Franklin BSP Real Estate Debt Inc.

03/12/2026 | Press release | Distributed by Public on 03/12/2026 13:49

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion And Analysis Of Financial Condition And Results Of Operations
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Franklin BSP Real Estate Debt, Inc., the notes thereto and other financial information included elsewhere in this Annual Report on Form 10-K.
Overview
We are a Maryland corporation that was formed on May 22, 2024. We intend to elect to qualify to be taxed as a REIT for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2025. We are externally managed by the Adviser pursuant to 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 plan to 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 Annual Report on Form 10-K.
2025 Highlights
Capital Activity and Distributions
•During the year ended December 31, 2025, we raised approximately $177.1 million of net proceeds from the sale of our common shares through our continuous offering. In addition, during the year ended December 31, 2025, we issued 120,273 shares pursuant to our distribution reinvestment plan (the "DRIP") for an aggregate net value of approximately $3 million.
•During the year ended December 31, 2025, we declared aggregate net distributions totaling approximately $5.9 million.
Investments
•As of December 31, 2025, our commercial real estate loan portfolio included 52 loans with a total commitment amount of $471.7 million, and total outstanding principal amount of $372.3 million.
•As of December 31, 2025, our floating rate CMBS bond portfolio included 17 securities with a total principal balance of $103.4 million and a total fair value of $103.7 million.
Financing Activity
•During the year ended December 31, 2025, we entered into six new repurchase agreement facilities. We received net borrowings of $292 million from our repurchase agreements.
•On March 17, 2025, we, through our indirect wholly-owned subsidiary FBRED REIT High Yield Securities, LLC, entered into a Master Repurchase Agreement (the "MRA") with J.P. Morgan Securities LLC. Under the MRA, there is no maximum aggregate commitment. There is no initial maturity date of the MRA, however the borrowings are tied to real estate securities with 30-day repurchase maturity terms.
•On March 18, 2025, we, through our indirect wholly-owned subsidiary FBRED REIT JWH Seller, LLC ("JWH"), entered into an Uncommitted Master Repurchase Agreement (the "Uncommitted MRA") with J.P. Morgan Chase Bank, National Association. The Uncommitted MRA provides up to $250 million of advances. At our option, the
Uncommitted MRA may be upsized to provide up to $500 million in advances. The initial maturity date of the Uncommitted MRA is March 18, 2027.
•On May 8, 2025, we, through our indirect wholly-owned subsidiary FBRED REIT BWH Seller, LLC, entered into an MRA with Barclays Bank PLC. The MRA provides up to $250 million of advances. The initial maturity date of the MRA is May 8, 2028.
•On July 30, 2025, we, through our indirect wholly-owned subsidiary FBRED REIT WWH Seller, LLC, entered into a Master Repurchase Agreement (the "MRA") with Wells Fargo Bank, National Association. The MRA provides up to $150 million of advances. The initial maturity date of the MRA is July 30, 2027, which may be extended for up to three years.
•On September 19, 2025, we, through our indirect wholly-owned subsidiary FBRED REIT High Yield Securities, LLC, entered into a Master Repurchase Agreement (the "Lucid MRA") with Lucid Prime Fund LLC. Under the Lucid MRA, there is no maximum aggregate commitment. There is no initial maturity date on the MRA, however the borrowings are tied to real estate securities 30-day repurchase maturity term.
•On December 17, 2025, we, through our indirect wholly-owned subsidiaries FBRED REIT AWH Seller, LLC and FBRED REIT AWH Mezzanine Loan Seller, LLC, entered into a Master Repurchase Agreement (the "Atlas MRA") with Atlas Securitized Products, L.P. The Atlas MRA provides up to $100 million of advances. The initial maturity of the Atlas MRA is December 16, 2026, which may be extended for one year.
Critical Accounting Estimates
Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. 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.
Set forth below is a summary of the critical accounting estimates that management believes are important to our financial statements and require complex management judgment. Our significant accounting policies, including recently issued accounting pronouncements, are more fully described in Note 2 - Summary of Significant Accounting Policies to the accompanying consolidated financial statements in this Annual Report on Form 10-K.
Valuation of Investments in Commercial Real Estate 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 set forth in our valuation policies.
Our investments in commercial real estate loans are carried at fair value as we elected the fair value option. In determining the fair value of our investment, the commercial real estate loans do not have readily available market quotations. The Company measures the fair value of its investments in commercial real estate loans using a discounted cash flow analysis unless observable market data is available. A discounted cash flow analysis requires management to make estimates regarding future interest rates and credit spreads. The most significant of these inputs relates to credit spreads and is unobservable. Thus, the Company has determined that the fair values of its commercial real estate loans using a discount cash flow analysis should be classified as Level 3 of the fair value hierarchy, while mortgage loans valued using securitized pricing should be classified as Level 2 of the fair value hierarchy. Mortgage loans classified as Level 3 are transferred to Level 2 if securitization pricing becomes available. The Company obtains third party pricing for determining the fair value of real estate securities, resulting in a Level 2 classification.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 monthly 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 our 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.
Financial Condition
Investment Activities
Investments in Loans Receivable
We commenced investing in commercial real estate loans in April 2025. As of December 31, 2025, we originated 52 loans totaling $471.7 million in total commitments. We elected 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 year ended December 31, 2025, we earned $10.3 million of interest income on the loans we originated.
The following table details overall statistics of our loan portfolio as of December 31, 2025:
($ in thousands)
Loan Type Number of Investments Principal Balance Outstanding Fair Value Unfunded Commitments
Weighted Average Interest Rate (1)
Weighted Average Life (2)
Senior 46 $ 367,996 $ 367,996 $ 84,544 7.06 % 4.18
Mezzanine 6 4,280 4,280 14,851 12.72 % 3.82
52 $ 372,276 $ 372,276 $ 99,395 7.13 % 4.17
(1) Represents the weighted average interest rate for each loan at December 31, 2025. Loans earn interest at the one-month term Secured Overnight Financing Rate ("SOFR") plus a spread. At December 31, 2025, the one-month SOFR was 3.69%.
(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 loan portfolio based on fair value as of December 31, 2025:
($ in thousands)
December 31, 2025
Property Type Fair Value Percentage
Multifamily $ 272,297 73.14 %
Industrial 67,816 18.22 %
Hospitality 22,500 6.04 %
Mixed Use 9,663 2.60 %
$ 372,276 100 %
($ in thousands)
December 31, 2025
Region Fair Value Percentage
Southeast $ 120,168 32.28 %
Southwest 74,389 19.98 %
Far West 66,349 17.82 %
Various(1)
39,715 10.67 %
Rocky Mountain 29,525 7.93 %
Mideast 26,020 6.99 %
Great Lakes 16,110 4.33 %
$ 372,276 100 %
(1) Various includes industrial and multifamily portfolios with multiple locations throughout the United States.
As of December 31, 2025, our commercial real estate loan portfolio consists of 52 loans. The following table details the statistics of our loans receivable portfolio as of December 31, 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 9.69 % $ 23,806 $ 4,026 $ 4,026 IO 10/9/2029
Multifamily Texas 3/26/2025 18.94 % 4,596 777 777 IO 10/9/2029
Industrial Various 4/7/2025 7.55 % 13,680 13,680 13,680 IO 4/9/2030
Multifamily Texas 4/11/2025 6.69 % 7,500 7,500 7,500 IO 4/9/2030
Hospitality Florida 5/14/2025 8.19 % 7,500 7,500 7,500 IO 5/9/2030
Hospitality South Carolina 4/16/2025 7.94 % 7,500 7,500 7,500 IO 5/9/2028
Multifamily California 5/8/2025 10.19 % 20,594 15,510 15,510 IO 5/9/2029
Multifamily(4)
California 5/8/2025 14.00 % 5,098 - - IO 5/9/2029
Multifamily California 5/22/2025 6.34 % 11,279 11,279 11,279 IO 6/9/2030
Multifamily California 5/30/2025 9.94 % 7,500 7,500 7,500 IO 6/9/2029
Multifamily North Carolina 5/30/2025 6.94 % 7,500 6,279 6,279 IO 6/9/2030
Multifamily North Carolina 6/13/2025 6.64 % 10,000 10,000 10,000 IO 6/9/2028
Multifamily Texas 6/30/2025 6.69 % 10,000 10,000 10,000 IO 7/9/2030
Multifamily Florida 7/3/2025 6.19 % 7,500 7,500 7,500 IO 7/9/2028
Multifamily Tennessee 8/18/2025 9.94 % 27,763 818 818 IO 9/9/2030
Multifamily Tennessee 8/18/2025 17.02 % 5,949 175 175 IO 9/9/2030
Mixed Use North Carolina 8/19/2025 6.94 % 10,000 9,663 9,663 IO 9/9/2029
Multifamily Various 8/15/2025 8.74 % 10,000 - - IO 2/9/2028
Multifamily Texas 8/21/2025 6.44 % 7,500 6,848 6,848 IO 9/9/2030
Industrial Various 9/10/2025 6.69 % 7,500 6,035 6,035 IO 9/9/2030
Multifamily Nevada 9/29/2025 6.34 % 10,000 10,000 10,000 IO 10/9/2030
Industrial West Virginia 10/15/2025 6.99 % 10,000 7,893 7,893 IO 10/9/2030
Multifamily New Jersey 9/30/2025 8.74 % 10,000 7,850 7,850 IO 10/9/2029
Industrial Georgia 10/29/2025 7.69 % 10,000 7,145 7,145 IO 11/9/2030
Multifamily New York 11/14/2025 6.41 % 6,191 6,191 6,191 IO 11/9/2030
Multifamily Ohio 10/22/2025 6.21 % 10,000 10,000 10,000 IO 11/9/2028
Multifamily Ohio 10/22/2025 6.19 % 6,110 6,110 6,110 IO 11/9/2028
Multifamily Texas 12/12/2025 9.45 % 10,000 8,941 8,941 IO 1/9/2028
Multifamily Georgia 10/29/2025 6.19 % 10,000 10,000 10,000 IO 11/9/2030
Multifamily Various 10/28/2025 5.99 % 10,000 10,000 10,000 IO 11/9/2030
Multifamily Texas 11/12/2025 6.42 % 7,500 7,500 7,500 IO 11/9/2030
Multifamily Texas 10/31/2025 6.24 % 7,388 7,388 7,388 IO 11/9/2030
Multifamily Utah 11/14/2025 6.29 % 12,025 12,025 12,025 IO 11/9/2029
Multifamily Texas 11/14/2025 6.16 % 7,500 7,500 7,500 IO 12/9/2030
Multifamily Texas 11/21/2025 7.44 % 7,500 7,500 7,500 IO 12/9/2028
Multifamily New York 12/1/2025 5.69 % 10,000 9,947 9,947 IO 12/9/2030
Multifamily New York 12/1/2025 8.21 % 1,351 1,344 1,344 IO 12/9/2030
Multifamily New York 11/14/2025 10.71 % 688 688 688 IO 11/9/2030
Multifamily Colorado 11/25/2025 5.99 % 10,000 10,000 10,000 IO 12/9/2030
Multifamily Florida 11/20/2025 6.19 % 7,500 7,500 7,500 IO 12/9/2030
Multifamily North Carolina 12/30/2025 7.69 % 7,500 6,381 6,381 IO 1/9/2031
Industrial Oregon 12/12/2025 7.24 % 7,500 6,125 6,125 IO 1/9/2030
Multifamily Texas 12/12/2025 14.15 % 1,449 1,296 1,296 IO 1/9/2028
Multifamily Nevada 12/16/2025 6.59 % 10,000 10,000 10,000 IO 1/9/2031
Industrial California 12/19/2025 7.24 % 7,500 5,936 5,936 IO 1/9/2030
Industrial Texas 12/16/2025 7.19 % 7,500 5,112 5,112 IO 1/9/2031
Multifamily Utah 12/23/2025 6.14 % 7,500 7,500 7,500 IO 1/9/2028
Industrial Various 12/23/2025 6.62 % 10,000 10,000 10,000 IO 1/9/2031
Hospitality Florida 12/19/2025 7.54 % 7,500 7,500 7,500 IO 1/9/2031
Industrial Florida 12/29/2025 6.84 % 7,500 5,890 5,890 IO 1/9/2031
Multifamily North Carolina 12/29/2025 6.94 % 13,704 12,000 12,000 IO 1/9/2031
Multifamily North Carolina 12/30/2025 7.14 % 7,500 6,424 6,424 IO 1/9/2031
$ 471,671 $ 372,276 $ 372,276
(1)Represents the interest rate for each loan at December 31, 2025. Loans earn interest at the one-month term Secured Overnight Financing Rate ("SOFR") plus spread. At December 31, 2025, the one-month SOFR was 3.69%.
(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 December 31, 2025:
CMBS Bonds
($ in thousands) Number of Bonds Benchmark Interest Rate Weighted Average Interest Rate Weighted Average Contractual Maturity (years) Par Value Fair Value
CMBS Bonds 17 1 month SOFR 6.83% 4.25 $ 103,370 $ 103,668
Financing Activities
We finance the majority of our loan portfolio through repurchase agreements. As of December 31, 2025, we had six repurchase agreement facilities that bear interest at one-month term SOFR plus a spread. At December 31, 2025, the one-month SOFR was 3.69%. These facilities had a weighted average borrowing rate of 5.28% at December 31, 2025.
The table below summarizes our repurchase agreement borrowings at December 31, 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 5.32 % $ 250,000 $ 177,162 $ 72,837 $ 72,837 $ 91,999 5/8/2028 5/8/2030
FBRED REIT JWH Seller, LLC 6.01 % 250,000 184,474 65,526 65,526 90,772 3/18/2027 3/18/2030
FBRED REIT WWH Seller, LLC 5.17 % 150,000 84,292 65,708 65,708 83,437 7/30/2027 7/30/2030
FBRED REIT AWH Seller, LLC 6.44 % 100,000 94,903 5,097 5,097 7,281 12/16/2026 12/16/2027
FBRED REIT High Yield Securities, LLC - JPM (3)
4.63 % N/A N/A 54,558 54,558 65,870 30 days 30 days
FBRED REIT High Yield Securities - Lucid (3)
4.76 % N/A N/A 28,306 28,306 37,500 30 days 30 days
Total 5.28 % $ 292,032 $ 292,032 $ 376,859
(1)Represents the weighted average interest rate at December 31, 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.
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 December 31, 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. Operations commenced April 1, 2025.
For the year ended December 31, 2025, our results of operations consisted of:
Year Ended December 31, 2025 For the Period from May 22, 2024 (date of inception) to December 31, 2024
Income
Interest income $ 13,650 $ -
Less: interest expense (6,473) -
Net interest income 7,177 -
Fee and other income 2,341 -
Total income 9,518 -
Expenses
Administrative fees 2,623 -
General and administrative expenses 1,346 -
Financing fees 1,283 -
Management & performance fees - related party 1,116 -
Organizational costs 1,053 -
Accounting fees 734 -
Total expenses 8,155 -
Other income
Unrealized gain on real estate securities, at fair value 400 -
Realized gain on real estate securities, at fair value 44 -
Total other income 444 -
Net income $ 1,807 $ -
Net income attributable to non-controlling interest (246) -
Net income attributable to Franklin BSP Real Estate Debt, Inc. $ 1,561 $ -
Net loss per common share, basic and diluted $ 0.35 $ -
Weighted average common shares outstanding, basic and diluted 4,469,542 40
We commenced investing in commercial real estate loans in April 2025. There were no operations prior to April 2025 and therefore, no net income reported for the period from May 22, 2024 (date of inception) to December 31, 2024. Net Income attributable to common stockholders for the year ended December 31, 2025 was $1.6 million or $0.35 per weighted average common share (basic).
•Total income for the year ended December 31, 2025 was $9.5 million which consisted of interest income of $13.7 million, interest expense of $6.5 million and fee and other income of $2.3 million (predominantly origination fees).
•Administrative fees for the year ended December 31, 2025, were $2.6 million. These fees were predominately personnel and other Adviser costs of providing services pursuant to the Advisory Agreement. We did not incur any administrative fees for the period from May 22, 2024 (date of inception) to December 31, 2024.
•General and administrative expenses for the year ended December 31, 2025 were $1.3 million. These fees related to services such as third party administrative fees, transfer agent fees, legal, filing fees, board of director compensation and valuation services. We did not incur any general and administrative expenses for the period from May 22, 2024 (date of inception) to December 31, 2024.
•Financing fees for the year ended December 31, 2025 were $1.3 million. These fees are related to the various debt obligations we entered into to fund loan originations. We did not incur any financing fees for the period from May 22, 2024 (date of inception) to December 31, 2024.
•Management and performance fees - related party for the year ended December 31, 2025 were $1.1 million. These fees represent fees incurred under the Advisory Agreement. We did not incur any management and performance fees for the period from May 22, 2024 (date of inception) to December 31, 2024.
•Organizational costs for the year ended December 31, 2025 were $1.1 million. We did not incur any organizational costs during the period from May 22, 2024 (date of inception) to December 31, 2024. These costs have been advanced by the Adviser and paid on our behalf. Pursuant to the Advisory Agreement, 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.
•Accounting fees for the year ended December 31, 2025 were $0.7 million. These fees are related to audit and tax services for the Company. We did not incur any accounting fees for the period from May 22, 2024 (date of inception) to December 31, 2024.
•Total other income for the year ended December 31, 2025 was $0.4 million, which related to the remeasurement of the real estate securities at fair value and the realized gain on sold real estate securities. There were no loan investments prior to commencing operations in April 2025, therefore, no impact of remeasurement of real estate securities for the period from May 22, 2024 (date of inception) to December 31, 2024.
•For the year ended December 31, 2025, Offering costs of $2.4 million were incurred. 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. Pursuant to the Advisory Agreement, 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. We did not incur any offering costs for the period from May 22, 2024 (date of inception) to December 31, 2024. In addition, for the year ended December 31, 2025 stockholder servicing fees were $2.5 million were charged directly against stockholders' equity.
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 $207.9 million through March 12, 2026, including $4.4 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 of Directors (the "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 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 has 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 is expected to advance certain of our operating expenses after January 1, 2026.
Our primary sources of liquidity include cash and available borrowings under our repurchase agreements. The following table summarizes amounts available under these sources at December 31, 2025:
(in thousands) December 31, 2025
Cash $ 12,315
Available borrowings on undrawn repurchase agreements 540,832
Total available liquidity and capital resources $ 553,147
Contractual Obligations and Commitments
The following table shows our payment obligations for repayment of debt at December 31, 2025:
(in thousands) Less Than 1 Year 1-3 Years 3-5 Years More Than 5 years Total
Repurchase agreements $ 82,864 $ 5,097 $ 204,071 $ - $ 292,032
Total $ 82,864 $ 5,097 $ 204,071 $ - $ 292,032
In the ordinary course of business, we may enter into future funding commitments. At December 31, 2025, we had unfunded commitments on delayed draw term loans of $99.4 million. At December 31, 2025 the Company's unfunded commitments consisted of the following:
Investment Type Total Commitment Remaining Commitment
Senior Mortgage $ 223,366 $ 84,544
Mezzanine 18,444 14,851
$ 241,810 $ 99,395
Cash Flows
The following table summarizes the changes in cash and restricted cash for the year ended December 31, 2025:
(in thousands) December 31, 2025
Net cash provided by operating activities $ 7,745
Net cash used in investing activities (475,501)
Net cash provided by financing activities 487,634
Net increase in cash and restricted cash $ 19,878
Cash flows provided by operating activities were $7.7 million and were primarily due to interest income and origination fees earned on the loans receivable and real estate securities during the year ended December 31, 2025.
Cash flows used in investing activities were $475.5 million and were primarily related to the origination of loans and real estate securities during the year ended December 31, 2025.
Cash flows provided by financing activities were $487.6 million and were primarily related to proceeds received from repurchase agreements and issuance of common stock during the year ended December 31, 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 December 31, 2025:
(in thousands, except share data)
Components of NAV December 31, 2025
Loans receivable, at fair value $ 372,276
Real estate securities, at fair value 103,668
Cash 12,315
Restricted cash 7,589
Interest receivable 1,016
Prepaid expenses and other assets (1)
1,296
Due from affiliate 615
Repurchase agreements, at fair value (292,032)
Interest payable (623)
Subscription received in advance (7,589)
Due to affiliates (2)
(2,282)
Accrued stockholder serving fees (3)
(33)
Distribution payable (1,164)
Other accrued liabilities (1,128)
Non-controlling interest (14,848)
NAV $ 179,076
Number of outstanding shares (all classes) 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.
(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 December 31, 2025:
(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 Total
Net Asset Value $ 98,040 $ 43,958 $ 36,884 $ 194 $ 179,076
Number of outstanding shares 3,918,589 1,768,731 1,484,584 7,773 7,179,677
NAV per share $ 25.02 $ 24.85 $ 24.84 $ 24.90 $ 24.94
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 December 31, 2025:
(in thousands) December 31, 2025
Stockholders' equity $ 170,913
Adjustments:
Advanced organization, offering and operating costs 4,813
Accrued stockholder servicing fees not currently payable (1)
2,385
Unamortized debt issuance costs 965
NAV $ 179,076
(1)We have accrued stockholder servicing fees totaling $2.4 million of which approximately $33,000 is currently payable to the Dealer Manager as of December 31, 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 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). 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 year ended December 31, 2025:
December 31, 2025
(in thousands) Amount Percentage
Distributions
Payable in cash $ 2,211 38 %
Reinvested in shares 3,678 62 %
Total distribution $ 5,889 100 %
Sources of Distributions
Cash flows from operating activities $ 5,889 100 %
Offering proceeds - - %
Total sources of distribution $ 5,889 100 %
Net cash provided by operating activities $ 7,745
The table below details the net distribution per share declared for each of our common share classes for the year ended December 31, 2025:
Record Date Common Shares
Class G 		Common Shares
Class G-D 		Common Shares
Class G-S 		Common Shares
Class E
June 30, 2025 $ 0.1667 $ 0.1607 $ 0.1489 $ -
July 31, 2025 0.1667 0.1623 0.1603 0.0000
August 31, 2025 0.1667 0.1616 0.1517 0.0000
September 8, 2025 0.0000 0.0000 0.0000 0.1667
September 30, 2025 0.1667 0.1617 0.1565 0.1667
October 31, 2025 0.1667 0.1620 0.1519 0.1667
November 28, 2025 0.1667 0.1618 0.1523 0.1667
December 31, 2025 0.1667 0.1617 0.1504 0.1667
Totals $ 1.1669 $ 1.1318 $ 1.0720 $ 0.8335
Related Party Transactions
We have entered into an advisory agreement with Benefit Street Partners. See Note 3 - Related Party Transactions to our Consolidated Financial Statements included in this Annual Report on Form 10-K.
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 Annual Report on Form 10-K 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 Annual Report on Form 10K.
Non-GAAP Financial Measures
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 and (iii) 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 of directors 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 for the year ended December 31, 2025:
(in thousands, except share and per share amounts) December 31, 2025
GAAP Net Income $ 1,807
Adjustments:
Unrealized gain on real estate securities, at fair value (400)
Advanced organization and operating costs(1)
2,450
Unamortized debt issuance costs(2)
965
Distributable Earnings $ 4,822
Net Income attributable to Non-Controlling Interest (246)
Distributable Earnings to Common Stockholders $ 4,576
Weighted average common shares outstanding, basic and diluted 4,469,542
Distributable Earnings per common share, basic and diluted $ 1.02
(1) Includes organizational and other operating expenses which were advanced by the Adviser through December 31, 2025, 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.
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