Franklin BSP Real Estate Debt Inc.

08/07/2025 | Press release | Distributed by Public on 08/07/2025 12:30

Quarterly Report for Quarter Ending June 30, 2025 (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 qualify as a real estate investment trust ("REIT") for U.S. federal income tax purposes beginning with the taxable year ending December 31, 2025. We are externally managed by Benefit Street Partners, L.L.C. ("Adviser").
We intend to use our proceeds from our private offering of common stock 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 intend to target middle market companies, which we generally define as companies that have loans between $25 million and $100 million, although we may invest in larger or smaller companies. We will invest across a mix of asset classes, but intend to focus on lending in the multifamily space. To a lesser extent, we may invest in, or originate, other real-estate related debt and equity investments, which may include subordinated debt, CMBS and collateralized loan obligations ("CLOs").
We seek to focus on a flexible mix of credit and other real estate investments associated with high-quality assets to generate current cash flow. We seek to identify attractive risk-reward investment opportunities with a focus on financing middle market investments.
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 2025 Highlights
Capital Activity and Distributions
•Raised approximately $79.3 million of net proceeds from the sale of our common shares through the continuous offering during the quarter ended June 30, 2025.
•Declared monthly net distributions totaling approximately $0.5 million for the quarter ended June 30, 2025.
Investments
•During the quarter ended June 30, 2025, originated 12 floating rate commercial real estate loans with a total commitment amount of $160.9 million and total outstanding principal amount of $144.6 million at June 30, 2025 and one fixed rate commercial real estate loan with a total commitment amount of $10.2 million, with no outstanding balance at June 30, 2025.
•During the quarter ended June 30, 2025, invested in 10 floating rate CMBS bonds with a total principal balance of $57.4 million and total fair value of $57.4 million at June 30, 2025.
Financing Activity
•Entered into a repurchase agreement facility with Barclays Bank PLC. The repurchase agreement has a maximum facility size of $250.0 million and bears interest at 4.45%.
•Received net borrowings of $135.9 million from our repurchase agreements during the quarter ended June 30, 2025.
Financial Condition
Investment Activities
Investments in Loans Receivable
As of June 30, 2025, we have originated 15 commercial real estate loans. The following table details the statistics of our loans receivable portfolio as of June 30, 2025:
(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 10.32 % $ 23,806 $ 1,326 $ 1,326 I/O 10/9/2029
Multifamily Texas 3/26/2025 19.57 % 4,596 255 255 I/O 10/9/2029
Industrial Various 4/7/2025 8.37 % 27,360 27,360 27,360 I/O 4/9/2030
Industrial Various 4/7/2025 14.32 % 4,560 4,560 4,560 I/O 4/9/2030
Multifamily Texas 4/11/2025 7.32 % 7,500 7,500 7,500 I/O 4/9/2030
Hospitality Florida 5/14/2025 8.82 % 7,500 7,500 7,500 I/O 5/9/2030
Hospitality South Carolina 4/16/2025 8.57 % 7,500 7,500 7,500 I/O 5/9/2028
Multifamily Texas 4/30/2025 7.12 % 7,500 7,500 7,500 I/O 5/9/2028
Multifamily California 5/8/2025 10.82 % 41,188 27,599 27,599 I/O 5/9/2029
Multifamily(4) California 5/8/2025 14 % 10,196 - - I/O 5/9/2029
Multifamily California 5/22/2025 6.97 % 22,558 22,558 22,558 I/O 6/9/2030
Multifamily California 5/30/2025 10.57 % 7,500 6,226 6,226 I/O 6/9/2029
Multifamily North Carolina 5/30/2025 7.57 % 7,500 6,279 6,279 I/O 6/9/2030
Multifamily North Carolina 6/13/2025 7.27 % 10,000 10,000 10,000 I/O 6/9/2028
Multifamily Texas 6/30/2025 7.32 % 10,000 10,000 10,000 I/O 7/9/2030
$ 199,264 $ 146,163 $ 146,163
(1)Represents the interest rate for each loan at June 30, 2025. Loans earn interest at the one-month term Secured Overnight Financing Rate ("SOFR") plus spread. At June 30, 2025, the one-month SOFR was 4.32%.
(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%.
Investments in Real Estate Securities
The following table details the statistics of our real estate securities portfolio as of June 30, 2025:
CMBS Bonds
(in thousands, except interest rates) Number of Bonds Benchmark Interest Rate Weighted Average Interest Rate Weighted Average Contractual Maturity (years) Par Value Fair Value
CMBS Bonds 10 1 month SOFR 7.51% 5.33 $ 57,410 $ 57,426
Financing Activities
We finance the majority of our loan portfolio through repurchase agreements. As of June 30, 2025, we had three repurchase agreement facilities that bear interest at one-month term SOFR plus a spread. These facilities had a weighted average borrowing rate of 3.97% at June 30, 2025.
The table below summarizes our repurchase agreement borrowings at June 30, 2025:
(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 4.45 % $ 250,000 $ 233,352 $ 16,648 $ 16,648 $ 21,280 5/8/2028 5/8/2030
FBRED REIT JWH Seller, LLC 5.86 % 250,000 178,068 71,932 71,932 103,116 3/18/2027 3/18/2030
FBRED REIT High Yield Securities, LLC (3)
0.94 % n/a n/a 47,296 47,296 57,410 30 days 30 days
Total 3.97 % $ 135,876 $ 135,876 $ 181,806
(1)Represents the weighted average interest rate at June 30, 2025.
(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.
Borrowings under the Company's repurchase agreements bear interest at one-month term SOFR plus a spread. At June 30, 2025, the one-month SOFR was 4.32%.
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, 2025, we were in compliance with the covenants of our financing facilities.
Results of Operations
There were no operations for the year ended December 31, 2024 and the three months ended March 31, 2025.
For the six months ended June 30, 2025:
•Financing fees were $0.4 million. These fees are related to the various debt obligations we entered into as part of initial loan originations.
•Administrative fees were $1.5 million. These fees were predominately personnel and other Advisor costs of providing services pursuant to the Advisory Agreement.
•Total income of $2.0 million, and consisted of interest income of $2.2 million, interest expense of $1.0 million and fee and other income of $0.8 million (predominantly origination fees).
•Organization costs were approximately $1.1 million. These costs have been advanced by the Adviser and paid on our behalf. We will commence reimbursement of the advances to the Adviser in April 2026 and will pay the balance due at that time, ratably in 60 monthly installments thereafter.
•Total other income of $0.1 million for the period is related to the remeasurement of the real estate securities at fair value as of June 30, 2025.
•Offering costs incurred were approximately $2.8 million. Under generally accepted accounting principles in the United States of America ("GAAP"), these costs are charged directly against stockholders' equity. These costs have been advanced by the Adviser and paid on our behalf. We will commence reimbursement of the advances to the Adviser in April 2026 and will pay the balance due at that time, ratably in 60 monthly installments thereafter.
•In addition, accrued stockholder servicing fees were approximately $0.7 million and were charged directly against stockholders' equity.
Our net loss for the period six month ended June 30, 2025 was approximately $1.9 million or $(0.78) per weighted average common share (basic).
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 $110.9 million through August 7, 2025. We expect 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 expect to obtain 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 expect to generate cash primarily from (i) the net proceeds of our continuous private offering, (ii) cash flows from our operations, (iii) any financing arrangements we may enter into in the future, and (iv) any future offerings of our equity or debt securities. We expect that during our first 12 months of operations our primary sources of capital will be 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 will be 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 of Directors (the "Board").
We intend to elect 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 ("Code") commencing with our taxable year ending 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 will enhance our liquidity. Our Adviser has agreed to advance all organization and offering expenses (other than upfront selling commissions, dealer manager fees and stockholder servicing fees) and may advance certain of our operating expenses 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 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, 2025:
(in thousands) June 30, 2025
Cash $ 13,042
Available borrowings on undrawn repurchase agreements 411,420
Total available liquidity and capital resources $ 424,462
Contractual Obligations and Commitments
The following table shows our payment obligations for repayment of debt at June 30, 2025:
(in thousands) Less Than 1 Year 1-3 Years 3-5 Years More Than 5 years Total
Repurchase agreements $ - $ - $ 88,580 $ 47,296 $ 135,876
Total $ - $ - $ 88,580 $ 47,296 $ 135,876
In the ordinary course of business, we may enter into future funding commitments. At June 30, 2025, we had unfunded commitments on delayed draw term loans of $53.1 million. At June 30, 2025 the Company's unfunded commitments consisted of the following:
(in thousands)
Investment Type Collateral Type Commitment Type Total Commitment Remaining Commitment
Senior Mortgage Multifamily Delayed Draw $ 23,806 $ 22,480
Mezzanine Multifamily Delayed Draw 4,596 4,340
Senior Mortgage Multifamily Delayed Draw 41,188 13,589
Mezzanine Multifamily Delayed Draw 10,196 10,196
Senior Mortgage Multifamily Delayed Draw 7,500 1,275
Senior Mortgage Multifamily Delayed Draw 7,500 1,221
Total $ 94,786 $ 53,101
Cash Flows
The following table summarizes the changes in cash and restricted cash for the six months ended June 30, 2025:
(in thousands) For the Six Months Ended June 30, 2025
Net cash provided by operating activities $ 1,647
Net cash used in investing activities (203,454)
Net cash provided by financing activities 237,859
Net increase in cash and restricted cash $ 36,052
Cash flows provided by operating activities were $1.6 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, 2025.
Cash flows used in investing activities were $203.4 million and were primarily related to the origination of loans and real estate securities during the six months ended June 30, 2025.
Cash flows provided by financing activities were $237.9 million and were primarily related to proceeds received from repurchase agreements and issuance of common stock during the six months ended June 30, 2025.
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, 2025:
(in thousands, except share data)
Components of NAV June 30, 2025
Loans receivable, at fair value $ 146,163
Real estate securities, at fair value 57,426
Cash 13,042
Restricted cash 23,036
Interest receivable 635
Other assets (1)
420
Repurchase agreements, at fair value (135,876)
Interest payable (293)
Subscription received in advance (23,036)
Due to affiliates (2)
(705)
Accrued stockholder serving fees (3)
(8)
Distribution payable (518)
Other accrued liabilities (562)
Net asset value $ 79,724
Number of outstanding shares (all classes) 3,169,777
(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 $4.6 million advanced by the Adviser for organizational, offering and operating expenses.
(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, 2025:
(in thousands, except share amounts and per share data) Common Shares
Class G 		Common Shares
Class G-D 		Common Shares
Class G-S 		Total
Net Asset Value $ 44,663 $ 30,857 $ 4,204 $ 79,724
Number of outstanding shares 1,770,675 1,230,562 168,500 3,169,737
NAV per share $ 25.22 $ 25.08 $ 24.95
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, 2025:
(in thousands) June 30, 2025
Stockholders' equity $ 74,108
Adjustments:
Advanced organization, offering and operating costs 4,593
Accrued stockholder servicing fees not currently payable (1)
668
Unamortized debt issuance costs 355
NAV $ 79,724
(1)We have accrued stockholder servicing fees totaling $0.7 million of which $8,000 is currently payable to the Dealer Manager as of June 30, 2025.
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 them to be repaid after the first anniversary of the initial closing of our private offering ratably over 60 months. 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). 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.
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 three and six months ended June 30, 2025:
Three and Six Months Ended June 30, 2025
(in thousands) Amount Percentage
Distributions
Payable in cash $ 135 26 %
Reinvested in shares 383 74 %
Total distribution $ 518 100 %
Sources of Distributions
Cash flows from operating activities $ 518 100 %
Offering proceeds - - %
Total sources of distribution $ 518 100 %
Net cash provided by operating activities $ 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, 2025:
Record Date Common Shares
Class G 		Common Shares
Class G-D 		Common Shares
Class G-S
June 30, 2025 $ 0.1667 $ 0.1607 $ 0.1489
Critical Accounting Estimates
Our financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting estimates are those that require the application of management's most difficult, subjective or complex judgments on matters that are inherently uncertain and that may change in subsequent periods. In preparing the financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.
Valuation of Investments in Commercial Loans
The Board is responsible for overseeing the valuation of our portfolio investments at fair value as determined in good faith pursuant to the Adviser's valuation policy, The Adviser, subject to the oversight of the Board, has the day-to-day responsibility for implementing the portfolio valuation process that is set forth in our valuation policies.
Our investments in commercial loans are carried at fair value as we elected the fair value option. In determining the fair value of our investment, the commercial loans do not have readily available market quotations. As such, we determine fair value using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. We classify this investment as Level 3 within the valuation hierarchy. Judgments used to determine fair value of Level 3 instruments are more significant than those required when determining the fair value of instruments classified as Level 1 or 2 due to the inherent uncertainty of the estimates and judgments used.
As part of our quarterly valuation process the Adviser may be assisted by one or more independent valuation firms engaged by us. The Adviser as valuation designee determines the fair value of each investment, in good faith, based on the input of the independent valuation firm(s) (to the extent applicable).
With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:
· Each portfolio company or investment will be valued by the Adviser, potentially with assistance from one or more independent valuation firms engaged by the Board;
· The independent valuation firm(s) conduct independent appraisals and make an independent assessment of the value of each investment; and
· The Adviser determines the fair value of each investment, in good faith, based on the input of the Adviser and independent valuation firm (to the extent applicable).
In circumstances where the Adviser deems appropriate, the Adviser's internal valuation team values certain investments. When performing the internal valuations, the Adviser utilizes similar valuation techniques as an independent third-party pricing service would use. Such valuations will be approved by an internal valuation committee of the Adviser, with oversight from the Board.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other
restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate an investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.
Net Change in Unrealized Appreciation or Depreciation
Net change in unrealized appreciation or depreciation will reflect the change in investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
New Tax Legislations
Effective July 4, 2025, certain changes to U.S. tax law were approved that impact us and our stockholders. Among other changes, this legislation (i) permanently extended the 20% deduction for "qualified REIT dividends" for individuals and other non-corporate taxpayers under Section 199A of the Internal Revenue Code (the "Code"), (ii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries ("TRSs") from 20% to 25% for taxable years beginning after December 31, 2025, and (iii) increased the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of "adjusted taxable income" (i.e. based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024.
Related Party Transactions
We have entered into an advisory agreement with Benefit Street Partners, L.L.C. See Note 3 - Related Party Transactionsto 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 the six months ended June 30, 2025 Performance Fees were approximately $4,000.
Franklin BSP Real Estate Debt Inc. published this content on August 07, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on August 07, 2025 at 18:30 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]