Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you touch on the nonperforming loans and what type of sponsors those are there? Any similarities or multiple loans to the same sponsor?
A: Michael Comparato, President of Franklin BSP Realty Trust, noted that there is more stress in syndicated borrower structures, particularly those with less control by the underlying sponsor. He mentioned that borrowers are generally cooperative in resolving issues, which helps avoid court proceedings.
Q: Can you talk about the decision to trim the capacity with Atlas and how discussions are with your financing line providers?
A: Jerome Baglien, CFO and COO, explained that the discussions have been positive, especially as the facilities are primarily used for financing new originations. The decision to adjust the size of the facilities is part of a rebalancing strategy to optimize the use of resources.
Q: Can you talk about the spreads you've generated on the $165 million originations quarter to date?
A: Michael Comparato mentioned that the spreads for the quarter to date would be tighter compared to previous quarters, influenced by specific deals like an office loan closed at a higher spread.
Q: Do you think there is enough solid demand out there that you can maintain the portfolio above $5 billion?
A: Richard Byrne, CEO, expressed optimism about the current lending environment, highlighting the opportunity to make new loans at better terms due to reduced competition. He also mentioned the potential for portfolio growth given the company's strong cash position and moderate leverage.
Q: Could you talk a little bit about cap rates and what you're underwriting to going in and exiting on these new deals?
A: Michael Comparato provided detailed insights into cap rates across various asset classes, noting that stabilized multifamily properties generally match Fannie Mae/Freddie Mac rates, while non-stabilized properties are evaluated more on a cost basis rather than cap rates.
Q: Are you still seeing opportunities for construction loans, and what's your appetite going forward on that?
A: Michael Comparato acknowledged ongoing opportunities in construction loans, attributing this to continued stress at the bank level. He described construction loans as offering some of the best risk returns, although they are capital inefficient.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
