Franklin BSP Realty Trust, Inc.

Good morning and welcome to the Franklin BSP Realty Trust fourth quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Lindsey Crabb, Vice President of Investor Relations. Please go ahead.

Good morning. Thank you, Andrew, for hosting our call today. Welcome to the Franklin BSP Realty Trust Fourth Quarter Earnings Conference Call. As the operator mentioned, I'm Lindsay Kraub, VP of Investor Relations. With me on the call today are Richard Byrne, Chairman and CEO of FBRT, Jerry Baglian, Chief Financial Officer and Chief Operating Officer, Mike Camperano, Head of Commercial Real Estate, and Roy Kim, Managing Director of our Capital Markets Group. Before we start today's conversation, I want to mention that some of today's comments from the team could be considered forward-looking statements and are based on certain assumptions. Those comments and assumptions are subject to inherent risks and uncertainties, as described in our most recently filed Form 10Q filed with the FCC, and actual future results may differ materially. The information conveyed on this call is current only as the date of this call, February 24, 2022. The company assumes no obligation to update any statements made during this call, including any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, we will refer to certain non-GAAP financial measures which are reconciled to GAAP figures in our earnings release and supplementary slide deck, which are available on our website at www.sbrtreet.com. We will refer to the supplementary slide deck on today's call. With that, I'll turn the call over to Richard Byrne.

Great. Thanks, Lindsay. Good morning, everyone, and thanks for joining us. I'm Rich Byrne. I'm the Chairman and CEO of Franklin BSP Realty Trust, or as we call it, FBRT. There's clearly a lot going on in the markets right now, so we appreciate all of you making time for our call today. As Lindsay mentioned, our earnings release and supplemental deck are published on our website, and they're available now. They were published yesterday evening. For this call, we're going to review fourth quarter results and highlights and walk you through the current status of our portfolio. We will also update you on what has occurred since the end of the year, specifically on our residential arms portfolio. You know, after that, we're going to open up the call for your questions. The supplemental deck also provides more information than we can cover today. But, you know, hopefully you'll find it useful to look at that information in addition to what we go through. You'll note that our Q421 is the first time, this is the first quarter, we're able to show fully consolidated financials following the closing of our merger with Capstate. Remember that occurred mid-quarter on October 19th, 2021. As a reminder, prior to our merger, we were a commercial mortgage REIT operating as a non-public, non-listed REIT since 2016. The opportunity to merge with Capstead represented a strategic transaction for our future growth prospects. It gave the predecessor read immediate scale and additional liquidity, and it represented an opportunity for the Capstead shareholders to transition out of a lower ROE business into a historically higher ROE business. Jerry will cover the financial highlights in a few minutes, and Mike will discuss the portfolio. But before that, I will provide some greater market color And I wanted to go through FBRT's current position and the progress we've made in our first few months of being publicly traded. I'll start all that on slide four. Looking at our commercial real estate platform, Q4 was indeed a record-breaking quarter that led to a record-breaking year for FBRT. Our origination business was strong in the fourth quarter, and it was also very strong throughout the entirety of 2021. we brought our CRE portfolio or our core portfolio to 4.2 billion of loans at year end. This is up approximately $1 billion from Q3 and $1.5 billion from where it was at the beginning of the year. Our ability to achieve such strong origination numbers was due to our ability to make significant progress selling the residential arms book we acquired through the merger. To give a bit more context on that, the merger closed on October 19th, as I mentioned. From that period through year end, the ARMS portfolio decreased by approximately $2.3 billion from both strategic sales and runoff. The ARMS portfolio at year end was $4.6 billion. This compares to $7.1 billion at 9.30. The truth is we exceeded our own expectations on the pace of this disposition It was a great time also to test our ability to redeploy the assets, which we clearly did. We originated 1.6 billion of new commitments in Q4, which is roughly three times our normal origination volume. That has continued in Q1, as evidenced by our strong pipeline. Something many of you will be interested to know is our progress on the arms sales in the first quarter as well. Our progress has been great. The arms portfolio has been further reduced by another $2.2 billion. Now, our total arms portfolio stands at $2.4 billion. That's a 66 percent decrease versus last quarter. Jerry will go through this in more detail and also mention that we've been very pleased with our execution, selling these bonds at very close to their marks. Let me just take another second to put that into context. On 930, as I mentioned before, the arms portfolio that we inherited was $7.1 billion in size. And our core portfolio was just a little bit over $3 billion. Today, our arms portfolio, as I mentioned, is $2.4 billion, and our core portfolio, or our commercial portfolio, is $4.2 billion. In other words, we've completely turned upside down the ratio of... you know, what this company consists of. And our objective is to continue the rapid pace of transition from residential arms to commercial loans given the higher earnings potential and lower historical volatility and also the lower leverage of our commercial or core portfolio. I would also like to provide an update on the company and manager buyback programs. We continue to have the full 100 million buyback available to us. This includes the first $35 million from BSP and Franklin Templeton, followed by $65 million from the company. Since December 15th, we have been blacked out from trading due to legal restrictions, so we have not been permitted to use any of our dedicated buyback proceeds during the market volatility since then. With yesterday's release of earnings, those restrictions will be lifted starting this Monday. Given the significant discount in our stock, especially at its price to book value, it is our intention and the company's intention to support the FBRT shares. This can be accomplished through open market purchases as well as a 10B51 plan that will permit us and the company to continue to buy when the company's trading window is closed. Before I turn it over to Jerry, I just want to say a few words about 2021 because it really was a historic year for the company. When BSP took over the REIT in 2016, we had two primary goals. First, we wanted to stabilize the business and turn it into a best-in-class middle market commercial mortgage rate. Second, we wanted to provide our shareholders with the liquidity of that. As we look back on the five-year period, we're very proud of what we have accomplished. Clearly, we've achieved both goals. In the five-year period, we have increased the company's revenues by approximately 190%. We've increased our core book of originations from basically zero to $4.2 billion today, or at year end, and increased distributable earnings by approximately 350%. In our five years of running this business, we have never had a credit loss on a BSP-originated loan. We have built, in our opinion, one of the top middle market commercial real estate origination platforms in the business. And we're very proud of that. And of course, in 2021, we delivered a liquidity event through this merger. As we continue to transition Capstead's asset base into our CRE portfolio, we are extremely excited about the opportunity in front of us. With that, let me now turn it over to Jerry to go over our financial highlights for the quarter. Jerry.