Franklin BSP Realty Trust (FBRT)

Commercial real estate lender Franklin BSP Realty Trust (NYSE:FBRT) fell short of the market’s revenue expectations in Q4 CY2025, but sales rose 52.7% year on year to $84.04 million. Its non-GAAP profit of $0.12 per share was 56% below analysts’ consensus estimates.

Company Overview

Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE:FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.

Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.

Franklin BSP Realty Trust competes with other commercial mortgage REITs such as Blackstone Mortgage Trust (NYSE:BXMT), Starwood Property Trust (NYSE:STWD), and KKR Real Estate Finance Trust (NYSE:KREF), as well as traditional banks and other financial institutions that provide commercial real estate financing.

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Thankfully, Franklin BSP Realty Trust’s 19.7% annualized revenue growth over the last five years was exceptional. Its growth beat the average banking company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Franklin BSP Realty Trust’s annualized revenue growth of 10.4% over the last two years is below its five-year trend, but we still think the results were respectable. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Franklin BSP Realty Trust achieved a magnificent 52.7% year-on-year revenue growth rate, but its $84.04 million of revenue fell short of Wall Street’s lofty estimates.

Net interest income made up 98.6% of the company’s total revenue during the last five years, meaning Franklin BSP Realty Trust lives and dies by its lending activities because non-interest income barely moves the needle.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Franklin BSP Realty Trust’s full-year EPS dropped significantly over the last three years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Franklin BSP Realty Trust’s low margin of safety could leave its stock price susceptible to large downswings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Franklin BSP Realty Trust, its two-year annual EPS declines of 49.5% show it’s still underperforming. These results were bad no matter how you slice the data.

In Q4, Franklin BSP Realty Trust reported adjusted EPS of $0.12, down from $0.32 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Franklin BSP Realty Trust’s full-year EPS of $0.49 to grow 159%.

Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

Franklin BSP Realty Trust’s TBVPS declined at a 7.5% annual clip over the last five years. A turnaround doesn’t seem to be in sight as its TBVPS also dropped by 11.3% annually over the last two years ($15.20 to $11.96 per share).

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, Franklin BSP Realty Trust has averaged an ROE of 5%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

We struggled to find many positives in these results. Its revenue missed and its net interest income fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $8.75 immediately after reporting.

Updated: February 14, 2026 at 11:55 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Franklin BSP Realty Trust.

We see the value of companies driving economic growth, but in the case of Franklin BSP Realty Trust, we’re out. Although its revenue growth was exceptional over the last five years and is expected to accelerate over the next 12 months, its TBVPS has declined over the last five years. And while the company’s projected EPS for the next year implies the company’s fundamentals will improve, the downside is its declining EPS over the last three years makes it a less attractive asset to the public markets.

Franklin BSP Realty Trust’s P/B ratio based on the next 12 months is 0.6x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $13.75 on the company (compared to the current share price of $9.01).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.