Franklin BSP Realty Trust (FBRT) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition expands the platform into agency lending, creating a one-stop solution for multifamily borrowers and enhancing market reach for sustained growth.

• Adds a scaled commercial real estate agency loan origination and servicing platform, complementing existing strengths and expanding product offerings.

• Provides highly sought-after agency licenses (FNMA, FHLMC, FHA/HUD), enabling direct agency loan origination and servicing.

• Enhances income stability and predictability through a scaled servicing business and long-term assets like mortgage servicing rights.

• Expands total addressable market and aligns culturally and operationally with NewPoint.

Financial terms and conditions

• Purchase price is $425 million, split 75% cash and 25% operating partnership units, with 8,385,951 OP units valued at $12.67 each.

• Cash portion funded by cash on hand, opportunistic note issuance, and existing cash, debt, and equity issuance.

• Transaction expected to close in Q3 2025, subject to customary closing conditions and regulatory approvals.

• Book value expected to decrease by $0.26-$0.28 in Q3 2025 due to dilution, with recovery anticipated in 2026.

• The acquired business will be operated through a taxable REIT subsidiary.

Synergies and expected cost savings

• Combined origination teams gain access to broader product suites, leveraging expanded national coverage and on-the-ground expertise.

• Immediate access to a $54.7 billion servicing portfolio, with $18 billion in agency MSRs.

• Over the past four years, BSP and NewPoint originated approximately $9 billion and $12 billion in multifamily loans, respectively.

• Diversification into agency and mortgage servicing broadens income streams and market reach.

• Predictable, recurring revenue from servicing and potential for third-party and CMBS servicing growth.