Franklin BSP Realty Trust ( NYSE: FBRT ) stock has slipped 1.8% in Thursday morning trading after JMP analyst Steven DeLaney downgraded the commercial mortgage REIT to Market Perform from Market Outperform given its recent outperformance relative to its peer group.
At the time of DeLaney's initial Outperform rating on March 10, Franklin BSP ( FBRT ) shares were trading at ~0.75x estimated fully-converted book value per share of $17.25 at Dec. 31, 2021. By the close of Aug. 17, "FBRT shares had gained 10.1% since March 31, while the CMREIT peer group experienced a median price decline of 4.4%. The August 17 closing price of $13.39 was equal to 0.97 June 30 fully converted BV per share of $15.81, which represents a decline in book value of 8.3% since year-end 2021," the analyst said in a note to clients.
Meanwhile, FBRT's outperformance continued even after the company reported a loan loss provision of $28.4M, or $0.34 per share, after it found a borrower had provided ~100 falsified and forged documents fraudulently inflated the purported value of collateral for a $113M.2M loan.
In addition, volatile interest rates disrupted its conduit lending business and triggered unexpectedly large losses on the ARM MBS portfolio it acquired from Capstead.
SA contributor George Spritzer's analysis considers Franklin BSP Realty ( FBRT ) a decent value
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Franklin BSP Realty downgraded to Market Perform at JPM after overperformance