BofA update shows where active managers are putting money
On Monday, B.Riley analysts sustained their positive stance on Franklin BSP Realty Trust (NYSE:FBRT), reaffirming a Buy rating with a steady price target of $15.00. The firm anticipates the company’s fourth-quarter 2024 results, due in 3 days, to surpass consensus expectations and believes the real estate investment trust (REIT) is well placed to cover its quarterly dividend of $0.355 per share for the period. With an impressive dividend yield of 11.09% and analyst targets ranging from $14.50 to $16.00, InvestingPro data shows FBRT commands attention in the REIT sector.
The analysts at B.Riley pointed to Franklin BSP Realty Trust’s robust origination activity in 2024 as a key factor in its favorable positioning, despite the wider commercial mortgage REIT sector grappling with the challenges posed by elevated interest rates. These challenges include impacts on new loan originations, valuation adjustments in portfolios, and the completion of financial exits. The company maintains a healthy financial position with a current ratio of 1.32 and trades at 0.83 times book value.
Franklin BSP Realty Trust is expected to demonstrate its resilience through its earnings per share (EPS) performance, which is predicted to outperform market consensus. The company’s liquidity stands at approximately $1.1 billion, and its leverage is considered to be in line with its industry peers. The firm’s ability to effectively allocate capital is underscored by an estimated $1.5 billion pipeline. InvestingPro analysis reveals a GOOD overall financial health score of 2.63, with particularly strong marks in profitability metrics. Subscribers can access 12+ additional ProTips and comprehensive financial analysis through the Pro Research Report.
The upcoming quarterly conference call and fourth-quarter results announcement are anticipated to provide encouraging updates on new origination opportunities, the state of multifamily credit, and general business progress. These updates are expected to further distinguish Franklin BSP Realty Trust’s shares from its competitors.
B.Riley emphasizes that the ability to navigate the persistently high-interest-rate environment will be crucial for commercial mREITs in 2025. The analysts believe that Franklin BSP Realty Trust’s relative market position will be a significant advantage, as many investors may not be fully prepared for the continued presence of higher rates.
In other recent news, Franklin BSP Realty Trust, a Maryland-based real estate investment trust, has announced an amendment to the rights of its Series H Convertible Preferred Stock holders. The amendment extends the mandatory conversion date from January 21, 2025, to January 21, 2026, providing the sole holder of the Series H Preferred Stock with increased flexibility in conversion options. The agreement between the company’s board and the stock holder allows for the conversion of up to 4,487 shares of the Series H Preferred Stock once each calendar month through December 2025, subject to a 10 business day notice period.
It’s important to note that aside from the extension of the conversion date and the provision for monthly conversions, no other terms of the Series H Preferred Stock have been modified. This change to the preferred stock terms, part of the company’s capital structure, is reported in compliance with SEC regulations. The amendment reflects a mutual interest between the board and the preferred stockholder in extending the conversion period. These are the latest developments for Franklin BSP Realty Trust, as the company continues to make strategic decisions in its operations.
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