Franklin BSP Realty Trust, Inc.

Good morning and welcome to the Franklin BSP Realty Trust fourth quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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 Lindsay Crabb. Please go ahead.

Good morning. Thank you, Chad, for hosting our call today. Welcome to the Franklin VST Realty Trust Fourth Quarter Earnings Conference Call. As the operator mentioned, I'm Lindsay Crabb, Director 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 of FBRT, and Michael Comparato, head of commercial real estate at BSP. Before we start today's conversation, I want to mention that some of today's comments from the team are 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 SEC periodic reports, and our actual future results may differ materially. The information conveyed on this call is current only as of the date of this call, February 23, 2023. The company assumed 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, each of which are available on our website at www.fbrtreit.com. We will refer to the supplementary slide deck on today's call. With that, I'll turn the call over to Rich Byrne.

Great. Thanks, Lindsay. Good morning, everyone, and thanks for joining us today. I'm Richard Byrne. As Lindsay mentioned, I'm chairman and CEO of FBRT. Our earnings release and supplemental deck were published to our website yesterday. So this morning, we're going to review our financial results for the fourth quarter and for the year ended 2022. I'm gonna start and I'm gonna begin on slide four where I wanna quickly cover FBRT's milestones throughout 2022. First, we closed 209 million of new loan commitments in the fourth quarter. This brings our total new loan commitments for the entire year 2022 to 2.3 billion at a weighted average spread of 462 basis points. Our commercial real estate portfolio ended the year at 5.3 billion In principle, balance spread over 161 loans. Importantly, throughout the year, we liquidated and recycled the capital underlying virtually the entire $7.1 billion of arms we inherited from Capstead's merger into our commercial real estate portfolio. We did this well ahead of the timeframe we originally specified and reached our target of positive distributable earnings dividend coverage by the end of the year. Our overall portfolio is well positioned with 76% of our loans allocated to the multifamily sector. We believe this sector will remain relatively resilient and represents a continued opportunity from a risk-reward perspective. We issued two managed CLOs in the first half of 22, raising over $2 billion. Both have two-year reinvestment periods, so the percentage of our liabilities that are non-recourse and non-mark to market now sits at 78% of our core portfolio. We also ended the year with ample liquidity cushion. We have cash and total liquidity of $179 million and $1 billion, respectively. FBRT and our advisor, Benefit Street Partners, also actively bought the company's stock back in 2022. FBRT repurchased approximately 16.6 million of common stock in total during the third and fourth quarter of 2022. We have just over 48 million left on our buyback authorization, which was extended through the end of this year, December 31st, 2023. Additionally, Benefit Street Partners, the advisor, purchased 35 million of common stock during the second and third quarter. So in total, BSP and FBRT's combined purchase activity totaled $52 million in common stock, and obviously that was purchased at attractive levels. Overall, we executed our strategic plan for 2022 and are encouraged by the growth in our portfolio, strength in our credits, and believe we are well positioned from many perspectives, including our liability structure. So with that, now I'd like to focus more specifically on the fourth quarter. First, we generated 37 cents in distributable earnings in the fourth quarter, an increase of 12% from the prior quarter. This translates to distributable earnings ROE of 9.2% for the quarter. Our distributable earnings dividend coverage was 104%. Our fourth quarter common dividend remained unchanged at 35.5 cents. This was the same dividend we've paid for the past six consecutive quarters, and it is delivering a yield of approximately 9% on our 1231 book value. Average risk rating of our portfolio moves slightly higher this quarter from two, it moved to 2.2 from 2.1. During the quarter, two loans were added to our watch list and three positions were added to foreclosure REO, two of which were previously on our watch list. of our REO positions represents the foreclosure properties in our Walgreens portfolio. Jerry and Mike will provide more detail on our REO and our watch list assets in their remarks. Importantly, 71% of our performing loan portfolio was originated in the last 18 months. Thus, our near-term maturity profile is quite muted. To conclude, we remain comfortable with the quality of our diversified portfolio that is predominantly multifamily. We have low leverage and ample liquidity to weather storms in the market that might come or could be caused by the accumulating pressure of sustained high interest rates and or a potential slowing economy. We also look forward to taking advantage of accretive new origination opportunities throughout the year as we believe the origination environment will become still more opportunistic as values adjust and new capital is needed. With that, I'll let Jerry walk through our performance for the quarter.