wording
As of March 31, 2024 and December 31, 2023 our commercial mortgage loans, held for investment, excluding commercial mortgage loans on non-performing status, had a weighted average coupon of 9.2% and 9.2%, respectively, and a weighted average remaining contractual maturity life of 1.0 years and 0.9 years, respectively.
Current wording
As of June 30, 2024 and December 31, 2023 our commercial mortgage loans, held for investment, excluding commercial mortgage loans on non-performing status, had a weighted average coupon of 9.0% and 9.2%, respectively, and a weighted average remaining contractual maturity life of 1.1 years and 0.9 years, respectively.
Previous wording
Interest expense for the three months ended March 31, 2024 and 2023 totaled $81.3 million and $71.1 million, respectively, an increase of $10.2 million. The increase was primarily due to an approximate 80 basis point increase in daily average SOFR and SOFR equivalent rates coupled with an increase in deferred fee amortization due to the utilization of expected duration of our CLOs compared to contractual duration partially offset by a decrease of $396.8 million in the average carrying value of our repurchase agreements - commercial mortgage loans.
Current wording
Interest expense for the three months ended June 30, 2024 and 2023 totaled $86.7 million and $75.3 million, respectively, an increase of $11.4 million. The increase was primarily due to an increase of $428.0 million in the average carrying balance of our collateralized loan obligations coupled with an increase in deferred fee amortization due to the utilization of expected duration of our CLOs compared to contractual duration.
Previous wording
For the three months ended March 31, 2024 and December 31, 2023, general provision for credit losses was $2.1 million and $5.4 million, respectively, attributable to a more pessimistic view of the macroeconomic scenario utilized for the CECL model compared to preceding periods. For the three months ended March 31, 2024, the increase in general reserve balance is also the result of an increase in the size of our loan portfolio compared to the preceding period.
Current wording
For the three months ended June 30, 2024, general benefit for credit losses was $0.1 million compared to a general provision of $9.7 million for the three months ended June 30, 2023. General benefit for the three months ended June 30, 2024 was attributable to the portfolio turnover of older vintage loans with new originated loans. For the three months ended June 30, 2023, the increase in general reserve was attributable to a more pessimistic view of the macroeconomic scenario utilized for the CECL model compared to preceding periods.
Previous wording
Unrealized gain on commercial mortgage loans, held for sale, measured at fair value, for the three months ended March 31, 2024 was $0.5 million compared to an unrealized gain of $0.4 million for the three months ended March 31, 2023. The $0.1 million increase was primarily the result of the change in market values of these loans.
Current wording
Unrealized gain on commercial mortgage loans, held for sale, measured at fair value, for the three months ended June 30, 2024 was $0.2 million compared to an unrealized loss of $0.3 million for the three months ended June 30, 2023. The $0.5 million increase was primarily the result of the change in market values of these loans.
Previous wording
Net result from derivative transactions for the three months ended March 31, 2024 of a $0.2 million gain was composed of a realized gain of $0.3 million was primarily related to the termination and settlement of credit default swaps and treasury note futures partially offset by an unrealized loss of $0.1 million. This is compared to a net gain on our derivative portfolio of $0.3 million composed primarily of realized gains related to the termination and settlement of interest rate swap positions for the three months ended December 31, 2023.
Current wording
Net result from derivative transactions for the three months ended June 30, 2024 of a $0.2 million loss was composed of a realized gain of $22.0 thousand primarily related to the termination and settlement of credit default swaps and treasury note futures offset by an unrealized loss of $0.2 million. This is compared to a net gain on our derivative portfolio of $1.0 million composed of a realized gain of $0.6 million primarily due to the termination and settlement of $69.0 million notional amount of our interest rate swap positions primarily designed to hedge the ARMs portfolio coupled with an unrealized gain of $0.4 million for three months ended June 30, 2023.
Previous wording
Provision for income tax for the three months ended March 31, 2024 was $0.8 million compared to a benefit of $0.3 million for the three months ended December 31, 2023. The difference is related to changes in taxable income/loss in our TRS segment.
Current wording
Benefit for income tax for the three months ended June 30, 2024 was $0.1 million compared to a benefit of $53.0 thousand for the three months ended June 30, 2023. The difference is related to changes in taxable income/loss in our TRS segment.
Previous wording
Net loss attributable to non-controlling interest in our consolidated joint ventures for the three months ended March 31, 2024 was $0.1 million compared to a net income attributable to non-controlling interest of $9.0 thousand for the three months ended March 31, 2023.
Current wording
Net loss attributable to non-controlling interest in our consolidated joint ventures for the three months ended June 30, 2024 was $1.6 million compared to a net income attributable to non-controlling interest of $41.0 thousand for the three months ended June 30, 2023.
Previous wording
Overall, operating expenses were consistent with prior quarter, with a decrease of $0.2 million primarily related to (i) a decrease in asset management and subordinated performance fees due to a larger amount of incentive fees incurred during the three months ended December 31, 2023 and (ii) a decrease in administrative service expenses due to less time spent on asset workout during the three months ended March 31, 2024 compared to the three months ended December 31, 2023 partially offset by (iii) an increase in professional fees due to increases in tax consulting fees and broker fees and (iv) an increase in share-based compensation due to equity awards issued under the Company's 2021 Incentive Plan during the three months ended March 31, 2024.
Current wording
The decrease in operating expense was primarily related to (i) a decrease in incentive fees due to the provision for specific credit losses recognized during the three months ended June 30, 2024 coupled with (ii) a decrease in administrative services expenses due to less time spent on asset workout during the three months ended June 30, 2024 compared to three months ended June 30, 2023, partially offset by (iii) an increase in professional fees due to a larger portfolio.
Previous wording
Interest income for the three months ended March 31, 2024 and December 31, 2023 totaled $130.6 million and $132.0 million, respectively, a decrease of $1.4 million. The decrease was primarily due to the loans placed on non-accrual status during the three months ended March 31, 2024. Daily average SOFR and SOFR equivalent rates remained relatively constant between periods. As of March 31, 2024, our portfolio consisted of (i) 145 commercial mortgage loans, held for investment, (ii) one commercial mortgage loan, held for sale, measured at fair value and (iii) seven real estate securities, available for sale, measured at fair value. 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.
Current wording
Interest income for the six months ended June 30, 2024 and 2023 totaled $264.1 million and $283.4 million, respectively, a decrease of $19.3 million. The decrease was primarily due to the loans placed on non-accrual status, which totaled $225.4 million in principal as of June 30, 2024, coupled with the recognition $20.4 million of interest income in the sale of a Brooklyn hotel asset in the second quarter of 2023. As of June 30, 2024, our portfolio consisted of (i) 153 commercial mortgage loans, held for investment, (ii) four commercial mortgage loans, held for sale, measured at fair value and (iii) nine real estate securities, available for sale, measured at fair value. As of June 30, 2023, our portfolio consisted of (i) 156 commercial mortgage loans, held for investment, (ii) one commercial mortgage loan, held for sale, measured at fair value, (iii) nine real estate securities, available for sale, measured at fair value and (iv) ARMs.
Previous wording
For the three months ended March 31, 2024 and 2023, general provision for credit losses was $2.1 million and $3.5 million, respectively, attributable to a more pessimistic view of the macroeconomic scenario utilized for the CECL model compared to preceding periods. For the three months ended March 31, 2024, the increase in general reserve balance was also the result of an increase in the size of our loan portfolio compared to the preceding period.
Current wording
For the six months ended June 30, 2024 and 2023, general provision for credit losses was $2.1 million and $13.3 million, respectively. General benefit for the six months ended June 30, 2024 was attributable to the portfolio turnover of older vintage loans with new originated loans. For the six months ended June 30, 2023, the increase in general reserve was attributable to a more pessimistic view of the macroeconomic scenario utilized for the CECL model compared to preceding periods.
Previous wording
For the three months ended March 31, 2024, the increase in specific reserve of $0.7 million was related to a non-performing multifamily loan secured by two properties in North Carolina placed on cost recovery status. For the three months ended March 31, 2023, the increase in specific reserve of $0.8 million was related to higher capitalization rates on the assumed fair value of the Walgreens properties which was partially offset by the cost recovery proceeds received during the quarter.
Current wording
For the six months ended June 30, 2024, the primary increase in specific reserve of $33.0 million was related to multiple loans including multi-family loans and non-performing office loans. For the six months ended June 30, 2023, the increase in specific reserve of $12.7 million was primarily related to one office loan located in Oregon coupled with higher capitalization rates on the assumed fair value of the properties in the Walgreens Portfolio.
Previous wording
The Company did not realize a gain or loss on extinguishment of debt for the three months ended March 31, 2024. Realized gain on extinguishment for debt for the three months ended March 31, 2023 was $4.8 million primarily related to the redemption of $17.5 million of our $100 million par value unsecured debt at a price equal to 75% of par.
Current wording
The Company did not realize a gain or loss on extinguishment of debt for the six months ended June 30, 2024. Realized gain on extinguishment of debt for the six months ended June 30, 2023 of $5.0 million was primarily related to the redemption of $17.5 million par value unsecured debt at a price equal to 75% par coupled with the repurchase of the Class E notes in our BSPRT 2021-FL7 CLO.
Previous wording
Realized gain on real estate securities, available for sale for the three months ended March 31, 2024 of $0.1 million was related to the sale of three CRE CLO bonds. Realized loss on real estate securities, available for sale for the three months ended December 31, 2023 of $30.0 thousand was related to the sale of two CRE CLO Bonds.
Current wording
Realized gain on real estate securities, available for sale for the six months ended June 30, 2024 was $88.0 thousand compared to $0.6 million for the six months ended June 30, 2023 related to the sale of four CRE CLO bonds.
Previous wording
The Company did not hold any trading securities as of March 31, 2024. Trading gain for the three months ended March 31, 2023 of $3.0 million was attributable to $7.5 million of principal paydowns, $95.5 million of sales of ARM Agency Securities and changes in market values on these securities.
Current wording
The Company did not hold any trading securities as of June 30, 2024. Trading gain for the six months ended June 30, 2023 of $2.0 million was attributable to principal paydowns, changes in market values and gains on sales of ARM Agency Securities.
Previous wording
Provision for income tax for the three months ended March 31, 2024 was $0.8 million compared to a benefit of $0.7 million for the three months ended March 31, 2023. The difference is related to changes in taxable income/loss in our TRS segment.
Current wording
Provision for income tax for the six months ended June 30, 2024 was $0.7 million compared to a benefit of $0.6 million for the six months ended June 30, 2023. The difference is related to changes in taxable income/loss in our TRS segment.
Previous wording
Net loss attributable to non-controlling interest in our consolidated joint ventures for the three months ended March 31, 2024 amounted to $0.1 million compared to a net income attributable to non-controlling interest of $16.0 thousand for the three months ended December 31, 2023.
Current wording
Net loss attributable to non-controlling interest in our consolidated joint ventures for the six months ended June 30, 2024 amounted to $1.7 million compared to a net income attributable to non-controlling interest of $0.1 million for the six months ended June 30, 2023.
Previous wording
The decrease in operating expenses was primarily related to (i) a decrease in administrative services expenses due to less time spent on asset workout during the three months ended March 31, 2024 compared to three months ended March 31, 2023,(ii) a decrease in professional fees due to the reduction in legal costs associated with our recovery efforts related to a hotel asset and the Walgreens Portfolio partially offset by (iii) an increase in share-based compensation due to equity compensation awards issued to our executive officers and other employees of the Advisor under the Company's 2021 Incentive Plan during the three months ended March 31, 2024.
Current wording
The decrease in operating expense was primarily related to (i) a decrease in incentive fees due to the provision for specific credit losses recognized during the six months ended June 30, 2023 and (ii) a decrease in administrative service expenses due to less time spent on asset workout during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 partially offset by (iii) an increase in share-based compensation due to equity awards issued under the Company's 2021 Incentive Plan during the six months ended June 30, 2024.
Previous wording
Interest income for the three months ended March 31, 2024 and 2023 totaled $130.6 million and $130.5 million, respectively, remaining relatively constant between periods. The minor increase in interest income during the three months ended March 31, 2024 was due to an approximate 80 basis point increase in daily average SOFR and SOFR equivalent rates coupled with an increase of $33.7 million in the average carrying value of our conduit portfolio partially offset by a decrease of $100.7 million in the average carrying value of our real estate debt along with a decrease due to the loans placed on non-accrual status during the three months ended March 31, 2024. As of March 31, 2024, our portfolio consisted of (i) 145 commercial mortgage loans, held for investment, (ii) one commercial mortgage loan, held for sale, measured at fair value and (iii) seven real estate securities, available for sale, measured at fair value. As of March 31, 2023, our portfolio consisted of (i) 157 commercial mortgage loans, held for investment, (ii) two commercial mortgage loans, held for sale, measured at fair value and (iii) five real estate securities, available for sale, measured at fair value and (iv) ARMs.
Current wording
Interest income for the three months ended June 30, 2024 and March 31, 2024 totaled $133.6 million and $130.6 million, respectively, an increase of $3.0 million. The increase in interest income during the three months ended June 30, 2024 is due to an increase of $332.9 million in the average carrying value of our real estate debt. As of June 30, 2024, our portfolio consisted of (i) 153 commercial mortgage loans, held for investment, (ii) four commercial mortgage loans, held for sale, measured at fair value and (iii) nine real estate securities, available for sale, measured at fair value. As of March 31, 2024, our portfolio consisted of (i) 145 commercial mortgage loans, held for investment, (ii) one commercial mortgage loan, held for sale, measured at fair value and (iii) seven real estate securities, available for sale, measured at fair value.
Previous wording
For the three months ended March 31, 2024 and December 31, 2023, revenue from real estate owned was $4.7 million and $4.0 million, respectively. The $0.7 million increase was primarily the result of recoveries received from an office tenant who has vacated one of our real estate owned properties.
Current wording
For the three months ended June 30, 2024 and March 31, 2024, revenue from real estate owned was $4.1 million and $4.7 million, respectively. The $0.6 million decrease was primarily the result of recoveries received in the first quarter of 2024 from an office tenant who has vacated one of our real estate owned properties.
Previous wording
For the three months ended March 31, 2024, the increase in specific reserve of $0.7 million was related to a non-performing multifamily loan secured by two properties in North Carolina placed on cost recovery status. The Company did not recognize a specific provision/benefit for credit losses for the three months ended December 31, 2023.
Current wording
For the three months ended June 30, 2024 and March 31, 2024, specific provision for credit losses was $32.3 million and $0.7 million, respectively. For the three months ended June 30, 2024, the increase in specific provision of $32.3 million was primarily related to a non-performing office loan secured by one property in Colorado placed on cost recovery status. For the three months ended March 31, 2024, the specific provision of $0.7 million was related to a non-performing multifamily loan secured by two properties in North Carolina placed on cost recovery status.
Previous wording
Realized gain on real estate securities, available for sale for the three months ended March 31, 2024 of $0.1 million was related to the sale of three CRE CLO bonds. Realized gain on real estate securities, available for sale for the three months ended March 31, 2023 was $0.6 million related to the sale of four CRE CLO bonds.
Current wording
The Company did not realize a gain or loss on real estate securities, available for sale for the three months ended June 30, 2024. Realized gain for the three months ended March 31, 2024 of $0.1 million was related to the sale of three CRE CLO bonds.
Previous wording
Realized gain on commercial mortgage loans, held for sale, measured at fair value for the three months ended March 31, 2024 of $5.5 million was related to the sale of $100.7 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $106.2 million. 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 $27.1 million.
Current wording
Realized gain on commercial mortgage loans, held for sale, measured at fair value for the three months ended June 30, 2024 of $1.4 million was related to the sale of $38.9 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $40.3 million. Realized gain on commercial mortgage loans, held for sale, measured at fair value for the three months ended March 31, 2024 of $5.5 million was related to the sale of $100.7 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $106.2 million.
Previous wording
Gain on other real estate investments for the three months ended March 31, 2024 was $6.0 thousand related to the sale of one real estate owned, held for sale property located in San Antonio, TX, compared to a loss of $1.3 million for the three months ended March 31, 2023 which was related to additional loss on our real estate owned, held for sale multifamily asset in New Rochelle, NY.
Current wording
Loss on other real estate investments for the three months ended June 30, 2024 was $6.2 million primarily due to sales and write offs related to the Walgreens properties coupled with the onboarding of real estate owned, held for sale multifamily properties. This is compared to a gain of $6.0 thousand related to the sale of one real estate owned, held for sale property located in San Antonio, TX for the three months ended March 31, 2024.
Previous wording
Net result from derivative transactions for the three months ended March 31, 2024 of a $0.2 million gain was composed of a realized gain of $0.3 million was primarily related to the termination and settlement of credit default swaps and treasury note futures partially offset by an unrealized loss of $0.1 million. This is compared to a net loss on our derivative portfolio of $0.3 million composed of a realized gain of $44.0 thousand offset by an unrealized loss of $0.3 million for the three months ended March 31, 2023 primarily related to the decreasing values on our interest rate swap portfolio.
Current wording
Net result from derivative transactions for the three months ended June 30, 2024 of a $0.2 million loss was composed of a realized gain of $22.0 thousand primarily related to the termination and settlement of credit default swaps and treasury note futures offset by an unrealized loss of $0.2 million. This is compared to a net gain on our derivative portfolio of $0.2 million composed of a realized gain of $0.3 million primarily due to the termination and settlement of credit default swaps and treasury note futures partially offset by an unrealized loss of $0.1 million for the three months ended March 31, 2024.
Previous wording
(1)Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, repurchase agreements - commercial mortgage loans, repurchase agreements - real estate securities, asset-specific financing arrangements, and unsecured debt, less cash and cash equivalents, to (ii) total equity and total redeemable convertible preferred stock, at period end. Recourse net debt-to-equity ratio was 0.3x and 0.2x as of March 31, 2024 and December 31, 2023, respectively.
Current wording
(1)Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, repurchase agreements - commercial mortgage loans, repurchase agreements - real estate securities, asset-specific financing arrangements, and unsecured debt, less cash and cash equivalents, to (ii) total equity and total redeemable convertible preferred stock, at period end. Recourse net debt-to-equity ratio was 0.6x and 0.2x as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
(2) Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, repurchase agreements - commercial mortgage loans, repurchase agreements - real estate securities, asset-specific financing arrangements, and unsecured debt, to (ii) total equity and total redeemable convertible preferred stock, at period end. Recourse leverage ratio was 0.4x and 0.4x as of March 31, 2024 and December 31, 2023, respectively.
Current wording
(2) Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, repurchase agreements - commercial mortgage loans, repurchase agreements - real estate securities, asset-specific financing arrangements, and unsecured debt, to (ii) total equity and total redeemable convertible preferred stock, at period end. Recourse leverage ratio was 0.7x and 0.4x as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
As of March 31, 2024, the Company had $10.8 million of reinvestment capital available across all outstanding collateralized loan obligations. The following table shows the par value outstanding for each CLO and the respective reinvestment end dates (dollars in millions):
Current wording
As of June 30, 2024, the Company had $30.6 million of reinvestment capital available across all outstanding collateralized loan obligations. The following table shows the par value outstanding for each CLO and the respective reinvestment end dates (dollars in millions):
Previous wording
The following tables summarize our Repo and Revolving Credit Facilities and our master repurchase agreements ("MRAs") for the three months ended March 31, 2024, 2023, and 2022, respectively (dollars in thousands):
Current wording
The following tables summarize our Repo and Revolving Credit Facilities and our master repurchase agreements ("MRAs") for the six months ended June 30, 2024, 2023, and 2022, respectively (dollars in thousands):
Previous wording
During the three months ended March 31, 2023, the maximum average outstanding balance was $1.1 billion, of which $0.7 billion was related to repurchase agreements on our commercial mortgage loans and $0.4 billion for repurchase agreements on our real estate securities.
Current wording
During the six months ended June 30, 2023, the maximum average outstanding balance was $1.1 billion, of which $0.7 billion was related to repurchase agreements on our commercial mortgage loans and $0.4 billion for repurchase agreements on our real estate securities.
Previous wording
During the three months ended March 31, 2022, the maximum average outstanding balance was $5.3 billion, of which $1.1 billion was related to repurchase agreements on our commercial mortgage loans and $4.2 billion for repurchase agreements on our real estate securities.
Current wording
During the six months ended June 30, 2022, the maximum average outstanding balance was $5.3 billion, of which $1.1 billion was related to repurchase agreements on our commercial mortgage loans and $4.2 billion for repurchase agreements on our real estate securities.
Previous wording
In March 2024, the Company's board of directors declared the following: (i) a first quarter 2024 dividend of $0.355 per share on the Company's common stock (equivalent to $1.42 per annum), (ii) a first quarter 2024 dividend of $106.22 per share on the Company’s Series H Preferred Stock, and (iii) a first quarter 2024 dividend of $0.46875 per share on the Company’s Series E Preferred Stock, all of which were paid in April 2024 to holders of record on March 31, 2024.
Current wording
In June 2024, the Company's board of directors declared the following: (i) a second quarter 2024 dividend of $0.355 per share on the Company's common stock (equivalent to $1.42 per annum), (ii) a second quarter 2024 dividend of $106.216 per share on the Company’s Series H Preferred Stock, and (iii) a second quarter 2024 dividend of $0.46875 per share on the Company’s Series E Preferred Stock, all of which were paid in July 2024 to holders of record as of June 30, 2024.
Previous wording
Under the Company’s DRIP, the Company may elect to supply shares for reinvestment via newly issued shares of common stock under the DRIP or via shares of common stock purchased by the DRIP administrator on the open market. During the three months ended March 31, 2024 and 2023, no shares were issued, and 40,735 shares and 58,310 shares, respectively, of common stock were purchased by the administrator under the dividend reinvestment component of the DRIP.
Current wording
Under the Company’s DRIP, the Company may elect to supply shares for reinvestment via newly issued shares of common stock or via shares of common stock purchased by the DRIP administrator on the open market. During the six months ended June 30, 2024 and 2023, 0 and 768 shares were newly issued, and 85,185 and 120,175 shares of common stock were purchased, respectively, by the administrator under the dividend reinvestment component of the DRIP.
Previous wording
During the three months ended March 31, 2024 and 2023, the Company paid an aggregate of $29.4 million and $29.5 million, respectively, of common stock distributions.
Current wording
During the six months ended June 30, 2024 and 2023, the Company paid an aggregate of $58.9 million and $58.3 million, respectively, of common stock distributions.
Previous wording
The following table sets forth changes in cash, cash equivalents and restricted cash for the three months ended March 31, 2024 and 2023:
Current wording
The following table sets forth changes in cash, cash equivalents and restricted cash for the six months ended June 30, 2024 and 2023:
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Interest expense for the six months ended June 30, 2024 and 2023 was $168.1 million and $146.4 million, respectively, an increase of $21.7 million. The increase was primarily due to an increase of $455.0 million in the average carrying value of our collateralized loan obligations coupled with an increase in deferred fee amortization due to the utilization of expected duration of our CLOs compared to contractual duration.
Current report — wording carried from elsewhere
Realized Gain/(Loss) on Extinguishment of Debt
Current report — wording carried from elsewhere
Unrealized Gain/(Loss) on Commercial Mortgage Loans, Held for Sale, Measured at Fair Value
Current report — wording carried from elsewhere
Net loss attributable to non-controlling interest in our consolidated joint ventures for the three months ended June 30, 2024 was $1.6 million compared to a net loss attributable to non-controlling interest in our consolidated joint ventures for the three months ended March 31, 2024 amounted to $0.1 million.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Realized Gain/(Loss) on Commercial Mortgage Loans, Held for Sale, Measured at Fair Value
Previous report — wording carried elsewhere
Realized gain on commercial mortgage loans, held for sale, measured at fair value for the three months ended March 31, 2024 of $5.5 million was related to the sale of $100.7 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $106.2 million. There were no sales of commercial mortgage loans, held for sale, measured at fair value for the three months ended March 31, 2023.
Previous report — wording carried elsewhere
Gain/(Loss) on Other Real Estate Investments
Previous report — wording carried elsewhere
Realized Gain/(Loss) on Commercial Mortgage Loans, Held for Sale, Measured at Fair Value
Previous report — wording carried elsewhere
Gain/(Loss) on Other Real Estate Investments
Previous report — wording carried elsewhere
Gain on other real estate investments for the three months ended March 31, 2024 was $6.0 thousand related to the sale of one real estate owned, held for sale property located in San Antonio, TX, compared to a gain of $0.1 million for the three months ended December 31, 2023 related to amounts recorded on a multifamily property in Lubbock, TX.