Franklin BSP Real Estate Debt Inc.
08/11/2026 | Press release | Distributed by Public on 08/11/2026 13:45
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.
References herein to "Franklin BSP Real Estate Debt Inc." "Company," "we," "us," or "our" refer to Franklin BSP Real Estate Debt, Inc. and its subsidiaries unless the context specifically requires otherwise.
Forward-Looking Statements
Certain information contained in this Quarterly Report on Form 10-Q constitutes "forward-looking statements," which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," "continue" or "believe" or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, including those set forth under Item 1A "Risk Factors", actual events or results or the actual performance of the company may differ materially from those reflected or contemplated in such forward-looking statements. As a result, prospective investors should not rely on such forward-looking statements in making their investment decisions. In addition, certain statements reflect estimates, predictions or opinions of the company, benefit street partners or their affiliates, which cannot be independently verified and may change. There is no guarantee that these estimates, predictions or opinions will be ultimately realized.
You should carefully review the section entitled "Risk Factors" for a discussion of the risks and uncertainties that we believe are material to our business, operating results, prospects and financial condition, as such factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission (the "SEC"), which are accessible on the SEC's website at http://www.sec.gov. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, including (but not limited to), as a result of new information and future events.
Overview
We are a Maryland corporation that was formed on May 22, 2024. We intend to elect to qualify to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2025. We are externally managed by Benefit Street Partners, L.L.C. ("Adviser") pursuant to the advisory agreement with the Adviser (the "Advisory Agreement"). Our Adviser manages our affairs on a day-to-day basis. The Adviser receives fees for services related to the investment and management of our assets and operations.
The Adviser, an SEC-registered investment adviser, is a credit-focused alternative asset management firm. The Adviser manages funds for institutions and high-net-worth investors across various credit funds and complementary strategies including high yield, levered loans, private / opportunistic debt, liquid credit, structured credit and commercial real estate debt. These strategies complement each other as they all leverage the sourcing, analytical, compliance, and operational capabilities that encompass the Adviser's robust platform. The Adviser is a wholly-owned subsidiary of Franklin Resources, Inc., which together with its various subsidiaries operates as "Franklin Templeton."
We use our proceeds from our private offering of common stock, along with borrowings, to finance our investment objectives. We seek to achieve attractive risk-adjusted returns while preserving capital by primarily originating senior floating-rate mortgage loans, but also by investing in other real estate-related assets, including subordinated mortgage loans, mezzanine loans, and participations in such loans, commercial real estate securities, including commercial mortgage-backed securities ("CMBS"), equity or equity-linked securities in real estate operating companies, and net leased properties.
We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from our business, other than those referred to in this Quarterly Report on Form 10-Q.
Q2 2026 Highlights
Capital Activity and Distributions
•During the three months ended June 30, 2026, we raised approximately $56.5 million of net proceeds from the sale of our shares of common stock through our continuous offering. In addition, during the three months ended June 30, 2026, we issued 110,649 shares pursuant to our distribution reinvestment plan (the "DRIP") for an aggregate net value of approximately $2.7 million.
•During the three months ended June 30, 2026, we declared aggregate net distributions totaling approximately $5.4 million.
•During the three months ended June 30, 2026, we repurchased 535,466 shares with an aggregate value of $13.3 million under the share repurchase plan.
Investments
•As of June 30, 2026, our commercial real estate loan portfolio included 79 loans with a total commitment amount of $842.9 million, and total outstanding principal amount of $754.5 million. During the quarter, the Company executed on 16 loans for a total commitment of $134.1 million.
•As of June 30, 2026, our floating rate CMBS bond portfolio included 20 securities with a total principal balance of $149.4 million and a total fair value of $149.4 million.
Financing Activity
•During the three months ended June 30, 2026, we entered into two new repurchase agreement facilities.
◦The new facility with Morgan Stanley Mortgage Capital Holdings, LLC has a facility capacity of $125 million. The Morgan Stanley MRA has an initial maturity date of May 27, 2029 and includes two, one-year extension options, subject to the administrative agent's approval and compliance with certain conditions.
◦The new facility with Barclays Bank, PLC does not have a maximum commitment. There is no initial maturity date of this facility, however the borrowings are tied to real estate securities with 30-day repurchase maturity terms.
•We amended our existing repurchase agreement with Wells Fargo Bank, National Association to, among other things, increase the facility's capacity from $150 million to $250 million.
•During the three months ended June 30, 2026, we incurred net borrowings of $133.5 million under our repurchase agreements.
Financial Condition
Investment Activities
Investments in Loans Receivable
We commenced investing in commercial real estate loans in April 2025. As of June 30, 2026, we have originated 79 loans totaling $842.9 million in total commitments. We elected the fair value option for our commercial real estate loan investments and accordingly, we recognize any origination costs or fees associated with the loans in the period of origination. During the quarter ended June 30, 2026, we earned $12.0 million of interest income on the loans we originated.
The following table details overall statistics of our investment loan portfolio as of June 30, 2026:
| ($ in thousands) | ||||||||||||||||||||||||||||||||||||||
| Loan Type | Number of Investments | Principal Balance Outstanding | Fair Value | Unfunded Commitments |
Weighted Average Interest Rate (1)
|
Weighted Average Life (2)
|
||||||||||||||||||||||||||||||||
| Senior | 73 | $ | 747,313 | $ | 747,313 | $ | 75,386 | 6.93 | % | 3.78 | ||||||||||||||||||||||||||||
| Mezzanine | 6 | 7,144 | 7,144 | 13,076 | 13.97 | % | 3.57 | |||||||||||||||||||||||||||||||
| 79 | $ | 754,457 | $ | 754,457 | $ | 88,462 | 7.00 | % | 3.77 | |||||||||||||||||||||||||||||
(1) Represents the weighted average interest rate for each loan at June 30, 2026. Loans earn interest at the one-month term Secured Overnight Financing Rate ("SOFR") plus a spread, aside from one senior loan with a fixed-rate of 6.45%. At June 30, 2026, the one-month SOFR was 3.65%.
(2) Assumes all extension options are exercised by the borrower, however, loans may be prepaid prior to such date. Extension options are subject to satisfaction of certain predefined conditions as defined in the respective loan agreements.
The following table details the diversification and composition of our investment loan portfolio based on fair value as of June 30, 2026:
| ($ in thousands) | ||||||||||||||
| June 30, 2026 | ||||||||||||||
| Property Type | Fair Value | Percentage | ||||||||||||
| Multifamily | $ | 599,863 | 79.51 | % | ||||||||||
| Industrial | 115,489 | 15.31 | % | |||||||||||
| Hospitality | 22,500 | 2.98 | % | |||||||||||
| Mixed Use | 16,605 | 2.20 | % | |||||||||||
| $ | 754,457 | 100 | % | |||||||||||
| ($ in thousands) | ||||||||||||||
| June 30, 2026 | ||||||||||||||
| Region | Fair Value | Percentage | ||||||||||||
| Southeast | $ | 241,437 | 32.00 | % | ||||||||||
| Southwest | 155,982 | 20.68 | % | |||||||||||
| Far West | 101,429 | 13.44 | % | |||||||||||
| Mideast | 95,137 | 12.61 | % | |||||||||||
|
Various(1)
|
76,045 | 10.08 | % | |||||||||||
| Rocky Mountain | 52,093 | 6.90 | % | |||||||||||
| Great Lakes | 23,610 | 3.13 | % | |||||||||||
| New England | 8,724 | 1.16 | % | |||||||||||
| $ | 754,457 | 100 | % | |||||||||||
(1) Various includes industrial and multifamily portfolios with multiple locations throughout the United States.
As of June 30, 2026, our commercial real estate loan portfolio consists of 79 loans. The following table details the statistics of our investment loan portfolio as of June 30, 2026:
| (in thousands, except interest rates) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Description | Location | Origination Date |
Interest Rate (1)
|
Loan Commitment (2)
|
Principal Balance Outstanding | Fair Value | Payment Terms |
Maximum Maturity Date (3)
|
||||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 3/26/2025 | 11.00 | % | $ | 23,806 | $ | 8,711 | $ | 8,711 | I/O | 10/9/2029 | ||||||||||||||||||||||||||||||||||||||
| Industrial | Various | 4/7/2025 | 7.51 | % | 13,680 | 13,680 | 13,680 | I/O | 4/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 4/11/2025 | 6.65 | % | 7,216 | 7,216 | 7,216 | I/O | 4/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Hospitality | South Carolina | 4/16/2025 | 7.90 | % | 7,500 | 7,500 | 7,500 | I/O | 5/9/2028 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | California | 5/8/2025 | 10.35 | % | 19,918 | 17,690 | 17,690 | I/O | 5/9/2029 | |||||||||||||||||||||||||||||||||||||||||
| Hospitality | Florida | 5/14/2025 | 8.20 | % | 7,500 | 7,500 | 7,500 | I/O | 5/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | California | 5/22/2025 | 6.30 | % | 11,279 | 11,279 | 11,279 | I/O | 6/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | California | 5/30/2025 | 9.90 | % | 7,500 | 7,500 | 7,500 | I/O | 6/9/2029 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | North Carolina | 5/30/2025 | 6.90 | % | 7,500 | 6,279 | 6,279 | I/O | 6/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | North Carolina | 6/13/2025 | 6.60 | % | 10,000 | 10,000 | 10,000 | I/O | 6/9/2028 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 6/30/2025 | 6.75 | % | 10,000 | 10,000 | 10,000 | I/O | 7/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Florida | 7/3/2025 | 6.15 | % | 7,500 | 7,500 | 7,500 | I/O | 7/9/2028 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Various | 8/15/2025 | 9.05 | % | 10,000 | 3,037 | 3,037 | I/O | 3/9/2028 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Tennessee | 8/18/2025 | 9.90 | % | 27,763 | 4,494 | 4,494 | I/O | 9/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | North Carolina | 8/19/2025 | 6.90 | % | 10,000 | 9,880 | 9,880 | I/O | 9/9/2029 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 8/21/2025 | 6.40 | % | 7,500 | 7,005 | 7,005 | I/O | 9/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | Various | 9/10/2025 | 6.65 | % | 7,500 | 6,426 | 6,426 | I/O | 9/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Nevada | 9/29/2025 | 6.30 | % | 28,522 | 28,522 | 28,522 | I/O | 10/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | New Jersey | 9/30/2025 | 10.05 | % | 31,315 | 30,715 | 30,715 | I/O | 10/9/2029 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | West Virginia | 10/15/2025 | 6.95 | % | 24,855 | 20,828 | 20,828 | I/O | 10/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Ohio | 10/22/2025 | 6.17 | % | 17,500 | 17,500 | 17,500 | I/O | 11/9/2028 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Ohio | 10/22/2025 | 6.15 | % | 6,110 | 6,110 | 6,110 | I/O | 11/9/2028 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Various | 10/28/2025 | 5.95 | % | 17,500 | 17,500 | 17,500 | I/O | 11/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Georgia | 10/29/2025 | 6.15 | % | 17,500 | 17,500 | 17,500 | I/O | 11/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | Georgia | 10/29/2025 | 7.65 | % | 10,000 | 8,331 | 8,331 | I/O | 11/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 10/31/2025 | 6.20 | % | 7,388 | 7,388 | 7,388 | I/O | 11/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 11/12/2025 | 6.38 | % | 15,000 | 15,000 | 15,000 | I/O | 11/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Utah | 11/14/2025 | 6.25 | % | 12,025 | 12,025 | 12,025 | I/O | 11/9/2029 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 11/14/2025 | 6.12 | % | 15,000 | 15,000 | 15,000 | I/O | 12/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | New York | 11/14/2025 | 6.37 | % | 16,193 | 16,193 | 16,193 | I/O | 11/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Florida | 11/20/2025 | 6.15 | % | 7,500 | 7,500 | 7,500 | I/O | 12/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 11/21/2025 | 7.40 | % | 7,500 | 7,500 | 7,500 | I/O | 12/9/2028 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Colorado | 11/25/2025 | 5.95 | % | 10,000 | 10,000 | 10,000 | I/O | 12/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | New York | 12/1/2025 | 5.65 | % | 10,000 | 9,946 | 9,946 | I/O | 12/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 12/12/2025 | 9.41 | % | 9,838 | 9,257 | 9,257 | I/O | 1/9/2028 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | Oregon | 12/12/2025 | 7.20 | % | 7,500 | 6,460 | 6,460 | I/O | 1/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Nevada | 12/16/2025 | 6.55 | % | 10,000 | 10,000 | 10,000 | I/O | 1/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | Texas | 12/16/2025 | 7.15 | % | 7,500 | 5,482 | 5,482 | I/O | 1/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Hospitality | Florida | 12/19/2025 | 7.50 | % | 7,500 | 7,500 | 7,500 | I/O | 1/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | California | 12/19/2025 | 7.20 | % | 7,500 | 6,268 | 6,268 | I/O | 1/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Utah | 12/23/2025 | 6.10 | % | 7,500 | 7,500 | 7,500 | I/O | 1/9/2028 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | Various | 12/23/2025 | 6.58 | % | 10,000 | 10,000 | 10,000 | I/O | 1/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | Florida | 12/29/2025 | 6.80 | % | 7,500 | 6,137 | 6,137 | I/O | 1/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | North Carolina | 12/29/2025 | 6.90 | % | 13,704 | 12,000 | 12,000 | I/O | 1/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | North Carolina | 12/30/2025 | 6.90 | % | 7,500 | 7,477 | 7,477 | I/O | 1/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | North Carolina | 12/30/2025 | 7.10 | % | 7,500 | 6,424 | 6,424 | I/O | 1/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | New Jersey | 1/2/2025 | 6.50 | % | 17,750 | 17,750 | 17,750 | I/O | 1/6/2027 | |||||||||||||||||||||||||||||||||||||||||
|
Multifamily (6)
|
Various | 9/16/2025 | 6.55 | % | 17,239 | 17,239 | 17,239 | I/O | 10/9/2029 | |||||||||||||||||||||||||||||||||||||||||
|
Multifamily (6)
|
Colorado | 9/25/2025 | 6.05 | % | 15,068 | 15,068 | 15,068 | I/O | 10/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Florida | 2/9/2026 | 7.15 | % | 27,400 | 27,400 | 27,400 | I/O | 2/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | Virginia | 2/12/2026 | 6.50 | % | 7,500 | 6,964 | 6,964 | I/O | 2/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 2/27/2026 | 6.35 | % | 7,500 | 7,500 | 7,500 | I/O | 3/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | Massachusetts | 2/26/2026 | 6.70 | % | 10,000 | 8,724 | 8,724 | I/O | 3/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | California | 3/4/2026 | 6.40 | % | 7,500 | 7,105 | 7,105 | I/O | 3/9/2029 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | North Carolina | 3/11/2026 | 6.45 | % | 7,500 | 7,500 | 7,500 | I/O | 3/9/2030 | |||||||||||||||||||||||||||||||||||||||||
|
Multifamily (5)
|
Texas | 3/26/2026 | 6.45 | % | 7,500 | 7,500 | 7,500 | I/O | 10/9/2027 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 3/27/2026 | 6.25 | % | 10,000 | 10,000 | 10,000 | I/O | 4/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Mixed Use | North Carolina | 4/14/2026 | 6.35 | % | 10,000 | 10,000 | 10,000 | I/O | 5/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | North Carolina | 4/27/2026 | 6.60 | % | 7,500 | 7,500 | 7,500 | I/O | 5/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 4/29/2026 | 6.45 | % | 7,500 | 6,829 | 6,829 | I/O | 5/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Utah | 4/30/2026 | 6.30 | % | 7,500 | 7,500 | 7,500 | I/O | 5/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Mixed Use | Washington | 5/6/2026 | 6.60 | % | 7,500 | 6,605 | 6,605 | I/O | 5/9/2029 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Florida | 5/20/2026 | 6.15 | % | 14,751 | 14,751 | 14,751 | I/O | 6/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | North Carolina | 5/21/2026 | 6.50 | % | 7,514 | 7,514 | 7,514 | I/O | 6/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Arizona | 5/28/2026 | 6.15 | % | 7,500 | 7,500 | 7,500 | I/O | 6/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | New York | 6/1/2026 | 6.40 | % | 7,500 | 7,500 | 7,500 | I/O | 6/9/2029 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | Maryland | 6/3/2026 | 6.75 | % | 11,203 | 9,890 | 9,890 | I/O | 6/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Arizona | 6/4/2026 | 6.34 | % | 7,500 | 7,272 | 7,272 | I/O | 6/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | South Carolina | 6/5/2026 | 6.10 | % | 7,500 | 7,389 | 7,389 | I/O | 6/9/2029 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Virginia | 6/18/2026 | 6.65 | % | 7,500 | 4,591 | 4,591 | I/O | 7/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 6/29/2026 | 6.15 | % | 7,500 | 7,500 | 7,500 | I/O | 7/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Industrial | Texas | 6/30/2026 | 6.30 | % | 7,500 | 6,299 | 6,299 | I/O | 7/9/2031 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Various | 6/30/2026 | 6.15 | % | 8,163 | 8,163 | 8,163 | I/O | 9/9/2026 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 3/26/2025 | 20.25 | % | 4,596 | 1,682 | 1,682 | I/O | 10/9/2029 | |||||||||||||||||||||||||||||||||||||||||
|
Multifamily (4)
|
California | 5/8/2025 | 14.00 | % | 5,098 | - | - | I/O | 5/9/2029 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Tennessee | 8/18/2025 | 16.98 | % | 5,949 | 977 | 977 | I/O | 9/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | New York | 11/14/2025 | 10.67 | % | 1,799 | 1,799 | 1,799 | I/O | 11/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | New York | 12/1/2025 | 8.17 | % | 1,351 | 1,344 | 1,344 | I/O | 12/9/2030 | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | Texas | 12/12/2025 | 14.11 | % | 1,426 | 1,342 | 1,342 | I/O | 1/9/2028 | |||||||||||||||||||||||||||||||||||||||||
| $ | 842,919 | $ | 754,457 | $ | 754,457 | |||||||||||||||||||||||||||||||||||||||||||||
(1)Represents the interest rate for each loan at June 30, 2026. Loans earn interest at the one-month term SOFR plus spread. At June 30, 2026, the one-month SOFR was 3.65%.
(2)Loan amounts consist of outstanding principal balance plus funded loan commitments for each loan.
(3)Maximum maturity date assumes all extension options are exercised by the borrower, however, loans may be prepaid prior to such date. Extension options are subject to satisfaction of certain predefined conditions as defined in the respective loan agreements.
(4)Loan has a fixed rate of 14%.
(5)Loan has a fixed rate of 6.45%.
(6)These loans were acquired as part of internal acquisitions in Q1 2026 so the origination date herein is the original funding date. For more details please refer to Note 3 - Related Party Transactions - Loan Acquisition Transactions to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
Investments in Real Estate Securities
The following table details the statistics of our real estate securities portfolio as of June 30, 2026:
| CMBS Bonds | ||||||||||||||||||||||||||||||||||||||
| ($ in thousands) | Number of Bonds | Benchmark Interest Rate |
Weighted Average Interest Rate (1)
|
Weighted Average Contractual Maturity (years) | Par Value | Fair Value | ||||||||||||||||||||||||||||||||
| June 30, 2026 | 20 | 1 month SOFR | 6.98% | 3.34 | $ | 149,447 | $ | 149,439 | ||||||||||||||||||||||||||||||
Financing Activities
We finance the majority of our loan portfolio through repurchase agreements. As of June 30, 2026, we had eight repurchase agreement facilities that bear interest at one-month term SOFR plus a spread. At June 30, 2026, the one-month SOFR was 3.65%. These facilities had a weighted average borrowing rate of 5.20% at June 30, 2026.
The table below summarizes our repurchase agreement borrowings at June 30, 2026:
| (in thousands, except interest rates) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Description |
Weighted Average Interest Rate (1)
|
Maximum Facility Size | Available Capacity | Debt Amount Outstanding | Fair Value of Debt | Fair Value of Collateral | Current Maturity Date |
Maximum Maturity Date (2)
|
||||||||||||||||||||||||||||||||||||||||||
| FBRED REIT BWH Seller, LLC | 5.24 | % | $ | 250,000 | $ | 129,659 | $ | 120,340 | $ | 120,340 | $ | 152,455 | 5/8/2028 | 5/8/2030 | ||||||||||||||||||||||||||||||||||||
| FBRED REIT JWH Seller, LLC | 5.41 | % | 250,000 | 27,470 | 222,530 | 222,530 | 289,923 | 3/18/2027 | 3/18/2030 | |||||||||||||||||||||||||||||||||||||||||
| FBRED REIT WWH Seller, LLC | 5.13 | % | 250,000 | 85,013 | 164,987 | 164,987 | 207,933 | 7/30/2027 | 7/30/2030 | |||||||||||||||||||||||||||||||||||||||||
| FBRED REIT MSWH Seller, LLC | 5.12 | % | 125,000 | 111,088 | 13,912 | 13,912 | 17,390 | 5/27/2029 | 5/27/2031 | |||||||||||||||||||||||||||||||||||||||||
| FBRED REIT AWH Seller, LLC | 6.40 | % | 100,000 | 82,123 | 17,877 | 17,877 | 24,664 | 12/16/2026 | 12/16/2027 | |||||||||||||||||||||||||||||||||||||||||
| FBRED REIT High Yield Securities, LLC - JPM (3) | 4.64 | % | N/A | N/A | 88,789 | 88,789 | 111,947 | 30 days | 30 days | |||||||||||||||||||||||||||||||||||||||||
| FBRED REIT High Yield Securities - Lucid (3) | 4.69 | % | N/A | N/A | 17,475 | 17,475 | 21,500 | 30 days | 30 days | |||||||||||||||||||||||||||||||||||||||||
| FBRED REIT High Yield Securities, LLC - Barclays (3) | - | % | N/A | N/A | - | - | - | 30 days | 30 days | |||||||||||||||||||||||||||||||||||||||||
| Total | 5.20 | % | $ | 645,910 | $ | 645,910 | $ | 825,812 | ||||||||||||||||||||||||||||||||||||||||||
(1)Represents the weighted average interest rate at June 30, 2026.
(2)Borrowing facilities may have extension options, subject to lender approval and compliance with certain financial and administrative covenants.
(3)Borrowings are tied to real estate securities with a 30-day repurchase maturity term, which automatically renew, subject to administrative covenants.
Each of our repurchase agreements contains customary terms and conditions, including but not limited to, negative covenants relating to restrictions on our operations with respect to our status as a REIT, and financial covenants, such as a minimum interest coverage ratio covenant, minimum tangible net worth covenant, cash liquidity covenant and maximum leverage ratio covenant.
As of June 30, 2026, we were in compliance with the covenants of our financing facilities.
Results of Operations
For the three and six months ended June 30, 2026 and 2025, respectively, our results of operations consisted of:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | $ Change | 2026 | 2025 | $ Change | ||||||||||||||||||||||||||||||||
| Income | ||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 14,206 | $ | 2,198 | $ | 12,008 | $ | 24,685 | $ | 2,198 | $ | 22,487 | ||||||||||||||||||||||||||
| Less: interest expense | (7,738) | (1,044) | (6,694) | (13,130) | (1,044) | (12,086) | ||||||||||||||||||||||||||||||||
| Net interest income | 6,468 | 1,154 | 5,314 | 11,555 | 1,154 | 10,401 | ||||||||||||||||||||||||||||||||
| Fee and other income | 803 | 799 | 4 | 1,403 | 799 | 604 | ||||||||||||||||||||||||||||||||
| Total income | 7,271 | 1,953 | 5,318 | 12,958 | 1,953 | 11,005 | ||||||||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||||||
| Administrative fees | 615 | 1,520 | (905) | 1,264 | 1,520 | (256) | ||||||||||||||||||||||||||||||||
| General and administrative expenses | 710 | 544 | 166 | 1,172 | 544 | 628 | ||||||||||||||||||||||||||||||||
| Financing fees | 429 | 387 | 42 | 875 | 387 | 488 | ||||||||||||||||||||||||||||||||
| Management & performance fees - related party | 968 | 87 | 881 | 1,834 | 87 | 1,747 | ||||||||||||||||||||||||||||||||
| Organizational cost | - | 1,053 | (1,053) | - | 1,053 | (1,053) | ||||||||||||||||||||||||||||||||
| Accounting fees | 178 | 387 | (209) | 379 | 387 | (8) | ||||||||||||||||||||||||||||||||
| Total expenses | 2,900 | 3,978 | (1,078) | 5,524 | 3,978 | 1,546 | ||||||||||||||||||||||||||||||||
| Other gain (loss) | ||||||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on real estate securities, at fair value | 217 | 135 | 82 | (313) | 135 | (448) | ||||||||||||||||||||||||||||||||
| Total other gain (loss) | 217 | 135 | 82 | (313) | 135 | (448) | ||||||||||||||||||||||||||||||||
| Net income (loss) | 4,588 | (1,890) | 6,478 | 7,121 | (1,890) | 9,011 | ||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interest | (789) | - | (789) | (1,025) | - | (1,025) | ||||||||||||||||||||||||||||||||
| Net income (loss) attributable to Franklin BSP Real Estate Debt, Inc. | 3,799 | (1,890) | 5,689 | 6,096 | (1,890) | 7,986 | ||||||||||||||||||||||||||||||||
| Net income (loss) per common share, basic and diluted | $ | 0.39 | (0.78) | 1.17 | 0.69 | (0.78) | 1.47 | |||||||||||||||||||||||||||||||
| Weighted average common shares outstanding, basic and diluted | 9,698,412 | 2,412,678 | 7,285,734 | 8,816,085 | 2,412,678 | 6,403,407 | ||||||||||||||||||||||||||||||||
We commenced investing in commercial real estate loans in April 2025. There were no operations prior to April 2025. Net Income attributable to common stockholders for the three and six months ended June 30, 2026 was $3.8 million and $6.1 million or $0.39 and $0.69 per weighted average common share (basic), respectively.
•Total income for the three and six months ended June 30, 2026 was $7.3 million and $13.0 million, respectively, compared to $2.0 million for the three and six months ended June 30, 2025. The $5.3 million and $11.0 million, respective increases over prior comparative periods were driven by the increase in real estate loan investments and real estate securities. Interest income increased $12.0 million and $22.5 million, respectively for the three and six months ended June 30, 2026 compared to the comparative prior period. Interest expense increased $6.7 million and $12.1 million, respectively for the three and six months ended June 30, 2026 compared to the comparative prior period and was driven by borrowings under the eight repurchase facilities, five of which were entered into after June 30, 2025. Fee and other income increased $4,000 and $0.6 million, respectively, for the three and six months ended June 30, 2026 compared to the comparative prior period. These fees primarily relate to origination fees, exit fees and other fees earned. The increase during the six months ended comparative period was primarily attributable to a full six months of operations, as operations did not commence until April 1, 2025.
•Administrative fees for the three and six months ended June 30, 2026, were $0.6 million and $1.3 million, respectively. These fees were predominately personnel and other Adviser costs of providing services pursuant to the
Advisory Agreement. The $0.9 million and $0.3 million respective decreases over prior comparative periods were driven by a decline in personnel costs.
•General and administrative expenses for the three and six months ended June 30, 2026 were $0.7 million and $1.2 million, respectively. These fees related to services such as third party administrative fees, transfer agent fees, legal, filing fees, board of director compensation and valuation services. The increase of $0.2 million and $0.6 million, respectively, over prior comparative periods were due to an increase in third party administrative fees and valuation services due to the growth in the investment portfolio.
•Financing fees for the three and six months ended June 30, 2026 were $0.4 million and $0.9 million, respectively. These fees are related to the various debt obligations we entered into to fund loan originations. The increase of $0.04 million and $0.5 million, respectively, over prior comparative periods was due to executing new repurchase agreements.
•Management and performance fees - related party for the three and six months ended June 30, 2026 were $1.0 million and $1.8 million, respectively. These fees represent fees incurred under the Advisory Agreement. The increase of $0.9 million and $1.7 million, respectively, over prior comparative periods was due to an increase in value of the investment portfolio.
•There were no Organizational costs for the three and six months ended June 30, 2026. Organizational costs incurred during the three and six months ended June 30, 2025 were related to costs incurred prior to the commencement of operations on April 1, 2025. No additional organizational costs have been recorded.
•Accounting fees for the three and six months ended June 30, 2026 were $0.2 million and $0.4 million, respectively. These fees are related to audit and tax services for the Company. There was a decrease of $0.2 million and $0.01 million, respectively, over the prior comparative periods.
•Total other gain (loss) for the three and six months ended June 30, 2026 was $0.2 million and $(0.3) million, respectively. There was an increase of $0.1 million and decrease of $0.4 million, respectively over prior comparative periods which were related to the remeasurement of the real estate securities at fair value.
•For the three and six months ended June 30, 2026, Offering costs of $0.2 million and $0.4 million respectively were incurred. Under GAAP, these costs are charged directly against stockholders' equity. These costs have been advanced by the Adviser and paid on our behalf. In addition, for the three and six months ended June 30, 2026 stockholder servicing fees were $1.0 million and $1.3 million, respectively, and were charged directly against stockholders' equity. In comparison, for the three and six months ended June 30, 2025, offering costs incurred were $2.1 million and accrued shareholder servicing fees of $0.7 million were charged directly against stockholders' equity. The $1.9 million and $1.7 million decrease in offering costs over the respective prior comparative periods were due to costs incurred marketing the sale of common stock of the Company prior to commencement of operations on April 1, 2025.
Liquidity And Capital Resources
Liquidity is a measure of our ability to meet our cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make new investments where appropriate, pay distributions to our stockholders and other general business needs. We believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for the next twelve months and beyond.
Our initial closing of our private offering occurred on April 1, 2025, at which time we commenced our principal operations.
Since the initial closing of our private offering of our common stock occurred on April 1, 2025, we have issued common stock for a total of $290.0 million through August 11, 2026, including $8.9 million issued pursuant to the DRIP. We expect to continue to have subsequent closings of common stock through our private offering on a monthly basis. We intend to promptly invest the net proceeds from each closing in our target assets consistent with our investment objectives. In addition, we have obtained, and expect to obtain additional, debt financing on our assets consistent with our financing strategy, and intend to use the proceeds to make additional investments in our target assets.
We generate cash primarily from (i) the net proceeds of our continuous private offering, (ii) cash flows from our operations, (iii) our financing arrangements, and (iv) any future offerings of our equity or debt securities. Our primary sources of capital are net proceeds from monthly closings on our continuous private offering, debt financing and interest payments on our investments. We expect longer term capital sources to include these same sources and repayments of principal on our target investments.
Our primary use of cash are for (i) origination or acquisition of commercial mortgage loans and other commercial debt investments, CMBS and other commercial real estate-related debt investments, (ii) the cost of operations (including the Management Fee and Performance Fee), (iii) debt service of any borrowings, (iv) periodic repurchases, including under our share repurchase plan, and (v) cash distributions (if any) to the holders of our shares to the extent declared by our Board.
We intend to qualify to be taxed and to operate in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), commencing with our taxable year ended December 31, 2025. Under the Code, to qualify as a REIT, we must distribute at least 90% of our taxable income subject to certain adjustments and excluding capital gain, and we must distribute 100% of our taxable income to avoid federal income tax payment obligations. These requirements will restrict our ability to retain cash flow to fund future liquidity needs.
Our Adviser has agreed to several support measures that have and will enhance our liquidity. Our Adviser has and will advance all organization and offering expenses (other than upfront selling commissions, dealer manager fees and stockholder servicing fees) on our behalf through the first anniversary of the initial closing of our private offering. We will reimburse the Adviser for all such advanced costs and expenses ratably over the 60 months following the first anniversary of the initial closing of our private offering. Our Adviser has also advanced certain operating expenses prior to January 1, 2026, which we will reimburse over the 60 months following January 1, 2026 and has and is expected to continue to advance certain of our operating expenses after January 1, 2026.
On February 26, 2026, the Company entered into the Amended Advisory Agreement with the Adviser to amend the terms regarding the reimbursement to the Adviser of operating expenses it pays on behalf of the Company. Pursuant to the Amended Advisory Agreement, commencing January 1, 2026 through December 31, 2026, the Company will reimburse the Adviser for operating expenses it pays on the Company's behalf in an amount up to 0.60% of Average Net Asset Value (as defined in the Amended Advisory Agreement) and expenses above such amount will be paid in 12 equal, quarterly installments, with approval of the independent directors of the Company required for the Company to reimburse the Adviser if such amounts are in excess of the greater of 2% of Average Invested Assets and 25% of Net Income (as defined in the Amended Advisory Agreement). Operating expenses paid by the Adviser prior to January 1, 2026 will be reimbursed in 60 monthly installments, as noted above, and beginning January 1, 2027, operating expenses will be reimbursed by the Company subject to the caps as provided for in the initial agreement.
Our primary sources of liquidity include cash and available borrowings under our repurchase agreements. The following table summarizes amounts available under these sources at June 30, 2026 and December 31, 2025:
| (in thousands) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Cash | $ | 37,641 | $ | 12,315 | ||||||||||
| Available borrowings on undrawn repurchase agreements | 435,354 | 540,832 | ||||||||||||
| Total available liquidity and capital resources | $ | 472,995 | $ | 553,147 | ||||||||||
Contractual Obligations and Commitments
The following table shows our payment obligations for repayment of debt at June 30, 2026:
| (in thousands) | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | Total | |||||||||||||||||||||||||||
| Repurchase agreements | $ | 106,264 | $ | 17,877 | $ | 521,769 | $ | 645,910 | ||||||||||||||||||||||||
| Total | $ | 106,264 | $ | 17,877 | $ | 521,769 | $ | - | $ | 645,910 | ||||||||||||||||||||||
In the ordinary course of business, we may enter into future funding commitments. At June 30, 2026, we had unfunded commitments on delayed draw term loans of $88.5 million . At June 30, 2026 the Company's unfunded commitments consisted of the following:
| Investment Type | Total Commitment | Remaining Commitment | ||||||||||||
| Senior Mortgage | $ | 339,902 | $ | 75,386 | ||||||||||
| Mezzanine | 18,420 | 13,076 | ||||||||||||
| $ | 358,322 | $ | 88,462 | |||||||||||
Cash Flows
The following table summarizes the changes in cash and restricted cash during the six months ended June 30, 2026 and 2025:
| (in thousands) | June 30, 2026 | June 30, 2025 | ||||||||||||
| Net cash provided by operating activities | $ | 10,216 | $ | 1,647 | ||||||||||
| Net cash used in investing activities | (428,325) | (203,454) | ||||||||||||
| Net cash provided by financing activities | 448,509 | 237,859 | ||||||||||||
| Net increase in cash and restricted cash | $ | 30,400 | $ | 36,052 | ||||||||||
Cash flows provided by operating activities were $10.2 million and were primarily due to interest income and origination fees earned on the loans receivable and real estate securities during the six months ended June 30, 2026. Cash flows provided by operating activities increased $8.6 million compared to the six months ended June 30, 2025. The increase was driven by a full six months of operations in 2026; as operations did not commence until April 1, 2025, and the growing loan and real estate securities portfolio.
Cash flows used in investing activities were $428.3 million and were primarily related to the origination of loans and real estate securities during the six months ended June 30, 2026. Cash flows used by investing activities increased $224.9 million compared to the six months ended June 30, 2025. The increase was driven by a full six months of operations in 2026, as operations did not commence until April 1, 2025, and the increase in loan originations and future fundings during the six months ended June 30, 2026.
Cash flows provided by financing activities were $448.5 million and were primarily related to net proceeds received from repurchase agreements and issuance of common stock during the six months ended June 30, 2026. Cash flows provided by financing activities increased $210.6 million compared to the six months ended June 30, 2025. An increase in borrowings under the Company's eight repurchase agreements, compared to three repurchase agreements in place as of June 30, 2025, is the main driver of the increase.
Distributions
We generally intend to distribute substantially all of our taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to our stockholders each year to comply with the REIT provisions of the Code. Distributions are at the discretion of the Board and include a review of earnings, cash flow, liquidity and capital resources.
The net distribution varies for each class based on the applicable stockholder servicing fee, which is deducted from the monthly distribution per share and paid directly to the applicable distributor.
The initial closing of our private offering occurred on April 1, 2025, at which time we commenced our principal operations.
The following table summarizes our distributions declared during the six months ended June 30, 2026 and June 30, 2025:
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | |||||||||||||||||||||||||
| (in thousands) | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||
| Distributions | ||||||||||||||||||||||||||
| Payable in cash | $ | 4,467 | 46 | % | $ | 135 | 26 | % | ||||||||||||||||||
| Reinvested in shares | 5,182 | 54 | % | 383 | 74 | % | ||||||||||||||||||||
| Total distribution | $ | 9,649 | 100 | % | $ | 518 | 100 | % | ||||||||||||||||||
| Sources of Distributions | ||||||||||||||||||||||||||
| Cash flows from operating activities | $ | 9,649 | 100 | % | $ | 518 | 100 | % | ||||||||||||||||||
| Offering proceeds | - | - | % | - | - | % | ||||||||||||||||||||
| Total sources of distribution | $ | 9,649 | 100 | % | $ | 518 | 100 | % | ||||||||||||||||||
| Net cash provided by operating activities | $ | 10,216 | $ | 1,647 | ||||||||||||||||||||||
The table below details the net distribution per share declared for each of our common share classes for the six months ended June 30, 2026:
| Record Date |
Common Shares Class G |
Common Shares Class G-D |
Common Shares Class G-S |
Common Shares Class E |
Common Shares Class I |
|||||||||||||||||||||||||||
| January 30, 2026 | $ | 0.1667 | $ | 0.1618 | $ | 0.1504 | $ | 0.1667 | $ | - | ||||||||||||||||||||||
| February 27, 2026 | 0.1900 | 0.1852 | 0.1736 | 0.1900 | 0.1900 | |||||||||||||||||||||||||||
| March 31, 2026 | 0.1900 | 0.1852 | 0.1734 | 0.1900 | 0.1900 | |||||||||||||||||||||||||||
| April 30, 2026 | 0.1900 | 0.1852 | 0.1730 | 0.1900 | 0.1900 | |||||||||||||||||||||||||||
| May 29, 2026 | 0.1900 | 0.1856 | 0.1770 | 0.1900 | 0.1900 | |||||||||||||||||||||||||||
| June 29, 2026 | 0.1900 | 0.1856 | 0.1737 | 0.1900 | 0.1900 | |||||||||||||||||||||||||||
| Totals | $ | 1.1167 | $ | 1.0886 | $ | 1.0211 | $ | 1.1167 | $ | 0.9500 | ||||||||||||||||||||||
Related Party Transactions
We have entered into the Advisory Agreement with Benefit Street Partners. See Note 3 - Related Party Transactions to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
The Adviser may be entitled to receive a Performance Fee for each class of common share except Class E common shares, which is accrued monthly and payable quarterly in arrears. Refer to Note 3 - Related Party Transactions - Management and Performance Fees to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a summary of how our performance fee is computed.
For other related party transactions, see Note 3 - Related Party Transactions to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
There have been no significant changes to our critical accounting policies and estimates that are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Non-GAAP Financial Measures
Net Asset Value ("NAV") and NAV Per Share Calculation
We calculate our NAV each month in accordance with valuation guidelines approved by the Board. We calculate our NAV for each class of shares based on the net asset values of our investments (including but not limited to commercial real estate loans and debt securities), the addition of any other assets (such as cash, restricted cash, receivables, and other assets obtained in the ordinary course of business), and the deduction of any liabilities (including but not limited to financing facilities, payables, and other liabilities incurred in the ordinary course of business). NAV is not a measure used under GAAP and the valuations of and certain adjustments made to our assets and liabilities used in the determination of NAV differs from GAAP. NAV is not equivalent to stockholders' equity or any other GAAP measure.
The following table details the major components of our NAV as of June 30, 2026 and December 31, 2025, respectively:
| (in thousands, except share data) | ||||||||||||||
| Components of NAV | June 30, 2026 | December 31, 2025 | ||||||||||||
| Loans receivable, at fair value | $ | 754,457 | $ | 372,276 | ||||||||||
| Real estate securities, at fair value | 149,439 | 103,668 | ||||||||||||
| Cash | 37,641 | 12,315 | ||||||||||||
| Restricted cash | 12,663 | 7,589 | ||||||||||||
| Interest receivable | 2,736 | 1,016 | ||||||||||||
|
Prepaid expenses and other assets (1)
|
2,041 | 1,296 | ||||||||||||
| Due from affiliate | - | 615 | ||||||||||||
| Repurchase agreements, at fair value | (645,910) | (292,032) | ||||||||||||
| Interest payable | (1,457) | (623) | ||||||||||||
| Subscription received in advance | (12,663) | (7,589) | ||||||||||||
|
Due to affiliates (2)
|
(3,102) | (2,282) | ||||||||||||
|
Accrued stockholder serving fees (3)
|
(52) | (33) | ||||||||||||
| Distribution payable | (1,983) | (1,164) | ||||||||||||
| Share repurchase payable | (13,234) | - | ||||||||||||
| Other accrued liabilities | (1,107) | (1,128) | ||||||||||||
| Non-controlling interest | (27,544) | (14,848) | ||||||||||||
| NAV | $ | 251,925 | $ | 179,076 | ||||||||||
| Number of outstanding shares (all classes) | 10,173,871 | $ | 7,179,677 | |||||||||||
(1)Other assets represents exit fee receivable and unamortized debt facility costs. In accordance with the fair value option under GAAP, direct costs incurred in the establishment of debt facilities are expensed at the time the facilities are established. For purposes of NAV, these costs are capitalized and amortized over the life of the debt facility, therefore included in the above amount.
(2)Due to affiliates excludes $4.8 million advanced by the Adviser for organizational, offering and operating expenses and $2.2 million of operating expenses deferred by the Adviser under the Advisory Agreement.
(3)Accrued stockholder servicing fee represents the accrual for the full cost of the stockholder servicing fee for Class G-D and Class G-S shares. Under GAAP, we accrued an estimate of the full cost of the stockholder servicing fees over the life of each share as an offering cost at the time we sold each of the Class G-D and Class G-S shares. For purposes of NAV, we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis.
The following table provides a breakdown of our total NAV and NAV per share by class as of June 30, 2026:
| (in thousands, except share amounts and per share data) |
Common Shares Class G |
Common Shares Class G-D |
Common Shares Class G-S |
Common Shares Class E | Common Shares Class I | Total | ||||||||||||||||||||||||||||||||
| Net Asset Value | $ | 140,308 | $ | 50,188 | $ | 61,051 | $ | 238 | $ | 140 | $ | 251,925 | ||||||||||||||||||||||||||
| Number of outstanding shares | 5,648,342 | 2,035,201 | 2,475,126 | 9,532 | 5,670 | 10,173,871 | ||||||||||||||||||||||||||||||||
| NAV per share | $ | 24.84 | $ | 24.66 | $ | 24.67 | $ | 24.92 | $ | 24.75 | $ | 24.76 | ||||||||||||||||||||||||||
Reconciliation of Stockholders' Equity to NAV
Despite being a well-recognized term across many industries as a practical expedient for measuring the fair value of certain investments, NAV is not a measure used under GAAP. As described above, our monthly NAV is determined in accordance with valuation guidelines that we believe are consistent with industry practice and have been approved by the Board, but the treatment of certain assets and liabilities used for the determination of NAV under these guidelines differs from GAAP. Thus, our NAV is not equivalent to Stockholders' equity or any other GAAP measure.
The following table reconciles GAAP stockholders' equity per our Consolidated Balance Sheets to our NAV at June 30, 2026 and December 31, 2025, respectively:
| (in thousands) | June 30, 2026 | December 31, 2025 | ||||||||||||
| Stockholders' equity | $ | 240,214 | $ | 170,913 | ||||||||||
| Adjustments: | ||||||||||||||
| Advanced organization, offering and operating costs | 4,763 | 4,813 | ||||||||||||
|
Accrued stockholder servicing fees not currently payable (1)
|
3,473 | 2,385 | ||||||||||||
|
Deferred operating expenses (2)
|
2,176 | - | ||||||||||||
| Unamortized debt issuance costs | 1,299 | 965 | ||||||||||||
| NAV | $ | 251,925 | $ | 179,076 | ||||||||||
(1)We have accrued stockholder servicing fees totaling $3.5 million of which approximately $51,513 is currently payable to the Dealer Manager as of June 30, 2026.
(2) Includes operating expenses which were deferred by the Adviser through June 30, 2026, pursuant to the Advisory Agreement.
Given their timing and substantial size, reflecting organizational, offering and operating expense in NAV when incurred can be overly punitive to the NAV per share of early investors and reduce cash available for new investments that will inure to the benefit of later investors. To help mitigate the impact of this timing difference, the Adviser incurred the bulk of these costs on our behalf and agreed to allow organizational and offering expenses to be repaid ratably over 60 months starting after the first anniversary of the initial closing of our private offering or January 1, 2026, with respect to operating expenses. Under the terms of our Advisory Agreement, the Adviser advanced all of our organizational, offering and operating expenses (other than upfront selling commissions and ongoing stockholder servicing fees) incurred prior to January 1, 2026 and has advanced certain operating expenses subsequent to January 1, 2026. We will decrease our NAV by the amount of each monthly repayment made to the Adviser during the reimbursement period. These costs were expensed as incurred in our GAAP financial statements.
Under the terms of our agreement, the Dealer Manager is entitled to receive upfront selling commissions for certain classes of common stock, including Class F-S, Class F-D, Class G-S and Class G-D shares and stockholder servicing fees for certain classes of our common stock, including Class F-S, Class F-D, Class G-S and Class G-D shares sold in the continuous offering. Under GAAP, we accrue the full amount of stockholder servicing fees payable over an estimated investor holding period as an offering cost at the time each applicable share is sold during the continuous offering and treat the amount as an offset (reduction) to Additional paid-in capital. As the actual monthly amounts are remitted to the Dealer Manager, the NAV is reduced by a corresponding amount.
We have elected the fair value option for our financing facilities and expense debt issuance costs in accordance with GAAP. However, when calculating our NAV, we capitalize debt issuance and other financing costs as incurred and expense the costs over the life of the financing facility so that the costs to maintain the facility are borne by all investors who benefit from its use, rather than just those who were invested during the period in which the facility was implemented.
Distributable Earnings and Distributable Earnings to Common Stockholders
Distributable Earnings is a non-GAAP measure, which the Company defines as GAAP net income (loss), adjusted for (i) unrealized gain/loss on loan investments and real estate securities, at fair value (ii) advanced organization and operating expenses (iii) deferred operating expenses and (iv) unamortized debt issuance costs. Further, Distributable Earnings to Common Stockholders, a non-GAAP measure, presents Distributable Earnings net of non-controlling interests in joint ventures.
The Company believes that Distributable Earnings and Distributable Earnings to Common Stockholders provide meaningful information to consider in addition to the disclosed GAAP results. The Company believes Distributable Earnings and Distributable Earnings to Common Stockholders are useful financial metrics for existing and potential future holders of its common stock, as Distributable Earnings to Common Stockholders is an indicator of common dividends per share. The Company intends to elect to qualify to be taxed as a REIT, and therefore, the Company generally must distribute annually at least 90% of its taxable income, subject to certain adjustments, and therefore believes dividends are one of the principal reasons stockholders may invest in its common stock. Further, Distributable Earnings to Common Stockholders help investors evaluate performance excluding the effects of certain transactions and GAAP adjustments that the Company does not believe are necessarily indicative of current loan portfolio performance and the Company's operations and is one of the performance metrics the Company's Board considers when dividends are declared.
Distributable Earnings and Distributable Earnings to Common Stockholders do not represent net income (loss) and should not be considered as an alternative to GAAP net income (loss). The methodology for calculating Distributable Earnings and Distributable Earnings to Common Stockholders may differ from the methodologies employed by other companies and thus may not be comparable to the Distributable Earnings reported by other companies.
The following table provides a reconciliation of GAAP net income to Distributable Earnings and Distributable Earnings to Common Stockholders during the three and six months ended June 30, 2026 and June 30, 2025, respectively:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (in thousands, except share and per share amounts) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| GAAP Net Income | $ | 4,588 | $ | (1,890) | $ | 7,121 | $ | (1,890) | ||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Unrealized gain on real estate securities, at fair value | (87) | - | 125 | - | ||||||||||||||||||||||
|
Advanced organization and operating costs(1)
|
(123) | 2,450 | (123) | 2,450 | ||||||||||||||||||||||
|
Deferred operating expenses(3)
|
1,063 | - | 2,176 | - | ||||||||||||||||||||||
|
Unamortized debt issuance costs(2)
|
110 | 355 | 334 | 355 | ||||||||||||||||||||||
| Distributable Earnings | 5,551 | 915 | 9,633 | 915 | ||||||||||||||||||||||
| Net Income attributable to Non-Controlling Interest | (789) | - | (1,025) | - | ||||||||||||||||||||||
| Distributable Earnings to Common Stockholders | $ | 4,762 | $ | 915 | $ | 8,608 | $ | 915 | ||||||||||||||||||
| Weighted average common shares outstanding, basic and diluted | 9,698,412 | 2,412,678 | 8,816,085 | 2,412,678 | ||||||||||||||||||||||
| Distributable Earnings per common share, basic and diluted | $ | 0.49 | $ | 0.38 | $ | 0.98 | $ | 0.38 | ||||||||||||||||||
(1) Includes organizational and other operating expenses which were advanced by the Adviser for the three months ended June 30, 2026, pursuant to the Advisory Agreement.
(2) We have elected the fair value option for our financing facilities and expense debt issuance costs in accordance with GAAP. However, when calculating Distributable Earnings, we adjust the effect of debt issuance and other financing costs to reflect the cost over the life of the financing facility so that the costs to maintain the facility are borne by all investors who benefit from its use, rather than just those who were invested during the period in which the facility was implemented.
(3) Includes operating expenses which were deferred by the Adviser through June 30, 2026, pursuant to the Advisory Agreement.
The following table provides a breakdown of our total Distributable Earnings and Distributable Earnings per share by class as for the three and six months ended June 30, 2026:
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| (in thousands, except share and per share amounts) | Class G | Class G-D | Class G-S | Class E | Class I | Total | ||||||||||||||||||||||||||||||||
| Distributable Earnings | $ | 2,559 | $ | 1,120 | $ | 1,075 | $ | 5 | $ | 3 | $ | 4,762 | ||||||||||||||||||||||||||
| Weighted average common shares outstanding, basic and diluted | 5,208,918 | 2,276,174 | 2,198,557 | 9,156 | 5,607 | 9,698,412 | ||||||||||||||||||||||||||||||||
| Distributable Earnings per common share, basic and diluted | $ | 0.49 | $ | 0.49 | $ | 0.49 | $ | 0.59 | $ | 0.45 | $ | 0.49 | ||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| (in thousands, except share and per share amounts) | Class G | Class G-D | Class G-S | Class E | Class I | Total | ||||||||||||||||||||||||||||||||
| Distributable Earnings | $ | 4,679 | $ | 2,030 | $ | 1,885 | $ | 10 | $ | 4 | $ | 8,608 | ||||||||||||||||||||||||||
| Weighted average common shares outstanding, basic and diluted | 4,791,124 | 2,076,536 | 1,935,130 | 8,679 | 4,616 | 8,816,085 | ||||||||||||||||||||||||||||||||
| Distributable Earnings per common share, basic and diluted | $ | 0.98 | $ | 0.98 | $ | 0.97 | $ | 1.18 | $ | 0.91 | $ | 0.98 | ||||||||||||||||||||||||||
The following table provides a breakdown of our total Distributable Earnings and Distributable Earnings per share by class for the three and six months ended June 30, 2025. As operations commenced on April 1, 2025, three and six months ended Distributable Earnings are the same:
| Three and Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||
| (in thousands, except share and per share amounts) | Class G | Class G-D | Class G-S | Total | ||||||||||||||||||||||
| Distributable Earnings | $ | 600 | $ | 297 | $ | 18 | $ | 915 | ||||||||||||||||||
| Weighted average common shares outstanding, basic and diluted | 1,456,640 | 881,752 | 74,286 | 2,412,678 | ||||||||||||||||||||||
| Distributable Earnings per common share, basic and diluted | $ | 0.41 | $ | 0.34 | $ | 0.24 | $ | 0.38 | ||||||||||||||||||
Franklin BSP Real Estate Debt Inc. published this content on August 11, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 11, 2026 at 19:46 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]