Good morning, and welcome to FBRT's first quarter earnings conference call. Thank you for joining us today.

As the operator mentioned, I'm Lindsey Crabbe. With me on the call today are Michael Comparato, Chief Executive Officer of FBRT; Jerry Baglien, Chief Financial Officer and Chief Operating Officer of FBRT; and Brian Buffone, President of FBRT.

Before we begin, I want to mention that some of today's comments are forward-looking statements and are based on certain assumptions. Those comments and assumptions are subject to inherent risks and uncertainties, as described in our most recently filed SEC periodic reports, and actual future results may differ materially.

The information conveyed on this call is current only as of the date of this call, April 30th, 2026. The company assumes no obligation to update any statements made during this call, including any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Additionally, we will refer to certain non-GAAP financial measures, which are reconciled to GAAP figures in our earnings release and supplementary slide deck, each of which are available on our website. We will refer to the supplementary slide deck on today's call.

With that, I'll turn the call over to Mike Comparato.

Thank you, Lindsey, and good morning, everyone. Thank you for joining today.

I will begin with key developments from the first quarter and an overview of the market, then Jerry will walk through our financial results, and Brian will provide updates on our portfolio. The quarter played out against an increasingly complex macro backdrop.

Geopolitical uncertainty and ongoing conflict have added volatility across markets, but in many ways, commercial real estate has already gone through its correction over the past few years. Values have reset meaningfully across all asset classes, and we believe we are much closer to the end of this cycle than the beginning.

What remains is the final phase, working through the legacy positions as lenders move beyond extend and pretend. Against that backdrop, liquidity in our markets remains strong, and competition is high, with spreads near cyclical tights.

We've stayed disciplined in that environment, while continuing to find opportunities in origination. Our origination activity outpaced repayments this quarter, resulting in portfolio growth.

That speaks to the strength of our platform and our ability to operate outside of the most crowded parts of the market. In addition, last year, we selectively began deploying capital into equity investments where we saw the potential for strong risk-adjusted returns.

We've already seen meaningful appreciation in those assets, with the estimated fair values significantly increasing since our initial investment. This is another good example of how we are using the breadth of our platform to allocate capital opportunistically and enhance overall returns.

We expect the equity allocation of the portfolio to increase throughout 2026, but we will also strategically exit equity investments if the pricing is compelling. On the credit side, we continue to make progress resolving legacy assets, including reducing our REO count this quarter.

We believe the majority of the legacy issues have been identified and are prioritizing resolution and redeployment of capital over holding underperforming assets. Within NewPoint, first quarter activity was seasonally lighter, which is typical.

If rates stabilize, we would expect origination volumes to build throughout the remainder of the year. As we've said before, even modest movements in rates today have an outsized impact on transaction activity.

All in all, I would put this in the excellent category for a quarter. Our adjusted distributable earnings covered our dividend.

We increased book value. We bought back a meaningful amount of stock at a substantial discount to book value.

The board approved more stock buybacks post quarter-end. We sold our largest REO position early in the second quarter, grew the overall portfolio size, issued a highly accretive CRE CLO that closed in the second quarter, we integrated the entire BSP servicing book into NewPoint, and we had meaningful appreciation on two equity investments.

The team really did an outstanding job this quarter, and with that, I'll hand it off to Jerry.

Great. Thanks, Mike.

Appreciate everyone joining the call today. I'll walk through the financial results for the quarter.

FBRT reported GAAP net income of $12.3 million, or 8 cents per fully converted common share. Distributable earnings for the quarter were $13.5 million, or 9 cents per fully converted share.

Distributable earnings includes $12.3 million of realized losses tied to foreclosure real estate that we sold. Excluding these losses, distributable earnings were 22 cents per fully converted share.

Results this quarter were supported by relatively stable net interest margins compared to Q4, along with a more normalized contribution from NewPoint, which I'll touch on briefly. During the quarter, we recorded a CECL provision of $13.5 million, which included a $1.3 million benefit from our general reserve and a $14.8 million specific reserve primarily tied to one watchlist loan.

Book value per share increased to $14.18, driven by our share repurchase activity. We've been consistent in allocating capital where we see the best risk-adjusted return, and we view our stock as one of those opportunities.

We repurchased nearly $40 million of common stock during the quarter. Subsequent to quarter-end, the board reauthorized the share repurchase program, with $50 million available through December 31st, 2026.

Net leverage ended the quarter at 2.84 times, with recourse leverage standing at 1.16 times. Excluding the leverage on NewPoint assets, our net leverage for the vehicle was 2.62 times, and with our current leverage target in the range of 2.75 to 3x times with NewPoint excluded.

Subsequent to quarter-end, we issued an $880.4 million managed CRE CLO. In connection with that transaction, we called a 2022 vintage CLO that had exited its reinvestment period.

We continue to maintain strong liquidity and financial flexibility, with reinvestment capacity now available across three CLOs. Looking ahead, we expect earnings to benefit from the larger core portfolio and a more stable contribution from NewPoint over the course of 2026.

Slide 11 highlights NewPoint's contribution for the quarter. Distributable earnings from NewPoint totaled $5.6 million, which is more consistent with what we view as a normalized steady-state level of income from the platform.

Agency origination volume was $646 million in Q1, reflecting typical seasonal softness compared to the back half of 2025. At quarter-end, the MSR portfolio was valued at approximately $217 million and generated $6.7 million of income in Q1, representing an average MSR rate of roughly 100 basis points.

NewPoint's servicing portfolio totaled $58.1 billion at quarter-end. The quarter-over-quarter increase was largely driven by integration efforts, including the successful transition of all BSP real estate loans onto the NewPoint servicing platform, which occurred over the course of the quarter.

The full earnings benefit from this transition will be realized in the coming quarters. This marks a significant milestone in our integration process and positions us to be a more differentiated servicing provider going forward.

We continue to see NewPoint as a meaningful driver of long-term value, with increasing contribution expected as volumes build, MSR and the servicing book grow, and the benefits of integration come through. With that, I'll turn it over to Brian to give you an update on our portfolio.

Thanks, Jerry, and good morning, everyone. I'll start on slide 14.

Our core portfolio finished Q1 at roughly $4.6 billion. As Mike mentioned, we grew that core loan portfolio during the quarter, with net growth of $173 million.

This was driven by $468 million of new loan commitments in addition to future funding commitments from previously closed loans, was partially offset by $323 million of repayments. We expect continued modest portfolio growth throughout the rest of this year.

Approximately 79% of our loans are backed by multifamily assets, and our office exposure is extremely limited, sitting at just 1% of our core portfolio. That office loan exposure is now only $55 million across three loans, two of which are performing, and the third is non-performing and on our watchlist.

During the quarter, we originated 26 loans at a weighted average spread of 278 basis points, with multifamily accounting for 92% of that production. We remained active in a highly competitive market, but stayed disciplined in how we deployed capital.

Our focus continues to be on high-quality multifamily loans with lower loan-to-value profiles, where we believe we are best positioned from a risk-adjusted return perspective. Our pre-rate hike portfolio continues to be reduced and now represents approximately 29% of our total loan commitments, with $175 million of payoffs during the first quarter tied to that vintage.

This continued runoff reflects steady progress in rotating the portfolio into newer, post-rate hike originations. Turning to slide 16, the overall portfolio remains stable, with an average risk rating of 2.5 and 11 loans on watchlist at quarter-end.

During the quarter, we resolved one watchlist loan, completing that loan sale within the quarter, and we added two multifamily loans during the quarter. Slide 17 covers our foreclosure REO portfolio.

We reduced our REO count to six assets at quarter-end, down from seven last quarter, reflecting continued execution on asset resolutions. The most meaningful milestone in resolving our REO positions came very shortly after quarter-end, with the sale of the Raleigh multifamily asset, which was by far our largest REO position.

Our financing of that sale will return equity associated with that investment from a negative to a positive contribution next quarter. Write-downs associated with that sale were recognized this quarter and contributed to realized losses as we continue to take a proactive approach to resolving these positions.

With that, I would like to turn it back over to the operator to begin the Q&A session.

Hey, good morning, guys. Thanks for taking the question.

I'd like to kind of touch on NewPoint to start. A lot better quarter this quarter than the prior.

Could you talk a little bit about the timing of when those loans were kind of transferred onto the servicing book and if it had the full effect for this quarter, and then if you expect any kind of normalization of that going forward?

This is Jerry. I'll take that.

It occurred during first quarter, you're not getting the entirety of that benefit, effectively done kind of mid first quarter. Keep in mind you've got to have the personnel to run that ahead of that, from a contribution in the first quarter perspective, you're certainly not capturing the entirety of what we expect that to contribute on a go-forward basis.

When we gave our estimations last quarter on kind of the expected growing contribution for 2026, the back or latter half of the year beyond this will show the full benefit of having the yield in its entirety throughout the rest of the quarters of the year. It's going to be more positive than it was in Q1.

Got it. That's helpful.

Then turning to the watchlist real quick, is there, I guess anything specific that you guys are seeing kind of across the Southeast, Southwest from a borrower profile perspective that's leading to kind of, I guess the Texases and Arizonas finding their way onto the watchlist?

Hey, Matt, it's Mike. I don't think much has changed, honestly, probably in the past two years in that regard.

Rates are kind of in the same spot that they've been. Everybody has been hoping for greener pastures that just haven't really materialized.

We've also been talking for the past two years just about borrower behavior and how difficult it's been to predict what borrowers are going to keep things current and pay loans down versus those that are walking away. I would say largely not much has changed.

We just learn more things every quarter. We got almost $200 million of paydowns from those kind of legacy 2021, 2022 vintage originations.

I continue to say that not everything originated in those years necessarily is bad and is losses, right? We've had billions of dollars of paydowns at par on that stuff.

It's just the natural kind of adverse selection of working through the rest of that portfolio. I think the team is doing a great job, but I don't think there's any new information that we have today that we haven't had for the last few quarters or years.

It's just kind of working through the system.

Got it. That's helpful.

I appreciate the comments, as always.

Good morning. Thanks for taking the question.

It'd be great to just hear a little bit more on your capital management and balance sheet management going forward. Obviously, you repurchased about $40 million worth of common stock and the board increased the repurchase program back to $50 million.

I guess going forward, is buying back stock continue to be kind of a focal point? Obviously the dividend was cut last quarter, how do you feel about that going forward?

Just kind of get an overall sense. Obviously, book value increased quarter-over-quarter, which is a positive.

Thank you.

Hey, Tim, it's Mike. Thanks for the question.

Let me start with the dividend, I'll answer backwards, and then go to the share repurchases. I think we were pretty straightforward in saying we thought the earnings potential of the company was where the dividend previously was, right?

We thought through the passage of time, the recycling of the REO portfolio and non-performing loans into performing investments that we could get back up into that general area. The cut obviously was a decision that we made just to stop burning book value while we went through that transition.

I don't think anything has changed from a macro perspective. I think we still believe the earnings power of the firm is substantially higher than what we performed this quarter.

It's really just about the team continuing the execution of getting through those legacy assets, liquidating the REO, and getting that capital reinvested. I would hope that earnings continue to move in the upward right trajectory, and I think that's been consistent what we've said all along.

With respect to share repurchases, look, we walk in the office every day looking for what we think are the best investments for our capital on any given day. Our shares are clearly one of those options.

I can't tell you obviously the magnitude at which we would buy back on any given day, week, or month, but it's something that the board is supportive of, and Jerry, Brian, and I, and the rest of the management team discuss it regularly.

Great. Thank you so much for taking the question today.

Hello, good morning. Regarding the two loans moved on to the watchlist, if you wouldn't mind expanding on sort of what drove both of those downgrades.

I know one went from a prior 3 rating to a 5, and the other from a 2 to a 4. I'd just love to hear a little more detail on specifically what went into those changes this quarter.

Thanks.

Hey, John, it's Mike again. I would say again, this is based on mostly borrower behavior.

One of them went from a 2 to a 4 because a borrower defaulted. Shortly after the default, I think they realized that that was not the greatest outcome for them.

They actually came whole on all of the payments due, including about $300,000 of default interest and late fees. That loan is current as we sit here today, but given that it did have a default, we thought it appropriate to risk-rate it at a 4.

With respect to the loan that was risk-rated a 5, I would say this is Exhibit A of trying to figure out borrower behavior and what happens next. These are, I would say, average to above-average assets in average to above-average locations.

This is a major, major sponsor who has been contributing, I would say, an exceptional amount of equity to the property and keeping the loan current for several years. Unfortunately, they just decided that the well had run dry.

We thought that they were going to rightsize the loan and continue to keep things current, and they woke up and said, "No más." We got a valuation in conjunction with that default that currently indicates it would be a loss.

Obviously, we'll see when we actually exit the positions what that turns out to be, but that's kind of the back story behind that one.

Thanks, Mike. That's super helpful for both of those.

Then just the other one from me, congratulations again on the sale of your largest REO position. We're just curious how you're thinking through the remaining five assets and any sort of timing or just what the cadence could look like for those potentially being sold throughout the rest of 2026.

Thanks.

Brian, you want to take that one?

Sure. On the majority of them, we are actively marketing for sale.

We hope to have resolution in Q2, Q3 on two or three of them. Right now, we are actively looking to resolve those, and as Jerry and Mike both pointed out, redeploy that capital back into what is our core portfolio on multifamily assets on the lending side.

Very actively in the market on those and hope to have resolution within the next couple quarters there.

I would add to that, John, that the two that are closest to being sold, indications are that they will be collectively at or maybe even above where we have them currently marked.

Great. Really appreciate the answers.

That's all for me.

Hey, guys. Thanks for taking the questions.

Following up on a prior question, on the increase in specific CECL reserves, there wasn't much of a change in risk ratings in the quarter, one new 4-rated loan and one new 5-rated loan. Was that increase in specific reserves due to those downward migrations, or is it more related to the other watchlist loans?

It's really

just the one position. Go ahead, Jerry, sorry.

We're saying the same thing. It's the one position that went to a 5.

That's the majority of the increase in the quarter. It's just a specific provision on that asset.

Got it. Makes a lot of sense.

Then I guess shifting gears to the NewPoint business, you guys originated $1.1 billion in 4Q and then down to $646 million in 1Q. Jerry touched on this a little bit, but how much of that dip was due to seasonality and how much was due to the conflict in the Middle East causing some interest rate volatility?

I'm just trying to see where the seasonally adjusted baseline for this business should be.

Chris, a harder question to answer, obviously. I think Q1 is seasonally lower, historically in the agency business overall, but we are just in this really complicated rate environment.

Right, we saw the 10-year briefly hit kind of 3.75%, 3.80%, and I would say borrowers became euphoric again, and the amount of inquiries shot through the roof. Then we completely reversed ourselves, and I think the high I saw was 4.48% in just the past few weeks.

Every borrower has kind of said, "Well, I'm going to wait again." We're just in this unfortunate period of I've said this a few times, 25 basis points with four and a quarter kind of being the start rate, at 4.50%, I think everything comes to a screeching halt, and at 4%, I think you're going to see a deluge of transactional volume.

Unfortunately right now, we're at the higher end of that range. To really see origination ramp, you need to see rates come down a little bit and have borrowers stop bridging and taking floating rate debt hoping for that lower rate environment.

I can't say it's 60/40, 70/30. There's just no way that I could really answer that or measure that for you.

Got it. That's fair.

If I could just squeeze one last one in, is that dynamic of interest rate volatility also impacting your guys' conduit business? That business has been a nice contributor to earnings.

It looked like it was about 6 cents this quarter. If we do see rates start to settle in a little bit, could there be some upside to the conduit business as well?

I think there could be. I also think there's potentially upside to the conduit business in that we are buying our first CMBS B-pieces that we've bought in probably five years.

I think we're going to be able to give borrowers much more certainty of execution within that space, which is a very sought-after commodity. We talk about this regularly, and you didn't directly ask this, but I'm going in a slightly different direction.

When you put all of the pieces on the board now, and how we've acquired NewPoint, we have a conduit business, we've got a servicing business, and we've got a floating rate debt business and a growing equity business, FBRT in its totality is kind of become a perfect hedge for itself, right? If rates go down, it benefits this side of the group.

It probably is to the detriment of others. As rates go up, we do more floating rate business, but maybe the conduit underperforms and the agency underperforms.

What we really have built is something that should be just a natural hedge based on rates overall, and I think that the market will figure that out in the coming quarters and years as the different pockets of the company perform in certain market environments.

That's very helpful, and I very much appreciate the comments this morning.

Hey, good morning, guys. Thanks for taking the question.

A lot of what I wanted to ask has been asked. I wanted to ask kind of a 20,000-foot question here.

FBRT has over the last years leant against newer vintage, obviously you've got 70+% of the book in newer vintage multi. Two questions on that: can you, Mike, talk about just general market color between what you're seeing in the transaction market between newer vintage product and older, and then kind of A/B/C product?

Then the piggyback to that is, as you mentioned potential more equity investments, is there at even Benefit Street in totality more want or interest in potentially owning some of the multifamily that you guys have been in and around the hoop on for longer from an equity perspective because of longer-term tailwinds? Thanks.

Hey, Gabe. Thanks for the question.

Appreciate it. I'll channel my inner Charles Dickens and say it's kind of the best of times and the worst of times, when it comes to Class A, new vintage to the older stuff.

It seems like everybody, whether that is equity or credit, wants to be in the nicer, newer vintage, higher-quality assets. It's easy for an equity investor to walk into their investment committee or look themselves in the mirror and say, "Okay, I'm buying a brand new asset below replacement cost.

Construction starts have declined. Supply is declining.

If I own this thing for 5, 7 years, 10 years, as long as I just operate it correctly, don't overleverage it, I'm probably going to have a pretty good investment experience." For credit guys, it's the same exact conversation.

It's slightly different, but it has the same foundations, which is this is the best asset in the market. If the buyer is below replacement cost, we're substantially below replacement cost.

I just think that that's a very, very easy thesis for people to understand and sink their teeth into. For example, Austin is probably one of the three most oversupplied markets in the country.

We closed two loans last quarter in Austin on brand new delivered stuff, 2024, maybe even a 2025 vintage assets, where we were lending at $135,000 to $140,000 a unit. We just kind of all looked at ourselves and said, "If that's not money good, wow, we're in trouble."

I think that everybody's kind of piling into that space. I think the exact same is true of people avoiding kind of the 1970s and 1980s vintage stuff.

It feels like that has to correct a little bit more on cap rates. There are a small handful of equity investors that are actively trying to play in that 1980s vintage stuff, and I don't think you're going to get more equity investors there until you see returns adequately reflect the additional risk of buying kind of that older vintage asset.

I would say we've generally avoided it as well from a lender standpoint. With the void there, we are slowly talking about does it make sense to go back into some of that 1980s vintage stuff if we're getting paid appropriately, if our attachment point is priced appropriately.

Definitely a tale of two different worlds, and it'll be interesting to see how that kind of plays out over the course of the next 12 to 18 months, because I do still think that older vintage stuff has to correct a little bit more. With respect to the equity investments— No, that's helpful.

—yeah, with respect to the equity investments, look, we always look at them and just say, is this the type of stuff that we want to own long term? As you and I have talked about, as I've talked about with the market, we are generally bullish on commercial real estate.

I think what's always left out of that question of debt versus equity is duration. Commercial real estate is an outstanding inflation hedge if you own it long enough and just let inflation compound and let inflation do its thing, you're probably going to have a good investment experience.

Every time we've got a loan that is downgraded to a 4, downgraded to a 5, we sit in a room and we have a conversation, "Hey, is this the type of asset that we want to own for the next 5, 7, 10 years, or is it time to move on, take our licks, and just reinvest the capital?" That answer is different obviously for every asset and location that we look at, but it is certainly something that we take into consideration.

I think there's probably some assets that we wish we kept a little bit longer, but it is something that certainly goes into the narrative and something that we talk about actively.

Thank you. Appreciate it.

We appreciate you joining us today. Please reach out if you have any further questions.

Thanks, and have a great day.