What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-16 compared with 2022-02-25 · 929 added, 1309 removed, 1339 unchanged (63% of the section changed)

1 unchanged sentence

Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports we file and submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in accordance with SEC guidelines and that such information is communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure based on the definition of "disclosure controls and procedures" in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.

In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures in reaching that level of reasonable assurance.

In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act management with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, as of the end of such period, that our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in our reports that we file or submit under the Exchange Act.

2 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act.

Our internal control system is designed to provide reasonable assurance to our management and the board of directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

In connection with the preparation of our Annual Report on Form 10-K, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022.

1 unchanged sentence

Based on its assessment, our management concluded that, as of December 31, 2022, our internal control over financial reporting was effective.

The rules of the SEC do not require, and this Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.

Our independent registered public accounting firm, Ernst and Young LLP (“EY”), has audited the effectiveness of our internal control over financial reporting as of December 31, 2022, as stated in its report which is included herein.

Changes in Internal Control Over Financial Reporting

During the quarter ended December 31, 2022, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Franklin BSP Realty Trust, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Franklin BSP Realty Trust, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Franklin BSP Realty Trust, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule IV and our report dated March 16, 2023 expressed an unqualified opinion thereon .

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Reporting on Internal Controls over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

New York, New York

March 16, 2023

Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive Officers and Corporate Governance.

The table set forth below lists the name and age of each of our current directors and the position and office that each director currently holds with the Company:

Name Age Position(s)

Byrne 60 Chairman of the Board of Directors, Chief Executive Officer and President

Jamie Handwerker 60 Director, Compensation Committee Chair

McDonough 63 Director, Nominating and Corporate Governance Committee Chair

Ortale 60 Director, Audit Committee Chair

Tuppeny 61 Lead Independent Director

Pat Augustine 59 Director

Gary Keiser 78 Director

Goolsby 63 Director

Business Experience of Directors

The name, principal occupation for the last five years, selected biographical information and the period of service of our directors are set forth below.

Byrne has served as Chairman of the Board of Directors, Chief Executive Officer and President of the Company since September 2016.

Byrne has served as the President of the Advisor since 2013.

He has also served as Chairman of the Board of Directors, Chief Executive Officer and President of the Business Development Corporation of America since November 2016, Broadtree Residential, Inc.

since February 2020 and Franklin BSP Capital Corp since December 2020.

Prior to joining the Advisor, Mr.

Byrne was Chief Executive Officer of Deutsche Bank Securities, Inc.

He was also the Co-Head of Global Capital Markets at Deutsche Bank.

Before joining Deutsche Bank, Mr.

Byrne was Global Co-Head of the Leveraged Finance Group and Global Head of Credit Research at Merrill Lynch & Co.

He was also a perennially top-ranked credit analyst.

Byrne earned an M.B.A.

from the Kellogg School of Management at Northwestern University and a B.A.

from Binghamton University.

Byrne is a member of the Boards of Directors of Wynn Resorts, Limited (NASDAQ:

WYNN) and New York Road Runners.

We believe that Mr.

Byrne’s current and prior experience as a director and Chief Executive Officer of the Company, and his significant investment banking experience in real estate make him well qualified to serve as a member of our Board.

Pat Augustine

Pat Augustine has served as an independent director of the Company since October 2021.

He previously served as a member of the Board of Directors of Capstead Mortgage Corporation (NYSE:

CMO) from 2020 until its merger with the Company in 2021.

Augustine spent most of his career in structured finance beginning in 1985 at Salomon Brothers during the developmental phase of the mortgage-backed securities market.

From 1996 until 2007, Mr.

Augustine built the securities business at NationsBank, now Bank of America, where he ran sales, trading and research for structured products.

Between 2009 and 2011, Mr.

Augustine served as Head of Structured Product and Credit Portfolio Management at Swiss RE Insurance Asset Management where he was primarily responsible for oversight of residential and commercial mortgage-related products.

Most recently, he served as founder of Meridian Enterprises where he built, owned and operated Planet Fitness franchises before selling to a private equity firm in 2019.

Augustine holds a BA in Economics from Duquesne University and an MBA from Emory University.

Augustine has a depth of specialty-finance related experience.

Goolsby has served as an independent director of the Company since October 2021.

She previously served as a member of the Board of Directors of Capstead Mortgage Corporation (NYSE:

CMO) from 2012 until its merger with the Company in 2021.

Goolsby was a partner and investment committee member for Greenmont Capital Partners II, a private equity firm, from 2008 to 2019.

From 1998 to 2008, Ms.

Goolsby served as an executive vice president of Dean Foods Company (NYSE:

DF) where she was responsible for corporate development, legal, corporate governance, ethics and compliance, government relations and corporate affairs.

Prior to 1998, Ms.

Goolsby provided legal representation for public and privately-held entities, including real estate investment trusts, in connection with securities offerings, financings, mergers, acquisitions and divestitures.

Goolsby previously served as a director of WhiteWave Foods Company (NYSE:

WWAV), a consumer-packaged food and beverage company, and served as a member of the Advisory Board of the successor company, Danone North America.

Goolsby serves on the board of Simply Good Foods Company (NASDAQ:

SMPL) and has served as a member of the Audit Committee, the Nominating and Governance Committee and as Chair of the Corporate Responsibility and Sustainability Committee.

She also serves on the board of SACHEM, Inc., a privately-held chemical science technology company.

Goolsby brings a diverse background of executive leadership experience, and has worked extensively with management teams and boards on matters involving risk management, strategy, compensation and corporate governance.

In addition, she has significant experience in corporate financing and other capital markets transactions, including transactions on behalf of public and privately-held real estate entities.

Jamie Handwerker

Jamie Handwerker has served as an independent director of the Company since September 2016.

Handwerker is a partner of KSH Capital, providing real estate entrepreneurs with capital and expertise to seed or grow their platform.

Prior to joining KSH, Ms.

Handwerker was a Senior Vice President and Principal of Cramer Rosenthal McGlynn (CRM) LLC, a New York-based asset management firm, which serves as investment adviser to institutions, as well as individual and family trusts.

Handwerker was the portfolio manager for the CRM Windridge Partners hedge funds since she founded the Funds in June 2000.

The funds were long/short US equity hedge funds, focused on real estate and consumer companies, generating absolute returns.

Prior to joining CRM in April 2002, Ms.

Handwerker managed Windridge Partners, L.P, as a Managing Director and Portfolio Manager with ING Furman Selz Asset Management LLC, a New York based holding company operating as a wholly-owned subsidiary of the Dutch financial conglomerate, ING Group.

Handwerker previously was a Managing Director and Senior Equity Research Analyst (Sell-Side) from 1994 to 2000 at the international corporate and investment bank ING Barings and its predecessor, Furman Selz, LLC where she exclusively focused on real estate companies, including the REIT industry.

She received a B.A.

in Economics from the University of Pennsylvania.

Handwerker serves on the Board of Trustees of Lexington Realty Trust (NYSE:

She also is a member of the University of Pennsylvania School of Arts & Sciences Board of Overseers and is the Founder and Chairperson of Penn Arts & Sciences Professional Women’s Alliance, as well as being involved in other charitable endeavors.

We believe Ms.

Handwerker’s extensive experience in real estate venture capital, asset management and portfolio management described above make her well qualified to serve as a member of our Board.

Gary Keiser has served as an independent director of the Company since October 2021.

He previously served as a member of the Board of Directors of Capstead Mortgage Corporation (NYSE:

CMO) from 2004 until its merger with the Company in 2021.

Gary Keiser served as an audit partner at Ernst & Young LLP from 1980 until his retirement in 2000.

Keiser began his career with Ernst & Young LLP in 1967.

He also serves on several governmental, non-profit and private company boards.

Keiser worked in the public accounting profession for his entire career, focusing a significant amount of his time on real estate and real estate finance clients, and has a wealth of accounting, mortgage banking and real estate experience.

McDonough has served as an independent director of the Company since April 2016.

McDonough brings innovative thinking to transform business performance from diverse experiences leading global organizations in industries such as Biotechnology, Personal Care Products, Consumer Appliances, Power Tools and Beverage Alcohol.

In 2022, Peter retired from his position as Chief Executive Officer of Trait Biosciences, a Los Alamos, NM biotechnology research organization developing Intellectual Property associated with the formulation of CBD Health & Wellness Products.

Before joining Trait, Peter served as President, Chief Marketing and Innovation Officer for Diageo North America ($5+ Billion Revenue) from 2009 to 2015.

While in this role he was responsible for over-seeing North America’s largest portfolio of premium spirits and beer brands.

In his diverse career, Peter has served as a senior leader in seven different industries, gaining cultural insights while residing in the Pacific Rim, Central Europe and numerous American cities.

After teaching at The University of Canterbury’s Graduate School of Business in Christchurch, New Zealand, Peter was appointed to serve as Procter & Gamble’s Vice President of European Marketing overseeing the brand marketing function for Duracell Batteries and Braun Appliances ($1.3 Billion Annual Revenues).

Prior to his overseas roles Peter served as Gillette's Head of North American Marketing where he launched industry leading brands such as Mach3 Turbo and Venus Razors ($1.3 Billion Annual Revenues).

Earlier in his career, he served as Director of North American Marketing at Black & Decker where he was involved in launching the DeWalt Power Tool Company.

McDonough is an alumnus of Cornell University and holds a Master of Business Administration from the Wharton School of Business at the University of Pennsylvania.

He currently serves on corporate boards including The Splash Beverage Group (NYSE:

SBEV) and Copalli Spirits.

He previously served on the Board of Directors for not-for-profit organizations such as The AdCouncil of America, Effies Worldwide Inc and The Children’s Trust Fund of Massachusetts.

We believe Mr.

McDonough’s extensive experience as an executive officer and/or director of the companies described above and his significant business accomplishments make him well qualified to serve as a member of our Board.

Ortale has served as an independent director of the Company since September 2016.

Ortale is a private equity investor based in Nashville, Tennessee.

He is a partner in NTR, a private equity firm focused on the energy space as well as a partner in Armour Capital Management, LP, the external manager of a residential mortgage REIT with over $8 billion in assets.

Ortale began his career with Merrill Lynch’s Merchant Banking Group in New York in 1987.

He was subsequently a founder and managing director of NationsBanc’s (Bank of America) High Yield Bond Group.

In 1996 he formed Sewanee Ventures, a private equity investment vehicle that he still manages today.

Ortale’s activities have included investments in startup venture backed companies, LBO’s, real estate development, and real estate acquisition.

He currently serves on the board of directors Waitr Holdings, Inc.

WTRH), an on-demand food ordering and delivery company, and Broadtree Residential, Inc., a private multifamily REIT.

He is currently a board advisor to Western Express (a privately owned $700 million trucking company) and a board member of Intrensic (a police bodycam and digital evidence management company) and Remote Care Partners (a private healthcare company in the remote health monitoring space).

He received his B.A.

from Sewanee:

The University of the South and a Masters of Business Administration from Vanderbilt University.

We believe Mr.

Ortale’s extensive experience as a private equity investor and banker described above make him well qualified to serve as a member of our Board of Directors.

Tuppeny has served as an independent director of the Company and its predecessor since January 2013.

Tuppeny has been the chief executive officer and founder of Domus, Inc.

(“Domus”), a full-service marketing communications agency, since 1993.

Her company works at the C-Suite level with clients such as Chevron;

Merrill Lynch;

Procter & Gamble;

Ralph Lauren and Westinghouse.

Real Estate clients include Ritz Carlton Residences;

S&H Associates;

and PMC Real Estate.

Tuppeny has 30 years of experience in the branding and advertising industries, with a focus on Fortune 50 companies.

Tuppeny also served for three years on the board of the Philadelphia Industrial Development Council, a public-private economic development organization, wherein she evaluated and approved 500+ industrial and commercial real estate transactions worth over a billion dollars.

Tuppeny currently serves as the Lead Director of New York City REIT, Inc.

NYC), a public real estate investment trust with a portfolio of high-quality commercial real estate located within the five boroughs of New York City, particularly in Manhattan, and Ms.

Tuppeny is also an independent director and Chair of the Nominating and Governance Committee of Healthcare Trust, Inc.

HTIA), a publicly registered real estate investment trust focused on acquiring a diversified portfolio of healthcare real estate, with an emphasis on seniors housing and medical office buildings, located in the United States.

Tuppeny previously served as an independent Director on the board of directors of American Realty Capital Trust IV.

Tuppeny has served on the boards of directors and advisory committees for the Arthur Ashe Foundation, Avenue of the Arts, Drexel Medical School, Philadelphia Hospitality Cabinet, Pennsylvania Commission for Women, Penn Relays and the Police Athletic League.

Tuppeny was the recipient of the national Stevie Award as the nation’s top woman entrepreneur in 2004 and was named as a “Top Woman in Philadelphia Business” in 1996, one of the “Top 50 Women in Pennsylvania” in 2004 and as the “Businessperson of the Year” in 2003 by the Greater Philadelphia Chamber of Commerce.

Tuppeny has taught at New York University, University of Pennsylvania and Temple University, and received her undergraduate degree from the University of Pennsylvania, Annenberg School of Communications.

We believe that Ms.

Tuppeny’s prior and current experience as an independent director of the companies described above, as chief executive officer and founder of Domus, and in evaluating healthcare-related real estate business development applications, make her well qualified to serve on our Board.

Executive Officers

The following table presents certain information concerning each of our executive officers serving in such capacity:

Chairman of the Board of Directors, Chief Executive Officer and President

Chief Financial Officer, Chief Operating Officer and Treasurer

Please see above for biographical information about Mr.

Baglien has served as Chief Financial Officer and Treasurer of the Company since September 2016, and as Chief Operating Officer of the Company since December 2021.

Baglien is a Managing Director and Chief Financial Officer of Real Estate of the Advisor.

Prior to joining the Advisor in 2016, Mr.

Baglien was director of fund finance for GTIS Partners LP (“GTIS”), where he oversaw all finance and operations for GTIS funds.

Previously, he was an accounting manager at iStar Inc.

with oversight of loans and special investments.

Baglien received a Masters of Business Administration from Kellstadt Graduate School of Business at DePaul University and a Bachelor of Science in Accounting from the University of Oregon.

Audit Committee

The Company’s Board of Directors has a standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act.

The Audit Committee consists of Mr.

Handwerker, Mr.

McDonough and Ms.

Tuppeny, each of whom is “independent” within the meaning of the applicable (i) provisions set forth in the Audit Committee charter, (ii) requirements set forth in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (iii) the rules and regulations of the SEC.

Ortale is the chair of our Audit Committee.

The Board has determined that Mr.

Handwerker and Mr.

Keiser are each qualified as an “Audit Committee financial expert” as defined in Item 407(d)(5) of Regulation S-K and the rules and regulations of the SEC.

Code of Ethics

The Board of Directors maintains a Code of Ethics is applicable to our directors, officers, our Advisor and employees of the Advisor performing substantial services for the Company.

6 unchanged sentences

A waiver of the Code of Ethics for all other person may be made only by our Chief Executive Officer and shall be discussed with the Board or a committee of the Board as appropriate.

The other information required by this item is hereby incorporated by reference to the material appearing in the Proxy Statement for the 2023 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A under the Exchange Act.

Executive Compensation.

2021 Executive Officer Compensation

We currently have no employees.

Our Advisor, through its employees, performs our day-to-day management functions.

Our current non-employee executive officers, Richard J.

Byrne and Jerome S.

Baglien, are each employees of our Advisor and in 2021 did not receive any compensation directly from the Company for the performance of their duties as executive officers of the Company.

As a result of our not paying any compensation directly to our executive officers in 2021, we have not included in this Annual Report on Form 10-K a “Compensation Discussion and Analysis” section or a report of the Compensation Committee.

Director Compensation

The following table sets forth information regarding compensation of our independent directors during the fiscal year ended December 31, 2021.

Byrne received no additional compensation for serving as a director.

Name Fees Paid in Cash* Stock Awards Total

Tuppeny $ 190,000 $ 50,000 $ 240,000

Ortale $ 190,000 $ 50,000 $ 240,000

McDonough $ 190,000 $ 50,000 $ 240,000

Jamie Handwerker $ 190,000 $ 50,000 $ 240,000

Pat Augustine** $ 22,120 $ — $ 22,120

Goolsby** $ 22,120 $ — $ 22,120

Gary Keiser** $ 22,120 $ — $ 22,120

________________________

* Includes a special, one-time supplemental director fee of $50,000 to Ms.

McDonough and Ms.

Handwerker in recognition of the significant incremental work required of the Board and its committees during the Company’s merger with Capstead and the listing of the Company’s common stock on the NYSE .

** Messrs, Augustine, Keiser and Ms.

Goolsby joined the Board in October 2021, and received an annual cash retainer prorated for the amount of time they served on the Board during 2021.

We currently pay to each of our independent directors the fees described in the table below.

All directors also receive reimbursement of reasonable out of pocket expenses incurred in connection with attendance at meetings of our Board of Directors.

If a director also is our employee or an employee of our Advisor or any of its affiliates, or is otherwise not independent, we do not pay compensation for services rendered as a director.

Name Fees Earned or Paid in Cash ($) Restricted Shares

Independent Directors A yearly retainer of $110,000 for each independent director;

$20,000 for the Lead Independent Director and the chairs of the Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee;

and $5,000 for each member of a committee who is not serving as a chair.

On the date of the annual meeting of stockholders, each independent director receives an annual grant of $50,000 in restricted shares of Common Stock based on the lower of the most recent GAAP book value or net asset value per share.

The restricted shares vest on the anniversary of the grant date.

Now that the Company's common stock is listed on the NYSE, commencing in 2022, the annual grant will be valued on the basis of the closing price of our common stock on the date of grant.

The information required by this item is hereby incorporated by reference to the material appearing in the Proxy Statement for the 2023 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A under the Exchange Act.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Except as set forth below, the information required by this item is hereby incorporated by reference to the material appearing in the Proxy Statement for the 2023 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A under the Exchange Act.

Equity Compensation Plan Information

The following table provides information about our common stock that may be issued under our equity compensation plans as of December 31, 2022:

Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise of Price of Outstanding Options, Warrants, and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans

Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1)

Weighted-Average Exercise of Price of Outstanding Options, Warrants, and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (2)

Equity compensation plans approved by security holders — — —

Equity compensation plans not approved by security holders 492,107 — 8,923,690

— — 9,443,936

Total 492,107 — 8,923,690

________________________

(1) The number of securities remaining available for future issuance consists of an aggregate of 3,943,936 shares issuable under our employee and director incentive restricted share plan (“RSP”) and 5,500,000 shares issuable under the Franklin BSP Realty Trust, Inc.

(1) Represents unvested and outstanding restricted stock units issued under the Franklin BSP Realty Trust, Inc.

2021 Equity Incentive Plan.

One share of the Company’s common stock will be issued for each restricted stock unit that vests.

(2) The number of securities remaining available for future issuance consists of an aggregate of 3,915,797 shares issuable under our employee and director incentive restricted share plan (“RSP”), which expired on February 7, 2023 and 5,007,893 shares issuable under the Franklin BSP Realty Trust, Inc.

2021 Equity Incentive Plan.

Each of our equity compensation plans were adopted and approved by our Board of Directors prior to the listing of our common stock on the NYSE.

The RSP will expire on February 7, 2023.

Compensation Committee Interlocks and Insider Participation

The Board of Directors has a standing Compensation Committee, which is currently comprised of Ms.

Handwerker, Mr.

Augustine, Mr.

McDonough, Mr.

Ortale and Ms.

Tuppeny, with Ms.

Handwerker serving as the committee’s chairperson.

All Compensation Committee members meet the independence criteria set forth in the listing standards of the NYSE.

No current or former employee of the Company serves on the Compensation Committee.

The Committee members have no interlocking relationships as defined by the SEC.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth information regarding the beneficial ownership of our Common Stock and our Series F Preferred Stock, including shares which may be acquired by such persons within 60 days, by:

• each of our executive officers and directors;

• all of our executive officers and directors as a group.

The percentage ownership set forth below is based on 43,957,363 shares of Common Stock and 39,733,299 shares of Series F Preferred Stock outstanding as of February 17, 2022.

Each share of Series F Preferred Stock votes on an as-converted basis with the Common Stock, voting as a single class.

Each share of Series F Preferred Stock will automatically convert into one share of Common Stock on April 19, 2022.

Beneficial Owner (1)

Number of Shares of Common Stock Beneficially Owned Percent of Class Number of Shares of Series F Preferred Stock Beneficially Owned Percent of Class

Pat Augustine 7,653 (2)

Baglien 283 * 2,506 *

Byrne 13,330 * 117,770

Goolsby 26,305 (2)

Jamie Handwerker 4,399 (3)

Gary Keiser 33,187 (2)

McDonough 4,399 (3)

Ortale 4,398 (3)

Tuppeny 4,650 (3)

All directors and executive officers as a group (9 persons) 98,604 (4)

________________________

* Less than 1%.

(1) The business address of each individual or entity listed in the table 1345 Avenue of the Americas, Suite 32A, New York, New York 10105.

(2) Includes 2,403 unvested restricted shares scheduled to vest on June 3, 2022.

(3) Includes 2,796 unvested restricted shares scheduled to vest on June 3, 2022.

(4) Includes 18,393 unvested restricted shares scheduled to vest on June 3, 2022.

The following table sets forth information regarding the beneficial ownership of our Common Stock and our Series C Preferred Stock, Series D Preferred Stock and Series F Preferred Stock (such preferred stock collectively, the “Voting Preferred Stock”), which votes as a single class with Common Stock on an as-converted basis, in each case including shares which may be acquired by such persons within 60 days, by each person known by us to be the beneficial owner of more than 5% of the outstanding shares of Common Stock or any class of the Voting Preferred Stock.

Beneficial Owner Number of Shares of Common Stock Beneficially Owned Percent of Class Number of Shares of Series C Preferred Stock Beneficially Owned Percent of Class Number of Shares of Series D Preferred Stock Beneficially Owned Percent of Class Number of Shares of Series F Preferred Stock Beneficially Owned Percent of Class

BlackRock, Inc.

7,002,427 15.9 % — — — — — —

The Vanguard Group (2)

3,588,587 8.2 %

Security Benefit Life Insurance Company (3)

— — — — 17,950 100.0 % — —

Penn Mutual Life Insurance Company (4)

— * 1,000 71.5 % — — — —

Vesta Global Stability Fund LP (5)

— — 400 28.5 % — — — —

Howard University Endowment Fund (6)

— * — — — — 2,179,465 5.5 %

________________________

* Less than 1%.

(1) This information is based on a Schedule 13G/A filed with the SEC on January 27, 2022, by BlackRock, Inc.

(“Blackrock”).

Blackrock reported that it has sole voting power with respect to 6,965,313 shares, shared voting power with respect to 0 shares, sole dispositive power with respect to 7,002,427 shares and shared dispositive power with respect to 0 shares.

The address of BlackRock, Inc.

is 55 East 52nd Street, New York, NY 10055.

(2) This information is based on a Schedule 13G filed with the SEC on February 9, 2022 by The Vanguard Group (“Vanguard”).

Vanguard reported that it has sole voting power with respect to 0 shares, shared voting power with respect to 28,577 shares, sole dispositive power with respect to 3,527,307 shares and shared dispositive power with respect to 61,280 shares.

The address of Vanguard is 100 Vanguard Blvd.

Malvern, PA 19355.

(3) The business address of Security Benefit Life Insurance Company is One SW Security Benefit Place, Topeka, KS 66636.

(4) The business address of Penn Mutual Life Insurance Company is 600 Dresher Road, Suite 100, Horsham, PA 19044.

(5) The business address of Vesta Global Stability Fund LP is 330 5 th Ave SW, Suite 640, Calgary, AB T2P 0L4, Canada.

(6) The business address of Howard University Endowment Fund is 2244 10th St NW Suite 302, Washington DC 20001-4012.

Certain Relationships and Related Transactions, and Director Independence.

Certain Relationships and Related Transactions

Executive Officers

Byrne our Chief Executive Officer and President, is the president of our Advisor.

Baglien, our Chief Financial Officer, Chief Operating Officer and Treasurer, is the chief financial officer and chief operating officer of the Advisor’s commercial real estate group.

Our Advisor is an affiliate of Franklin Templeton.

The Advisor manages our day to day operations pursuant to the Amended and Restated Advisory Agreement, dated January 19, 2018, as amended August 18, 2021 (the “Advisory Agreement”).

Our Advisor is responsible for identifying, originating, acquiring and asset managing investments on our behalf.

Under the Advisory Agreement, the Advisor is entitled to an asset management fee equal to one and one-half percent (1.5%) of Equity (as defined in the Advisory Agreement) and an annual subordinated performance fee equal to fifteen percent (15%) of the Total Return (as defined in the Advisory Agreement) over a six percent (6%) per annum hurdle, subject to certain limitations.

The Company or the Operating Partnership continues to pay directly or reimburse the Advisor for all the expenses paid or actually incurred by the Advisor in connection with the services it provides to the Company and the Operating Partnership pursuant to the Advisory Agreement, subject to certain limitations.

For the year ended December 31, 2021, pursuant to the terms of the Amended Advisory Agreement, the Company paid total asset management fees of $28.1 million, acquisition expenses of approximately $1.2 million, reimbursements for administrative expenses and personnel costs of approximately $7.7 million, and other related party expenses, primarily related to reimbursable costs incurred for the increase in loan origination activities, of approximately $0.4 million.

Indemnification Agreements

We have entered into an indemnification agreement with each of our directors and officers providing for indemnification of such directors and officers consistent with the provisions of our Charter.

No amounts have been paid by us pursuant to these indemnification agreements.

Certain Conflict Resolution Procedures

Every transaction that we enter into with our Advisor or its affiliates will be subject to an inherent conflict of interest.

Our Board of Directors may encounter conflicts of interest in enforcing our rights against any affiliate in the event of a default by or disagreement with an affiliate or in invoking powers, rights or options pursuant to any agreement between us and our Advisor or any of its affiliates.

In order to reduce or eliminate certain potential conflicts of interest, our Nominating and Corporate Governance Committee charter contains a number of requirements, including that:

• the committee shall review and evaluate the terms and conditions of, and determine the advisability of, any related party transaction;

• unless the Board appoints a special committee of independent directors to negotiate any related party transaction, the committee shall negotiate the terms and conditions of any related party transaction, and if the committee deems appropriate, but subject to the limitations of applicable law, shall recommend to the Board the execution and delivery of documents in connection with any related party transaction on behalf of the Company;

• the committee shall determine whether any related party transaction is fair to, and in the best interest of the Company;

• the committee shall recommend to the Board what action, if any should be taken by the Board with respect to any related party transaction pursuant to the Company’s Charter;

• the committee shall review, evaluate and approve of any potential conflicts brought to its attention and shall report the results of its consideration of any such conflict to the Board;

• the committee shall review, on a quarterly basis, the services provided by the Advisor, the reasonableness of the Advisor’s or its affiliates’ fees and expenses, the reasonableness of the Company’s expenses and the allocation of expenses among the Company and its affiliates and among accounting categories, and report its findings to the Board.

These responsibilities have also been codified in the Related Party Transactions Policy adopted by our Nominating and Corporate Governance Committee.

Pursuant to the Related Party Transactions Policy, all related party transactions (as defined by Item 404(a) of Regulation S-K) must be approved by either the Nominating and Corporate Governance Committee or a majority of the disinterested members of the Board.

As a general rule, any director who has a direct or indirect material interest in such related party transaction should not participate in the Nominating and Corporate Governance Committee or Board action regarding whether to approve the transaction.

Any payment of fees and reimbursements to the Advisor pursuant to and in accordance with the Advisory Agreement are deemed to have been approved in accordance with the Related Party Transactions Policy.

Our independent directors have determined that all our transactions and relationships with our Advisor and their respective affiliates during the year ended December 31, 2021 were fair and were approved in accordance with the applicable Company policies.

Director Independence

Under our Corporate Governance Guidelines and NYSE rules, a majority of our directors must be “independent.” A director is not independent unless the Board affirmatively determines that he or she does not have a “material relationship” with us and the director must meet the bright-line test for independence set forth by the NYSE rules.

A relationship with the Advisor or an affiliate thereof (other than service as an independent director or trustee for another company managed by the Advisor) is treated as a relationship with the Company.

Our Corporate Governance Guidelines also require all members of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee to be “independent” directors.

Based upon its review, the Board has affirmatively determined that each of Messrs.

Augustine, Keiser, McDonough and Ortale, and each of Mses.

Goolsby, Handwerker and Tuppeny is independent under all applicable criteria for independence set forth in the listing standards of the NYSE, including with respect to committee service.

In making its independence determinations, the Board considered and reviewed all information known to it, including information identified through directors’ questionnaires.

There are no familial relationships between any of our directors and executive officers.

Principal Accounting Fees and Services.

The Audit Committee of the Board of Directors has selected and appointed Ernst and Young LLP (“EY”) as our independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2022.

EY has been our independent registered accounting firm since 2017.

The following table shows the fees billed by EY for the years ended December 31, 2021 and December 31, 2020 for each of the following categories of services:

Audit Fees (1)

$ 2,435,000 $ 1,357,600

Audit-Related Fees (2)

911,901 20,000

713,762 408,328

Total $ 4,060,663 $ 1,785,928

________________________

(1) Audit fees relate to audits of the Company’s annual consolidated financial statements and reviews of the Company’s quarterly consolidated financial statements, comfort letters, and consents related to SEC registration statements.

(2) Audit-Related fees relate to assurance and related services that are traditionally performed by the independent registered public accounting firm and includes due diligence and debt compliance reporting.

(3) Tax fees primarily relate to preparation of tax returns, assistance with federal and state income tax filing calendar, compliance services, tax planning and modeling services, assistance with tax audits, tax advice related to mergers, and routine on-call tax services concerning issues, as requested by the Company, when such projects are not covered by a separate agreement and do not involve any significant tax planning or projects .

Pre-Approval Policies and Procedures

In accordance with our Audit Committee’s Audit and Non-Audit Services Pre-Approval Policy, all audit and non-audit services performed for us by our independent registered public accounting firm were pre-approved by the Audit Committee of our board of directors, which concluded that the provision of such services by EY was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.

The Audit and Non-Audit Services Pre-Approval Policy provides for categorical pre-approval of specified audit and permissible non-audit services.

Services to be provided by the independent registered public accounting firm that are not within the category of pre-approved services must be approved by the Audit Committee prior to engagement, regardless of the service being requested or the dollar amount involved.

The Audit Committee must provide separate pre-approval of engagements for the performance of audit and non-audit services if (i) the type of service to be provided by the independent auditor has not received pre-approval as specifically set forth in the Audit and Non-Audit Services Pre-Approval Policy or (ii) the performance of such service would cause the aggregate annual fee, as applicable, to exceed the maximum fee level established for such type of service by the Audit Committee;

provided that the Audit Committee determines that the provision of such services will not impair the auditors’ independence.

The Audit Committee may delegate pre-approval authority to one or more of its members.

The member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit Committee at its next scheduled meeting.

The Audit Committee does not delegate to management its responsibilities to pre-approve services to be performed by the independent registered public accounting firm.

Exhibits and Financial Statement Schedules.

2 unchanged sentences

See the Index to Exhibit below.

Form 10-K Summary.

INDEX TO EXHIBITS

The following exhibits are included in this Annual Report on Form 10-K for the year ended December 31, 2022 (and are numbered in accordance with Item 601 of Regulation S-K).

2.1 Agreement and Plan of Merger, dated as of July 25, 2021, by and among Benefit Street Partners Realty Trust, Inc., Rodeo Sub I, LLC, Capstead Mortgage Corporation and Benefit Street Partners L.L.C.

(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on July 26, 2021).

First Amendment to Agreement and Plan of Merger, dated September 22, 2021, by and among Benefit Street Partners Realty Trust, Inc., Rodeo Sub I, LLC, Capstead Mortgage Corporation and Benefit Street Partners L.L.C.

(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on September 22, 2021).

Articles of Amendment and Restatement, effective March 10, 2021 (incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021).

Articles of Amendment to the Articles of Amendment and Restatement of Benefit Street Partners Realty Trust, Inc.

(incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on October 8, 2021).

Articles Supplementary dated October 18, 2019, relating to Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 18, 2019).

Articles Supplementary dated March 17, 2021, relating to Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 19, 2021).

Articles of Amendment to the Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on October 8, 2021).

3.3 Articles Supplementary of Franklin BSP Realty Trust, Inc., effective October 19, 2021, relating to Series E Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on October 21, 2021).

Articles Supplementary of Franklin BSP Realty Trust, Inc., effective October 12, 2021, relating to Series F Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the SEC on October 8, 2021).

3.4 Articles Supplementary of Franklin BSP Realty Trust, Inc., dated June 21, 2022, relating to Series H Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 24, 2022).

Amendment No.

1 to Articles Supplementary of Franklin BSP Realty Trust, Inc., effective January 19, 2023, relating to Series H Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on January 20, 2023).

Articles Supplementary of Franklin BSP Realty Trust, Inc.

effective October 12, 2022, relating to Series I Convertible Preferred Stock (incorporate d by reference to Exhibit 3.1 to the Current Report on Form 8-K Filed with the SEC on October 14, 2022).

Amended and Restated Bylaws of Franklin BSP Realty Trust, Inc.

4 unchanged sentences

4.3* Description of Securities of the Registrant

10.1 Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed with the SEC on November 14, 2016).

10.2† Amended and Restated Employee and Director Incentive Restricted Share Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 29, 2017).

10.3† Form of Director Restricted Share Award Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 29, 2017).

Uncommitted Master Repurchase Agreement, dated as of June 18, 2014, between the Company JPM Loan, LLC and JPMorgan Chase Bank, National Association.

(incorporated by reference to Exhibit 10.9 to the Pre-Effective Amendment No.

1 to Post-Effective Amendment No.

7 to our Registration Statement on Form S-11 filed with the SEC on July 11, 2014).

Amendment No.1 to Master Repurchase Agreement, dated as of June 24, 2015, by and between the Company, JPM Loan, LLC and JP Morgan Chase Bank, National Association (incorporated by reference to Exhibit 10.11 to the Pre-Effective Amendment No.1 to Post-Effective Amendment No.12 to our Registration Statement on Form S-11 filed with the SEC on July 8, 2015).

Amendment No.

2 to Master Repurchase Agreement, dated as of September 28, 2015, between the Company, JPM Loan, LLC and JPMorgan Chase Bank, National Association (incorporated by reference to Exhibit 10.12 to the Pre-Effective Amendment No.

1 to Post-Effective Amendment No.

13 filed with the SEC on October 8, 2015).

Amendment No.

3 to Master Repurchase Agreement, dated as of December 30, 2015, between the Company, JPM Loan, LLC and JPMorgan Chase Bank, National Association (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 11, 2016).

Amendment No.

4 to Master Repurchase Agreement, dated as of October 5, 2016, between the Company, JPM Loan, LLC and JPMorgan Chase Bank, National Association (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 12, 2016).

Guarantee Agreement, dated as of June 18, 2014, between the Company and JPMorgan Chase Bank, National Association (incorporated by reference to Exhibit 10.10 to Pre-Effective Amendment No.

1 to Post-Effective Amendment No.

8 to our Registration Statement on Form S-11 filed with the SEC on October 8, 2014).

Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed with the SEC on November 14, 2016).

Amended and Restated Uncommitted Master Repurchase Agreement, dated as of June 12, 2017, by and between BSPRT JPM Loan, LLC and JP Morgan Chase Bank, National Association (incorporated by reference to Exhibit 10.2 to Amendment No.

1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed with the SEC on August 23, 2017).

10.11 Amendment No.

5 to Amended and Restated Uncommitted Master Repurchase Agreement, dated as of October 6, 2020, by and between BSPRT JPM Loan, LLC and JP Morgan Chase Bank, National Association (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021).

Amended and Restated Guarantee Agreement, dated as of June 12, 2017, by and between the Company and JPMorgan Chase Bank, National Association.

Master Repurchase and Securities Contract, dated as of June 15, 2017, between BSPRT USB Loan, LLC and U.S.

Bank National Association (incorporated by reference to Exhibit 10.4 to Amendment No.

1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed with the SEC on August 23, 2017).

Payment Guaranty, dated as of June 15, 2017, by and between the Company and U.S.

Bank National Association (incorporated by reference to Exhibit 10.5 to Amendment No.

1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed with the SEC on August 23, 2017 .

Master Repurchase Agreement, dated as of August 31, 2017, by and among Column Financial, Inc., Credit Suisse AG, Alpine Securitization Ltd., the Company and BSPRT Finance Sub-Lender I, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 7, 2017).

Guaranty, dated as of August 31, 2017, by and between the Company and Column Financial, Inc (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 7, 2017).

Credit Agreement, dated as of September 19, 2017, by and among the Company, BSPRT BB Loan, LLC, BSPRT Finance Sub-Lender II, L.L.C., Barclays Bank PLC, as sole lead arranger and bookrunner, Barclays Bank PLC, as administrative agent, and the lenders from time to time partiers thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 25, 2017)..

Guarantee and Collateral Agreement, dated as of September 19, 2017, by and among the Company, BSPRT BB Loan, LLC, BSPRT Finance Sub-Lender II, L.L.C.

and Barclays Bank PLC, as administrative agent for the secured parties (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 25, 2017).

Indenture, dated as of November 29, 2017, by and among BSPRT 2017-FL2 Issuer, Ltd., as issuer, BSPRT 2017-FL2 Co-Issuer, LLC, as co-issuer, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent, and U.S.

Bank National Association, as trustee, note administrator and custodian (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 5, 2017).

10.4† Franklin BSP Realty Trust, Inc.

2021 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to the Registrant’s Registration Statement on Form S-8 filed with the SEC on November 12, 2021).

10.5† Form of Restricted Share Unit Award Agreement pursuant to the Franklin BSP Realty Trust, Inc.

2021 Equity Incentive Plan.(incorporated by reference to Exhibit 10.45 to the Registrant’s Annual Report on Form 10-K filed with the SEC on February 25, 2022).

Amended and Restated Advisory Agreement, dated as of January 19, 2018, by and among Benefit Street Partners Realty Trust, Benefit Street Partners Realty Operating Partnership, L.P.

and Benefit Street Partners, L.L.C (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 23, 2018).

.Indenture, dated as of October 12, 2018, by and among BSPRT 2018-FL4 Issuer, Ltd., BSPRT 2018-FL4 Co-Issuer, LLC, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent, and U.S.

Bank National Association, as trustee, note administrator and custodian (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 filed with the SEC on November 9, 2018).

Master Repurchase and Securities Contract, dated November 21, 2018, among the Company, BSPRT WFB LOAN, LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 29, 2019).

Guarantee Agreement, dated November 21, 2018, between the Company and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 29, 2019).

Master Repurchase and Securities Contract, dated March 15, 2019, among the Company, BSPRT BB FLOAT, LLC, BSPRT BB Fixed, LLC and BARCLAYS BANK PLC (incorporated by reference to Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 29, 2019).

Guarantee Agreement, dated March 15, 2019, between the Company and BARCLAYS BANK PLC (incorporated by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 29, 2019).

Indenture, dated as of May 30, 2019, by and among BSPRT 2010-FL5 Issuer, Ltd., BSPRT 2019-FL5 Co-Issuer, LLC, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent, and U.S.

Loan and Security Agreement, dated February 11, 2020 and as amended by Agreement of Amendment dated March 26, 2020, among BSPRT OP SUB I, LLC, Benefit Street Partners Realty Trust, Inc., Benefit Street Partners Realty Trust LP, LLC, Benefit Street Partners Realty Operating Partnership, L.P., and Security Benefit Life Insurance Company and the other lenders from time to time parties thereto, and Cortland Capital Market Services LLC, as administrative agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 15, 2020).

Loan and Security Agreement, dated as of February 11, 2020, as amended by that certain Agreement of Amendment No.

1, dated March 26, 2020 and that certain Consent and Amendment No.

2 to Loan and Security Agreement, dated as of July 14, 2020, among BSPRT OP Sub I, LLC, Benefit Street Partners Realty Trust, Inc., Benefit Street Partners Realty Trust LP, LLC, and Benefit Street Partners Realty Operating Partnership, L.P.

and Security Benefit Life Insurance Company and the other lenders from time to time parties thereto, and Cortland Capital Market Services LLC, as administrative agent (incorporated by reference to Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021).

10.29 Purchase and Exchange Agreement, dated March 15, 2021, by and between Benefit Street Partners Realty Trust, Inc.

and Security Benefit Life Insurance Company (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 19, 2021).

10.30 Indenture, dated as of March 25, 2021, by and among BSPRT 2021-FL6 Issuer, Ltd., BSPRT 2021-FL6 Co-Issuer, LLC, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent, and U.S.

10.7 Amendment No.

2 unchanged sentences

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 18, 2021).

10.32 Third Amendment to Credit Agreement, dated as of September 8, 2021, among the Company, BSPRT BB Loan, LLC and Barclays Bank PLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed with the SEC on November 10, 2021).

10.33† Franklin BSP Realty Trust, Inc.

2021 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to the Registrant’s Registration Statement on Form S-8 filed with the SEC on November 12, 2021).

10.34* First Amendment to Fee Letter and Second Amendment to Master Repurchase Agreement, dated November 23, 2021, by and among BSPRT BB FLOAT , LLC, and BSPRT BB FIXED, LLC, and Barclays Bank PLC.

10.35* Second Amendment to Fee Letter and Third Amendment to Master Repurchase Agreement, dated December 3, 2021, by and among BSPRT BB FLOAT, LLC, BSPRT BB FIXED, LLC, and Barclays Bank PLC.

Indenture, dated as of May 30, 2019, by and among BSPRT 2010-FL5 Issuer, Ltd., BSPRT 2019-FL5 Co-Issuer, LLC, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent, and U.S.

10.9 Indenture, dated as of March 25, 2021, by and among BSPRT 2021-FL6 Issuer, Ltd., BSPRT 2021-FL6 Co-Issuer, LLC, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent, and U.S.

10.10 Indenture, dated as of December 21, 2021, by and among BSPRT 2021-FL7 Issuer, Ltd., BSPRT 2021-FL7 Co-Issuer, LLC, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent, and U.S.

10.37* Fourth Amendment to Credit Agreement, dated December 1, 2021, among BSPRT BB LOAN, LLC, BSPRT FINANCE SUB-LENDER II, LLC, FRANKLIN BSP REALTY TRUST, INC., and Barclays Bank PLC.

10.38* Amendment No.

10 To Pricing Side Letter, dated as of November 3, 2021, among Column Financial, Inc., Credit Suisse AG, Alpine Securitization LTD, BSPRT FINANCE SUB-LENDER I, LLC, BSPRT CS LOAN, LLC, and Franklin BSP Realty Trust, Inc.

10.39* First Amendment to Guarantee Agreement, entered into as of September 30, 2021, by Benefit Street Partners Realty Trust, Inc., and Wells Fargo Bank, National Association.

10.40* Master Repurchase and Securities Contract, dated as of October 18, 2021 between BSPRT WF Loan, LLC and Wells Fargo Bank National Association.

10.41* Amendment No.

2 to Master Repurchase and Securities Contract, dated as of November 19, 2021, between BSPRT WFB Loan, LLC and Wells Fargo Bank, National Association.

10.42* Amendment No.

1 to Amended and Restated Guarantee Agreement, entered into as of September 29, 2021 between Benefit Street Partners Realty Trust, Inc., and JPMorgan Chase Bank, National Association.

10.43* Amendment No.

7 to Amended and Restated Uncommitted Master Repurchase Agreement, entered into as of September 29, 2021 between BSPRT JPM Loan, LLC, and JPMorgan Chase Bank, National Association.

10.44* Amendment No.

8 to Amended and Restated Uncommitted Master Repurchase Agreement, entered into as of October 20, 2021 between BSPRT JPM Loan, LLC, and JPMorgan Chase Bank, National Association.

10.45*† Form of Restricted Share Unit Award Agreement pursuant to the Franklin BSP Realty Trust, Inc.

2021 Equity Incentive Plan.

10.11 Indenture, dated as of February 15, 2022, by and among BSPRT 2022-FL8 Issuer, Ltd., BSPRT 2022-FL8 Co-Issuer, LLC, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent, and U.S.

10.12 Indenture, dated as of June 29, 2022, by and among BSPRT 2022-FL9 Issuer, LLC, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent, U.S.

Bank Trust Company, National Association, as trustee and note administrator, and U.S.

Bank National Association as custodian (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 1, 2022).

10.13 Exchange Agreement, dated June 21, 2022, by and between Franklin BSP Realty Trust, Inc.

and the holder of the Company’s Series D Convertible Preferred Stock (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 24, 2022) .

21* Subsidiaries of the Registrant

10 unchanged sentences

† Indicates management contract or compensatory plan or arrangement.

Form 10-K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Franklin BSP Realty Trust, Inc.

February 25, 2022 By /s/ Richard J.

March 16, 2023 By /s/ Richard J.

Chief Executive Officer and President

2 unchanged sentences

/s/ Richard J.

Byrne Chairman, Chief Executive Officer and President February 25, 2022

Byrne Chairman, Chief Executive Officer and President March 16, 2023

Byrne (Principal Executive Officer)

/s/ Jerome S.

Baglien Chief Financial Officer, Chief Operating Officer and Treasurer (Principal Financial and Accounting Officer) February 25, 2022

Baglien Chief Financial Officer, Chief Operating Officer and Treasurer (Principal Financial and Accounting Officer) March 16, 2023

/s/ Elizabeth K.

Tuppeny Lead Independent Director February 25, 2022

/s/ Pat Augustine Director February 25, 2022

Tuppeny Lead Independent Director March 16, 2023

/s/ Pat Augustine Director March 16, 2023

Pat Augustine

/s/ Michelle Goolsby Director February 25, 2022

Michelle Goolsby

/s/ Jamie Handwerker Director February 25, 2022

/s/ Joe Dumars Director March 16, 2023

/s/ Jamie Handwerker Director March 16, 2023

Jamie Handwerker

/s/ Gary Keiser Director February 25, 2022

/s/ Peter McDonough Director February 25, 2022

/s/ Gary Keiser Director March 16, 2023

/s/ Peter McDonough Director March 16, 2023

Peter McDonough

/s/ Buford Ortale Director February 25, 2022

/s/ Buford Ortale Director March 16, 2023

Buford Ortale

14 unchanged sentences

We have audited the accompanying consolidated balance sheets of Franklin BSP Realty Trust, Inc.

(formerly Benefit Street Partners Realty Trust, Inc.) (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule IV (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule IV (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

Adoption of new accounting standard

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for credit losses in 2020.

As explained below, auditing the Company’s allowance for credit losses – commercial mortgage loans held for investment was a critical audit matter.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 16, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

1 unchanged sentence

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

2 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for credit losses – Commercial mortgage loans held-for-investment

Description of the Matter Allowance for credit losses– Commercial mortgage loans held-for-investment totaled $15.8 million as of December 31, 2021.

As disclosed in Note 2 to the consolidated financial statements, the allowance for credit losses for the Commercial mortgage loans held-for-investment carried at amortized cost, represents a lifetime estimate of expected credit losses.

The allowance for credit losses is established for current expected credit losses on the Company’s loan portfolio by utilizing expected loss models.

When determining expected losses, the Company uses an economic scenario over a reasonable and supportable forecast period and then fully reverts to historical loss experience to estimate losses over the remaining asset lives.

The modeled results are then evaluated to determine if adjustments are needed for certain qualitative factors.

Auditing the Allowance for credit losses– Commercial mortgage loans held-for-investment was complex due to the use of intricate expected loss models and the highly judgmental nature of the economic scenario and qualitative factors.

How We Addressed the Matter in Our Audit With the support of specialists, we assessed the economic scenario by, among other procedures, evaluating management’s methodology and agreeing a sample of key economic variables used to external sources.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Allowance for credit losses

Description of the Matter As of December 31, 2022, the allowance for credit losses totaled $40.8 million comprising a general allowance component and a specific allowance component of $26.6 million and $14.2 million, respectively.

As disclosed in Note 2 to the consolidated financial statements, the general allowance for credit losses for the Company’s financial instruments carried at amortized cost, such as loans held for investment, represents a lifetime estimate of expected credit losses.

In measuring the general allowance for credit losses for commercial mortgage loans held for investment, the Company primarily applies a probability of default/loss given model for loans that are collectively assessed (“expected loss model”).

The Company’s expected loss model uses historical loss rates, forecasting the loss parameters using a scenario-based statistical approach over a reasonable and supportable forecast period of twelve months (the “economic scenario”), followed by an immediate reversion to average historical losses.

Also as disclosed in Note 2, for commercial loans where the borrower is experiencing financial difficulty based on the Company’s assessment at the reporting date and the repayment is expected to be provided substantially through the operation or sale of the collateral, a specific allowance for credit losses is assessed by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan.

The estimated fair value of the collateral at the reporting date when determining the allowance for credit losses requires judgment, which includes assumptions regarding the market capitalization rates.

Auditing the Allowance for credit losses was complex due to the use of the expected loss model and the judgmental nature of the economic scenario.

For the specific allowance, determining the fair value of the collateral may consider a number of assumptions including, but not limited to, the market capitalization rates.

Such assumptions are generally based on current market conditions and are subject to economic and market uncertainties which leads to a high degree of subjectivity.

How We Addressed the Matter in Our Audit For the general allowance, these procedures included, among others, understanding, evaluating the design, and testing the operating effectiveness of controls, including the significant assumptions related to the selection of the economic scenario.

With the support of specialists, we assessed the economic scenario by, among other procedures, evaluating management’s methodology and agreeing a sample of key economic variables used to external sources.

We also performed and considered the results of various sensitivity analyses and analytical procedures, including comparison of a sample of the key economic variables to alternative external sources, historical statistics and peer real estate investment trust information.

With respect to expected loss models, with the support of specialists, we evaluated model calculation design and re-performed the calculation for the models.

We also tested the appropriateness of a sample of key inputs and assumptions used in these models by agreeing significant inputs and underlying data to internal and external sources, as well as recalculating when required.

We evaluated the overall allowance amount, including model estimates, qualitative factors, and whether the recorded allowance for credit losses appropriately reflects expected credit losses on the loan portfolio.

We reviewed historical loss statistics, peer real estate investment trust information, subsequent events and transactions and considered whether they corroborate or contradict the Company’s measurement of the allowance for credit losses.

Accounting for the Company’s acquisition of Capstead Mortgage Corporation and subsequent impairment of certain acquired assets

Description of the Matter On October 19, 2021, the Company completed its merger with Capstead Mortgage Corporation (”CMO”).

As disclosed in Note 18 to the consolidated financial statements, the transaction was accounted for as an asset acquisition based on the Company’s qualitative evaluation that substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets.

Accordingly, the acquired net assets were fair valued and the Company determined that the consideration paid exceeded the fair value of the net assets acquired resulting in a premium.

The premium paid by the Company was allocated to the basis of qualifying assets acquired by the Company.

The qualifying assets were subsequently tested for recoverability and determined to be impaired at December 31, 2021 resulting in the recognition of impairment expense by the Company.

Auditing the Company's accounting for its asset acquisition was complex due to the qualitative factors considered by the Company in determining that

substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets and the determination that no material intangible assets were acquired.

Further, the determination of the appropriate grouping of acquired long-lived assets for the subsequent impairment review required a significant amount of judgment.

Auditing the fair value of the net assets acquired, the allocation of the premium to qualifying assets, and the determination of the grouping of long-lived assets for the subsequent impairment review related to certain acquired long-lived assets was complex.

How We Addressed the Matter in Our Audit To test the Company’s accounting for its acquisition of CMO, we performed audit procedures that included, among others, inspecting minutes of board of directors’ meetings, executed transaction agreements, and transfer agent documentation to test the authorization and execution of the transaction and the consideration paid.

We evaluated management’s determination that substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets and the determination that no material intangible assets were acquired.

Additionally, we evaluated the Company’s measurement of the acquired assets, at fair value, at the acquisition date, the allocation of the related purchase premium to qualifying assets and the determination of the grouping of the acquired assets for purposes of the subsequent impairment review of certain acquired long-lived assets.

With respect to the expected loss model, with the support of specialists, we evaluated the model calculation design and the model output for reasonableness.

We also tested the appropriateness of a sample of key inputs used in the model, agreed significant inputs and underlying data to internal and external sources, as well as performed recalculations when required.

With the support of our specialists, we evaluated the general allowance amount, including model estimates, and whether the recorded Allowance for credit losses appropriately reflects expected credit losses on the portfolio of financial instruments carried at amortized cost.

For the specific allowance, these procedures included understanding, evaluating the design, and testing the operating effectiveness of controls related to the specific allowance for credit losses, including the significant assumptions related to market capitalization rates used to determine the fair value of the collateral.

Supported by a specialist, these procedures also included, among others, evaluating the appropriateness of the methodologies used by management, testing the completeness and accuracy of the data, and evaluating the reasonableness of the significant assumptions by considering external market data.

/s/ Ernst & Young LLP

1 unchanged sentence

New York, New York

February 25, 2022

March 16, 2023

FRANKLIN BSP REALTY TRUST, INC.

4 unchanged sentences

Restricted cash 11,173 13,270

Commercial mortgage loans, held for investment, net of allowance of $ 15,827 and $ 20,886 as of December 31, 2021 and December 31, 2020, respectively

Commercial mortgage loans, held for investment, net of allowance for credit losses of $ 40,848 and $ 15,827 as of December 31, 2022 and December 31, 2021, respectively

5,228,928 4,211,061

1 unchanged sentence

Real estate securities, trading, measured at fair value 235,728 4,566,871

Real estate securities, available for sale, measured at fair value, amortized cost of $ — and $ 179,392 as of December 31, 2021 and December 31, 2020, respectively

Real estate securities, available for sale, measured at fair value, amortized cost of $ 220,635 as of December 31, 2022

Derivative instruments, measured at fair value 415 436

6 unchanged sentences

Real estate owned, net of depreciation 127,772 90,048

Real estate owned, held for sale 36,497 —

Cash collateral receivable from derivative counterparties — 56,767

12 unchanged sentences

Due to affiliates 15,429 17,538

Intangible lease liability, net of depreciation 6,428 —

Total liabilities $ 4,530,465 $ 7,666,645

Redeemable convertible preferred stock Series A, $ 0.01 par value, 60,000 authorized and none issued or outstanding as of December 31, 2021 and 40,515 issued and outstanding as of December 31, 2020

$ — $ 202,292

Redeemable convertible preferred stock Series C, $ 0.01 par value, 20,000 authorized and 1,400 issued and outstanding as of December 31, 2021 and December 31, 2020

Redeemable convertible preferred stock Series D, $ 0.01 par value, 20,000 authorized and 17,950 issued and outstanding as of December 31, 2021 and none issued or outstanding as of December 31, 2020

Preferred stock, $ 0.01 par value, 10,000,000 authorized, none issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

Redeemable convertible preferred stock:

Redeemable convertible preferred stock Series C, $ 0.01 par value, 20,000 authorized and 1,400 issued and outstanding as of December 31, 2021

Redeemable convertible preferred stock Series D, $ 0.01 par value, 20,000 authorized and 17,950 issued and outstanding as of December 31, 2021

Redeemable convertible preferred stock Series H, $ 0.01 par value, 20,000 authorized and 17,950 issued and outstanding as of December 31, 2022

Redeemable convertible preferred stock Series I, $ 0.01 par value, 1,000 authorized and 1,000 issued and outstanding as of December 31, 2022

Total redeemable convertible preferred stock $ 94,748 $ 96,655

Preferred stock, $ 0.01 par value;

100,000,000 shares authorized, 7.5 % Cumulative Redeemable Preferred Stock, Series E, 10,329,039 shares issued and outstanding as of December 31, 2021 and none issued or outstanding as of December 31, 2020

Series F Preferred stock, $ 0.01 par value, 40,000,000 authorized and 39,733,299 issued and outstanding as of December 31, 2021 and none issued or outstanding as of December 31, 2020

Common stock, $ 0.01 par value, 900,000,000 shares authorized, 43,965,928 and 44,510,051 issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

100,000,000 shares authorized, 7.5 % Cumulative Redeemable Preferred Stock, Series E, 10,329,039 shares issued and outstanding as of December 31, 2022 and 2021

$ 258,742 $ 258,742

Series F Preferred stock, $ 0.01 par value, 40,000,000 authorized, 39,733,299 issued and outstanding as of December 31, 2021

Common stock, $ 0.01 par value, 900,000,000 shares authorized, 82,992,784 and 43,965,928 issued and outstanding as of December 31, 2022 and 2021 , respectively

Additional paid-in capital 1,602,247 903,264

2 unchanged sentences

Total stockholders' equity $ 1,562,980 $ 1,705,637

Non-controlling interest $ 5,764 $ —

Noncontrolling interest 15,408 5,764

Total equity 1,578,388 1,711,401

1 unchanged sentence

_______________________________________________________________________

(1) Includes $ 187.0 million and $ 98.6 million of cash held by the servicer related to CLO loan payoffs as of December 31, 2021 and December 31, 2020, as well as $ 65.3 million of RMBS principal paydowns receivable as of December 31, 2021.

(1) Includes $ 42.5 million and $ 187.0 million of cash held by the servicer related to the CLOs as of December 31, 2022 and 2021, respectively, as well as $ 0.1 million and $ 65.3 million of RMBS principal paydowns receivable as of December 31, 2022 and 2021, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

15 unchanged sentences

Professional fees 22,566 11,650 10,964

Share-based compensation expense 2,519 — —

Real estate owned operating expenses — — 3,653

6 unchanged sentences

Realized (gain)/loss on extinguishment of debt ( 15 ) — ( 3,678 )

Realized (gain)/loss on sale of real estate securities 1,376 10,137 0

Realized (gain)/loss on sale of commercial mortgage loans, held for sale 354 ( 26 ) ( 184 )

Realized (gain)/loss on sale of real estate owned assets, held for sale — ( 9,809 ) ( 1,851 )

Realized (gain)/loss on sale of other real estate investments, measured at fair value 33 — —

Realized (gain)/loss on sale of commercial mortgage loans, held for sale, measured at fair value ( 2,358 ) ( 24,208 ) ( 15,931 )

5 unchanged sentences

Total other (income)/loss $ 110,326 $ ( 11,443 ) $ 15,775

Income before taxes 29,301 52,684 88,407

Income/(loss) before taxes 13,816 29,301 52,684

Provision/(benefit) for income tax ( 399 ) 3,599 $ ( 2,062 )

Net income $ 25,702 $ 54,746 $ 83,924

Net income/(loss) applicable to common stock $ ( 7,885 ) $ 39,826 $ 66,914

Net income/(loss) $ 14,215 $ 25,702 $ 54,746

Net (income)/loss attributable to noncontrolling interest 216 — —

Net income/(loss) attributable to Franklin BSP Realty Trust, Inc.

$ 14,431 $ 25,702 $ 54,746

Net income/(loss) attributable to common shareholders $ ( 27,310 ) $ ( 7,885 ) $ 39,826

Basic net income per share $ ( 0.38 ) $ ( 0.18 ) $ 0.90

11 unchanged sentences

Amounts related to cash flow hedges:

Change in net unrealized gain or loss ( 852 ) — —

Change in net unrealized gain/(loss) $ ( 220 ) $ ( 852 ) $ —

Reclassification adjustment for amounts included in net income/(loss) 282 790 —

$ 62 $ ( 62 ) $ —

Comprehensive (income)/loss attributable to noncontrolling interest $ 216 $ — $ —

Comprehensive income attributable to Franklin BSP Realty Trust, Inc.

4 unchanged sentences

(In thousands, except share data)

Number of Shares Par Value Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Preferred E Preferred F Total Stockholders' Equity Non-Controlling Interest Total Equity

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income/(Loss) Accumulated Deficit Preferred E Preferred F Total Stockholders' Equity Noncontrolling Interest Total Equity

Number of Shares Par Value

Balance, December 31, 2019 43,916,815 $ 441 $ 903,310 $ ( 978 ) $ ( 85,968 ) $ — $ — $ 816,805 $ — $ 816,805

4 unchanged sentences

Offering costs — — ( 214 ) — — — — ( 214 ) — ( 214 )

Net income — — — — 83,924 — — 83,924 — 83,924

Net income/(loss) — — — — 54,746 — — 54,746 — 54,746

Distributions declared — — — — ( 67,488 ) — — ( 67,488 ) — ( 67,488 )

Other comprehensive income — — — ( 519 ) — — — ( 519 ) — ( 519 )

Cumulative-effect adjustment upon adoption of ASU 2016-13 (Note 2) — — — — ( 7,761 ) — — ( 7,761 ) — ( 7,761 )

Other comprehensive income/(loss) — — — ( 7,278 ) — — — ( 7,278 ) — ( 7,278 )

Balance, December 31, 2020 44,510,051 $ 446 $ 912,725 $ ( 8,256 ) $ ( 106,471 ) $ — $ — $ 798,444 $ — $ 798,444

Issuance of preferred stock — $ — $ — $ — $ — $ 258,742 $ 710,431 $ 969,173 $ — $ 969,173

Issuance of common stock 31,887,442 319 579,207 — — — — 579,526 — 579,526

3 unchanged sentences

Offering costs — — ( 68 ) — — — — ( 68 ) — ( 68 )

Net income — — — — 54,746 — — 54,746 — 54,746

Common stock exchanged for series F preferred stock ( 39,733,299 ) ( 397 ) ( 710,034 ) — — — — ( 710,431 ) — ( 710,431 )

Preferred A conversion to common stock 7,649,632 76 127,527 — — — — 127,603 — 127,603

Net income/(loss) — — — — 25,702 — — 25,702 — 25,702

Distributions declared — — — — ( 86,410 ) — — ( 86,410 ) — ( 86,410 )

Cumulative-effect adjustment upon adoption of ASU 2016-13 (Note 2) — — — — ( 7,761 ) — — ( 7,761 ) — ( 7,761 )

Other comprehensive income — — — ( 7,278 ) — — — ( 7,278 ) — ( 7,278 )

Other comprehensive income/(loss) — — — 8,194 — — — 8,194 — 8,194

Contributions in noncontrolling interest, net — — — — — — — — 5,764 5,764

Balance, December 31, 2021 43,965,928 $ 441 $ 903,264 $ ( 62 ) $ ( 167,179 ) $ 258,742 $ 710,431 $ 1,705,637 $ 5,764 $ 1,711,401

Issuance of preferred stock — — — — — 258,742 710,431 969,173 — 969,173

The accompanying notes are an integral part of these consolidated financial statements.

FRANKLIN BSP REALTY TRUST, INC.

THE ACCOMPANYING CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands, except share data)

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income/(Loss) Accumulated Deficit Preferred E Preferred F Total Stockholders' Equity Noncontrolling Interest Total Equity

Number of Shares Par Value

Balance, December 31, 2021 43,965,928 $ 441 $ 903,264 $ ( 62 ) $ ( 167,179 ) $ 258,742 $ 710,431 $ 1,705,637 $ 5,764 $ 1,711,401

Issuance of common stock — — — — — — — — — —

3 unchanged sentences

Offering costs — — — — ( 91 ) — — ( 91 ) — ( 91 )

Exchanged for series F preferred stock ( 39,733,299 ) ( 397 ) ( 710,034 ) — — — — ( 710,431 ) — ( 710,431 )

Preferred A conversion to common stock 7,649,632 76 127,527 — — — — 127,603 127,603

Net income — — — — 25,702 — — 25,702 — 25,702

Preferred F exchanged for common stock 39,733,299 397 710,034 — — — ( 710,431 ) — —

Preferred C exchanged for common stock 119,538 1 1,996 — — — — 1,997 — 1,997

Net income/(loss) attributable to Franklin BSP Realty Trust, Inc.

— — — — 14,431 — — 14,431 — 14,431

Net (income)/loss attributable to noncontrolling interest — — — — — — — — 216 216

Distributions declared — — — — ( 146,386 ) — — ( 146,386 ) — ( 146,386 )

Other comprehensive income — — — 8,194 — — — 8,194 — 8,194

Non-controlling interest — — — — — — — — 5,764 5,764

Other comprehensive income/(loss) — — — 452 — — — 452 — 452

Contributions in noncontrolling interest, net — — — — — — — — 9,428 9,428

Balance, December 31, 2022 82,992,784 $ 826 $ 1,602,247 $ 390 $ ( 299,225 ) $ 258,742 $ — $ 1,562,980 $ 15,408 $ 1,578,388

6 unchanged sentences

Cash flows from operating activities:

Net income $ 25,702 $ 54,746 $ 83,924

Net income/(loss) $ 14,215 $ 25,702 $ 54,746

Adjustments to reconcile net income to net cash provided by operating activities:

3 unchanged sentences

Share-based compensation 2,519 211 193

Realized (gain)/loss from sale of real estate securities 1,376 10,137 —

Realized (gain)/loss from sale of real estate owned, held for sale — ( 9,809 ) ( 1,851 )

Realized (gain)/loss from sale of other real estate investments, measured at fair value 33 — —

Realized (gain)/loss from extinguishment of debt ( 15 ) — ( 3,678 )

Realized (gain)/loss on swap terminations ( 55,301 ) ( 616 ) —

Unrealized (gain)/loss on commercial mortgage loans held for sale ( 469 ) 75 ( 359 )

Realized (gain)/loss on sale of commercial mortgage loans, held for sale 354 — —

Trading (gain)/loss 119,220 36,128 10,137

Unrealized (gain)/loss on commercial mortgage loans held for sale, measured at fair value 511 ( 469 ) 75

Unrealized (gain)/losses on derivative instruments 15,840 ( 7,402 ) 995

Unrealized loss on other real estate securities 19 32 —

Realized and unrealized gain/loss on real estate securities, trading 34,752 — —

Unrealized loss on other real estate investments, measured at fair value 659 19 32

Depreciation and amortization 5,329 2,107 2,233

Recognition of deferred rent revenue — — ( 150 )

Increase/(decrease) for credit losses ( 5,192 ) 13,296 3,007

Provision/(benefit) for credit losses 36,115 ( 5,192 ) 13,296

Impairment losses on real estate owned assets — — 398

Origination of commercial mortgage loans, held for sale ( 420,673 ) ( 267,553 ) ( 1,020,702 )

Proceeds from sale of commercial mortgage loans, held for sale 454,073 312,206 975,243

Origination of commercial mortgage loans, held for sale, measured at fair value ( 366,692 ) ( 420,673 ) ( 267,553 )

Proceeds from sale of commercial mortgage loans, held for sale, measured at fair value 384,808 454,073 312,206

Severance and deferred compensation — ( 22,168 ) —

10 unchanged sentences

Principal repayments received on commercial mortgage loans, held for investment 1,258,393 1,225,645 1,228,225

Purchase/repayment of other real estate investments 426 — ( 2,511 )

Principal repayments received on commercial mortgage loans, held for sale, measured at fair value 532 — —

Proceeds from (purchase)/sale of other real estate investments 2,045 426 —

Purchase of real estate owned and capital expenditures ( 663 ) ( 134,052 ) ( 2,824 )

2 unchanged sentences

Purchase of real estate securities ( 220,630 ) — ( 148,580 )

Principal repayments received on real estate securities — —

Proceeds from sale/(repayment) of real estate securities 3,731,716 2,059,418 346,201

Principal collateral on mortgage investments 545,416 541,313 —

Purchase of derivative instruments 1,239 ( 813 ) 1,333

Proceeds from sale/(purchase) of derivative instruments ( 1,165 ) 1,239 ( 813 )

Net cash (used in)/provided by investing activities $ 3,097,265 $ 1,068,747 $ 240,687

1 unchanged sentence

Cash consideration paid in merger $ — $ ( 20,485 ) $ —

Proceeds from issuance of common stock — — 10,672

Proceeds from issuances of redeemable convertible preferred stock — 15,000 47

Payments for common stock repurchases ( 16,579 ) ( 11,417 ) ( 10,259 )

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

(In thousands)

Proceeds from issuance of common stock — 10,672 75,545

Proceeds from issuances of convertible preferred stock 15,000 47 63,197

Common stock repurchases ( 11,417 ) ( 10,259 ) ( 13,813 )

Borrowings under collateralized loan obligation 1,410,173 — 639,899

Repayments of collateralized loan obligation ( 869,887 ) ( 182,680 ) ( 343,191 )

Borrowings on collateralized loan obligations 1,630,639 1,410,173 —

Repayments of collateralized loan obligations ( 662,410 ) ( 869,887 ) ( 182,680 )

Borrowings on repurchase agreements - commercial mortgage loans 1,918,631 1,874,694 682,970

5 unchanged sentences

Borrowings on unsecured debt — 210,000 —

Repayments on unsecured debt ( 160,000 ) — —

Repayments of unsecured debt ( 50,000 ) ( 160,000 ) —

Borrowing on mortgage note payable — 23,940 11,712

2 unchanged sentences

Proceeds from interest rate swap settlements 8,478 9,115 —

Distributions to noncontrolling interest ( 745 ) — —

Contributions from noncontrolling interest 125 — —

Distributions paid ( 139,415 ) ( 67,955 ) ( 49,790 )

4 unchanged sentences

Cash, cash equivalents and restricted cash, end of period $ 190,487 $ 168,199 $ 92,141

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents, beginning of period $ 154,929 $ 82,071 $ 87,246

Restricted cash, beginning of period 13,270 10,070 21,876

Cash, cash equivalents and restricted cash, beginning of period $ 168,199 $ 92,141 $ 109,122

Cash and cash equivalents, end of period $ 179,314 $ 154,929 $ 82,071

Restricted cash, end of period 11,173 13,270 10,070

Cash, cash equivalents and restricted cash, end of period $ 190,487 $ 168,199 $ 92,141

Supplemental disclosures of cash flow information:

Taxes paid $ 140 $ 4,400 $ —

Interest paid 51,050 59,819 78,901

Cash payments for income taxes $ 1,199 $ 140 $ 4,400

Cash payments for interest 144,195 51,050 59,819

Supplemental disclosures of non-cash flow information:

2 unchanged sentences

Distribution payable 36,317 30,346 15,688

Commercial mortgage loans transferred from held for sale to held for investment — — 10,072

Real estate owned received in foreclosure — 35,411 8,110

Net assets acquired through foreclosure 79,481 — 35,411

Transfer of net assets to real estate owned, held for sale 36,497 — —

Conversion of Series F preferred stock to common stock 710,431 —

Conversion of Series D preferred stock to Series H preferred stock 89,748 — —

Partial conversion of Series C preferred stock to Series I preferred stock 5,000 — —

Partial conversion of Series C preferred stock to common stock 1,997 — —

Issuances of common stock due to merger — 579,526 —

2 unchanged sentences

Exchanged for Series F preferred stock — 710,431 —

Conversion of Preferred A stock to common stock ( 127,603 ) — —

Reconciliation of cash, cash equivalents and restricted cash at end of period:

Cash and cash equivalents $ 154,929 $ 82,071 $ 87,246

Restricted cash 13,270 10,070 21,876

Cash, cash equivalents and restricted cash, end of period $ 168,199 $ 92,141 $ 109,122

Conversion of Series A preferred stock to common stock — ( 127,603 ) —

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

Note 1 - Organization and Business Operations

Franklin BSP Realty Trust, Inc., formerly known as Benefit Street Partners Realty Trust, Inc., (the "Company") is a real estate finance company that primarily originates, acquires and manages a diversified portfolio of commercial real estate debt investments secured by properties located within and outside the United States.

Franklin BSP Realty Trust, Inc., (the "Company") is a real estate finance company that primarily originates, acquires and manages a diversified portfolio of commercial real estate debt investments secured by properties located within and outside the United States.

The Company is a Maryland corporation and has made tax elections to be treated as a real estate investment trust (a "REIT") for U.S.

17 unchanged sentences

The Company also originates conduit loans which the Company intends to sell through its TRS into commercial mortgage-backed securities ("CMBS") securitization transactions.

Historically this business has focused primarily on CMBS, unsecured REIT debt, collateralized debt obligations ("CDOs") and other securities.

As a result of the October 2021 acquisition of Capstead, the Company acquired and continues to hold a significant portfolio of Residential Mortgage Backed Securities (“RMBS”) in the form of the ARM Agency Securities.

The Company also owns real estate acquired by the Company through foreclosure and deed in lieu of foreclosure, and purchased for investment, typically subject to triple net leases.

On October 19, 2021, the Company completed a merger with Capstead Mortgage Corporation (“Capstead”) pursuant to which Capstead merged into a wholly-owned subsidiary of the Company, and the Company’s common stock commenced trading on the NYSE under the ticker “FBRT”.

The Capstead assets acquired in the merger consist primarily of cash and residential adjustable-rate mortgage pass-through securities ("ARM Agency Securities") issued and guaranteed by government-sponsored enterprises or by an agency of the federal government.

The Company intends to reinvest the cash and proceeds from dividends, interest, repayments and sales of the assets acquired in the merger into its own investment strategies.

Refer to Note 18 - Merger with Capstead for additional information.

Historically this business has focused primarily on CMBS, commercial real estate collateralized loan obligation bonds ("CRE CLO bonds"), collateralized debt obligations ("CDOs") and other securities.

As a result of the October 2021 acquisition of Capstead Mortgage Corporation ("Capstead"), the Company acquired a portfolio of residential mortgage backed securities (“RMBS”) in the form of residential adjustable-rate mortgage pass-through securities ("ARM Agency Securities" or "ARMs") issued and guaranteed by government-sponsored enterprises or by an agency of the federal government.

Although the Company continues to hold a small portion of this portfolio it does not intend to do so long-term and intends to reinvest proceeds from this portfolio in its other businesses.

The Company also owns real estate that was either acquired by the Company through foreclosure or deed in lieu of foreclosure, or that was purchased for investment, primarily subject to triple net leases.

On October 19, 2021, the Company completed a merger with Capstead pursuant to which Capstead merged into a wholly-owned subsidiary of the Company, and the Company’s common stock commenced trading on the NYSE under the ticker “FBRT”.

The Capstead assets acquired in the merger consisted primarily of cash and ARM Agency Securities issued and guaranteed by government-sponsored enterprises or by an agency of the federal government.

Although the Company continues to hold a small portion of this portfolio it does not intend to do so long-term and intends to reinvest proceeds from this portfolio in its other businesses.

Note 2 - Summary of Significant Accounting Policies

7 unchanged sentences

December 31, 2022

In response to the global coronavirus (COVID-19) pandemic, numerous countries, including the U.S., have declared national emergencies with respect to COVID-19 and certain jurisdictions, including those where our corporate headquarters and/or properties that secure our investments, or properties that the Company owns, are located, have at times imposed “stay-at-home” guidelines or orders or other restrictions to help prevent its spread.

The effects of COVID-19 may negatively and materially impact significant estimates and assumptions used by the Company including, but not limited to estimates of expected credit losses, valuation of our equity method investments and the fair value estimates of the Company’s assets and liabilities.

Actual results could materially differ from those estimates.

Principles of Consolidation

8 unchanged sentences

The entity that consolidates a VIE is its primary beneficiary and is generally the entity with (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE.

Non-controlling interest represents the equity of consolidated joint ventures that are not owned by the Company.

The accompanying consolidated financial statements include the accounts of collateralized loan obligations ("CLOs") issued and securitized by wholly owned subsidiaries of the Company.

1 unchanged sentence

The assets and liabilities of the CLOs are consolidated in the accompanying consolidated balance sheets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation.

Certain prior year balances have been reclassified in order to conform to the current period presentation.

For the years ended December 31, 2021 and 2020, Realized (gain)/loss on sale of real estate securities of $ 1.4 million and $ 10.1 million respectively, was reclassified to Trading (gain)/loss in our consolidated statements of operations.

Acquisition Expenses

11 unchanged sentences

Held for Investment - Commercial mortgage loans that are held for investment purposes and are anticipated to be held until maturity, are carried at cost, net of unamortized acquisition expenses, discounts or premiums and unfunded commitments.

Commercial mortgage loans, held for investment purposes, are carried at amortized cost less a specific allowance for credit losses.

Commercial mortgage loans, held for investment purposes, are carried at amortized cost less a allowance for credit losses.

Interest income is recorded on the accrual basis and related discounts, premiums and acquisition expenses on investments are amortized over the life of the investment using the effective interest method.

5 unchanged sentences

December 31, 2022

Held for Sale - Commercial mortgage loans that are intended to be sold in the foreseeable future are reported as held-for sale and are transferred at fair value and recorded at the lower of cost or fair value with changes recorded through the statements of operations.

Held for Sale - Commercial mortgage loans that are intended to be sold in the foreseeable future are reported as held for sale and are recorded at the lower of cost or fair value with changes recorded through the statements of operations.

Unamortized loan origination costs for commercial mortgage loans held for sale that are carried at the lower of cost or fair value are capitalized as part of the carrying value of the loans and recognized upon the sale of such loans.

Amortization of origination costs ceases upon transfer of commercial mortgage loans to held for sale.

Held for Sale, Accounted for Under the Fair Value Option - The fair value option provides an option to irrevocably elect fair value as an alternative measurement for selected financial assets, financial liabilities, and written loan commitments.

Held for Sale, Measured at Fair Value - The fair value option provides an option to irrevocably elect fair value as an alternative measurement for selected financial assets, financial liabilities, and written loan commitments.

The Company has elected to measure commercial mortgage loans held for sale in the Company's TRS under the fair value option.

5 unchanged sentences

Held for investment assets are stated at cost, as adjusted for any impairment loss, less accumulated depreciation.

Real estate owned is classified as held for sale in the period in which the six criteria under ASC Topic 360, "Property, Plant, and Equipment" are met:

(1) we commit to a plan and have the authority to sell the asset;

(2) the asset is available for sale in its current condition;

(3) we have initiated an active marketing plan to locate a buyer for the asset;

(4) the sale of the asset is both probable and expected to qualify for full sales recognition within a period of 12 months;

(5) the asset is being actively marketed for sale at a price that is reflective of its current fair value;

and (6) we do not anticipate changes to our plan to sell the asset.

Held for sale assets are carried at the lower of depreciated cost or estimated fair value, less estimated costs to sell.

Amounts capitalized to real estate owned consist of the cost of acquisition or construction, any tenant improvements or major improvements, betterments that extend the useful life of the related asset, and transaction costs associated with the acquisition of an individual asset that does not qualify as a business combination.

Real estate owned, held for investment - Amounts capitalized to real estate owned, held for investment consist of the cost of acquisition or construction, any tenant improvements or major improvements, betterments that extend the useful life of the related asset, and transaction costs associated with the acquisition of an individual asset that does not qualify as a business combination.

All repairs and maintenance are expensed as incurred.

1 unchanged sentence

No development or redevelopments of real estate owned assets are in progress as of December 31, 2022.

The Company’s real estate owned assets are depreciated or amortized using the straight-line method over the following useful lives:

The Company’s real estate owned, held for investment assets are depreciated or amortized using the straight-line method over the following useful lives:

Building 40 years

7 unchanged sentences

(i) recently quoted market prices, (ii) market prices for comparable properties, or (iii) the present value of undiscounted cash flows, including estimated sales value (which is based on key assumptions such as estimated market rents, lease-up periods, estimated lease terms, and capitalization and discount rates) less estimated selling costs.

Real estate owned assets that are probable to be sold within one year are reported as held for sale.

Real estate owned assets classified as held for sale are measured at the lower of its carrying amount or fair value less cost to sell.

Real estate owned, held for sale - Real estate owned is classified as held for sale in the period in which the six criteria under ASC Topic 360, "Property, Plant, and Equipment" are met:

(1) we commit to a plan and have the authority to sell the asset;

(2) the asset is available for sale in its current condition;

(3) we have initiated an active marketing plan to locate a buyer for the asset;

(4) the sale of the asset is both probable and expected to qualify for full sales recognition within a period of 12 months;

(5) the asset is being actively marketed for sale at a price that is reflective of its current fair value;

and (6) we do not anticipate changes to our plan to sell the asset.

Held for sale assets are carried at the lower of depreciated cost or estimated fair value, less estimated costs to sell.

Real estate owned assets are not depreciated or amortized while they are classified as held for sale.

7 unchanged sentences

Upon the acquisition of real properties, the Company records the fair value of properties (plus any related acquisition costs) allocated based on relative fair value as tangible assets, consisting of land and building, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, based on their estimated fair values.

Substantially all of the Company’s property acquisitions qualify as asset acquisitions under Accounting Standards Codification ("ASC") 805, Business Combinations.

Substantially all of the Company’s property acquisitions qualify as asset acquisitions under ASC 805, Business Combinations.

The estimated fair values of the tangible assets of an acquired property are determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and building based on management’s determination of the estimated fair value of these assets.

11 unchanged sentences

Credit Losses

In June 2016, the FASB issued Accounting Standards Update ("ASU") No.

2016-13, Financial Instruments-Credit Losses, which amends the credit impairment model for financial instruments.

The Company adopted ASU 2016-13 on January 1, 2020.

The allowance for credit losses required under ASU 2016-13 is deducted from the respective loans’ amortized cost basis on the Company’s consolidated balance sheets.

The allowance for credit losses attributed to unfunded loan commitments is included in Accounts payable and accrued expenses on the consolidated balance sheets.

As reflected in the consolidated statements of changes in stockholders' equity and Note 3 - Commercial Mortgage Loans, the guidance also required a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption.

The following discussion highlights changes to the Company’s accounting policies as a result of this adoption.

Allowance for credit losses

The allowance for credit losses for the Company’s financial instruments carried at amortized cost and off-balance sheet credit exposures, such as loans held for investment and unfunded loan commitments represents a lifetime estimate of expected credit losses.

Factors considered by the Company when determining the allowance for credit losses reserve include loan-specific characteristics such as loan-to-value (“LTV”) ratio, vintage year, loan term, property type, occupancy and geographic location, financial performance of the borrower, expected payments of principal and interest, as well as internal or external information relating to past events, current conditions and reasonable and supportable forecasts.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist for multiple financial instruments.

If similar risk characteristics do not exist, the Company measures the allowance for credit losses on an individual instrument basis.

The allowance for credit losses required under ASU 2016-13 is deducted from the respective loan's amortized cost basis on the Company’s consolidated balance sheets.

General allowance for credit losses

The general allowance for credit losses for the Company’s financial instruments carried at amortized cost and off-balance sheet credit exposures, such as loans held for investment and unfunded loan commitments represents a lifetime estimate of expected credit losses.

Factors considered by the Company when determining the general provision for credit losses reserve include loan-specific characteristics such as loan-to-value (“LTV”) ratio, vintage year, loan term, property type, occupancy and geographic location, financial performance of the borrower, expected payments of principal and interest, as well as internal or external information relating to past events, current conditions and reasonable and supportable forecasts.

The general allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist for multiple financial instruments.

If similar risk characteristics do not exist, the Company measures the general allowance for credit losses on an individual instrument basis.

The determination of whether a particular financial instrument should be included in a pool can change over time.

3 unchanged sentences

December 31, 2022

In measuring the allowance for credit losses for financial instruments including our unfunded loan commitments that share similar risk characteristics, the Company primarily applies a probability of default (“PD”)/loss given default (“LGD”) model for instruments that are collectively assessed, whereby the allowance for credit losses is calculated as the product of PD, LGD and exposure at default (“EAD”).

In measuring the general allowance for credit losses for financial instruments including our unfunded loan commitments that share similar risk characteristics, the Company primarily applies a probability of default (“PD”)/loss given default (“LGD”) model for instruments that are collectively assessed, whereby the provision for credit losses is calculated as the product of PD, LGD and exposure at default (“EAD”).

The Company’s model principally utilizes historical loss rates derived from a commercial mortgage backed securities database with historical losses from 1998 to 2018 provided by a reputable third party, forecasting the loss parameters using a scenario-based statistical approach over a reasonable and supportable forecast period of twelve months, followed by an immediate reversion to average historical losses.

The modeled results are then evaluated to determine if adjustments are needed for certain qualitative factors.

For financial instruments assessed on an individual basis, including when it is probable that the Company will be unable to collect the full payment of principal and interest on the instrument, the Company applies a discounted cash flow (“DCF”) methodology.

For financial instruments where the borrower is experiencing financial difficulty based on the Company’s assessment at the reporting date and the repayment is expected to be provided substantially through the operation or sale of the collateral, the Company may elect to use as a practical expedient the fair value of the collateral at the reporting date when determining the allowance for credit losses.

In developing the allowance for credit losses for its loans held for investment, the Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability, using similar factors as those in developing the allowance for credit losses.

Specific allowance for credit losses

For financial instruments which the Company identifies reasonable doubt as to whether the collection of contractual components can be satisfied, a loan specific allowance for credit losses analysis is performed.

Determining whether a specific allowance for credit losses for a loan is required entails significant judgment from management and is based on several factors including (i) the underlying collateral performance, (ii) discussions with the borrower, (iii) borrower events of default, and (iv) other facts that impact the borrower’s ability to pay the contractual amounts due under the terms of the loan.

If a loan is determined to have a specific allowance for credit losses, the specific allowance for credit losses is recorded as a component of our Current Expected Credit Loss ("CECL") reserve by applying the practical expedient for collateral dependent loans.

The CECL reserve is assessed on an individual basis for such loans by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan.

These valuations require judgments, which include assumptions regarding capitalization rates, discount rates, leasing, creditworthiness of major tenants, occupancy rates, availability and cost of financing, exit plans, loan sponsorship, actions of other lenders, and other factors deemed relevant by the Company.

Actual losses, if any, could ultimately differ materially from these estimates.

The Company only expects to write-off specific provisions if and when such amounts are deemed non-recoverable.

Non-recoverability is generally determined at the time a loan is settled, or in the case of foreclosure, when the underlying asset is sold.

Non-recoverability may also be concluded if, in the Company's determination, it is deemed certain that all amounts due will not be collected.

If a loan is determined to be impaired based on the above considerations, management records a write-off through a charge to the allowance for credit losses and the respective loan balance.

In developing the provision for credit losses for its loans held for investment, the Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability, using similar factors as those in developing the provision for credit losses.

This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss.

7 unchanged sentences

Trends and risk factors show some deterioration.

High Risk/Delinquent/Potential for Loss- Underperforming investment with the potential of some interest loss but still expecting a positive return on investment.

High Risk/Delinquent/Defaulted/Potential for Loss- Underperforming investment with the potential of some interest loss but still expecting a positive return on investment.

Trends and risk factors are negative.

Impaired/Defaulted/Loss Likely- Underperforming investment with expected loss of interest and some principal.

The Company also considers qualitative and environmental factors, including, but not limited to, economic and business conditions, nature and volume of the loan portfolio, lending terms, volume and severity of past due loans, concentration of credit and changes in the level of such concentrations in its determination of the allowance for credit losses.

Changes in the allowance for credit losses for the Company’s financial instruments are recorded in Provision/(benefit) for credit losses on the consolidated statements of operations with a corresponding offset to the financial instrument’s amortized cost recorded on the consolidated balance sheets, or as a component of Accounts payable and accrued expenses for unfunded loan commitments.

The Company has elected to not measure an allowance for credit losses for accrued interest receivable as it is timely, following three months time, reversed against interest income when a loan, real estate security or preferred equity investment is placed on nonaccrual status.

The Company did not record reversals of accrued interest receivable during the year ended December 31, 2020.

Loans are charged off against the Provision/(benefit) for credit losses when all or a portion of the principal amount is determined to be uncollectible.

Past due and nonaccrual status

Loans are placed on nonaccrual status and considered non-performing when full payment of principal and interest is unpaid for 90 days or more or where reasonable doubt exists as to timely collection, unless the loan is both well secured and in the process of collection.

Interest received on nonaccrual status loans are accounted for under the cost-recovery method, until qualifying for return to accrual.

Upon restructuring the nonaccrual loan, the Company may return a loan to accrual status when repayment of principal and interest is reasonably assured.

Impaired/Loss Likely- Underperforming investment with expected loss of interest and some principal.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

Changes in the provision for credit losses for the Company’s financial instruments are recorded in Provision/(benefit) for credit losses on the consolidated statements of operations with a corresponding offset to the financial instrument’s amortized cost recorded on the consolidated balance sheets, or as a component of Accounts payable and accrued expenses for unfunded loan commitments.

The Company has elected to not measure a provision for credit losses for accrued interest receivable as balances are written off in a timely manner when loans, real estate securities or preferred equity investments are designated as non-performing and placed on non-accrual or cost recovery status within 90 days of becoming past due.

Non-performing status

The Company designates loans as non-performing when (i) full payment of principal and coupon interest components become 90-days past due ("non-accrual status");

or (ii) the Company has reasonable doubt as to whether the collection of contractual components can be satisfied ("cost recovery status").

When a loan is designated as non-performing and placed on non-accrual status, interest is only recognized as income when payment has been received.

Loans designated as non-performing and placed on non-accrual status are removed from their non-performing designation when collection of principal and coupon interest components have been satisfied.

When a loan is designated as non-performing and placed on cost recovery status, the cost-recovery method is applied to which receipt of principal or coupon interest is recorded as a reduction to the amortized cost until collection of all contractual components are reasonably assured.

Troubled Debt Restructuring (“TDR”)

1 unchanged sentence

Concessions could include term extensions, payment deferrals, interest rate reductions, principal forgiveness, forbearance, or other actions designed to maximize the Company’s collection on the financial instrument.

The Company determines the allowance for credit losses for financial instruments that are TDRs individually.

The Company determines the provision for credit losses for financial instruments that are TDRs individually.

Real Estate Securities

Available For Sale

On the acquisition date, all of the Company’s commercial real estate securities were classified as available for sale and carried at fair value, and subsequently any unrealized gains or losses are recognized as a component of accumulated other comprehensive income or loss.

The Company may elect the fair value option for its real estate securities, and as a result, any unrealized gains or losses on such real estate securities will be recorded in the Company’s consolidated statements of operations.

No such election has been made to date.

On the acquisition date, all of the Company’s real estate securities were classified as available for sale ("AFS") and carried at fair value, and subsequently any unrealized gains or losses are recognized as a component of accumulated other comprehensive income or loss.

The Company elected the fair value option for its real estate securities, available for sale, and as a result, any unrealized gains or losses on such real estate securities will be recorded in the Company’s consolidated statements of comprehensive income.

Related discounts, premiums and acquisition expenses on investments are amortized or accreted over the life of the investment using the effective interest method.

5 unchanged sentences

If the Company intends to sell an impaired real estate security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount is recognized in the consolidated statements of operations with a corresponding adjustment to the security’s amortized cost basis.

The Company analyzes the AFS real estate securities portfolio on a periodic basis for credit losses at the individual security level using the same criteria described above for those amortized cost financial assets subject to an allowance for credit losses including but not limited to;

The Company analyzes the AFS real estate securities portfolio on a periodic basis for credit losses at the individual security level using the same criteria described above for those amortized cost financial assets subject to an provision for credit losses including but not limited to;

performance of the underlying assets in the security, borrower financial resources and investment in collateral, collateral type, credit ratings, project economics and geographic location as well as national and regional economic factors.

The non-credit loss component of the unrealized loss within the Company’s AFS portfolio is recognized as an adjustment to the individual security’s asset balance with an offsetting entry to accumulated other comprehensive income in the consolidated balance sheets.

In the merger with Capstead, the Company acquired a portfolio of ARM Agency Securities classified as trading and recorded at fair value on the balance sheet with trading gains and losses on the paydowns and sales of these securities recorded in the Company's consolidated statements of operations.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

In the merger with Capstead, the Company acquired a portfolio of residential mortgage pass-through securities consisting primarily of ARM Agency Securities issued and guaranteed by government-sponsored enterprises, either Fannie Mae, Freddie Mac, or by an agency of the federal government, Ginnie Mae.

ARM Agency Securities and are classified as "trading".

ARM Agency Securities are recorded at fair value on the balance sheets with trading gains and losses due to fair value changes and sales of these securities recorded in the Company's consolidated statements of operations.

The Company calculates trading gains and losses on the sales of ARM Agency Securities based on the specific identification method.

Fair values fluctuate with current and projected changes in interest rates, prepayment expectations and other factors such as market liquidity conditions and the perceived credit quality of agency securities.

4 unchanged sentences

Interest paid in accordance with repurchase agreements is recorded in interest expense on the Company's consolidated statements of operations.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Deferred Financing Costs

The deferred financing costs related to the Company's various Master Repurchase Agreements as well as certain prepaid subscription costs are included in Prepaid expenses and other assets on the consolidated balance sheets.

Deferred financing cost on the Company's collateralized loan obligations ("CLO") are netted against the Company's CLO payable in the Collateralized loan obligations on the consolidated balance sheets.

Deferred financing cost on the Company's CLO are netted against the Company's CLO payable in the Collateralized loan obligations on the consolidated balance sheets.

Deferred financing costs are amortized over the terms of the respective financing agreement using the effective interest method and included in interest expense on the Company's consolidated statements of operations.

Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity.

Share Repurchase Program

Until the merger with Capstead, the Company had a Share Repurchase Program (the "SRP") that enabled stockholders to sell their shares to the Company, subject to certain conditions.

Refer to Note 9 - Stock Transactions for a description of the SRP.

Under the SRP, when a stockholder requested a redemption and the redemption was approved by the board of directors, the Company reclassified such obligation from equity to a liability based on the settlement value of the obligation.

Shares repurchased under the SRP have the status of authorized but unissued shares.

Offering and Related Costs

Since 2018, the Company has from time to time offered, and may in the future offer, shares of the Company’s common stock or one or more series of its preferred stock, including its Series A convertible preferred stock (“Series A Preferred Stock”), Series C convertible preferred stock (the “Series C Preferred Stock,”) and Series D convertible preferred stock ("Series D Preferred Stock") in private placements exempt from the registration requirements of the Securities Act of 1933, as amended.

In connection with these offerings, the Company incurs various offering costs.

Since 2018, the Company has from time to time offered, shares of the Company’s common stock or one or more series of its preferred stock, including its former Series C convertible preferred stock (the “Series C Preferred Stock,”), former Series D convertible preferred stock (the “Series D Preferred Stock”), Series H convertible preferred stock (the “Series H Preferred Stock”) and former Series I convertible preferred stock (the “Series I Preferred Stock”) in private placements exempt from the registration requirements of the Securities Act of 1933, as amended.

In connection with these offerings, the Company incurred various offering costs.

These offering costs include but are not limited to legal, accounting, printing, mailing and filing fees, and diligence expenses of broker-dealers.

Offering costs for the common stock are recorded in the Company’s stockholders’ equity, while the offering costs for the Preferred Stock are included within Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, respectively, on the Company’s consolidated balance sheets.

Distribution Reinvestment Plan

Pursuant to the terms of the Company's distribution reinvestment plan ("DRIP") in effect until December 17, 2021, stockholders had the option to elect to reinvest distributions by purchasing shares of common stock in lieu of receiving cash.

No dealer manager fees or selling commissions were paid with respect to shares purchased pursuant to the DRIP.

The purchase price for shares purchased through the DRIP was the lesser of (i) the Company’s most recent estimated per share NAV, and (ii) the Company’s GAAP book value per share.

The Company had the right to amend any aspect of the DRIP or terminate the DRIP with ten days’ notice to participants.

Shares issued under the DRIP were recorded to equity in the consolidated balance sheets in the period distributions are declared.

On December 17, 2021, the Company amended and restated the DRIP (the “Amended DRIP”) in recognition of the listing of the Company’s common stock on the New York Stock Exchange (“NYSE”).

Shares of common stock purchased through the Amended DRIP for dividend reinvestments will be supplied either directly by the Company as newly issued shares or via purchases by the Amended DRIP administrator of shares of common stock on the open market, at the Company’s option.

If the shares are purchased in the open market, the purchase price will be the average price per share of shares purchased;

if the shares are purchased directly from the Company, the purchase price will generally be the average of the daily high and low sales prices for a share of common stock reported by the NYSE on the dividend payment date authorized by the Company’s board of directors.

The Company may suspend, modify or terminate the Amended DRIP at any time in its sole discretion.

Share-Based Compensation

The Company has share-based incentive plans for certain of the Company's directors, officers and employees of the Advisor and its affiliates.

Share-based awards are measured at the grant date fair value and are recognized as compensation expense on a on a straight line basis over the related vesting period of the award.

See Note 12 - Share-Based Compensation.

Offering costs for the common stock are recorded in the Company’s stockholders’ equity, while the offering costs for the Series C Preferred Stock and Series D Preferred Stock are included within Series C Preferred Stock and Series D Preferred Stock, respectively, on the Company’s consolidated balance sheets.

Offering costs for the Series H Preferred Stock and Series I Preferred Stock were expensed to the Company's consolidated statement of operations.

Equity Incentive Plan

The Company maintains the Franklin BSP Realty Trust, Inc.

2021 Equity Incentive Plan (the “2021 Incentive Plan”), pursuant to which the Company has granted and may in the future, from time to time, grant equity awards to the Company’s directors, officers and employees (if it ever has employees), employees of the Advisor and its affiliates, or certain of the Company’s consultants, advisors or other service providers to the Company or an affiliate of the Company.

The 2021 Incentive Plan, which is administered by the Compensation Committee of the board of directors, provides for the grant of awards of share options, share appreciation rights, restricted shares, restricted share units, deferred share units, unrestricted shares, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards, long-term incentive plan units and cash bonus awards.

In January 2022, the Company issued for the first time under the 2021 Incentive Plan awards of restricted stock units ("RSUs") to its officers and certain other personnel of the Advisor who provide services to the Company.

These awards are service-based and vest in equal annual installments beginning on the anniversary of the date of grant over a period of three years , subject to continuing service.

One share of the Company’s common stock will be issued for each unit that vests.

These awards also grant non-forfeitable dividend equivalent rights equal to the cash dividend paid in the ordinary course on a common share to the Company's common shareholders.

Upon termination for any reason, all unvested RSUs will be forfeited by the grantee, who will be given no further rights to such RSUs.

The fair value of the RSUs are expensed over the vesting period, which are included in share-based compensation expense on the consolidated statements of operations.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

Restricted Share Plan

The Company also had an Amended and Restated Employee and Director Incentive Restricted Share Plan (the "RSP"), which provided the Company with the ability to grant awards of restricted shares to the Company’s directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, the Advisor and its affiliates.

The total number of common shares granted under the RSP shall not exceed 5 % of the Company’s authorized common shares, and in any event, will not exceed 4.0 million shares (as such number may be adjusted for stock splits, stock distributions, combinations and similar events).

The RSP expired on February 7, 2023.

Restricted share awards entitle the recipient to receive common shares from the Company under terms that provide for vesting over a specified period of time or upon attainment of pre-established performance objectives.

Such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient’s employment or other relationship with the Company.

Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested.

Holders of restricted shares may receive cash distributions prior to the time that the restrictions on the shares have lapsed.

Any distributions payable in common shares shall be subject to the same restrictions as the underlying restricted shares.

The fair value of the restricted share awards are expensed over the vesting period, which are included in share-based compensation expense on the consolidated statements of operations.

Distribution Reinvestment Plan

The Company maintains a dividend reinvestment plan ("DRIP") pursuant to which stockholders may reinvest dividends into shares of common stock.

Shares of common stock purchased through the DRIP for dividend reinvestments are supplied either directly by the Company as newly issued shares or via purchases by the DRIP administrator of shares of common stock on the open market, at the Company’s option.

If the shares are purchased in the open market, the purchase price is the average price per share of shares purchased;

if the shares are purchased directly from the Company, the purchase price is generally the average of the daily high and low sales prices for a share of common stock reported by the NYSE on the dividend payment date authorized by the Company’s board of directors.

The Company may suspend, modify or terminate the DRIP at any time in its sole discretion.

The Company has conducted its operations to qualify as a REIT for U.S.

7 unchanged sentences

The Company’s TRSs are not consolidated for U.S.

federal income tax purposes, but is instead taxed as a C corporations.

federal income tax purposes, but are instead taxed as C corporations.

For financial reporting purposes, the TRSs are consolidated and a provision for current and deferred taxes is established for the portion of earnings recognized by the Company with respect to its interest in its TRSs.

10 unchanged sentences

Treasury note futures and credit derivatives on various indices including CMBX and CDX.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

The Company recognizes all derivatives on the consolidated balance sheets at fair value.

With the exception of the Company’s unsecured debt-related interest rate swap agreements, the Company does not designate its derivatives as hedges to qualify for hedge accounting for financial reporting purposes and therefore any net payments under, or fluctuations in the fair value of these derivatives have been recognized currently in unrealized (gain)/loss on derivative instruments in the accompanying consolidated statements of operations.

For the derivatives that are designated as an accounting hedge, the Company must document at inception that the hedge relationship is highly effective and must continue to monitor ongoing effectiveness on at least a quarterly basis.

As long as the hedge relationship remains highly effective, changes in fair value are recorded in accumulated other comprehensive income.

The Company records derivative asset and liability positions on a gross basis with any collateral posted with or received from counterparties recorded separately within Restricted cash and cash collateral receivable from derivative counterparties on the Company’s consolidated balance sheets.

The Company's interest rate swaps hedging repurchase agreements acquired in the merger with Capstead are recorded net of variation margin and accrued interest per the legal definition of these cleared swaps as settling on a daily basis.

The Company does not designate derivatives as hedges to qualify for hedge accounting for financial reporting purposes and therefore any net payments under, or fluctuations in the fair value of these derivatives have been recognized currently in unrealized (gain)/loss on derivative instruments in the accompanying consolidated statements of operations.

Certain derivatives that the Company has entered into are subject to master netting agreements with its counterparties, allowing for netting of the same transaction, in the same currency, on the same date.

Per Share Data

The Company’s Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock are each considered a participating security and the Company calculates basic earnings per share using the two-class method.

The Company’s Series H Preferred Stock and Series I Preferred Stock are each considered a participating security and the Company calculates basic earnings per share using the two-class method.

The Company’s dilutive earnings per share calculation is computed using the more dilutive result of the treasury stock method, assuming the participating security is a potential common share, or the two-class method, assuming the participating security is not converted.

The Company calculates basic earnings per share by dividing net income applicable to common stock for the period by the weighted-average number of shares of common stock outstanding for that period.

Diluted earnings per share reflects the potential dilution that could occur from shares outstanding if potential shares of common stock with a dilutive effect have been issued in connection with the restricted stock plan or upon conversion of the outstanding shares of the Company’s Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock , except when doing so would be anti-dilutive.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Diluted earnings per share reflects the potential dilution that could occur from shares outstanding if potential shares of common stock with a dilutive effect have been issued in connection with the restricted stock plan or upon conversion of the outstanding shares of the Company’s Series H Preferred Stock and Series I Preferred Stock , except when doing so would be anti-dilutive.

Reportable Segments

3 unchanged sentences

• The real estate securities business focuses on investing in and asset managing real estate securities.

Historically this business has focused primarily on CMBS, unsecured REIT debt, CDO notes and other securities.

The Company intends to reinvest the cash and proceeds from dividends, interest, repayments and sales of these assets into its other segments and does not intend to continue to invest in ARM Agency Securities or RMBS in general.

As of December 31, 2021, all of the real estate securities in this segment were ARM Agency Securities acquired in the Capstead acquisition.

Historically this business has focused primarily on CMBS, CRE CLO bonds, CDO notes and other securities.

As a result of the October 2021 acquisition of Capstead, the Company acquired and continues to hold a portfolio of RMBS in the form of the ARM Agency Securities.

The Company has, and intends to reinvest the cash and proceeds from dividends, interest, repayments and sales of these assets into its other segments and does not intend to continue to invest in ARM Agency Securities or RMBS in general.

• The commercial conduit business in the Company's TRS, which is focused on originating and subsequently selling fixed-rate commercial real estate loans into the CMBS securitization market.

3 unchanged sentences

The Company’s outstanding classes of redeemable convertible preferred stock are classified outside of permanent equity in the consolidated balance sheets.

Series A Preferred Stock

The Series A Preferred Stock ranked senior to the Common Stock and the Company’s Series F Convertible Preferred Stock (“Series F Preferred Stock”), and on parity with all other outstanding classes of preferred stock of the Company (including the Series C and Series D Preferred Stock) with respect to priority in dividends and in the distribution of assets in the event of the liquidation, dissolution or winding-up of the Company.

The liquidation preference of each share of Series A Preferred Stock was the greater of (i) $ 5,000 plus accrued and unpaid dividends, and (ii) the amount that would be received upon a conversion of the Series A Preferred Stock into Common Stock.

Dividends on the Series A Preferred Stock, which were typically declared and paid quarterly, accrued at a rate equal to the greater of (i) an annual amount equal to 4.0 % of the liquidation preference per share (subject to a 1.0 % increase in the event of the ratings for the Series A Preferred Stock decreases below a certain threshold) and (ii) the dividends that would have been paid had such share of Series A Preferred Stock been converted into a share of Common Stock on the first day of such quarter, subject to proration in the event the share of Series A Preferred Stock is not outstanding for the full quarter.

Dividends are paid in arrears.

On October 19, 2021, each share of Series A Preferred Stock converted into 299.2 shares of common stock, pursuant to the terms of the Articles Supplementary for the Series A Preferred Stock, and no shares of Series A Preferred Stock were outstanding as of December 31, 2021.

Series C Preferred Stock

The Series C Preferred Stock ranks senior to the Common Stock and Series F Preferred Stock and on parity with the Series D Preferred Stock and the Company’s 7.50 % Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”) with respect to priority in dividends and in the distribution of assets in the event of the liquidation, dissolution or winding-up of the Company.

The liquidation preference of each share of Series C Preferred Stock is the greater of (i) $ 5,000 plus accrued and unpaid dividends, and (ii) the amount that would be received upon a conversion of the Series C Preferred Stock into the Common Stock.

Dividends on the Series C Preferred Stock, which are typically declared and paid quarterly, accrue at a rate equal to the greater of (i) an annual amount equal to 4.0 % of the liquidation preference per share and (ii) the dividends that would have been paid had such share of Series C Preferred Stock been converted into a share of common stock on the first day of such quarter, subject to proration in the event the share of Series C preferred stock is not outstanding for the full quarter.

Dividends are paid in arrears.

Dividends will accumulate and be cumulative from the most recent date to which dividends had been paid.

Pursuant to the terms of the Series C Preferred Stock, 400 outstanding shares of Series C Preferred Stock each converted into 299.2 shares of common stock on October 19, 2022, while 1,000 shares of Series C Preferred Stock were exchanged for an equal number of shares of the Company’s newly created Series I Preferred Stock, $ 0.01 par value per share, on October 20, 2022.

Series D Preferred Stock

All of the shares of the Series D Preferred Stock were exchanged for an equivalent number of shares of Series H Preferred Stock on June 24, 2022.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

Each outstanding share of Series C Preferred Stock will convert into 299.2 shares of common stock, subject to anti-dilution adjustments described in the Articles Supplementary for the Series C Preferred Stock, on October 19, 2022 or, upon the election of the Company upon 10 days’ notice to the holders, on or after April 19, 2022.

In the event of the sale of all or substantially all of the business or assets of the Company (by sale, merger, consolidation or otherwise) or the acquisition by any person of more than 50 % of the total economic interests or voting power of all securities of the Company (a “ Change of Control”), in each case prior to the automatic conversion dates set forth above, each holder of Series C Preferred Stock will have the right, prior to consummation of such transaction, to convert its Series C Preferred Stock into common stock at the Conversion Rate.

In addition, in the event of a change of control (as defined in the Articles Supplementary of the Series C Preferred Stock) of the Advisor or a Change of Control that is not a "Liquidity Event" and that is related to the removal of the Advisor, both the Company and the holder shall have the right, prior to consummation of the transaction, to require the redemption of the Series C Preferred Stock for the liquidation preference.

A "Liquidity Event" is defined as (i) the listing of the Common Stock on a national securities exchange or quotation on an electronic inter-dealer quotation system;

(ii) a merger or business combination involving the Company pursuant to which outstanding shares of Common Stock are exchanged for securities of another company which are listed on a national securities exchange or quoted on an electronic inter-dealer quotation system;

or (iii) any other transaction or series of transaction that results in all shares of Common Stock being transferred or exchanged for cash or securities which are listed on a national securities exchange or quoted on an electronic inter-dealer quotation system.

Holders of the Series C Preferred Stock (voting as a single class with holders of common stock) are entitled to vote on each matter submitted to a vote of the stockholders of the Company upon which the holders of common stock are entitled to vote.

The number of votes applicable to a share of outstanding Series C Preferred Stock will be equal to the number of shares of common stock a share of Series C Preferred Stock could have been converted into as of the record date set for purposes of such stockholder vote (rounded down to the nearest whole number of shares of common stock).

In addition, the affirmative vote of the holders of two-thirds of the outstanding shares of Series C Preferred Stock, voting as a single class with other shares of parity preferred stock, is required to approve the issuance of any equity securities senior to the Series C Preferred Stock and to take certain actions materially adverse to the holders of the Series C Preferred Stock.

Series D Preferred Stock

The Series D Preferred Stock is on parity with the Series C Preferred Stock and Series E Preferred Stock with respect to preference on liquidation and dividend rights.

The terms of the Series D Preferred Stock are substantially the same as the terms of the Series C Preferred Stock, except that the holders of the Series D Preferred Stock have the option to accelerate the mandatory conversion date, which is October 19, 2022, to a date no earlier than April 19, 2022.

Convertible Preferred Stock

Series F Preferred Stock

On October 12, 2021, as contemplated by the Merger Agreement with Capstead, the Company completed its previously-announced stock dividend on the outstanding shares of Common Stock, which stock dividend was paid at a rate of nine shares of the Company’s newly issued Series F Convertible Preferred Stock (“Series F Preferred Stock”) for each share of Common Stock issued and outstanding.

The Series F Preferred Stock ranks junior to all other outstanding classes of the Company’s preferred stock with respect to priority in dividends and in the distribution of assets in the event of the liquidation, dissolution or winding-up of the Company.

The liquidation preference of each share of Series F Preferred Stock is $ 2.00 .

Dividends on the Series F Preferred Stock are equal to, and will be paid at the same time as, dividends that are authorized and declared on the Company’s common stock.

The Series F Preferred Stock ranks senior to the Company’s Common Stock with respect to the distribution of assets upon any liquidation, dissolution or winding up of the Company (other than a liquidation, dissolution or winding up of the Company that results in the automatic conversion of such Series F Preferred Stock into Common Stock).

Series H Preferred Stock

The Series H Preferred Stock ranks senior to the Common Stock and on parity with the Series I Preferred Stock and the Company’s 7.50 % Series E Preferred Stock with respect to priority in dividends and in the distribution of assets in the event of the liquidation, dissolution or winding-up of the Company.

The liquidation preference of each share of Series H Preferred Stock is the greater of (i) $ 5,000 plus accrued and unpaid dividends, and (ii) the amount that would be received upon a conversion of the Series H Preferred Stock into the Common Stock.

Dividends on the Series H Preferred Stock, which are typically declared and paid quarterly, accrue at a rate equal to the greater of (i) an annual amount equal to 4.0 % of the liquidation preference per share and (ii) the dividends that would have been paid had such share of Series H Preferred Stock been converted into a share of common stock on the first day of such quarter, subject to proration in the event the share of Series H preferred stock is not outstanding for the full quarter.

Dividends are paid in arrears.

Dividends will accumulate and be cumulative from the most recent date to which dividends had been paid.

On June 24, 2022, the Company issued 17,950 shares of Series H Preferred Stock to the holder of the Series D Preferred Stock in exchange for an equal amount of shares of Series D Preferred Stock.

The exchange was undertaken to accommodate the holder’s request to extend the mandatory conversion date set forth in the terms of the Series D Preferred Stock, which was set to occur on October 19, 2022, to January 19, 2023.

The Company received no consideration for the exchange.

On January 19, 2023, the Series H Preferred Stock was amended such that the mandatory conversion date was extended by one year, to January 19, 2024.

The Series H Preferred Stock is on parity with the Series I Preferred Stock and Series E Preferred Stock with respect to preference on liquidation and dividend rights.

Unless earlier converted, the Series H Preferred Stock will automatically convert into common stock at a rate of 299.2 shares of common stock per share of Series H Preferred Stock (subject to adjustments as described in the Articles Supplementary for the Series H Preferred Stock) on January 19, 2024.

The holder of the Series H Preferred Stock has the right to convert up to 4,487 shares of Series H Preferred Stock one time in each calendar month through December 2023, upon 10 business days’ advance notice to the Company.

Holders of the Series H Preferred Stock (voting as a single class with holders of common stock) are entitled to vote on each matter submitted to a vote of the stockholders of the Company upon which the holders of common stock are entitled to vote.

The number of votes applicable to a share of outstanding Series H Preferred Stock will be equal to the number of shares of common stock a share of Series H Preferred Stock could have been converted into as of the record date set for purposes of such stockholder vote (rounded down to the nearest whole number of shares of common stock).

In addition, the affirmative vote of the holders of two-thirds of the outstanding shares of Series H Preferred Stock, voting as a single class with other shares of parity preferred stock, is required to approve the issuance of any equity securities senior to the Series H Preferred Stock and to take certain actions materially adverse to the holders of the Series H Preferred Stock.

Series I Preferred Stock

On October 20, 2022, 1,000 shares of Series C Preferred Stock were exchanged for an equal number of shares of the Company’s newly created Series I Preferred Stock.

The exchange was undertaken to accommodate the holder’s request to extend the mandatory conversion date set forth in the terms of the Series C Preferred Stock, which was set to occur on October 19, 2022, to January 19, 2023.

There were no other material differences between the terms of the Series C Preferred Stock and Series I Preferred Stock.

The Company received no consideration for the exchange.

The Series I Preferred Stock was parity with the Series H Preferred Stock and Series E Preferred Stock with respect to preference on liquidation and dividend rights.

The terms of the Series I Preferred Stock were substantially the same as the Series H Preferred Stock, except that the holders of the Series I Preferred Stock have the option to accelerate the mandatory conversion date, which is January 19, 2023, upon at least 10 days' written notice.

On January 19, 2023, all of the 1,000 outstanding shares of the Series I Preferred Stock converted by their terms into 299.2 shares of common stock per share of Series I Preferred Stock.

Automatically Convertible Preferred Stock - Series F Preferred Stock

On April 19, 2022, all of the 39,733,299 outstanding shares of the Company’s Series F Preferred Stock, $ 0.01 par value, automatically converted on a one -for-one basis into an equal amount of shares of Common Stock, pursuant to the terms of the Articles Supplementary of the Series F Preferred Stock.

There are no shares of Series F Preferred Stock outstanding.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

Each share (or fractional share) of Series F Preferred Stock shall automatically convert into one share of Common Stock (or equivalent fractional share, as applicable) upon the earlier of (i) April 19, 2022, (ii) three business days prior to a liquidation, dissolution or winding up of the Company in the event that the Company’s board of directors determines (which determination will be conclusive) that the liquidating distribution per share in respect of such converted share of Series F Preferred Stock (or fractional share) would be in an amount in excess of the liquidation preference of $ 2.00 per share or (iii) immediately prior to the effective time of a qualifying change of control, provided that the consideration per share payable in connection with such change in control in respect of such converted share of Series F Preferred Stock (or fractional share) is an amount in excess of the liquidation preference of $ 2.00 .

The Series F Preferred Stock has no stated maturity and is not redeemable.

Holders of Series F Preferred Stock (voting as a single class with holders of Common Stock and other series of Company equity securities entitled to vote with the common stockholders) are entitled to vote on each matter submitted to a vote of the stockholders of the Company upon which the holders of Common Stock are entitled to vote.

The number of votes applicable to a share of outstanding Series F Preferred Stock will be equal to the number of shares of Common Stock a share of Series F Preferred Stock could have been converted into as of the record date set for purposes of such stockholder vote (rounded down to the nearest whole number of shares of Common Stock).

In addition, the affirmative vote of the holders of two-thirds of the outstanding shares of Series F Preferred Stock is required to take certain actions materially adverse to the holders of the Series F Preferred Stock.

The complete terms of the Series A Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock are set forth in the Articles Supplementary applicable to each class, which have been filed as exhibits to the Company’s periodic reports filed pursuant to the Securities Exchange Act of 1934, as amended.

The below table summarizes the timing of the conversion of the Company’s outstanding classes of convertible preferred stock into common stock:

Series/Shares Outstanding at 12/31/21

Conversion Date

Conversion Amount Per One Share of Preferred*

Redeemable Convertible Series C Preferred Stock / 1,400 shares outstanding

October 19, 2022, subject to the Company’s right to accelerate the conversion to April 19, 2022

299.2 shares of Common Stock

Redeemable Convertible Series D Preferred Stock / 17,950 shares outstanding

October 19, 2022, subject to the holder’s right to accelerate the conversion to April 19, 2022

299.2 shares of Common Stock

Series F Preferred Stock/ 39,733,299 shares outstanding

April 19, 2022

1 share of Common Stock

*Subject to anti-dilution adjustments as set forth in Articles Supplementary.

Perpetual Preferred Stock—Series E Preferred Stock

The Series E Preferred Stock has no stated maturity and is not subject to any sinking fund or mandatory redemption.

The Series E Preferred Stock ranks, with respect to rights to the payment of dividends and the distribution of assets upon its liquidation, dissolution or winding up, senior to the common stock and on a parity with the Series I Preferred Stock and Series H Preferred Stock.

The liquidation preference is $ 25.00 per share, plus an amount equal to any accumulated and unpaid dividends.

Holders of shares of the Series E Preferred Stock are entitled to receive, when, as and if authorized by our board of directors and declared by the Company, out of funds legally available for the payment of dividends, cumulative cash dividends at the rate of 7.50 % of the $ 25.00 per share liquidation preference per annum (equivalent to $ 1.875 per annum per share).

Dividends on the Series E Preferred Stock are cumulative and payable quarterly in arrears.

Dividends on the Series E Preferred Stock will accumulate whether or not the Company has earnings, whether or not there are funds legally available for the payment of those dividends and whether or not those dividends are declared.

The Company may, at its option, upon not less than 30 nor more than 60 days’ written notice, redeem the Series E Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $ 25.00 per share, plus any accumulated and unpaid dividends thereon to, but not including, the date fixed for redemption.

Upon a change of control of the Company, in the event the Company does not redeem the Series E Preferred Stock, a holder of Series E Preferred Stock will have the right to convert to Common Stock upon the terms set forth in the applicable Articles Supplementary.

The Series E Preferred Stock is listed on the New York Stock Exchange under the symbol “FBRT PRE”.

Accounting Pronouncements Not Yet Adopted

On March 12, 2020, the FASB issued ASU No.

In March 2022, the FASB issued ASU 2022-02 "Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures," or ASU 2022-02.

ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings and requires disclosure of current-period gross write-offs by year of loan origination.

Additionally, ASU 2022-02 updates the accounting for credit losses under ASC 326 and adds enhanced disclosures with respect to loan refinancing and restructuring in the form of principal forgiveness, interest rate concessions, other-than-insignificant payment delays, or term extensions when the borrower is experiencing financial difficulties.

ASU 2022-02 is effective for fiscal years beginning after December 15, 2022.

The amendments should be applied prospectively, however for the recognition and measurement of troubled debt restructurings, the entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption.

We are currently evaluating what impact, if any ASU 2022-02 will have on our consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates.

The guidance is effective upon issuance and generally can be applied through December 31, 2022.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London interbank offered rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

The guidance is effective upon issuance and generally can be elected over time through December 31, 2024, as extended under ASU No.

2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 .

The Company has not adopted any of the optional expedients or exceptions through December 31, 2022, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period as circumstances evolve.

8 unchanged sentences

Total gross carrying value of loans 5,269,776 4,226,888

General allowance for credit losses 26,624 15,827

Specific allowance for credit losses (1)

Allowance for credit losses 40,848 15,827

15,827 20,886

Total commercial mortgage loans, held for investment, net $ 5,228,928 $ 4,211,061

________________________

(1) As of December 31, 2021 and 2020, there have been no specific reserves for loans in non-performing status.

As of December 31, 2021 and December 31, 2020, the Company's total commercial mortgage loan portfolio, excluding commercial mortgage loans accounted for under the fair value option, was comprised of 165 and 130 loans, respectively.

(1) As of December 31, 2022, the Company recorded a specific reserve with respect to a retail loan designated as non-performing.

As of December 31, 2022 and 2021, the Company's total commercial mortgage loan portfolio, held for investment, was composed of 161 and 165 loans, respectively.

Allowance for Credit Losses

3 unchanged sentences

Beginning Balance $ 9,681 $ 288 $ 776 $ 86 $ 169 $ 4,597 $ 152 $ 78 $ 15,827

Current Period:

Provision/(benefit) for credit losses 6,875 ( 116 ) ( 799 ) ( 3,709 ) 37 ( 7,049 ) 35 ( 44 ) ( 4,770 )

Write offs ( 289 ) — — — — — — — ( 289 )

General allowance/(benefit) for credit losses 11,485 89 ( 106 ) 173 ( 122 ) ( 533 ) ( 142 ) ( 47 ) 10,797

Specific allowance/(benefit) for credit losses — 25,281 — — — — — — 25,281

Write offs from specific allowance for credit losses — ( 11,057 ) — — — — — — ( 11,057 )

Ending Balance $ 21,166 $ 14,601 $ 670 $ 259 $ 47 $ 4,064 $ 10 $ 31 $ 40,848

2 unchanged sentences

Beginning Balance $ 3,095 $ 404 $ 1,575 $ 3,795 $ 132 $ 11,646 $ 117 $ 122 20,886

Cumulative-effect adjustment upon adoption of ASU 2016-13 3,220 386 1,966 434 9 739 399 58 7,211

Current Period:

Provision/(benefit) for credit losses ( 447 ) ( 184 ) ( 640 ) 3,338 119 11,231 ( 282 ) 46 13,181

Write offs — — — — — ( 427 ) — — ( 427 )

General allowance/(benefit) for credit losses 6,875 ( 116 ) ( 799 ) ( 3,709 ) 37 ( 7,049 ) 35 ( 44 ) ( 4,770 )

Write offs from general allowance for credit losses ( 289 ) — — — — — — — ( 289 )

Ending Balance $ 9,681 $ 288 $ 776 $ 86 $ 169 $ 4,597 $ 152 $ 78 $ 15,827

The Company recorded a decrease in its allowance for credit losses during the year ended December 31, 2021 of $ 4.8 million.

The primary driver for the improvement in the reserve balance is the positive economic outlook since the end of the prior year.

The Company recorded an increase in its general allowance for credit losses during the year ended December 31, 2022 of $ 10.8 million.

The primary driver for the higher reserve balance is the change in economic outlook since the end of the prior year coupled with the increase in overall portfolio of commercial mortgage loans, held for investment as of December 31, 2022.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

The following table presents the activity in the Company's allowance for credit losses for the unfunded loan commitments, which is presented in accounts payable and accrued expenses in the consolidated balance sheets as of December 31, 2021 and 2020 (dollars in thousands):

As of December 31, 2022, the Company identified a commercial mortgage loan, held for investment secured by a portfolio of retail properties, that was assigned a risk rating of “5” due to certain conditions that negatively impacted the underlying collateral property’s cash flows.

Since the loan was considered a collateral-dependent asset under GAAP, as of December 31, 2022, a specific provision for credit losses of $ 14.2 million was recorded based on the difference between the Company’s estimation of the fair value of the underlying collateral property, less costs to sell, and the loan’s amortized cost basis.

As of December 31, 2022, the loan has a fully funded outstanding principal balance of $ 63.6 million, and carrying value of $ 46.1 million.

The significant unobservable inputs to the discounted cash flow model used to estimate the fair value of the retail properties collateralizing the loan included a capitalization rate, which ranged from 4.75 %- 6.50 %.

The following table presents the activity in the Company' s allowance for credit losses for the unfunded loan commitments, which is included in accounts payable and accrued expenses in the consolidated balance sheets as of December 31, 2022 and 2021 (dollars in thousands):

Year Ended December 31, 2022

1 unchanged sentence

Beginning Balance $ 137 $ 1 $ 13 $ 3 $ 10 $ 79 $ — $ — $ 243

Current Period:

Provision/(benefit) for credit losses 52 1 ( 34 ) ( 415 ) ( 4 ) ( 22 ) — — ( 422 )

General allowance/(benefit) for credit losses 28 ( 37 ) 73 — ( 10 ) ( 18 ) — 1 37

Ending Balance $ 165 $ ( 36 ) $ 86 $ 3 $ — $ 61 $ — $ 1 $ 280

2 unchanged sentences

Beginning Balance $ 85 $ — $ 47 $ 418 $ 14 $ 101 $ — $ — $ 665

Cumulative-effect adjustment upon adoption of ASU 2016-13 239 40 150 30 1 57 28 5 550

Current Period:

Provision/(benefit) for credit losses ( 154 ) ( 40 ) ( 103 ) 388 13 44 ( 28 ) ( 5 ) 115

General allowance/(benefit) for credit losses 52 1 ( 34 ) ( 415 ) ( 4 ) ( 22 ) — — ( 422 )

Ending Balance $ 137 $ 1 $ 13 $ 3 $ 10 $ 79 $ — $ — $ 243

The following table represents the composition by loan type of the Company's commercial mortgage loans portfolio, excluding commercial mortgage loans, held for investment (dollars in thousands):

The following table represents the composition by loan collateral type and region of the Company's commercial mortgage loans, held for investment portfolio (dollars in thousands):

December 31, 2022 December 31, 2021

Loan Type Par Value Percentage Par Value Percentage

Loan Collateral Type Par Value Percentage Par Value Percentage

Multifamily $ 4,030,975 76.1 % $ 2,953,938 69.6 %

Office 485,575 11.4 % 517,464 19.0 %

Hospitality 510,566 9.7 % 460,884 10.9 %

Office 405,705 7.7 % 485,575 11.4 %

Retail 120,017 2.3 % 104,990 2.5 %

Industrial 93,035 1.8 % 88,956 2.1 %

Mixed Use 62,965 1.5 % 102,756 3.8 %

Self Storage 56,495 1.3 % 86,424 3.2 %

Manufactured Housing 29,159 0.7 % 71,263 2.6 %

Land — — % 16,400 0.6 %

Other 128,676 2.4 % 148,619 3.5 %

Total $ 5,288,974 100.0 % $ 4,242,962 100.0 %

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

December 31, 2022 December 31, 2021

Loan Region Par Value Percentage Par Value Percentage

Southwest $ 1,764,905 41.6 % $ 515,392 18.9 %

Southeast $ 2,229,756 42.2 % $ 1,106,439 26.2 %

Southwest 1,763,492 33.3 % 1,764,905 41.6 %

Mideast 706,192 13.4 % 646,125 15.2 %

2 unchanged sentences

Various 192,481 3.6 % 240,523 5.6 %

New England 67,651 1.6 % 69,675 2.6 %

Plains 60,225 1.4 % 116,143 4.3 %

Rocky Mountain 43,751 1.0 % — — %

Total $ 5,288,974 100.0 % $ 4,242,962 100.0 %

As of December 31, 2021 and 2020, the Company's total commercial mortgage loans, held for sale, measured at fair value was comprised of one and three loans, respectively.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

As of December 31, 2022 and 2021, the Company's total commercial mortgage loans, held for sale, measured at fair value was composed of two loans and one loan, respectively.

As of December 31, 2022 and 2021, the contractual principal outstanding of commercial mortgage loans, held for sale, measured at fair value was $ 15.6 million and $ 34.3 million, respectively.

As of December 31, 2021 and 2020, none of the Company's commercial mortgage loans, held for sale, measured at fair value were in default or greater than 90 days past due.

The following table represents the composition by loan type of the Company's commercial mortgage loans, held for sale, measured at fair value (dollars in thousands):

As of December 31, 2022 and 2021, none of the Company's commercial mortgage loans, held for sale, measured at fair value were in default or greater than ninety days past due.

The following table represents the composition by loan collateral type and region of the Company's commercial mortgage loans, held for sale, measured at fair value (dollars in thousands):

December 31, 2022 December 31, 2021

Loan Type Par Value Percentage Par Value Percentage

Loan Collateral Type Par Value Percentage Par Value Percentage

Retail $ 12,000 76.8 % $ — — %

Office 3,625 23.2 % 34,250 100.0 %

Industrial — — % 67,550 99.9 %

Multifamily — — % 100 0.1 %

Total $ 15,625 100.0 % $ 34,250 100.0 %

2 unchanged sentences

Southeast $ 15,625 100.0 % $ 34,250 100.0 %

Far West — — % 58,500 86.5 %

Great Lakes — — % 9,150 13.5 %

Total $ 34,250 100.0 % $ 67,650 100.0 %

Loan Credit Quality and Vintage

The following tables present the amortized cost of our commercial mortgage loans, held for investment as of December 31, 2021 and 2020, by loan type, year of origination and the Company’s internal risk rating at the corresponding balance sheet date.

The following tables present the amortized cost of our commercial mortgage loans, held for investment as of December 31, 2022 and 2021, by loan collateral type, the Company’s internal risk rating and year of origination.

The risk ratings are updated as of December 31, 2022.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

2021 2020 2019 2018 2017 Prior Total

As of December 31, 2022

2022 2021 2020 2019 2018 2017 Total

1-2 internal grade $ 1,511,181 $ 2,184,362 $ 74,372 $ — $ 34,668 $ — $ 3,804,583

3 unchanged sentences

3-4 internal grade — — — — — — —

5 internal grade 60,304 — — — — — 60,304

Total Retail Loans $ 82,579 $ 33,884 $ — $ — $ — $ — $ 116,463

24 unchanged sentences

December 31, 2021

2020 2019 2018 2017 2016 2015 Prior Total

2021 2020 2019 2018 2017 2016 Total

1-2 internal grade $ 2,438,376 $ 270,953 $ 103,989 $ 90,877 $ — $ — $ 2,904,195

23 unchanged sentences

3-4 internal grade — — — — — — —

Total Manufactured Housing Loans $ 6,665 $ 22,372 $ — $ — $ — $ — $ 29,037

Total $ 2,729,537 $ 689,545 $ 475,252 $ 253,452 $ 79,102 $ — $ 4,226,888

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

Total Manufactured Housing Loans $ 25,905 $ 45,049 $ — $ — $ — $ — $ — $ 70,954

Total $ 1,084,655 $ 851,194 $ 551,241 $ 190,501 $ — $ 33,655 $ 3,488 $ 2,714,734

Past Due Status

3 unchanged sentences

1-29 days past due — — — — — — — — —

— — — 56,933 — — — — 56,933

30-59 days past due — — — — — — — — —

5 unchanged sentences

________________________

(1) For the year ended December 31, 2021, interest income recognized on this loan was $ 3.1 million.

(2) For the year ended December 31, 2021, there was no interest income recognized on this loan.

As of December 31, 2021, the Company had one loan on non-accrual status with a total cost basis of $ 57.1 million for which there was no related allowance for credit losses.

As of December 31, 2020, the Company had two loans on non-accrual status with a total cost basis of $ 94.9 million for which there was no related allowance for credit losses.

(1) For the year ended December 31, 2022, there was no interest income recognized on these loans.

Non-performing Status

The following table presents the amortized cost basis of the loans on nonaccrual status as of December 31, 2022 and December 31, 2021 (dollars in thousands):

December 31, 2022 December 31, 2021

Non-performing loan amortized cost at beginning of year, January 1 $ 57,075 $ 94,887

Addition of non-performing loan amortized cost 60,304 —

Removal of non-performing loan amortized cost — 37,812

Non-performing loan amortized cost at end of period $ 117,379 $ 57,075

As of December 31, 2022, the Company had two loans with a total amortized cost basis of $ 117.4 million designated as non-performing status.

One loan is for a hotel property located in New York, NY, which was placed on non-accrual status in 2019 and had an amortized cost basis of $ 57.1 million as of December 31, 2022.

No specific allowance for credit losses has been recorded on the loan.

The Company did no t recognize any interest income on the non-accrual loan during the year ended December 31, 2022.

The second loan relates to a commercial mortgage loan with a fully funded outstanding principal balance of $ 63.6 million collateralized by a portfolio of retail properties in various locations throughout the United States.

The loan has been assigned a risk rating of “5” and concurrently, the Company elected to apply a practical expedient for collateral dependent assets in which the allowance for credit losses is calculated as the difference between the estimated fair value of the underlying collateral, less estimated cost to sell, and the amortized cost basis of the individual loan.

The loan was evaluated in accordance with ASC 310 - Receivables and was determined to be a TDR.

As of December 31, 2022, the Company has recorded a specific allowance for credit losses of $ 14.2 million on this loan.

Further, the Company has designated the loan as non-performing and placed the loan on cost recovery status by ceasing the recognition of interest income.

Any contractual amounts received are accounted for under the cost-recovery method, until the loan qualifies for return to accrual status.

As of December 31, 2022, the Company has received $ 8.0 million in cost recovery proceeds, which reduced the amortized cost of the loan.

As of December 31, 2021, the Company had one loan, the hotel property in New York, NY, with a carrying value of $ 57.1 million, designated as non-performing, which had no specific allowance for credit losses.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

Credit Characteristics

9 unchanged sentences

Trends and risk factors show some deterioration.

4 High Risk/Delinquent/Potential For Loss - Underperforming investment with the potential of some interest loss but still expecting a positive return on investment.

4 High Risk/Defaulted/Potential For Loss - Underperforming investment with the potential of some interest loss but still expecting a positive return on investment.

Trends and risk factors are negative.

5 Impaired/Defaulted/Loss Likely - Underperforming investment with expected loss of interest and some principal.

5 Impaired/Loss Likely - Underperforming investment with expected loss of interest and some principal.

All commercial mortgage loans, excluding loans classified as commercial mortgage loans, held for sale, measured at fair value within the consolidated balance sheets, are assigned an initial risk rating of 2 .

As of December 31, 2022 and 2021, the weighted average risk ratings of loans were 2.2 and 2.1 , respectively.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

The following table represents the allocation by risk rating for the Company's commercial mortgage loans, held for investment, (dollars in thousands):

6 unchanged sentences

5 1 63,640 5 — —

For the years ended December 31, 2021 and December 31, 2020, the activity in the Company's commercial mortgage loans, held for investment portfolio, net of allowance, was as follows (dollars in thousands):

161 $ 5,288,974 165 $ 4,242,962

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

For the years ended December 31, 2022 and December 31, 2021, the activity in the Company's commercial mortgage loans, held for investment portfolio, net of provision for credit losses, was as follows (dollars in thousands):

Year Ended December 31,

Balance at Beginning of Year $ 2,693,848 $ 2,762,042

Cumulative-effect adjustment upon adoption of ASU 2016-13 — ( 7,211 )

Amortized cost, Beginning of Year $ 4,226,888 $ 2,714,734

Acquisitions and originations 2,247,613 2,897,002

3 unchanged sentences

Net fees capitalized into carrying value of loans ( 13,775 ) ( 15,150 )

(Provision)/benefit for credit losses 4,770 ( 13,181 )

Charge-off from allowance 289 427

Transfer to real estate owned ( 80,460 ) ' (1)

Cost recovery ( 4,039 ) —

Amortized cost, End of Year $ 5,269,776 $ 4,226,888

Allowance for credit losses, Beginning of Year $ ( 15,827 ) $ ( 20,886 )

General (provision)/benefit for credit losses ( 10,797 ) 4,770

Specific (provision)/benefit for credit losses ( 25,281 ) —

Write offs from specific allowance for credit losses 11,057 ' (1)

Write offs from general allowance for credit losses — 289

Allowance for credit losses, End of Year $ ( 40,848 ) $ ( 15,827 )

Balance at End of Year $ 5,228,928 $ 4,211,061

During the year ended December 31, 2021, the Company wrote off a commercial mortgage loan, held for investment, with a carrying value of $ 37.8 million in exchange for the possession of a REO investment at a fair value of $ 37.5 million, comprised of $ 33.0 million of real property (land, building and improvements) and $ 4.5 million of personal property (furniture, fixture, and equipment) at the time of transfer.

The transfer occurred when the Company took possession of the property by completing a foreclosure transaction in January 2021, resulting in a $ 0.3 million impairment loss at the time of transfer.

Since the foreclosure was entered into due to the borrower experiencing financial difficulty and the recorded investment in the receivable was more than the fair value for the collateral collected, the transaction qualifies as a TDR.

The Company accounted for the REO acquired during the year ended December 31, 2021 as an asset acquisition.

The Company subsequently sold this REO asset during the year ended December 31, 2021 for a $ 0.8 million gain, presented net of direct selling costs associated with the disposition of the asset, included within Realized gain/loss on sale of real estate owned assets, held for sale in the Company's consolidated statements of operations.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Note 4 - Real Estate Securities

As of December 31, 2021 the Company did not hold any real estate securities, available for sale, measured at fair value.

The following is a summary of the Company's real estate securities, available for sale, measures at fair value as of December 31, 2020 (dollars in thousands):

December 31, 2020

Type Interest Rate Maturity Par Value Fair Value

CMBS 1 3.0 % 5/15/2022 $ 13,250 $ 12,657

CMBS 2 2.2 % 6/26/2025 10,800 10,335

CMBS 3 2.5 % 2/15/2036 40,000 38,292

CMBS 4 1.9 % 6/15/2037 8,000 7,892

CMBS 5 2.1 % 9/15/2037 24,000 23,297

CMBS 6 2.3 % 6/15/2034 12,000 11,580

CMBS 7 1.5 % 12/15/2036 20,000 18,975

CMBS 8 1.8 % 12/15/2036 25,000 23,268

CMBS 9 2.3 % 3/15/2035 25,665 24,840

The Company classified its CMBS investments as available for sale and reported them at fair value in the consolidated balance sheets with changes in fair value recorded in accumulated other comprehensive income/(loss) as of December 31, 2020.

The weighted average contractual maturity for CLO investments included within the CMBS portfolio as of December 31, 2020 was 14 years.

The weighted average contractual maturity for single asset single borrower "SASB" investments as of December 31, 2020 was 14 years.

The following table shows the amortized cost, allowance for expected credit losses, unrealized gain/(loss) and fair value of the Company's CMBS investments by investment type as of December 31, 2020 (dollars in thousands):

Amortized Cost Credit Loss Allowance Unrealized Gain Unrealized Loss Fair Value

December 31, 2020

CLO $ 123,444 $ — $ — ( 4,888 ) $ 118,556

SASB 55,948 — — ( 3,368 ) 52,580

Total $ 179,392 $ — $ — $ ( 8,256 ) $ 171,136

As of December 31, 2021 the Company did not hold any real estate securities, CMBS.

As of December 31, 2020, the Company held 9 CMBS positions with an amortized cost basis of $ 179.4 million and an unrealized loss of $ 8.3 million of which 7 positions had an unrealized loss for a period greater than twelve months.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

The following table provides information on the unrealized losses and fair value on the Company's real estate securities, CMBS, available for sale that were in an unrealized loss position, and for which an allowance for credit losses has not been recorded, in each case as of December 31, 2020 (amounts in thousands):

Fair Value Unrealized Loss

Securities with an unrealized loss less than 12 months Securities with an unrealized loss greater than 12 months Securities with an unrealized loss less than 12 months Securities with an unrealized loss greater than 12 months

December 31, 2020

CLOs $ 63,131 $ 55,425 $ ( 2,824 ) $ ( 2,064 )

SASB — 52,580 — ( 3,368 )

Total $ 63,131 $ 108,005 $ ( 2,824 ) $ ( 5,432 )

As of December 31, 2021 the Company did not hold any real estate securities, CMBS.

As of December 31, 2020, there were seven securities, respectively with unrealized losses for a period greater than twelve months reflected in the table above.

After evaluating the securities, the Company concluded that the unrealized losses reflected above were noncredit-related and would be recovered from the securities’ estimated future cash flows.

The Company considered a number of factors in reaching this conclusion, including that the Company did not intend to sell the securities, it was not considered more likely than not that we would be forced to sell the securities prior to recovering our amortized cost, the portfolio is made up of investment grade securities of recent originations and higher tranches, and that there were no material credit events that would have caused us to otherwise conclude that the Company would not recover our cost.

The allowance for credit losses is calculated using a discounted cash flow approach and is measured as the difference between the original cash flows expected to be collected to the revised cash flows expected to be collected discounted using the effective interest rate, limited by the amount that the fair value is less than the amortized cost basis.

Significant judgment is used in projecting cash flows.

As a result, actual income and/or credit losses could be materially different from what is currently projected and/or reported.

The following table provides information on the amounts of gain/(loss) on the Company's real estate securities, CMBS, available for sale, recorded in other comprehensive income (dollars in thousands):

Year Ended December 31,

________________________

Unrealized gain/(loss) available for sale securities $ — $ ( 8,026 ) $ ( 978 )

Reclassification of net (gain)/loss on available for sale securities included in net income (loss) 8,256 748 —

Unrealized gain/(loss) available for sale securities, net of reclassification adjustment $ 8,256 $ ( 7,278 ) $ ( 978 )

The amounts reclassified for net (gain)/loss on available for sale securities are included in the realized (gain)/loss on sale of real estate securities in the Company's consolidated statements of operations.

The Company's unrealized gain/(loss) on available for sale securities is net of tax.

Due to the Company's designation as a REIT, there was no tax impact on unrealized gain/(loss) on available for sale securities.

The deterioration in fair value of real estate securities for both collateralized loan obligations and other securities as of December 31, 2020 can be attributed mainly to the market down-turn and volatility as a result of high unemployment and credit uncertainties related to the outbreak of COVID-19.

(1) See Note 5 - Real Estate Owned for details.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

Note 4 - Real Estate Securities

Real Estate Securities Classified As Trading

The following is a summary of the Company's real estate mortgage backed securities ("RMBS") classified by collateral type and interest rate characteristics (dollars in thousands):

Amount Average

The following is a summary of the Company's RMBS classified by collateral type and interest rate characteristics as of December 31, 2022 (dollars in thousands):

Carrying Amount Average Yield (1)

December 31, 2022

1 unchanged sentence

Fannie Mae/Freddie Mac ARMs $ 235,728 2.42 %

Ginnie Mae ARMs 320,068 2.72 %

$ 4,566,871 2.26 %

December 31, 2021

3 unchanged sentences

$ 4,566,871 2.26 %

________________________

(1) Average yield is presented for the year then ended, and is based on the cash component of interest income expressed as a percentage on average cost basis (the “cash yield”).

On October 19, 2021, the Company completed the Capstead merger pursuant to which the Company acquired a portfolio of adjustable-rate mortgage ("ARM") securities issued and guaranteed by government sponsored enterprises, either Fannie Mae or Freddie Mac, or by an agency of the federal government, Ginnie Mae.

Together, these securities are referred to as “Agency Securities,” and are considered to have limited, if any, credit risk because the timely payment of principal and interest is guaranteed.

The maturity of Agency Securities is directly affected by prepayments of principal on the underlying mortgage loans.

Consequently, actual maturities will be significantly shorter than the portfolio’s weighted average contractual maturity of 310 months.

The maturity of ARM Agency Securities is directly affected by prepayments of principal on the underlying mortgage loans.

Consequently, actual maturities may be significantly shorter than the portfolio’s weighted average contractual maturity of 182 months.

The Company's ARM Agency Securities are backed by residential mortgage loans that have coupon interest rates that adjust at least annually to more current interest rates or begin doing so after an initial fixed-rate period.

After the initial fixed-rate period, if applicable, mortgage loans underlying ARM securities typically either (i) adjust annually based on specified margins over the one-year London interbank offered rate (“LIBOR”) or the one-year Constant Maturity U.S.

Treasury Note Rate (“CMT”), (ii) adjust semiannually based on specified margins over six-month LIBOR or the six-month Secured Overnight Financing Rate (“SOFR”), or (iii) adjust monthly based on specified margins over indices such as one-month LIBOR, the Eleventh District Federal Reserve Bank Cost of Funds Index, or over a rolling twelve month average of the one-year CMT index, usually subject to periodic and lifetime limits, or caps, on the amount of such adjustments during any single interest rate adjustment period and over the contractual term of the underlying loans.

During 2021, the Company sold trading securities using the specific identification method for proceeds totaling $ 1.9 billion recognizing $ 0.1 million in net realized gains.

Subsequent to year end, the Company sold trading securities using the same method for proceeds totaling $ 1.8 billion recognizing $ 12 million in net realized losses.

The Company did not own any trading securities during 2020 or 2019.

For the year ended December 31, 2022 and 2021, the Company sold trading securities totaling $ 3.8 billion and $ 1.9 billion.

For the year ended December 31, 2022 and 2021, the Company recognized trading losses on ARM Agency Securities of $ 119.2 million and $ 34.8 million, respectively, due to principal paydowns, changes in market values, and sales of these securities, and were included in Trading (gain)/loss in the Company's consolidated statements of operations.

The Company did not own any trading securities during 2020.

Real Estate Securities Classified As Available For Sale

The following is a summary of the Company's real estate securities, available for sale, measured at fair value as of December 31, 2022 (dollars in thousands):

December 31, 2022

Type Interest Rate Maturity Par Value Fair Value

CRE CLO bond 1 7.1 % 8/19/2035 $ 40,000 $ 39,795

CRE CLO bond 2 7.6 % 8/19/2035 25,000 25,010

CRE CLO bond 3 8.4 % 8/19/2035 10,000 10,056

CRE CLO bond 4 7.4 % 10/25/2039 36,700 36,990

CRE CLO bond 5 8.0 % 10/25/2039 35,000 35,298

CRE CLO bond 6 8.6 % 10/25/2039 14,300 14,221

CRE CLO bond 7 7.3 % 10/19/2039 60,000 59,655

$ 221,000 $ 221,025

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

The Company classified its CRE CLO bonds as available for sale and reported them at fair value in the consolidated balance sheets with changes in fair value recorded in accumulated other comprehensive income/(loss) as of December 31, 2022.

The weighted average contractual maturity for CRE CLO investments included within the CRE CLO bond portfolio as of December 31, 2022 was 15.4 years.

As of December 31, 2021, the Company did not hold any Real Estate Securities classified as Available for Sale.

The following table shows the amortized cost, allowance for expected credit losses, unrealized gain/(loss) and fair value of the Company's CRE CLO bonds by investment type as of December 31, 2022 (dollars in thousands):

Amortized Cost Credit Loss Allowance Unrealized Gain Unrealized (Loss) Fair Value

December 31, 2022

CLO $ 220,635 $ — $ 833 ( 443 ) $ 221,025

As of December 31, 2022, the Company held seven CRE CLO bonds with an amortized cost basis of $ 220.6 million and a net unrealized gain of $ 0.39 million, three of which were held in an unrealized loss position of $ 0.4 million.

As of December 31, 2022, zero positions had an unrealized loss for a period greater than twelve months.

As of December 31, 2022, the fair value of the Company's CRE CLO bonds that were in an unrealized loss position for less than twelve months, and for which an allowance for credit loss has not been recorded was $ 113.7 million.

Note 5 - Real Estate Owned

The following table summarizes the Company's real estate owned assets as of December 31, 2021 (dollars in thousands):

Real Estate Owned, Held for Investment

The following table summarizes the Company's real estate owned, held for investment assets as of December 31, 2022 (dollars in thousands):

As of December 31, 2022

Acquisition Date Property Type Primary Location(s) Land Building and Improvements Furniture, Fixtures and Equipment Accumulated Depreciation Real Estate Owned, net

September 2021 (1)

Industrial Jeffersonville, GA $ 3,436 $ 84,259 $ 2,928 $ ( 575 ) $ 90,048

Acquisition Date (1)

Property Type Primary Location(s) Land Building and Improvements Furniture, Fixtures and Equipment Accumulated Depreciation Real Estate Owned, net

September 2021 Industrial Jeffersonville, GA $ 3,436 $ 84,259 $ 2,928 $ ( 2,877 ) $ 87,746

Retail Various 9,105 31,036 — ( 115 ) 40,026

$ 12,541 $ 115,295 $ 2,928 $ ( 2,992 ) $ 127,772

________________________

(1) Refer to Note 2 for the useful life of the above asset.

(1) Refer to Note 2 for the useful life of the above assets.

(2) As discussed below, ten retail properties associated with a loan secured by the Walgreen's Portfolio (defined below) were foreclosed upon during the quarter ended December 31, 2022.

The properties are located throughout the country.

The following table summarizes the Company's real estate owned assets as of December 31, 2021 (dollars in thousands):

As of December 31, 2021

Acquisition Date Property Type Primary Location(s) Land Building and Improvements Furniture, Fixtures and Equipment Accumulated Depreciation Real Estate Owned, net

October 2019 (1)

Office Jeffersonville, IN $ 1,887 $ 21,989 $ 3,565 $ ( 931 ) $ 26,510

$ 1,887 $ 21,989 $ 3,565 $ ( 931 ) $ 26,510

Acquisition Date (1)

Property Type Primary Location(s) Land Building and Improvements Furniture, Fixtures and Equipment Accumulated Depreciation Real Estate Owned, net

September 2021 Industrial Jeffersonville, GA $ 3,436 $ 84,259 $ 2,928 $ ( 575 ) $ 90,048

________________________

(1) Refer to Note 2 for the useful life of the above asset.

Depreciation expense for the years ended December 31, 2021 and 2020 totaled $ 1.0 million.

During the year ended December 31, 2021, the Company sold the real estate owned asset in Jeffersonville, IN to a third party, resulting in a $ 8.6 million gain recognized within Realized gain/loss on sale of real estate owned assets, held for sale in the consolidated statements of operations.

Depreciation expense for the years ended December 31, 2022 and 2021 totaled $ 2.4 million and $ 1.0 million, respectively.

In August 2021 the Company and an investment fund managed by the Advisor entered into a joint venture agreement and formed a joint venture entity, Jeffersonville Member, LLC (the "Jeffersonville JV") to acquire a $ 139.5 million triple net lease property in Jeffersonville, GA.

1 unchanged sentence

The Company invested a total of $ 109.8 million, made up of $ 88.7 million in debt and $ 21.1 million in equity, representing 79 % of the ownership interest in the Jeffersonville JV.

The affiliated fund made up the remaining $ 29.8 million composed of a $ 24.0 million mortgage note payable and $ 5.7 million in equity.

The affiliated fund made up the remaining $ 29.8 million composed of a $ 24.0 million mortgage note payable and $ 5.7 million in non-controlling interest.

The Company has control of Jeffersonville JV with 79 % ownership and, therefore, consolidates Jeffersonville JV on its consolidated balance sheet.

3 unchanged sentences

December 31, 2022

As disclosed in Note 3 - Commercial Mortgage Loans in April 2022, the Company fully funded a $ 113.2 million first mortgage loan, collateralized by 24 retail properties with various locations throughout the United States (the "Walgreens Portfolio").

During the quarter ended December 31, 2022, through foreclosures, the Company acquired ten of the 24 properties and as a result recorded at fair value $ 40.1 million of real estate owned, held for investment.

These properties are held through a joint venture entity, BSPRT Walgreens Portfolio, LLC (the "Walgreens JV"), formed by the Company and an affiliate of the Company.

The Company has 75.618 % ownership interest in the Walgreens Portfolio, while the affiliated fund has 24.242 % interest.

The Company has control of the Walgreens Portfolio as the majority owner in the joint venture and, therefore, consolidates the Walgreens Portfolio on its consolidated balance sheet.

As of December 31, 2022, the Company recorded $ 10.5 million in non-controlling interest related to the Walgreens Portfolio on its consolidated balance sheets as of December 31, 2022.

Subsequent to year ended December 31, 2022, the Walgreens JV obtained legal ownership of four additional properties.

We are engaged in ongoing litigation relating to a loan secured by the retail properties located throughout the United States, as more fully described in "Part I, Item 3.

Legal Proceedings".

Real Estate Owned, Held for Sale

During the year ended December 31, 2022, the Company entered into agreements with two borrowers to voluntarily transfer their assets in exchange for the removal of the borrowers' obligation to repay all of the associated commercial mortgage loans receivable with an amortized cost of $ 36.9 million, in aggregate, provided by the Company.

One of the voluntary transfers collateralized by a multifamily portfolio was the result of the borrower experiencing financial difficulty and the recorded investment in the receivable was more than the fair value, less estimated costs to sell, for the collateral collected.

Therefore, the voluntary transfer qualified as a TDR.

The Company accounted for both voluntary transfers and the real estate owned acquired as asset acquisitions.

The voluntary transfers resulted in a total realized loss of $ 0.4 million, in aggregate, and was recognized in Realized (gain)/loss on sale of commercial mortgage loan, held for sale in the consolidated statements of operations for the year ended December 31, 2022.

As of December 31, 2022, the Company has designated the properties included within the real estate owned business segment as held for sale in accordance with ASC 360.

The properties are currently being marketed and sales are probable to occur within one year.

As of December 31, 2022, the Company recognized an unrealized loss of $ 0.7 million on real estate owned, held for sale assets resulting in a carrying value of $ 36.5 million, in aggregate.

There was no real estate owned, held for sale on the Company's consolidated balance sheets as of December 31, 2021.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

Note 6 - Leases

Intangible Lease Asset

The following table summarizes the Company's intangible lease asset recognized in the consolidated balance sheets as of December 31, 2021 (dollars in thousands):

Acquisition Date Property Type Primary Location(s) Intangible Lease Asset, Gross Accumulated Amortization Intangible Lease Asset, Net of Amortization

September 2021 Industrial Jeffersonville, GA $ 49,192 $ ( 720 ) $ 48,472

$ 49,192 $ ( 720 ) $ 48,472

The following table summarizes the Company's intangible lease asset recognized in the consolidated balance sheets as of December 31, 2020 (dollars in thousands):

Acquisition Date Property Type Primary Location(s) Intangible Lease Asset, Gross Accumulated Amortization Intangible Lease Asset, Net of Amortization

October 2019 Office Jeffersonville, IN $ 14,509 $ ( 963 ) $ 13,546

$ 14,509 $ ( 963 ) $ 13,546

The following table summarizes the Company's intangible lease asset recognized in the consolidated balance sheets as of December 31, 2022 and 2021 (dollars in thousands):

Identified intangible assets:

December 31, 2022 December 31, 2021

Gross amount 58,542 49,192

Accumulated amortization ( 3,711 ) ( 720 )

Total, net $ 54,831 $ 48,472

Identified intangible liabilities:

Gross amount 6,507 $ —

Accumulated amortization ( 79 ) —

Total, net $ 6,428 $ —

Rental Income

On September 17, 2021, the Company purchased an industrial facility that was subject to an existing triple net lease.

On September 17, 2021, the Company purchased an industrial facility that is subject to an existing triple net lease.

The minimum rental amount due under the lease is subject to annual increases of 2.0 %.

1 unchanged sentence

The remaining lease term is 15.8 years.

Rental income for this operating lease for the year ended December 31, 2021 totaled $ 2.6 million and is included in Revenue from real estate owned in the consolidated statements of operations.

On October 15, 2019, the Company purchased an office building that was subject to an existing triple net lease.

The minimum rental amount due under the lease was subject to annual increases of 1.5 %.

The initial term of the lease expires in 2037 and contained renewal options for four consecutive five -year terms.

The Company sold the real estate owned asset during the year ended December 31, 2021 (see Note 5 - Real Estate Owned).

Rental income for this lease for the years ended December 31, 2021 and 2020 totaled $ 2.1 million and $ 2.9 million, respectively.

Rental income for this operating lease for the year ended December 31, 2022 and 2021 totaled $ 9.2 million and $ 2.6 million.

Rental income is included in Revenue from real estate owned in the consolidated statements of operations.

During the quarter ended December 31, 2022, the Company acquired ten retail properties through foreclosures that were each subject to triple net leases.

The initial terms of the leases expire in March 2034 and contain renewal options for eleven consecutive five-year terms.

The remaining lease term is 11.3 years.

Rental income for these operating leases for the year ended December 31, 2022 totaled $ 0.4 million.

The following table summarizes the Company's schedule of future minimum rents to be received under the lease (dollars in thousands):

Minimum Rents December 31, 2021

Future Minimum Rents December 31, 2022

2023 $ 10,494

2027 and beyond 132,525

7 unchanged sentences

December 31, 2022

The following table summarizes the Company's expected amortization for intangible assets over the next five years, assuming no further acquisitions or dispositions (dollars in thousands):

December 31, 2021

2022 $ ( 2,880 )

2023 ( 2,880 )

2024 ( 2,880 )

2025 ( 2,880 )

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental revenues of $ 0.1 million for the year ended December 31, 2022.

The following table summarizes the Company's expected acquired below (above) market leases, net amortization over the next five years, assuming no further acquisitions or dispositions (dollars in thousands):

Amortization Expense - Acquired below (above) market leases, net December 31, 2022

2023 $ ( 576 )

The following table summarizes the Company's expected other identified intangible assets, net amortization over the next five years, assuming no further acquisitions or dispositions (dollars in thousands):

Amortization Expense - Other identified intangible assets December 31, 2022

Note 7 - Debt

Repurchase Agreements - Commercial Mortgage Loans

The Company has entered into repurchase facilities with JPMorgan Chase Bank, National Association (the "JPM Repo Facility"), Barclays Bank PLC (the "Barclays Revolver Facility" and the "Barclays Repo Facility"), Wells Fargo Bank, National Association (the "WF Repo Facility"), and Credit Suisse AG (the "CS Repo Facility" and together with JPM Repo Facility, USB Repo Facility, WF Repo Facility, Barclays Revolver Facility, and Barclays Repo Facility, the "Repo Facilities").

The Company has entered into repurchase facilities with JPMorgan Chase Bank, National Association (the "JPM Repo Facility"), Barclays Bank PLC (the "Barclays Revolver Facility" and the "Barclays Repo Facility"), Wells Fargo Bank, National Association (the "WF Repo Facility"), and Credit Suisse AG (the "CS Repo Facility" and together with JPM Repo Facility, WF Repo Facility, Barclays Revolver Facility, and Barclays Repo Facility, collectively, the "Repo Facilities").

The Repo Facilities are financing sources through which the Company may pledge one or more mortgage loans to the financing entity in exchange for funds typically at an advance rate of between 65 % to 75 % of the principal amount of the mortgage loan being pledged.

The details of the Company's Repo Facilities at December 31, 2021 and December 31, 2020 are as follows (dollars in thousands):

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

The details of the Company's Repo Facilities at December 31, 2022 and 2021 are as follows (dollars in thousands):

As of December 31, 2022

2 unchanged sentences

JPM Repo Facility (2)

$ 500,000 $ 275,423 $ 11,773 7.42 % 10/6/2024

CS Repo Facility (3)

3 unchanged sentences

Barclays Revolver Facility (5)

250,000 166,700 1,976 6.12 % 9/20/2023

250,000 — 1,267 N/A 9/20/2023

Barclays Repo Facility (6)

4 unchanged sentences

Includes amortization of deferred financing costs.

(2) On August 12, 2021, the Company exercised the extension option upon the satisfaction of certain conditions, and extended the term maturity to September 30, 2022.

Additionally, on November 3, 2021 the committed financing amount was amended from $ 200 million to $ 300 million with the option to increase to $ 400 million at the Company's discretion.

(3) On November 19, 2021 the committed financing amount was increased from $ 275 million to $ 450 million.

(2) With one-year extension option available at the Company's discretion.

On July 7, 2022, the committed financing was increased from $ 400 million to $ 500 million.

Additionally, on December 12, 2022, the Company extended the maturity date to October 6, 2024.

(3) On July 12, 2022, the committed financing was increased from $ 300 million to $ 600 million.

Additionally, on November 1, 2022 the maturity date was extended to October 31, 2023.

(4) On May 12, 2022, the committed financing amount was increased from $ 450 million to $ 500 million.

There are three more one-year extension options available at the Company's discretion.

(4) On September 8, 2021, the Company amended the maturity date to September 20, 2023.

On December 1, 2021 the committed financing amount was increased from $ 100 million to $ 250 million.

(5) The Company may increase the total commitment amount by an amount between $ 100 million and $ 150 million for three month intervals, on an unlimited basis prior to maturity.

(5) On December 3, 2021 the Company amended the maturity date to March 14, 2025 and the committed financing amount was increased from $ 300 million to $ 500 million.

(6) There are two one-year extension options available at the Company's discretion.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

As of December 31, 2021

2 unchanged sentences

JPM Repo Facility $ 400,000 $ 136,470 $ 5,178 2.13 % 10/6/2022

$ 300,000 $ 113,884 $ 5,020 2.54 % 10/6/2022

USB Repo Facility (3)

100,000 5,775 599 2.40 % 6/15/2021

CS Repo Facility 300,000 137,364 3,446 2.43 % 9/30/2022

200,000 106,971 3,539 2.84 % 8/19/2021

WF Repo Facility 450,000 186,734 2,090 1.64 % 11/21/2023

175,000 27,150 1,041 2.50 % 11/21/2021

Barclays Revolver Facility 250,000 166,700 1,976 6.12 % 9/20/2023

100,000 — 387 N/A 9/20/2021

Barclays Facility (7)

300,000 22,560 1,046 2.51 % 3/15/2022

Barclays Repo Facility 500,000 392,332 4,057 1.76 % 3/14/2025

Total $ 1,900,000 $ 1,019,600 $ 16,747

2 unchanged sentences

Includes amortization of deferred financing costs.

(2) On October 6, 2020 the maturity date was amended to October 6, 2022.

(3) On June 9, 2020, the Company exercised the extension option upon the satisfaction of certain conditions, and extended the term maturity to June 15, 2021.

(4) On August 28, 2020, the Company exercised the extension option upon the satisfaction of certain conditions, and extended the term maturity to August 19, 2021.

Additionally, in 2020 the committed financing amount was downsized from $ 300 million to $ 200 million.

(5) On November 17, 2020, the Company exercised the extension option upon the satisfaction of certain conditions, and extended the term maturity to November 21, 2021.

There are two more one -year extension options available at the Company's discretion.

(6) There is one one -year extension option available at the Company's discretion.

(7) Includes two one -year extensions at the Company's option.

The Company expects to use the advances from the Repo Facilities to finance the acquisition or origination of eligible loans, including first mortgage loans, subordinated mortgage loans, mezzanine loans and participation interests therein.

The Repo Facilities generally provide that in the event of a decrease in the value of the Company's collateral, the lenders can demand additional collateral.

As of December 31, 2021 and December 31, 2020, the Company is in compliance with all debt covenants.

As of December 31, 2022 and 2021, the Company is in compliance with all debt covenants.

Other financing and loan participation - Commercial Mortgage Loans

On March 23, 2020, the Company transferred $ 15.2 million of its interest in a term loan to Sterling National Bank ("SNB") via a participation agreement.

Since origination, the Company's outstanding loan increased resultant of future fundings, leading to an increase in amount outstanding via the participation agreement.

The Company incurred $ 0.9 million of interest expense on SNB for the year ended December 31, 2021.

As of December 31, 2021 and December 31, 2020 the outstanding participation balance was $ 37.9 million and $ 31.4 million, respectively.

The loan matures on February 9, 2023.

Mortgage Note Payable

On October 15, 2019, the Company obtained a commercial mortgage loan for $ 29.2 million related to the real estate owned portfolio.

The Company incurred $ 0.9 million of interest expense for the twelve months ended December 31, 2021.

As of December 31, 2021 the loan has been assumed by the purchaser of the underlying asset and is no longer held by the Company (see Note 5 - Real Estate Owned).

On September 17, 2021, the Company, in connection with the consolidating joint venture (as discussed in Note 5 - Real Estate Owned), originated a $ 112.7 million mortgage note payable, of which $ 88.7 million is eliminated in consolidation (see Note 5 - Real Estate Owned).

As of December 31, 2021 the Company incurred $ 0.2 million of interest expense, of which $ 0.2 million is eliminated in consolidation, for the twelve months ended December 31, 2021.

The remaining mortgage note payable of $ 24 million is included in the consolidated balance sheets under the caption Mortgage note payable.

As of December 31, 2021 , the loan accrued interest at an annual rate of 3.1 % and matures on October 9, 2024.

On March 23, 2020, the Company transferred $ 15.2 million of its interest in a term loan to a regional bank via a participation agreement.

Since inception, the Company's outstanding loan increased resultant of future fundings, leading to an increase in amount outstanding via the participation agreement.

The Company incurred $ 1.7 million and $ 0.9 million of interest expense on the regional bank term loan for the year ended December 31, 2022 and 2021, respectively.

As of December 31, 2022 and 2021 the outstanding participation balance was $ 59.2 million and $ 37.9 million, respectively.

The loan accrued interest at an annual rate of one-month LIBOR + 2.20 % and matures on June 9, 2023.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

On February 10, 2022, the Company transferred $ 38.0 million of its interest in a term loan to a regional bank via a participation agreement.

Since inception, the Company's outstanding loan could increase as a result of future fundings, which could lead to an increase in amount outstanding via the participation agreement.

The Company incurred $ 0.5 million of interest expense on the regional bank term loan for the year ended December 31, 2022.

As of December 31, 2022, the outstanding participation balance was $ 17.1 million.

The loan accrued interest at an annual rate of one-month SOFR + 4.01 % and matures on May 1, 2025.

Mortgage Note Payable

On September 17, 2021, the Company, in connection with the consolidated joint venture (as discussed in Note 5 - Real Estate Owned), originated a $ 112.7 million mortgage note payable, of which $ 88.7 million is eliminated in our consolidated financial statements (see Note 5 - Real Estate Owned).

As of December 31, 2022 and 2021, t he remaining outstanding mortgage note payable of $ 24.0 million is included in the consolidated balance sheet.

As of December 31, 2022 , the loan accrued interest at an annual rate of Libor + 3.0 %, which is eliminated in our consolidated financial statements, and matures on October 9, 2024.

Unsecured Debt

In the merger with Capstead, we acquired 30 -year junior subordinated notes issued in 2005 and 2006 and maturing in 2035 and 2036, with a total face amount of $ 100 million.

Note balances net of deferred issuance costs, and related weighted average interest rates as of the indicated dates (calculated including issuance cost amortization and adjusted for the effects of related derivatives held as cash flow hedges) were as follows (dollars in thousands):

As of December 31, 2022, the Company had outstanding 30-year junior subordinated notes issued in 2005 and 2006 and maturing in 2035 and 2036, respectively, with a total face amount of $ 100.0 million.

December 31, 2022 December 31, 2021

Outstanding Average

Rate Borrowings

Outstanding Average

Outstanding Weighted Average Borrowings

Outstanding Weighted Average

Junior subordinated notes maturing in:

7 unchanged sentences

The notes are currently redeemable, in whole or in part, without penalty, at the Company’s option.

Pursuant to a lending and security agreement with Security Benefit Life Insurance Company ("SBL"), which was entered into in February 2020 and amended in March and August 2020, the Company may borrow up to $ 100.0 million at a rate of one-month LIBOR + 4.5 %.

The facility has a maturity of February 10, 2023 and is secured by a pledge of equity interests in certain of the Company’s subsidiaries.

The Company incurred $ 2.0 million of interest expense on the lending agreement with SBL for the twelve months ended December 31, 2021.

Interest paid on unsecured debt, including related derivative cash flows, totaled $ 5.7 million and $ 0.6 million for the twelve months ended December 31, 2022 and 2021, respectively.

The Company entered into a $ 100.0 million lending and security agreement with Security Benefit Life Insurance Company ("SBL") in February 2020, which was amended in March and August 2020.

The Company incurred $ 1.0 million and $ 2.0 million of interest expense on the lending agreement with SBL for the twelve months ended December 31, 2022 and 2021 respectively.

In November 2022, the lending and security agreement with SBL was terminated by the Company.

As of December 31, 2021 the outstanding balance was $ 50.0 million.

2 unchanged sentences

The repurchase contracts on each security under an MRA generally mature in 30 - 90 days and terms are adjusted for current market rates as necessary.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

Below is a summary of the Company's MRAs as of December 31, 2022 and 2021 (dollars in thousands):

4 unchanged sentences

JP Morgan Securities LLC $ 103,513 $ 1,281 $ 120,751 5.34 % 22

Wells Fargo Securities, LLC — — — N/A N/A

Goldman Sachs International — 37 — N/A N/A

Barclays Capital Inc.

119,351 1,646 144,778 5.18 % 50

Credit Suisse AG — — — N/A N/A

Citigroup Global Markets, Inc.

— 81 — N/A N/A

Total/Weighted Average $ 222,864 $ 2,927 $ 265,529 5.25 % 37

1 unchanged sentence

JP Morgan Securities LLC $ 19,025 $ 261 $ 24,087 1.14 % 10

Wells Fargo Securities, LLC — 1,057 — N/A N/A

Goldman Sachs International 22,440 455 30,794 1.68 % 16

Goldman Sachs International — 37 — N/A N/A

Barclays Capital Inc.

15,286 526 19,131 1.21 % 14

Credit Suisse AG — 905 — N/A N/A

Citigroup Global Markets, Inc.

53,788 2,532 71,723 — 29

— 81 — N/A N/A

Total/Weighted Average $ 34,311 $ 905 $ 43,218 1.71 % 33

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

___________________________________________________________________

(1) Includes $ 43.2 million and $ 72.2 million of CLO notes, held by the Company, which is eliminated within the Real estate securities, at fair value line of the consolidated balance sheets as of as of December 31, 2021 and December 31, 2020, respectively.

(1) Includes $ 67.1 million and $ 43.2 million of CLO notes, held by the Company, which is eliminated within the Real estate securities, at fair value line of the consolidated balance sheets as of December 31, 2022 and 2021, respectively.

Repurchase Agreements - Real Estate Securities Classified As Trading

In the merger with Capstead, we acquired repurchase agreements - real estate securities classified as trading.

The Company pledges its real estate securities classified as trading as collateral for repurchase agreements with commercial banks and other financial institutions.

8 unchanged sentences

Conversely, in response to increases in fair value of pledged securities, the Company routinely margin calls its lending counterparties in order to have previously pledged collateral returned.

Repurchase agreements (and related pledged collateral, including accrued interest receivable), classified by collateral type and remaining maturities, and related weighted average borrowing rates as of the indicated dates were as follows (dollars in thousands):

Collateral Type Collateral

Amount Accrued

Receivable Borrowings

Outstanding Average

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

Repurchase agreements (and related pledged collateral, including accrued interest receivable), classified by remaining maturities, and related weighted average borrowing rates as of the indicated dates were as follows (dollars in thousands):

Outstanding Accrued

Interest Collateral

Pledged Weighted Average

December 31, 2022

Repurchase arrangements secured by Agency securities with maturities of 30 days or less $ 172,144 $ 544 $ 180,400 4.25 %

Repurchase arrangements secured by Agency securities with maturities of 31 to 90 days 45,000 114 47,210 4.51 %

$ 217,144 $ 658 $ 227,610 4.30 %

1 unchanged sentence

Repurchase arrangements secured by Agency securities with maturities of 30 days or less $ 4,144,473 $ 8,908 $ 4,327,020 0.13 %

$ — $ — $ — —

Average repurchase agreements outstanding were $ 3.97 billion in 2021.

Average repurchase agreements outstanding were $ 1.0 billion and $ 4.0 billion during the year ended December 31, 2022 and 2021, respectively.

Average repurchase agreements outstanding differed from respective year-end balances during the indicated periods primarily due to changes in portfolio levels and differences in the timing of portfolio acquisitions relative to portfolio runoff and asset sales.

Interest paid on repurchase agreements, including related derivative payments, totaled $ 8.5 million and $ 1.24 million during the twelve months ended December 31, 2022 and 2021, respectively.

Collateralized Loan Obligation

On December 14, 2021, the Company called all of the outstanding notes issued by BSPRT 2018-FL3 Issuer, Ltd., a wholly owned indirect subsidiary of the Company.

On May 13, 2022, the Company called all of the outstanding notes issued by BSPRT 2018-FL4 Issuer, Ltd., a wholly owned indirect subsidiary of the Company.

The outstanding principal of the notes on the date of the call was $ 69.5 million.

The Company recognized all the remaining unamortized deferred financing costs of $ 5.2 million recorded within the Interest expense line of the consolidated statements of operations, which was a non-cash charge.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

As of December 31, 2021 and December 31, 2020 the notes issued by BSPRT 2018-FL4 Issuer, Ltd.

As of December 31, 2022 and 2021, the notes issued by BSPRT 2019-FL5 Issuer, Ltd.

and BSPRT 2019-FL5 Co-Issuer, LLC, each wholly owned indirect subsidiaries of the Company, are collateralized by interests in a pool of 25 and 48 mortgage assets having a principal balance of $ 378.8 million and $ 589.0 million, respectively, (the "2019-FL5 Mortgage Assets").

The sale of the 2019-FL5 Mortgage Assets to BSPRT 2019-FL5 Issuer, Ltd.

is governed by a Mortgage Asset Purchase Agreement dated as of October 12, 2018, between the Company and BSPRT 2018-FL4 Issuer, Ltd.

As of December 31, 2021 and December 31, 2020, the notes issued by BSPRT 2019-FL5 Issuer, Ltd.

is governed by a Mortgage Asset Purchase Agreement dated as of May 30, 2019, between the Company and BSPRT 2019-FL5 Issuer, Ltd.

As of December 31, 2022 and 2021 , the notes issued by BSPRT 2021-FL6 Issuer, Ltd.

and BSPRT 2021-FL6 Co-Issuer, LLC, each wholly owned indirect subsidiaries of the Company , are collateralized by interests in a pool of 58 and 44 mortgage assets having a principal balance of $ 691.1 million and $ 682.3 million, respectively, (the "2021-FL6 Mortgage Assets").

The sale of the 2021-FL6 Mortgage Assets to BSPRT 2021-FL6 Issuer, Ltd.

is governed by a Mortgage Asset Purchase Agreement dated as of May 30, 2019, between the Company and BSPRT 2019-FL5 Issuer, Ltd.

On March 25, 2021, BSPRT 2021-FL6 Issuer, Ltd.

and BSPRT 2021-FL6 Co-Issuer, LLC, both wholly owned indirect subsidiaries of the Company entered into an indenture with the OP, as advancing agent and U.S.

Bank National Association, as note administrator and trustee, which governs the issuance of approximately $ 645.8 million principal balance secured floating rate notes, of which $ 573.1 million were purchased by third party investors and $ 72.6 million were purchased by a wholly owned subsidiary of the OP.

In addition, concurrently with the issuance of these notes, BSPRT 2021-FL6 Issuer, Ltd.

also issued 54,250 Preferred Shares, par value of $ 0.001 per share and with an aggregate liquidation preference and notional amount equal to $ 1,000 per share, which were not offered as part of closing the indenture.

federal income tax purposes, BSPRT 2021-FL6 Issuer, Ltd.

and BSPRT 2021-FL6 Co-Issuer, LLC are disregarded entities.

As of December 31, 2021, the notes issued by BSPRT 2021-FL6 Issuer, Ltd.

and BSPRT 2021-FL6 Co-Issuer, LLC, are collateralized by interests in a pool of 44 mortgage assets having a principal balance of $ 682.3 million (the "2021-FL6 Mortgage Assets").

is governed by a Collateral Interest Purchase Agreement dated as of March 25, 2021, between the Company and BSPRT 2021-FL6 Issuer, Ltd.

As of December 31, 2022 and 2021 , the notes issued by BSPRT 2021-FL7 Issuer, Ltd.

and BSPRT 2021-FL7 Co-Issuer, LLC, each wholly owned indirect subsidiaries of the Company , are collateralized by interests in a pool of 39 and 47 mortgage assets having a principal balance of $ 899.7 million and $ 871.4 million, respectively, (the "2021-FL7 Mortgage Assets").

The sale of the 2021-FL7 Mortgage Assets to BSPRT 2021-FL7 Issuer, Ltd.

is governed by a Collateral Interest Purchase Agreement dated as of March 25, 2021, between the Company and BSPRT 2021-FL7 Issuer, Ltd.

On December 21, 2021, BSPRT 2021-FL7 Issuer, Ltd.

On February 15, 2022, BSPRT 2022-FL8 Issuer, Ltd.

and BSPRT 2022-FL8 Co-Issuer, LLC, both wholly owned indirect subsidiaries of the Company entered into an indenture with the OP, as advancing agent and U.S.

Bank National Association, as note administrator and trustee, which governs the issuance of approximately $ 817.9 million principal balance secured floating rate notes, of which $ 722.3 million were purchased by third party investors and $ 95.6 million were purchased by a wholly owned subsidiary of the OP.

Bank National Association, as note administrator and trustee, which governs the issuance of approximately $ 1.1 billion principal balance secured floating rate notes, of which $ 960.0 million were purchased by third party investors and $ 132.0 million were purchased by a wholly owned subsidiary of the OP.

In addition, concurrently with the issuance of the notes, BSPRT 2022-FL8 Issuer, Ltd.

2 unchanged sentences

and BSPRT 2022-FL8 Co-Issuer, LLC are disregarded entities.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

As of December 31, 2022, the notes issued by BSPRT 2022-FL8 Issuer, Ltd.

and BSPRT 2021-FL7 Co-Issuer, LLC, are collateralized by interests in a pool of 47 mortgage assets having a principal balance of $ 871.4 million (the "2021-FL7 Mortgage Assets").

and BSPRT 2022-FL8 Co-Issuer, LLC, are collateralized by interests in a pool of 39 mortgage assets having a principal balance of $ 1.2 billion, respectively, (the "2022-FL8 Mortgage Assets").

The sale of the 2022-FL8 Mortgage Assets to BSPRT 2022-FL8 Issuer, Ltd.

is governed by a Collateral Interest Purchase Agreement dated as of December 21, 2021, between the Company and BSPRT 2022-FL8 Issuer, Ltd.

On June 29, 2022, BSPRT 2022-FL9 Issuer, LLC, a wholly-owned indirect subsidiary of the Company, entered into an indenture with the OP, as advancing agent, U.S.

Bank Trust Company, National Association, as trustee and note administrator, and U.S.

Bank National Association, as custodian and in other capacities, which governs the issuance of approximately $ 740.9 million principal balance secured floating rate notes, of which $ 670.6 million were purchased by third party investors and $ 70.3 million were purchased by a wholly-owned subsidiary of the OP.

In addition, concurrently with the issuance of the notes, BSPRT 2022-FL9 Issuer, LLC also issued 62,246 preferred shares, par value of $ 0.001 per share and with an aggregate liquidation preference and notional amount equal to $ 1,000 per share, which were not offered as part of closing the indenture.

federal income tax purposes, BSPRT 2022-FL9 Issuer, LLC is a disregarded entity.

As of December 31, 2022, the notes issued by BSPRT 2022-FL9 Issuer, LLC are collateralized by interests in a pool of 50 mortgage assets having a principal balance of $ 797.5 million, respectively, (the "2022-FL9 Mortgage Assets").

The sale of the 2022-FL9 Mortgage Assets to BSPRT 2022-FL9 Issuer, LLC is governed by a Collateral Interest Purchase Agreement, dated as of June 29, 2022, by and among FBRT Sub REIT, BSPRT 2022-FL9 Issuer, LLC, the OP, and BSPRT 2022-FL9 Seller, LLC.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

The Company, through its wholly-owned subsidiaries, holds the preferred equity tranches of the above CLOs of approximately $ 329.2 million and $ 256.9 million as of December 31, 2021 and December 31, 2020, respectively.

The following table represents the terms of the notes issued by 2018-FL4 Issuer, 2019-FL5 Issuer, 2021-FL6 Issuer, and 2021-FL7 Issuer (the "CLOs), respectively, as of December 31, 2021 (dollars in thousands):

The Company, through its wholly-owned subsidiaries, holds the preferred equity tranches of the above CLOs of approximately $ 401.8 million and $ 329.2 million as of December 31, 2022 and 2021, respectively.

The following table represents the terms of the notes issued by 2019-FL5 Issuer, 2021-FL6 Issuer, 2021-FL7 Issuer, 2022-FL8 Issuer and 2022-FL9 Issuer (collectively the "CLOs"), respectively, as of December 31, 2022 (dollars in thousands):

CLO Facility Tranche Par Value Issued Par Value Outstanding (1)

18 unchanged sentences

2021-FL7 Issuer Tranche E 13,500 13,500 1M LIBOR + 340

2021-FL7 Issuer Tranche A 508,500 508,500 1M LIBOR + 132

2021-FL7 Issuer Tranche A-S 13,500 13,500 1M LIBOR + 165

2021-FL7 Issuer Tranche B 52,875 52,875 1M LIBOR + 205

2021-FL7 Issuer Tranche C 66,375 66,375 1M LIBOR + 230

2021-FL7 Issuer Tranche D 67,500 67,500 1M LIBOR + 275

2021-FL7 Issuer Tranche E 13,500 13,500 1M LIBOR + 340

2022-FL8 Issuer Tranche A 690,000 690,000 1M SOFR + 150

2022-FL8 Issuer Tranche A-S 66,000 66,000 1M SOFR + 185

2022-FL8 Issuer Tranche B 55,500 55,500 1M SOFR + 205

2022-FL8 Issuer Tranche C 67,500 67,500 1M SOFR + 230

2022-FL8 Issuer Tranche D 81,000 81,000 1M SOFR + 280

2022-FL9 Issuer Tranche A 423,667 423,667 1M SOFR + 255

2022-FL9 Issuer Tranche A-S 96,380 96,380 1M SOFR + 310

2022-FL9 Issuer Tranche B 42,166 42,166 1M SOFR + 360

2022-FL9 Issuer Tranche C 48,189 48,189 1M SOFR + 415

2022-FL9 Issuer Tranche D 49,194 49,194 1M SOFR + 505

2022-FL9 Issuer Tranche E 11,041 11,043 1M SOFR + 565

$ 3,601,586 — $ 3,147,728

4 unchanged sentences

December 31, 2022

The following table represents the terms of the notes issued by the 2017-FL1 Issuer, 2017-FL2 Issuer, 2018-FL3 Issuer, 2018-FL4 Issuer, and 2019-FL5 Issuer (the "CLOs), respectively, as of December 31, 2020 (dollars in thousands):

The following table represents the terms of the notes issued by the 2018-FL4 Issuer, 2019-FL5 Issuer, 2021-FL6 Issuer and 2021-FL7 Issuer, as of December 31, 2021 (dollars in thousands):

CLO Facility Tranche Par Value Issued Par Value Outstanding (1)

5 unchanged sentences

2018-FL4 Issuer Tranche D 57,531 57,531 1M LIBOR + 275

2018-FL4 Issuer Tranche E 28,223 28,223 1M LIBOR + 305

2019-FL5 Issuer Tranche A 407,025 299,529 1M LIBOR + 115

3 unchanged sentences

2019-FL5 Issuer Tranche D 48,600 5,000 1M LIBOR + 240

2019-FL5 Issuer Tranche E 20,250 20,250 1M LIBOR + 285

2021-FL6 Issuer Tranche A 367,500 367,500 1M LIBOR + 110

4 unchanged sentences

2021-FL6 Issuer Tranche E 11,375 11,375 1M LIBOR + 350

2021-FL7 Issuer Tranche A 508,500 508,500 1M LIBOR + 132

2021-FL7 Issuer Tranche A-S 13,500 13,500 1M LIBOR + 165

2021-FL7 Issuer Tranche B 52,875 52,875 1M LIBOR + 205

2021-FL7 Issuer Tranche C 66,375 66,375 1M LIBOR + 230

2021-FL7 Issuer Tranche D 67,500 67,500 1M LIBOR + 275

2021-FL7 Issuer Tranche E 13,500 13,500 1M LIBOR + 340

$ 2,672,174 $ 2,179,514

5 unchanged sentences

The below table reflects the total assets and liabilities of the Company's outstanding CLOs.

The CLOs are considered VIEs and are consolidated into the Company's consolidated financial statements as of December 31, 2021 and December 31, 2020 as the Company is the primary beneficiary of the VIE.

The CLOs are considered VIEs and are consolidated into the Company's consolidated financial statements as of December 31, 2022 and 2021 as the Company is the primary beneficiary of the VIE.

The Company is the primary beneficiary of the CLOs because (i) the Company has the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the right to receive benefits from the VIEs or the obligation to absorb losses of the VIEs that could be significant to the VIE.

12 unchanged sentences

________________________

(1) Includes $ 187.0 million and $ 98.6 million of cash held by the servicer related to CLO loan payoffs as of December 31, 2021 and December 31, 2020.

(2) The balance is presented net of allowance for credit losses of $ 8.7 million and $ 19.4 million as of December 31, 2021 and December 31, 2020, respectively.

(3) Includes $ 320.6 million and $ 267.1 million of CLO notes, held by the Company, which are eliminated within the collateralized loan obligation line of the consolidated balance sheets as of December 31, 2021 and December 31, 2020.

(4) The balance is presented net of deferred financing cost and discount of $ 17.3 million and $ 13.7 million as of December 31, 2021 and December 31, 2020, respectively.

(1) Includes $ 42.5 million and $ 187.0 million of cash held by the servicer related to CLO loan payoffs as of December 31, 2022 and 2021, respectively.

(2) The balance is presented net of allowance for credit losses of $ 13.2 million and $ 8.7 million as of December 31, 2022 and 2021, respectively.

(3) Includes $ 453.4 million and $ 320.6 million of CLO notes, held by the Company, which are eliminated within the collateralized loan obligation line of the consolidated balance sheets as of December 31, 2022 and 2021, respectively.

(4) The balance is presented net of deferred financing cost and discount of $ 19.2 million and $ 17.3 million as of December 31, 2022 and 2021, respectively.

FRANKLIN BSP REALTY TRUST, INC.

8 unchanged sentences

Numerator 2022 2021 2020

Net income $ 25,702 $ 54,746 $ 83,924

Net income/(loss) $ 14,215 $ 25,702 $ 54,746

Net (income)/loss from noncontrolling interest 216 — —

Preferred stock dividends 41,741 33,587 14,920

3 unchanged sentences

Effect of dilutive shares:

Unvested restricted shares 15,521 14,066 12,504

Unvested restricted shares and stock units (1)

— 15,521 14,066

Weighted-average common shares outstanding for diluted earnings per share 71,628,365 43,434,731 44,398,879

1 unchanged sentence

Diluted earnings per share $ ( 0.38 ) $ ( 0.18 ) $ 0.90

Note 9 - Stock Transactions

As of December 31, 2021 and December 31, 2020, the Company had 43,965,928 and 44,510,051 shares of common stock outstanding, respectively, including shares issued pursuant to the Company's distribution reinvestment plan (the "DRIP"), share repurchases and unvested restricted shares.

As of each of December 31, 2021 and December 31, 2020, the Company had 1,400 shares of Series C Preferred Stock outstanding.

Additionally, as of December 31, 2021, the Company had 17,950 shares of Series D Preferred Stock, 39,733,299 shares of Series F Preferred Stock and 10,329,039 shares of Series E Preferred Stock outstanding.

As of December 31, 2020 the Company had 0 shares of Series D Preferred Stock, Series F Preferred Stock, and Series E Preferred Stock outstanding.

As of December 31, 2021 the Company had 0 shares of Series A Preferred Stock outstanding.

The following tables present the activity in the Company's Series A Preferred Stock for the periods ended December 31, 2021 and December 31, 2020, (dollars in thousands, except share amounts).

In March 2021, we exchanged 14,949 shares of Series A Preferred Stock for an equivalent amount of shares of Series D Preferred Stock and sold 3,000 new shares of Series D Preferred Stock for total proceeds of $ 14.0 million, representing the $ 15.0 million aggregate liquidation preference per share of the 3,000 shares of Series D Preferred Stock sold less the accrued and unpaid dividends on the surrendered shares of Series A Preferred Stock:

_________________________________________________________

(1) The effect of dilutive shares excluded an aggregate of 476,653 weighted average restricted shares and stock units for year ended December 31, 2022, as the effect was anti-dilutive.

Additionally, the effect of dilutive shares excluded an aggregate of 17,521,845 weighted average common equivalent of convertible preferred shares for the year ended December 31, 2022, as the effect was anti-dilutive.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

Series A Preferred Stock Shares Amount

Beginning Balance, December 31, 2020 40,515 $ 202,292

Surrender of Series A Preferred Stock in exchange for Series D Preferred Stock ( 14,950 ) ( 74,748 )

Conversion of Preferred Stock (1)

Note 9 - Redeemable Convertible Preferred Stock and Equity Transactions

The following table presents the summary of the Company's outstanding shares of Redeemable Convertible Preferred Stock, Perpetual Preferred Stock, Automatically Convertible Preferred Stock and Common Stock as of December 31, 2022 and December 31, 2021 (dollars in thousands, except share amounts):

Balance as of Shares Outstanding as of Fourth Quarter 2022 Dividend/Distribution Per Share (6)

December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Redeemable Convertible Preferred Stock

Series C Preferred Stock (1)

$ — $ 6,971 — 1,400 n/a

Series D Preferred Stock (2)

$ — $ 89,684 — 17,950 n/a

Series H Preferred Stock (2)

$ 89,748 $ — 17,950 — $ 106.22

Dividends paid in Preferred Stock 2 5

Offering costs — ( 14 )

Amortization of offering costs — 68

Ending Balance, December 31, 2021 — $ —

Series I Preferred Stock (1)

$ 5,000 $ — 1,000 — $ 106.22

(1) In connection with the listing of the Common Stock on the NYSE, on October 19, 2021 immediately prior to the closing of the Capstead merger, each outstanding share of Series A Preferred Stock automatically converted into 299.2 shares of Common Stock, pursuant to the terms of the Series A Preferred Stock, resulting in the issuance of 7,649,632 shares of Common Stock.

Series A Preferred Stock Shares Amount

Beginning Balance, December 31, 2019 40,500 $ 202,144

Issuance of Preferred Stock 14 70

Dividends paid in Preferred Stock 1 7

Offering costs — ( 23 )

Amortization of offering costs — 94

Ending Balance, December 31, 2020 40,515 $ 202,292

The following tables present the activity in the Company's Series C Preferred Stock for the periods ended December 31, 2021 and December 31, 2020, (dollars in thousands, except share amounts):

Series C Preferred Stock Shares Amount

Beginning Balance, December 31, 2020 1,400 $ 6,962

Issuance of Preferred Stock — —

Dividends paid in Preferred Stock — —

Offering costs — —

Amortization of offering costs — 9

Ending Balance, December 31, 2021 1,400 $ 6,971

Series C Preferred Stock Shares Amount

Beginning Balance, December 31, 2019 1,400 $ 6,966

Issuance of Preferred Stock — —

Dividends paid in Preferred Stock — —

Offering costs — ( 11 )

Amortization of offering costs — 7

Ending Balance, December 31, 2020 1,400 $ 6,962

Perpetual Preferred Stock

Series E Preferred Stock $ 258,742 $ 258,742 10,329,039 10,329,039 $ 0.46875

Automatically Convertible Preferred Stock

Series F Preferred Stock (3)

$ — $ 710,431 — 39,733,299 n/a

Common Stock - at par value (4)(5)

$ 826 $ 441 82,992,784 43,965,928 $ 0.355

_________________________________________________________

(1) On October 19, 2022, 400 shares of the Company's Series C Preferred Stock each automatically converted into 299.2 shares of Common Stock, pursuant to the terms of the Series C Preferred Stock, resulting in the issuance of 119,538 shares of Common Stock.

The remaining 1,000 outstanding shares of Series C Preferred Stock were exchanged by the holder for an equal number of the Company's newly created Series I Preferred Stock, all of which automatically converted into 299.2 shares of Common Stock on January 19, 2023, pursuant to the terms of the Series I Preferred Stock, resulting in the issuance of 299,200 shares of Common Stock.

(2) 17,950 shares of Series D Preferred Stock were issued in March 2021, all of which were exchanged for an equal number of shares of Series H Preferred Stock in June 2022.

Unless earlier converted by the holder, each share of the Series H Preferred Stock will automatically convert into 299.2 shares of Common Stock on January 19, 2024, pursuant to the terms of the Series H Preferred Stock.

(3) On April 19, 2022, all of the 39,733,299 outstanding shares of the Company’s Series F Preferred Stock automatically converted on a one -for-one basis into an equal amount of shares of Common Stock, pursuant to the terms of the Articles Supplementary of the Series F Preferred Stock.

(4) Common Stock include shares issued pursuant to the Company's distribution reinvestment plan (the "DRIP") and unvested restricted shares.

(5) During the year ended December 31, 2022, the Company repurchased 1,416,369 shares of Common Stock at an average price of $ 11.71 per share, for a total of $ 16.6 million.

All of these shares were retired upon settlement, reducing the total outstanding shares as of December 31, 2022.

See discussion in the "Stock Repurchases" section below.

(6) As declared by the Company's board of directors.

Distributions

In order to maintain its election to qualify as a REIT, the Company must currently distribute, at a minimum, an amount equal to 90 % of its taxable income, without regard to the deduction for distributions paid and excluding net capital gains.

The Company must distribute 100 % of its taxable income (including net capital gains) to avoid paying corporate U.S.

federal income taxes.

Distribution payments are dependent on the availability of funds.

The Company's board of directors may reduce the amount of distributions paid or suspend distribution payments at any time, and therefore, distributions payments are not assured.

Dividends on the Company’s outstanding shares of preferred stock, to the extent not declared by the board of directors quarterly, will accrue, and dividends may not be paid on the Company's common stock to the extent there are accrued and unpaid dividends on the preferred stock.

The amount of dividends paid on the Company’s Series H Preferred Stock and Series I Preferred Stock are generally in an amount equal to the dividends a holder of such preferred stock would have received if the preferred stock had been converted into common stock in accordance with its terms, except when the amount of common stock dividends are below the threshold stated in the terms of such preferred stock.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

The following table presents the activity in the Company's Series D Preferred Stock for the period ended December 31, 2021 (dollars in thousands, except share amounts):

Series D Preferred Stock Shares Amount

Balance, December 31, 2020 — $ —

The Company distributed $ 87.8 million of common stock dividends during the year ended December 31, 2022, composed of $ 85.8 million in cash and $ 2.0 million in shares of common stock issued under the DRIP.

The Company distributed $ 53.1 million of common stock dividends during the year ended December 31, 2021, composed of $ 48.0 million in cash and $ 5.1 million in shares of common stock issued under the DRIP.

As of December 31, 2022 and December 31, 2021, the Company had declared but unpaid common stock distributions of $ 29.5 million and $ 12.5 million, respectively, and $ 4.8 million of declared but unpaid Series E Preferred Stock distributions.

Additionally, as of December 31, 2022 the Company had declared but unpaid Series H Preferred stock distributions of $ 1.9 million and declared but unpaid Series I Preferred stock distributions of $ 0.1 million.

As of December 31, 2021, the Company had declared but unpaid Series C Preferred Stock distributions of $ 0.1 million, $ 1.5 million of declared but unpaid Series D Preferred Stock distributions and $ 11.3 million of declared but unpaid Series F Preferred Stock distributions.

These amounts are included in Distributions payable on the Company’s consolidated balance sheets.

Preferred Stock

The following tables present the activity in the Company's Series C Preferred Stock for the years ended December 31, 2022 and 2021 (dollars in thousands, except share amounts):

For the Years Ended

December 31, 2022 December 31, 2021

Shares Amount Shares Amount

Balance at Beginning of Period 1,400 $ 6,971 1,400 $ 6,962

Converted into Common Stock ( 400 ) ( 1,997 ) — —

Exchanged for Series I Preferred Stock ( 1,000 ) ( 5,000 ) — —

Amortization of offering costs — 26 — 9

Balance at End of Period — $ — 1,400 $ 6,971

The following table presents the activity in the Company's Series D Preferred Stock for the years ended December 31, 2022 and 2021 (dollars in thousands, except share amounts):

For the Years Ended

December 31, 2022 December 31, 2021

Shares Amount Shares Amount

Balance at Beginning of Period 17,950 $ 89,684 — $ —

Issuance of Preferred Stock — — 17,950 89,748

Dividends paid in Preferred Stock — —

Exchanged for Series H Preferred Stock ( 17,950 ) ( 89,748 ) — —

Offering costs — — — ( 82 )

Amortization of offering costs — 64 — 18

Ending Balance, December 31, 2021 17,950 $ 89,684

As of December 31, 2020 the Company did not have any Series D Preferred Stock outstanding.

Common Stock and Series F Preferred Stock Recapitalization

In accordance with the terms of the Merger Agreement (as defined below), on October 6, 2021, the Company filed Articles of Amendment to the Company’s Charter (the “Articles of Amendment”) with the State Department of Assessments and Taxation of Maryland (the “SDAT”) to effect (a) a Company name change and (b) a one-for-ten reverse stock split (the “Reverse Stock Split”).

Pursuant to the Articles of Amendment, effective as of 9:00 a.m.

eastern time on October 12, 2021, the Company’s name changed to “Franklin BSP Realty Trust, Inc.,” and effective as of the close of business on October 12, 2021, each outstanding share of the Company’s Common Stock, automatically combined into 1/10th of a share of Common Stock.

Fractional shares that were created as a result of the Reverse Stock Split remained outstanding.

As a result of the Reverse Stock Split, the number of outstanding shares of Common Stock of the Company as of the date of the Reverse Stock Split were reduced to approximately 4.5 million shares.

In addition, also on October 6, 2021 the Company filed Articles Supplementary (the “Articles Supplementary”) to the Company’s charter with the SDAT, with an effective date of October 12, 2021.

The Articles Supplementary (a) reclassified 50,000,000 shares of authorized but unissued shares of Common Stock as preferred stock, $ 0.01 par value per share, as a result of which the Company is authorized to issue 900,000,000 shares of Common Stock and 100,000,000 shares of preferred stock under the charter, and (b) designated and classified 40,000,000 shares of preferred stock as a new series of Series F Preferred Stock, with the rights, preferences and obligations set forth in the Articles Supplementary.

Also in accordance with the terms of the Merger Agreement, on October 4, 2021, the Board declared a stock dividend (the “Stock Dividend”) on the outstanding shares of Common Stock, payable at a rate of nine shares of Series F Preferred Stock for each share of Common Stock issued and outstanding following the Reverse Stock Split on October 12, 2021.

The record date used to determine the list of holders of Common Stock eligible to receive the Stock Dividend (following the Reverse Stock Split) was set by the Board as October 7, 2021.

As a result of the Reverse Stock Split, holders of Common Stock collectively received 39,733,298 shares of Series F Preferred Stock.

The Reverse Stock Split and Stock Dividend resulted in each stockholder of Common Stock having the same economic value of equity securities in the Company as such holder did prior to the Reverse Stock Split and Stock Dividend, except that each such holder now has 10 % of their holdings in Common Stock and 90 % of their holdings in Series F Preferred Stock.

Each share (or fractional share) of Series F Preferred Stock will automatically convert into one share of Common Stock (or equivalent fractional share, as applicable) on April 19, 2022.

Issuance of Common Stock and Series E Preferred Stock in the Merger with Capstead Mortgage Corporation

On October 19, 2021 (the “Closing Date”), the Company consummated the transactions contemplated by that certain Agreement and Plan of Merger, dated as of July 25, 2021, as amended pursuant to that certain First Amendment to Agreement and Plan of Merger, dated as of September 22, 2021 (as amended, the “Merger Agreement”), by and among the Company, Rodeo Sub I, LLC (“Merger Sub”), Capstead Mortgage Corporation (“Capstead”) and, solely for the purposes set forth therein, the Advisor.

Pursuant to the Merger Agreement, on the Closing Date, Capstead merged with and into Merger Sub, with Merger Sub continuing as the surviving company (the “Merger”).

At the effective time of the merger (the "Effective Time"), each outstanding share of common stock, par value $ 0.01 per share, of Capstead (the “Capstead Common Stock”) (other than shares held by the Company or Merger Sub or by any wholly owned subsidiary of the Company or Merger Sub or any wholly owned subsidiary of Capstead immediately prior to the Effective Time, which were automatically canceled and retired and ceased to exist) was cancelled and converted into the right to receive:

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

• from the Company, (A) 0.3288 newly-issued shares of the Company's Common Stock (the “Per Share Stock Payment”);

and (B) a cash amount equal to $ 0.21 per share (the “Per Share Cash Payment” and together with the Per Share Stock Payment, the “Per Common Share FBRT Payment”);

• from the Advisor, a cash amount equal to $ 0.73 per share (the “Advisor Cash Payment” and together with the Per Common Share FBRT Payment, the “Total Per Common Share Payment”).

No fractional shares of Common Stock were issued in the Merger, and the value of any fractional interests to which a former holder of Capstead Common Stock is otherwise entitled will be paid in cash.

Additionally, at the Effective Time, (i) each outstanding share of Capstead’s 7.50 % Series E Cumulative Redeemable Preferred Stock, $ 0.10 par value per share (“Capstead Preferred Stock”), was cancelled and converted into the right to receive one newly-issued share of the Company's Series E Preferred Stock, which has the rights, preferences, and privileges and voting powers materially the same as those of the Capstead Preferred Stock.

The Company filed Articles Supplementary to the Company’s charter with the SDAT, with an effective date of October 19, 2021, which designated and classified 10,329,039 shares of preferred stock as a new series of Series E Preferred Stock, with the rights, preferences and obligations set forth in the Articles Supplementary.

Furthermore, effective immediately prior to the Effective Time, all outstanding restricted stock under Capstead’s Amended and Restated 2014 Flexible Incentive Plan (the “Capstead Plan”) automatically became fully vested and non-forfeitable, and all shares of Capstead Common Stock represented thereby became eligible to receive the Total Per Common Share Payment.

Also effective immediately prior to the Effective Time, all outstanding awards of performance units under the Capstead Plan automatically became earned and vested at the conversion rate of one share of Capstead Common Stock for each outstanding performance unit, and all shares of Capstead Common Stock represented thereby became eligible to receive the Total Per Common Share Payment.

Each outstanding dividend equivalent right under the Capstead Plan was automatically cancelled as of the Effective Time;

provided that any accrued amounts that were not paid as of immediately prior to the Effective Time were paid to the holders thereof at the Effective Time (or will be as soon as practicable thereafter but in no event later than the first payroll date following the Effective Time).

The issuances of shares of Common Stock and Series E Preferred Stock in connection with the Merger were registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Company’s registration statement on Form S-4 (Registration No.

333-258947), which was declared effective by the U.S.

Securities and Exchange Commission (the “SEC”) on September 3, 2021 (as amended or supplemented, the “S-4 Registration Statement”).

The proxy statement/prospectus included in the S-4 Registration Statement contains additional information regarding the Merger.

Per the terms of the transactions described in the Merger Agreement, approximately 31.9 million shares of Common Stock were issued in connection with the Merger to former Capstead common stockholders, and the Company paid $ 20.5 million in cash payments to former Capstead common stockholders.

In addition, the Company issued 10.3 million shares of Series E Preferred Stock to former holders of Capstead Preferred Stock.

In addition, both the Company’s Common Stock and Series E Preferred Stock were listed on the New York Stock Exchange (“NYSE”) on October 19, 2021, under the ticker symbols “FBRT” and “FBRT PRE,” respectively.

7.50% Series E cumulative redeemable preferred stock

The Series E Preferred Stock has no stated maturity and is not subject to any sinking fund or mandatory redemption.

The Series E Preferred Stock ranks, with respect to rights to the payment of dividends and the distribution of assets upon its liquidation, dissolution or winding up, senior to the Common Stock and Series F Preferred Stock and on a parity with the Series C Preferred Stock and Series D Preferred Stock.

The liquidation preference is $ 25.00 per share, plus an amount equal to any accumulated and unpaid dividends.

Dividends on the Series E Preferred Stock are cumulative and payable quarterly in arrears.

Balance at End of Period — $ — 17,950 $ 89,684

The following table presents the activity in the Company's Series E Preferred Stock for the years ended December 31, 2022 and 2021 (dollars in thousands, except share amounts):

For the Years Ended

December 31, 2022 December 31, 2021

Shares Amount Shares Amount

Balance at Beginning of Period 10,329,039 $ 258,742 — $ —

Issuance of Preferred Stock — — 10,329,039 258,742

Balance at End of Period 10,329,039 $ 258,742 10,329,039 $ 258,742

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

The Series E Preferred Stock is listed on the New York Stock Exchange under the symbol “FBRT PRE”.

Share Repurchase Program

Prior to the listing of the Common Stock on the NYSE on October 19, 2021, the Company maintained a share repurchase program (the “SRP”) that enabled stockholders to sell their shares to the Company.

The following table reflects the number of shares repurchased under the SRP cumulatively through December 31, 2021:

Number of Requests Number of Shares Repurchased Average Price per Share

Cumulative as of December 31, 2020 8,094 4,121,735 $ 19.88

January 1 - January 31, 2021 (1)

1,355 525,580 17.53

February 1 - February 28, 2021 — — N/A

March 1 - March 31, 2021 (1)

April 1 - April 30, 2021 — — N/A

May 1 - May 31, 2021 (1)

June 1 - June 30, 2021 — — N/A

July 1 - July 31, 2021 (2)

1,424 123,257 17.88

August 1 - August 31, 2021 — — N/A

September 1 - September 30, 2021 (2)

October 1 - October 31, 2021 — — N/A

November 1 - November 30, 2021 — — N/A

December 1 - December 31, 2021 — — N/A

Cumulative as of December 31, 2021 10,873 4,770,572 $ 19.57

________________________

(1) Reflects shares repurchased pursuant to repurchase requests submitted for the second semester of 2020, including 15,772 and 3,784 shares which for administrative reasons were processed in March 2021 and May 2021, respectively.

Pursuant to the terms of the SRP, the Company is only authorized to repurchase up to the amount of proceeds reinvested through our DRIP during the applicable semester.

As a result, redemption requests in the amount of 1,881,556 shares were not fulfilled for the second semester of 2020.

(2 ) Reflects shares repurchased pursuant to repurchase requests submitted for the first semester of 2021, including 1,776 shares which for administrative reasons were processed in September 2021 .

Pursuant to the terms of the SRP, the Company is only authorized to repurchase up to the amount of proceeds reinvested through our DRIP during the applicable semester.

As a result, redemption requests in the amount of 761 shares were not fulfilled for the first semester of 2021.

The Company’s board of directors has authorized a $ 65 million share repurchase program that will become operative following the conclusion of the $ 35 million open market share purchase program the Advisor agreed to implement in connection with the Capstead acquisition.

The following table presents the activity in the Company's Series F Preferred Stock for the years ended December 31, 2022 and 2021 (dollars in thousands, except share amounts):

For the Years Ended

December 31, 2022 December 31, 2021

Shares Amount Shares Amount

Balance at Beginning of Period 39,733,299 $ 710,431 — $ —

Issuance of Preferred Stock — — 39,733,299 710,431

Automatically converted into Common Stock ( 39,733,299 ) ( 710,431 ) — —

Balance at End of Period — $ — 39,733,299 $ 710,431

The following table presents the activity in the Company's Series H Preferred Stock for the years ended December 31, 2022 and 2021 (dollars in thousands, except share amounts):

For the Years Ended

December 31, 2022 December 31, 2021

Shares Amount Shares Amount

Balance at Beginning of Period — $ — — $ —

Issuance of Series H Preferred Stock in exchange for Series D Preferred Stock 17,950 89,748 — —

Balance at End of Period 17,950 $ 89,748 — $ —

The following table presents the activity in the Company's Series I Preferred Stock for the years ended December 31, 2022 and 2021 (dollars in thousands, except share amounts):

For the Years Ended

December 31, 2022 December 31, 2021

Shares Amount Shares Amount

Balance at Beginning of Period — $ — — $ —

Issuance of Series I Preferred Stock in exchange for Series C Preferred Stock 1,000 5,000 — —

Balance at End of Period 1,000 $ 5,000 — $ —

Stock Repurchases

The Company’s board of directors has authorized a $ 65 million share repurchase program of the Company’s common stock.

The Company’s share repurchase program authorizes share repurchases at prices below the most recently reported book value per share as determined in accordance with GAAP.

Purchases made under the Company’s program may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, as permitted by securities laws and other legal requirements.

The timing, manner, price and amount of any purchases by the Company and the Advisor will be determined by the respective teams responsible at the Company and the Advisor, as applicable, in their reasonable business judgment and consistent with the exercise of their legal duties and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors.

The Company share repurchase program does not obligate the Company to acquire any particular amount of common stock.

The Company’s and the Advisor’s share purchase programs will remain open until at least November 2022 or until the capital committed to the applicable repurchase program has been exhausted, whichever is sooner.

Purchases made under the program may be made through open market, block, and privately negotiated transactions, including Rule 10b5-1 plans, as permitted by securities laws and other legal requirements.

The timing, manner, price and amount of any purchases by the Company will be determined by the Company in its reasonable business judgment and consistent with the exercise of its legal duties and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors.

The share repurchase program does not obligate the Company to acquire any particular amount of common stock.

The Company share repurchase program will remain open until at least December 31, 2023 or until the capital committed to the applicable repurchase program has been exhausted, whichever is sooner.

Repurchases under the Company’s share repurchase program may be suspended from time to time at the Company’s discretion without prior notice.

2 unchanged sentences

December 31, 2022

The following table is a summary of the Company’s repurchase activity of its common stock during the year ended December 31, 2022:

For the Year Ended December 31, 2022

Shares Amount

Authorized repurchase amount — $ 65,000

Repurchases paid (1)(2)

1,416,369 ( 16,579 )

Remaining as of December 31, 2022

_________________________________________________________

(1) Amount includes commissions paid associated with share repurchases .

(2) For the year ended December 31, 2022, the average purchase price was $ 11.71 per share.

As of December 31, 2022, the Company had $ 48.4 million remaining under the share repurchase program.

Accumulated Other Comprehensive Income/(Loss)

The following tables set forth the changes in accumulated other comprehensive income/(loss) by component (dollars in thousands):

For the Years Ended

December 31, 2022 December 31, 2021 December 31, 2020

Total Available for Sale Securities Cash Flow Hedges Total Available for Sale Securities Cash Flow Hedges Total Available for sale securities Cash Flow Hedges

Balance at Beginning of Period $ ( 62 ) $ — $ ( 62 ) $ ( 8,256 ) $ ( 8,256 ) $ — $ ( 978 ) $ ( 978 ) $ —

Other comprehensive income/(loss) 170 390 ( 220 ) 7,404 8,256 ( 852 ) ( 7,278 ) ( 7,278 ) —

Reclassification adjustment for amounts included in net income/(loss) 282 — 282 790 — 790 — — —

Balance at End of Period $ 390 $ 390 $ — $ ( 62 ) $ — $ ( 62 ) $ ( 8,256 ) $ ( 8,256 ) $ —

Note 10 - Commitments and Contingencies

8 unchanged sentences

$ 465,988 $ 458,105

The borrowers are required to meet or maintain certain metrics in order to qualify for the unfunded commitment amounts.

The borrowers are generally required to meet or maintain certain metrics in order to qualify for the unfunded commitment amounts.

Litigation and Regulatory Matters

The Company is not presently involved in any material litigation arising outside the ordinary course of business.

The Company is not presently named as a defendant in any material litigation arising outside the ordinary course of business.

However, the Company is involved in routine litigation arising in the ordinary course of business, none of which the Company believes, individually or in the aggregate, will have a material impact on the Company’s financial condition, operating results or cash flows.

Capstead Merger Litigation

Five lawsuits were filed by purported stockholders of Capstead with respect to the Capstead merger.

The first suit, styled as Shiva Stein v.

Capstead Mortgage Corporation, et al., No.

1:21-cv-7306 (the “Stein Lawsuit”), was filed in the United States District Court for the Southern District of New York on August 31, 2021, and asserted claims against Capstead, members of the Capstead board of directors (the “Capstead Board”) and the Company.

The second suit, styled as Matthew Hopkins v.

Capstead Mortgage Corporation, et al., No.

1:21-cv-07369 (the “Hopkins Lawsuit”), was filed in the United States District Court for the Southern District of New York on September 1, 2021, and asserted claims against Capstead, members of the Capstead Board, the Company and the Advisor.

The third suit, styled as Bryan Harrington v.

Capstead Mortgage Corporation, et al., No.

1:21-cv-05080 (the “Harrington Lawsuit”), was filed in the United States District Court for the Eastern District of New York on September 11, 2021, and asserted claims against Capstead and members of the Capstead Board.

The fourth suit, styled as Randy Gill v.

Capstead Mortgage Corporation, et al., No.

1:21-cv-07973 (the “Gill Lawsuit”), was filed in the United States District Court for the Southern District of New York on September 24, 2021, and asserted claims against Capstead and members of the Capstead Board.

The fifth suit, styled as Jordan Wilson v.

Capstead Mortgage Corporation, et al., No.

1:21-cv-08147-UA (the “Wilson Lawsuit”), was filed in the United States District Court for the Southern District of New York on October 1, 2021, and asserted claims against Capstead and members of the Capstead Board.

Capstead also received demand letters from two purported stockholders, Brett Braafhart and Angelo Fisichella, threatening to assert claims against Capstead and members of the Capstead Board (such demand letters, together with the Stein Lawsuit, the Hopkins Lawsuit, the Harrington Lawsuit, the Gill Lawsuit and the Wilson Lawsuit, the “Lawsuits”).

Each of the Lawsuits alleged that certain of the disclosures in the Capstead proxy statement related to the merger were deficient, and sought preliminary and injunctive relief.

While Capstead believed that the disclosures set forth in the proxy statement complied fully with applicable law, in order to address certain disclosure claims in the Lawsuits, minimize the cost, risk and uncertainty inherent in litigation, avoid nuisance and preclude any efforts to delay the completion of the merger, Capstead voluntarily supplemented the proxy statement with certain supplemental disclosures.

The Company, as successor to Capstead in the merger, believes the claims asserted in the Lawsuits are without merit and expressly denies all allegations in the Lawsuits, including that any additional disclosure was or is required.

Subsequent to the completion of the Capstead merger, each of the Stein Lawsuit, the Hopkins Lawsuit, the Harrington Lawsuit, the Gill Lawsuit and the Wilson Lawsuit was voluntarily dismissed without prejudice.

FRANKLIN BSP REALTY TRUST, INC.

6 unchanged sentences

• The Company pays the Advisor, or its affiliates, a monthly asset management fee equal to one-twelfth of 1.5% of stockholders' equity as calculated pursuant to the Advisory Agreement.

• The Company will pay the Advisor an annual subordinated performance fee calculated on the basis of total return to stockholders, payable monthly in arrears, such that for any year in which total return on stockholders’ capital exceeds 6.0 % per annum, our Advisor will be entitled to 15.0 % of the excess total return;

• The Company will pay the Advisor an annual subordinated performance fee calculated on the basis of total return to stockholders, payable monthly in arrears, such that for any year in which total return on stockholders’ capital (as defined in the Advisory Agreement) exceeds 6.0 % per annum, our Advisor will be entitled to 15.0 % of the excess total return;

provided that in no event will the annual subordinated performance fee payable to our Advisor exceed 10.0 % of the aggregate total return for such year.

11 unchanged sentences

________________________

(1) Total acquisition fees and expenses paid during the years ended December 31, 2021, 2020 and 2019 were $ 15.0 million, $ 7.1 million and $ 8.4 million respectively, of which $ 13.8 million, $ 6.4 million and $ 7.5 million were capitalized within the commercial mortgage loans, held for investment line of the consolidated balance sheets for the years ended December 31, 2021, 2020 and 2019.

(1) Total acquisition fees and expenses paid during the years ended December 31, 2022, 2021 and 2020 were $ 11.7 million, $ 15.0 million and $ 7.1 million respectively, of which $ 10.3 million, $ 13.8 million and $ 6.4 million were capitalized within the commercial mortgage loans, held for investment and real estate securities, available for sale, measured at fair value lines of the consolidated balance sheets for the years ended December 31, 2022, 2021 and 2020.

(2) These are related to reimbursable costs incurred related to the increase in loan origination activities and are included in Other expenses in the Company's consolidated statements of operations.

(3) The related party payable includes $ 1.9 million and $ 1.8 million, respectively, of payments made by the Advisor to third party vendors on behalf of the Company.

(3) As of December 31, 2022 and December 31, 2021, the related party payables include $ 2.9 million and $ 1.9 million of payments made by the Advisor to third party vendors on behalf of the Company.

The payables as of December 31, 2022 and 2021 in the table above are included in Due to affiliates on the Company's consolidated balance sheets.

Other Transactions

The facility has a maturity of February 10, 2023 and is secured by a pledge of equity interests in certain of the Company’s subsidiaries.

The Company incurred $ 2.0 million and $ 0.2 million of interest expense on the lending agreement with SBL for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021 there was a $ 50.0 million outstanding balance under the lending agreement.

SBL is an entity that also holds 17,950 of the Company’s outstanding shares of Series D Preferred Stock of which, 14,950 shares were acquired in exchange for an equivalent number of shares of Series A Preferred Stock in March 2021.

SBL also acquired an additional 3,000 shares of Series D Preferred Stock at the liquidation preference of $ 15.0 million (net of accrued and unpaid dividends on the exchanged Series A Preferred Stock) in such transaction.

The Company entered into a $ 100.0 million lending and security agreement with Security Benefit Life Insurance Company ("SBL") in February 2020, which was amended in March and August 2020.

The Company incurred $ 1.0 million and $ 2.0 million of interest expense on the lending agreement with SBL for the twelve months ended December 31, 2022 and 2021 respectively.

In November 2022, the lending and security agreement with SBL was terminated by the Company.

As of December 31, 2021 the outstanding balance was $ 50.0 million.

As of the beginning of 2022, SBL held 17,950 shares of the Company's outstanding shares of Series D Preferred Stock.

On June 24, 2022, all 17,950 outstanding shares of Series D Preferred Stock were exchanged for an equal amount of shares of Series H Preferred Stock for no consideration (see Note 2 - Summary of Significant Accounting Policies).

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

In August 2021 the Company and an affiliate of the Company entered into a joint venture agreement and formed a joint venture entity, Jeffersonville Member, LLC (the "Jeffersonville JV") to acquire a $ 139.5 million triple net lease property in Jeffersonville, GA.

The Company has a 79 % interest in the Jeffersonville JV, while the affiliated fund has a 21 % interest.

The Company invested a total of $ 109.8 million, made up of $ 88.7 million in debt and $ 21.1 million in equity, representing 79 % of the ownership interest in the Jeffersonville JV.

The affiliated fund made up the remaining $ 29.8 million composed of a $ 24.0 million mortgage note payable and $ 5.7 million in equity.

The affiliate made up the remaining $ 29.8 million composed of a $ 24.0 million mortgage note payable and $ 5.7 million in equity.

The Company has control of Jeffersonville JV with 79 % ownership and, therefore, consolidates Jeffersonville JV on its consolidated balance sheet.

The Company's $ 88.7 million mortgage note payable to Jeffersonville JV is eliminated in consolidation (see Note 7 - Debt).

As discussed below, in the first quarter of 2022, pursuant to the 2021 Incentive Plan, the Company issued awards of restricted stock units to its officers and certain other personnel of the Advisor who provide services to the Company under the Advisory Agreement (see Note 12 - Share-Based Compensation).

As of December 31, 2022, our commercial mortgage loans, held for investment, includes an aggregate of $ 122.9 million carrying value of loans to affiliates of our Advisor.

The Company recognized $ 5.5 million interest income from these loans for the year ended December 31, 2022, in the Company’s consolidated statements of operations.

As disclosed in Note 3 - Commercial Mortgage Loans in April 2022, the Company fully funded a $ 113.2 million first mortgage consisting of 24 retail properties with various locations throughout the United States.

The Company entered into a joint venture agreement and formed a joint venture entity, BSPRT Walgreens Portfolio, LLC (the "Walgreens Portfolio") to acquire 75.618 % ownership interest in the Walgreens Portfolio, while the affiliated fund has 24.242 % interest (see Note 5 - Real Estate Owned).

Note 12 - Share-Based Compensation

The Company maintains the Franklin BSP Realty Trust, Inc.

2021 Equity Incentive Plan (the “2021 Incentive Plan”), pursuant to which the Company may, from time to time, grant equity awards to the Company’s directors, officers and employees (if it ever has employees), employees of the Advisor and its affiliates, or certain of the Company’s consultants, advisors or other service providers to the Company or an affiliate of the Company.

The 2021 Incentive Plan, which is administered by the Compensation Committee of the Board of Directors, provides for the grant of awards of share options, share appreciation rights, restricted shares, restricted share units, deferred share units, unrestricted shares, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards, LTIP units and cash bonus awards.

The maximum number of shares of common stock available for issuance under the 2021 Incentive Plan is 5,500,000 shares.

No awards had been made under the 2021 Incentive Plan as of December 31, 2021 .

The Company's equity incentive plans provide the Company with the ability to grant equity-based awards to its directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, or certain of the Company's consultants, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, the Advisor and its affiliates.

Under the Company's RSP, the total number of common shares granted shall not exceed 5 % of the Company’s authorized common shares, and in any event, will not exceed 4.0 million shares (as such number may be adjusted for stock splits, stock distributions, combinations and similar events).

The RSP expired on February 7, 2023.

Under the Company's 2021 Incentive Plan, as of December 31, 2022 , there were 5,007,893 shares of common stock remaining available for issuance.

The Board may amend, suspend or terminate the 2021 Incentive Plan at any time;

provided that no amendment, suspension or termination may impair rights or obligations under any outstanding award without the participant’s consent or violate the 2021 Incentive Plan’s prohibition on repricing.

The Company also has an employee and director incentive restricted share plan (the "RSP"), which provides the Company with the ability to grant awards of restricted shares to the Company’s directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, the Advisor and its affiliates.

The total number of common shares granted under the RSP shall not exceed 5.0 % of the Company’s authorized common shares pursuant to the Offering, and in any event, will not exceed 4.0 million shares (as such number may be adjusted for stock splits, stock distributions, combinations and similar events).

The RSP will expire on February 7, 2023.

Such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient’s employment or other relationship with the Company.

Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested.

Holders of restricted shares may receive cash distributions prior to the time that the restrictions on the restricted shares have lapsed.

Any distributions payable in common shares shall be subject to the same restrictions as the underlying restricted shares.

The fair value of the restricted share awards are expensed over the vesting period.

As of December 31, 2021, the Company had granted 56,060 restricted shares to its independent directors, of which 5,333 were forfeited and 39,543 have vested, leaving a balance of 11,184 unvested restricted shares.

As of December 31, 2020, the Company had granted 44,876 restricted shares to its independent directors, of which 5,333 were forfeited and 27,823 had vested, leaving a balance of 11,720 unvested restricted shares.

The compensation expense associated with the restricted share grants was $ 0.2 million, $ 0.2 million and $ 0.2 million, for the years ended December 31, 2021, 2020 and 2019, respectively and are included within Other expenses line on the consolidated statements of operations.

Service-based Restricted Stock and Restricted Stock Units

During the year ended December 31, 2022 , in accordance with the Company's RSP, the Company issued awards of restricted stock to its non-employee directors, and in accordance with the 2021 Incentive Plan, the Company issued awards of RSUs to its officers and certain other personnel of the Advisor who provide services to the Company under the Advisory Agreement.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

Restricted Stock and RSU activity issued under the RSP and 2021 Incentive Plan for the year ended December 31, 2022 is summarized below:

Shares Outstanding

RSP 2021 Incentive Plan Weighted Average Grant Date Fair Value

Unvested equity awards outstanding as of December 31, 2021 11,184 — $ 17.88

Grants 28,143 492,107 14.10

Forfeitures — — —

Vested ( 18,393 ) — 16.14

Unvested equity awards outstanding as of December 31, 2022 20,934 492,107 $ 14.11

During the year ended December 31, 2022, the Company recognized compensation expense associated with the equity awards of $ 2.5 million, which is included in share-based compensation expense on the consolidated statements of operations.

Unrecognized estimated compensation expense for these awards totaled $ 5.8 million as of December 31, 2022, to be expensed over a weighted average period of 1.5 years.

Note 13 - Fair Value of Financial Instruments

3 unchanged sentences

• Level I - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

• Level II - Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

7 unchanged sentences

Financial Instruments Measured at Fair Value on a Recurring Basis

CMBS recorded in real estate securities, available for sale, measured at fair value on the consolidated balance sheets are valued utilizing both observable and unobservable market inputs.

CRE CLO bonds, recorded in real estate securities, available for sale, measured at fair value on the consolidated balance

sheets are valued utilizing both observable and unobservable market inputs.

These factors include projected future cash flows, ratings, subordination levels, vintage, remaining lives, credit issues, and recent trades of similar real estate securities.

Depending upon the significance of the fair value inputs used in determining these fair values, these real estate securities are classified in either Level II or Level III of the fair value hierarchy.

As of December 31, 2020, the Company obtained third party pricing for determining the fair value of each CMBS investment, resulting in a Level II classification.

Real estate securities classified as trading, RMBS, are measured at fair value by utilizing a third party pricing service to obtain a current estimated liquid price of the securities.

The RMBS are classified in Level II of the fair value hierarchy.

Commercial mortgage loans held for sale, measured at fair value in the Company's TRS are initially recorded at transaction proceeds, which are considered to be the best initial estimate of fair value.

The Company obtains third party pricing for determining the fair value of each CRE CLO investment, resulting in a Level II classification.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

Real estate securities classified as trading, RMBS, are measured at fair value by utilizing a third party pricing service to obtain a current estimated price of the securities.

The third party pricing service utilizes relevant market information and interest rate movements and applies its internal pricing application to the evaluation to test against internal tolerances and parameters.

The RMBS are classified in Level III of the fair value hierarchy.

Commercial mortgage loans held for sale, measured at fair value in the Company's TRS are initially recorded at transaction price, which are considered to be the best initial estimate of fair value.

The Company engaged the services of a third party independent valuation firm to determine fair value of certain investments held by the Company.

Fair value is determined using a discounted cash flow model that primarily considers changes in interest rates and credit spreads, weighted average life and current performance of the underlying collateral.

Commercial mortgage loans held for sale, measured at fair value that are originated in the last month of the reporting period are held and marked to the transaction proceeds.

Commercial mortgage loans held for sale, measured at fair value that are originated in the last month of the reporting period are held and marked to the transaction price.

The Company classified the commercial mortgage loans held for sale, measured at fair value as Level III.

9 unchanged sentences

Treasury note futures are generally categorized in Level I of the fair value hierarchy.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

The fair value for credit default swaps and interest rate swaps contracts are derived using pricing models that are widely accepted by marketplace participants.

Credit default swaps and some interest rate swaps are traded in the OTC market.

Credit default swaps and some interest rate swaps are traded in the over the counter ("OTC") market.

The pricing models take into account multiple inputs including specific contract terms, interest rate yield curves, interest rates, credit curves, recovery rates, and/or current credit spreads obtained from swap counterparties and other market participants.

4 unchanged sentences

If the underlying indices are illiquid and the OTC market for the current spread is not active, credit default swaps are categorized in Level III of the fair value hierarchy.

The credit default swaps and

interest rate swaps are generally categorized in Level II of the fair value hierarchy.

The fair value of exchange-traded swap agreements hedging RMBS repurchase agreements are calculated using the net discounted future fixed cash payments and the discounted future variable cash receipts which are based on expected future interest rates derived from observable market interest rate curves.

The credit default swaps and interest rate swaps are generally categorized in Level II of the fair value hierarchy.

The fair value of exchange-traded swap agreements economically hedging RMBS repurchase agreements are calculated using the net discounted future fixed cash payments and the discounted future variable cash receipts which are based on expected future interest rates derived from observable market interest rate curves.

The Company also incorporates both its own nonperformance risk and its counterparties’ nonperformance risk in determining fair value.

In considering the effect of nonperformance risk, the Company considered the impact of netting and credit enhancements, such as collateral postings and guarantees, and has concluded that counterparty risk is not significant to the overall valuation.

Interest rate swap agreements hedging the Company's RMBS repurchase agreements are measured at fair value on a recurring basis primarily using Level II inputs.

The fair value of these derivatives are calculated including accrued interest and net of variation margin amounts received or paid through the exchange, resulting in separately presenting on the balance sheet a significantly reduced fair value amount representing the unsettled fair value of these derivatives.

Interest rate swap agreements economically hedging the Company's RMBS repurchase agreements are measured at fair value on a recurring basis primarily using Level II inputs.

The fair value of these derivatives are calculated including accrued interest and net of variation margin amounts received or paid through the exchange, resulting in a significantly reduced fair value amount representing the unsettled fair value of these derivatives on the consolidated balance sheets.

A review of the fair value hierarchy classification is conducted on a quarterly basis.

1 unchanged sentence

The Company's policy with respect to transfers between levels of the fair value hierarchy is to recognize transfers into and out of each level as of the beginning of the reporting period.

There were no material transfers between levels within the fair value hierarchy during the years ended December 31, 2021 and December 31, 2020.

Material transfers between levels within the fair value hierarchy during the year ended December 31, 2022 were specifically related to the transfer of ARM Agency Securities from Level II to Level III.

There were no material transfers between levels within the fair value hierarchy during the year ended December 31, 2021.

FRANKLIN BSP REALTY TRUST, INC.

10 unchanged sentences

Interest rate swaps 90 — 90 —

Credit default swaps 234 — 234 —

Total assets, at fair value $ 472,727 $ 91 $ 221,349 $ 251,287

1 unchanged sentence

Credit default swaps $ 64 $ — $ 64 $ —

Treasury note futures — — — —

Unsecured debt-related interest rate swap agreements 31,153 — 31,153 —

Total liabilities, at fair value $ 64 $ — $ 64 $ —

1 unchanged sentence

Assets, at fair value

Real estate securities, available for sale, measured at fair value $ 171,136 $ — $ 171,136 $ —

Real estate securities.

3 unchanged sentences

Interest rate swaps 312 — 312 —

Treasury note futures 124 — 124 —

Total assets, at fair value $ 4,604,099 $ — $ 4,567,307 $ 36,792

1 unchanged sentence

Credit default swaps $ 1,142 $ — $ 1,142 $ —

Treasury note futures 106 106 — —

Unsecured debt-related interest rate swap agreements 31,153 — 31,153 —

Total liabilities, at fair value $ 32,295 $ — $ — $ —

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level III category.

1 unchanged sentence

The following table summarizes the valuation method and significant unobservable inputs used for the Company’s financial instruments that are categorized within Level III of the fair value hierarchy as of December 31, 2022 and December 31, 2021 (dollars in thousands).

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

The following table contains the Level III inputs used to value assets and liabilities on a recurring and nonrecurring basis or where the Company discloses fair value as of December 31, 2022:

Asset Category Fair Value Valuation Methodologies Unobservable Inputs (1)

2 unchanged sentences

Commercial mortgage loans, held for sale, measured at fair value $ 15,559 Discounted Cash Flow Yield 7.2 % 6.3 % - 7.7 %

Other real estate investments, measured at fair value 2,074 Discounted Cash Flow Yield 10.9 % 9.9 % - 11.9 %

Real estate securities, trading, measured at fair value 235,728 Discounted Cash Flow Yield 3.3 % 2.0 % - 6.5 %

Other real estate investments, measured at fair value — Discounted Cash Flow Yield N/A N/A

December 31, 2021

Commercial mortgage loans, held for sale, measured at fair value $ 34,718 Discounted Cash Flow Yield 3.4 % 3.2 % - 4.2 %

Other real estate investments, measured at fair value 2,522 Broker Quotes Yield 13.2 % 12.2 % - 14.2 %

Other real estate investments, measured at fair value 2,074 Discounted Cash Flow Yield 10.9 % 9.9 % - 11.9 %

________________________

2 unchanged sentences

(2) Inputs were weighted based on the fair value of the investments included in the range.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

There were no assets measured at fair value on a nonrecurring basis on our consolidated balance sheets as of December 31, 2022.

Increases or decreases in any of the above unobservable inputs in isolation would result in a lower or higher fair value measurement for such assets.

1 unchanged sentence

December 31, 2022

Commercial mortgage loans, held for sale, measured at fair value Other real estate investments, measured at fair value

Commercial mortgage loans, held for sale, measured at fair value Real estate securities, trading, measured at fair value Other real estate investments, measured at fair value

Beginning balance, January 1, 2022 $ 34,718 $ — $ 2,074

Transfers into Level III (1)

— 4,566,871 —

Total realized and unrealized gain/(loss) included in earnings:

Realized gain/(loss) on sale of commercial mortgage loan, held for sale 2,358 — —

Realized gain/(loss) on sale of real estate securities — — ( 33 )

Unrealized gain/(loss) on commercial mortgage loans, held for sale and other real estate investments ( 511 ) — 4

Trading gain/(loss) — ( 119,220 ) —

Net accretion — — —

4 unchanged sentences

Ending balance, December 31, 2022 $ 15,559 $ 235,728 $ —

________________________

(1) Transfers into Level III include transfers related to ARM Agency Securities transferred from Level II.

There were no transfers out of Level III as of December 31, 2022.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

Commercial mortgage loans, held for sale, measured at fair value Other real estate investments, measured at fair value

December 31, 2021

Commercial mortgage loans, held for sale, measured at fair value Real estate securities, trading, measured at fair value Other real estate investments, measured at fair value

Beginning balance, January 1, 2021 $ 67,649 $ — $ 2,522

6 unchanged sentences

Sales / paydowns ( 478,281 ) — ( 426 )

( 328,321 ) —

Cash repayments/receipts — — —

Transfers out of Level III (1)

December 31, 2020 balance (2)

$ 67,649 $ 2,522

Ending balance, December 31, 2021 $ 34,718 $ — $ 2,074

________________________

(1) Excluded from Purchases and Sales/paydowns are $ 679.1 million and $ 682.0 million, respectively, of loans that collateralize a CMBS investment required to be consolidated in connection with the Company's retention of the B tranche during the year ended December 31, 2020.

Upon disposition of the B tranche during the year ended December 31, 2020, the Company recognized a gain of $ 2.8 million that is recorded in Realized gain/loss on sale of real estate securities on the consolidated statements of operations.

(2) Transfers in and transfers out include transfers between Commercial mortgage loans, held for sale and Commercial mortgage loans, held for investment.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

(1) There were no transfers in or out of Level III as of December 31, 2021.

The fair value of cash and cash equivalents and restricted cash are measured using observable quoted market prices, or Level I inputs and their carrying value approximates their fair value.

1 unchanged sentence

Financial Instruments Not Measured at Fair Value

The fair values of the Company's commercial mortgage loans, held for investment and collateralized loan obligations, which are not reported at fair value on the consolidated balance sheets are reported below as of December 31, 2021 and 2020 (dollars in thousands):

The Company's financial assets and liabilities that are not reported at fair value on the consolidated balance sheets are reported below as of December 31, 2022 and 2021 (dollars in thousands):

Level Carrying Amount Fair Value

12 unchanged sentences

Other financing and loan participation - commercial mortgage loans Liability III 37,903 37,903

Unsecured Debt Liability III 148,594 125,400

________________________

(1) The carrying value is gross of $ 40.8 million and $ 15.8 million of allowance for credit losses as of December 31, 2022 and December 31, 2021, respectively.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

Repurchase agreements - commercial mortgage loans of $ 680.9 million and $ 1.02 billion as of December 31, 2022 and 2021, respectively, and repurchase agreements - real estate securities of $ 440.0 million and $ 4.2 billion as of December 31, 2022 and 2021, respectively, are not carried at fair value and include accrued interest expense, which are presented in Note 7 – Debt.

For these instruments, carrying value generally approximates fair value and are classified as Level III.

The fair value of the commercial mortgage loans, held for investment is estimated using a discounted cash flow analysis, based on the Advisor's experience with similar types of investments.

3 unchanged sentences

The fair value of the unsecured borrowings is based on discounted cash flows using Company estimates for market yields on similarly structured debt instruments.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Note 14 - Derivative Instruments

The Company uses derivative instruments primarily to manage the fair value variability of fixed rate assets caused by interest rate fluctuations and overall portfolio market risk.

As of December 31, 2021, the net premiums received on derivative instrument assets were $ 6.5 million.

The following derivative instruments were outstanding as of December 31, 2022 and December 31, 2021 (dollars in thousands):

3 unchanged sentences

Interest rate swaps 9,800 90 —

Interest rate swaps on unsecured debt 100,000 — 31,153

Treasury note futures 3,500 91 —

3 unchanged sentences

Interest rate swaps 3,649,500 312 —

Interest rate swaps on unsecured debt 100,000 — 31,153

Treasury note futures 360 124 —

11 unchanged sentences

Total $ 15,840 $ ( 60,033 ) $ ( 7,402 ) $ ( 484 )

The following table includes disclosures regarding components of unsecured debt-related effects on interest expense and other comprehensive income for the year ended December 31, 2021 and December 31, 2020:

Year Ended December 31, 2021 Year Ended December 31, 2020

Related to the statement of operations

Amount of loss reclassified from other comprehensive income (1)

$ ( 790 ) $ —

Related to other comprehensive income

Amount of gain/(loss) recognized in other comprehensive income $ ( 852 ) $ —

________________________

(1) Included in interest expense in the consolidated statements of operations

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

The merger with Capstead has expanded the Company's portfolio of derivatives to additionally hedge the variability of the underlying benchmark interest rate of current and forecasted 30- to 90-day repurchase agreements.

The Company attempts to mitigate exposure to higher interest rates primarily by entering into pay-fixed, receive-variable, interest rate swap agreements for terms between eighteen months and three years .

The Company may engage in residential mortgage investment-related derivative agreements that economically hedge the variability of the underlying benchmark interest rate of current and forecasted 30- to 90-day repurchase agreements.

The Company may attempt to mitigate exposure to higher interest rates primarily by entering into pay-fixed, receive-variable, interest rate swap agreements for terms between eighteen months and three years .

From an economic perspective, this hedge relationship establishes a relatively stable fixed rate on related debt because the variable-rate payments received on the swap agreements offset a significant portion of the interest accruing on the debt, leaving the fixed-rate swap payments as the Company’s effective borrowing rate.

Additionally, changes in fair value of these derivatives tend to offset opposing changes in fair value of the Company’s residential mortgage investments that can occur in response to changes in market interest rates.

Subsequent to the completion of the merger through December 31, 2021, the Company did not enter into any additional swap agreements and no swaps had matured.

In the fourth quarter of 2021, the Company terminated $ 600 million notional amount of swaps related to the ARM portfolio requiring fixed-rate interest payments averaging 0.3 %.

Subsequent to December 31, 2021, the Company entered into swap agreements with notional amounts totaling $ 1 billion requiring fixed-rate interest payments averaging 0.98 % and terminated $ 2.90 billion notional amount of swaps requiring fixed-rate interest payments averaging 0.28 %.

At December 31, 2021, the Company’s trading securities portfolio financing-related swap positions, all of which were either SOFR or OIS-indexed, had the following characteristics (dollars in thousands):

Period of Contract Expiration Swap Notional

Amounts Average Fixed Rates

Second quarter 2022 $ 400,000 0.02 %

Third quarter 2022 1,200,000 0.01 %

Fourth quarter 2022 800,000 0.07 %

First quarter 2023 50,000 0.13 %

Second quarter 2023 350,000 0.20 %

Third quarter 2023 100,000 0.03 %

Fourth quarter 2023 374,500 0.09 %

First quarter 2024 150,000 0.28 %

Second quarter 2024 225,000 0.32 %

The Company has three-month LIBOR-indexed, pay-fixed, receive-variable, interest rate swap agreements with notional amounts totaling $ 100 million and average fixed rates of 4.09 % with 20 -year payment terms coinciding with the floating-rate terms of the Company’s unsecured debt that mature in 2035 and 2036.

These derivatives, which are designated as cash flow hedges for accounting purposes, hedge the variability of the underlying benchmark interest rate associated with the floating-rate terms of these long-term borrowings.

Subsequent to year-end, the Company terminated the entirety of its $ 100 million notional amount of unsecured debt-related swap agreements.

Interest rate swap agreements are measured at fair value on a recurring basis primarily using Level Two Inputs in accordance with ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820).

During the year ended December 31, 2022, the Company paired out of the entirety of its ARM portfolio-related swap agreements and does not hold any derivative positions related to the trading securities as of December 31, 2022.

Interest rate swap agreements are measured at fair value on a recurring basis primarily using Level II Inputs in accordance with ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820).

In determining fair value estimates for swaps, the Company utilizes the standard methodology of netting the discounted future fixed cash payments and the discounted future variable cash receipts which are based on expected future interest rates derived from observable market interest rate curves.

1 unchanged sentence

The fair value of exchange-traded swap agreements hedging repurchase agreements is calculated including accrued interest and net of variation margin amounts received or paid through the exchange, resulting in separately presenting on the balance sheet a fair value amount representing the unsettled fair value of these derivatives.

Non-exchange traded swap agreements held as cash flow hedges of unsecured debt are reported at fair value calculated excluding accrued interest.

At December 31, 2021, Cash collateral receivable from derivative counterparties includes initial margin for all derivatives and variation margin for non-exchange traded derivatives.

Accrued interest for non-exchange traded swap agreements is included in accounts payable and accrued expenses.

The fair value of exchange-traded swap agreements economically hedging repurchase agreements is calculated including accrued interest and net of variation margin amounts received or paid through the exchange.

FRANKLIN BSP REALTY TRUST, INC.

3 unchanged sentences

The Company's consolidated balance sheets used a gross presentation of repurchase agreements and collateral pledged.

The table below provides a gross presentation, the effects of offsetting and a net presentation of the Company's derivative instruments and repurchase agreements within the scope of ASC 210-20, Balance Sheet—Offsetting , as of December 31, 2021 and December 31, 2020 (dollars in thousands):

Gross Amounts Not Offset on the Balance Sheet

23 unchanged sentences

________________________

(1) These cash collateral amounts are recorded within the Restricted cash, Accounts payable and accrued expenses and Cash collateral receivable from derivative counterparties balances on the consolidated balance sheets.

(1) Included in Restricted cash in the Company's consolidated balance sheets.

FRANKLIN BSP REALTY TRUST, INC.

2 unchanged sentences

Note 16 - Segment Reporting

The Company conducts its business through the following reporting segments:

• The real estate debt business focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgage loans, subordinate mortgages, mezzanine loans and participations in such loans.

The Company conducts its business through the following segments:

• The real estate debt business focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgages, subordinate mortgages, mezzanine loans and participations in such loans.

• The real estate securities business focuses on investing in and asset managing real estate securities.

Historically this business has focused primarily on CMBS, unsecured REIT debt, CDO notes and other securities.

As of December 31, 2021, all of the real estate securities in this segment were ARM Agency Securities acquired in the Capstead acquisition.

Historically this business has focused primarily on CMBS, CRE CLO bonds, CDO notes and other securities.

As a result of the October 2021 acquisition of Capstead, the Company acquired a portfolio of ARM Agency Securities.

• The commercial real estate conduit business operated through the Company's TRS, which is focused on generating risk-adjusted returns by originating and subsequently selling fixed-rate commercial real estate loans into the CMBS securitization market at a profit.

• The real estate owned business represents real estate acquired by the Company through foreclosure, deed in lieu of foreclosure, or purchase.

The following table represents the Company's operations by segment for the years ended December 31, 2021, December 31, 2020 and December 31, 2019 (dollars in thousands):

The following table represents the Company's operations by segment for the years ended December 31, 2022, 2021 and 2020 (dollars in thousands):

December 31, 2022 Total Real Estate Debt and Other Real Estate Real Estate Securities TRS Real Estate Owned

16 unchanged sentences

Total assets as of December 31, 2020 3,189,761 2,866,790 175,088 105,364 42,519

For the purposes of the table above, any expenses not associated with a specific segment have been allocated to the business segments using a percentage derived by using the sum of commercial mortgage loans originated during the year as the denominator and commercial mortgage loans, held for investment net of allowance and commercial mortgage loans, held for sale, measured at fair value as numerator.

For the purposes of the table above, management fees have been allocated to the business segments using an agreed upon percentage of each respective segment's prior period equity.

Administrative fees have been allocated to the business segments using a percentage derived from taking the respective business segment's prior period equity as a percent of consolidated equity and multiplying it by the Company's total administrative fee.

FRANKLIN BSP REALTY TRUST, INC.

14 unchanged sentences

Total income tax expense/(benefit) for the years ended December 31, 2022, December 31, 2021 and December 31, 2020 were $( 0.4 ) million, $ 3.6 million and $( 2.1 ) million, respectively.

As of December 31, 2022, our taxable REIT subsidiaries have an estimated $ 0.4 million of federal net operating loss ("NOL") carryforwards and $ 4.0 million of state and local NOL carryforwards.

The NOL carryforwards are subject to certain limitations.

The Company uses a more-likely-than-not threshold for recognition and derecognition of tax positions taken or to be taken in a tax return.

13 unchanged sentences

Provision for income tax expense/(benefit) $ ( 399 ) $ 3,599 $ ( 2,062 )

The tax characteristics of $ 1.26 distributions per common share declared during 2021 was $ 1.22 ordinary income and $ 0.04 capital gain.

The tax characteristics of the $ 1.42 distributions per common share declared during 2022 was $ 1.42 ordinary income.

The tax characteristics of the $ 318.66 distributions per share of Series C Preferred stock declared during 2022 was $ 318.66 ordinary income.

The tax characteristics of the $ 106.22 per share of Series I Preferred Stock declared during 2022 was $ 106.22 ordinary income.

The Series D Preferred Stock was exchanged for an equivalent number of shares of Series H Preferred Stock on June 24, 2022 and the tax characteristics of the $ 424.86 per share declared during 2022 was $ 424.86 ordinary income.

The tax characteristics of the $ 0.355 distributions per share of Series F Preferred stock declared during 2022, prior to converting on a one-for-one basis into shares of Common Stock, was $ 0.355 ordinary income.

The tax characteristics of the $ 1.875 distributions per share of Series E Preferred stock declared during 2022 was $ 1.875 ordinary income.

The ordinary income per share of each stockholder represents the amount of ordinary dividends that may be eligible for the 20% deduction applicable to qualified REIT dividends under Section 199A.

The tax characteristics of the $ 1.26 distributions per common share declared during 2021 was $ 1.22 ordinary income and $ 0.04 capital gain.

The tax characteristics of the $ 353.08 distributions per share of Series A Preferred stock declared during 2021 was $ 343.03 ordinary income and $ 10.05 capital gain.

3 unchanged sentences

The ordinary income per share of each stockholder represents the amount of ordinary dividends that may be eligible for the 20% deduction applicable to qualified REIT dividends under Section 199A.

The tax characteristics of the $ 1.30 distributions per common share declared during 2020 was $ 1.24 ordinary income and $ 0.06 capital gain.

Of the $ 1.24 of ordinary income, $ 1.24 represents the amount of the ordinary dividend that may be eligible for the 20% deduction applicable to qualified REIT dividends under Internal Revenue Code Section 199A.

The tax characteristics of the $ 390.48 distributions per share of Series A Preferred Stock and Series C Preferred Stock declared during 2020 was $ 370.93 ordinary income and $ 19.55 capital gain.

Of the $ 370.93 of ordinary income, $ 370.93 represents the amount of the ordinary dividend that may be eligible for the 20% deduction applicable to qualified REIT dividends under Section 199A.

The Company utilizes the TRSs to reduce the impact of the prohibited transaction tax and to avoid penalty for the holding of assets not qualifying as real estate assets for purposes of the REIT asset tests.

Any income associated with a TRS is fully taxable because the TRS is subject to federal and state income taxes as a domestic C corporation based upon its net income.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2022

Any income associated with a TRS is fully taxable because the TRS is subject to federal and state income taxes as a domestic C corporation based upon its net income.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic.

1 unchanged sentence

In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

The Company utilized the carryback provision in the CARES Act relating to the 2020 tax year NOL and is awaiting the refund.

Note 18 - Merger with Capstead

On October 19, 2021, the Company, Rodeo Sub I, LLC, a wholly-owned subsidiary of the Company (“Merger Sub”), Capstead Mortgage Corporation (“Capstead”), and the Advisor completed the Merger pursuant to the terms of the Merger Agreement.

On the Closing Date, Capstead merged with and into Merger Sub, with Merger Sub continuing as the surviving company.

Asset Acquisition

The Company accounted for the acquisition of Capstead in accordance with Accounting Standards Codification Topic 805, “Business Combinations,” which is referred to as ASC 805.

The Company determined the transaction did not meet the definition of a business combination under ASC 805 and was accounted for as an asset acquisition since substantially all of the fair value of the gross assets acquired was concentrated in a group of similar identifiable assets, a portfolio of agency mortgage-backed securities, which Capstead previously recognized as available for sale.

In an asset acquisition, goodwill is not recognized, and any excess consideration transferred over the fair value of the net identifiable assets acquired is allocated on a relative fair value basis to the acquired assets.

The Company measured the cost of the net identifiable assets acquired on the basis of the fair value of the consideration given, inclusive of transaction costs, which was determined to be more reliably measurable.

The fair value of the consideration paid of $ 870.1 million was comprised of $ 579.5 million of Common Stock, $ 258.7 million of Series E Preferred Stock, $ 20.5 million of Per Share Cash Payment, and $ 11.3 million of transaction costs.

As the cost of the acquisition exceeded the fair value of the net identifiable assets acquired, the Company allocated the difference on the basis of relative fair values to certain assets which were not carried at fair value.

The amount of excess consideration, including the Company's transaction costs, was capitalized on the balance sheet as a long-lived asset at the time of acquisition.

In the fourth quarter of 2021, the Company concluded the long-lived asset had no potential value to the generation of future cash flows and fully impaired the asset, recognizing an expense totaling $ 88.3 million in the consolidated statements of operations with an associated reduction in stockholders' equity.

Included in the expense was $ 15.9 million of consideration associated with change-in-control severance payments and accelerated equity award vesting paid to former Capstead employees upon the completion of the merger.

The allocation of the purchase price to assets acquired and liabilities assumed is as follows (amounts in thousands):

Assets Acquired As of October 19, 2021

Cash and cash equivalents $ 174,083

Real estate securities, trading, measured at fair value 6,841,482

Prepaid expenses and other assets 275,127

Cash collateral receivable from derivative counterparties 68,969

Liabilities Assumed

Repurchase agreements and secured borrowings - real estate securities 6,421,262

Unsecured borrowings 98,574

Derivative instruments, measured at fair value 31,091

Distributions payable 1,345

Accounts payable and accrued expenses 25,606

Net Assets Acquired 781,783

Note 18 - Subsequent Events

4 unchanged sentences

(Dollars in thousands)

Description Property Type Face Amount Carrying Amount Interest

Description Property Type Face Value Amortized Cost Index Spread Payment

Terms Maturity Date

1 unchanged sentence

Senior Debt 2 Hospitality 57,075 57,075 1 month LIBOR 5.19 % Interest Only 6/9/2019

Senior Debt 3 Multifamily 26,568 26,568 1 month LIBOR + 4.50% Interest Only 12/31/2022

Senior Debt 4 Hospitality 22,150 22,150 1 month LIBOR + 6.00% Interest Only 1/9/2023

Senior Debt 5 Office 6,901 6,901 1 month LIBOR + 5.15% Interest Only 3/9/2022

Senior Debt 6 Multifamily 36,822 36,822 1 month LIBOR + 3.00% Interest Only 3/9/2022

Senior Debt 7 Multifamily 37,025 37,025 1 month LIBOR + 3.00% Interest Only 11/9/2022

Senior Debt 8 Hospitality 22,355 22,355 1 month LIBOR + 3.50% Interest Only 3/9/2023

Senior Debt 9 Office 20,685 20,685 1 month LIBOR + 3.75% Interest Only 9/9/2022

Senior Debt 10 Office 15,722 15,722 1 month LIBOR + 3.40% Amortizing Balloon 9/9/2022

Senior Debt 11 Retail 29,500 29,452 6.50% Interest Only 9/9/2023

Senior Debt 3 Multifamily 34,668 34,668 1 month SOFR 3.03 % Interest Only 9/9/2023

Senior Debt 4 Multifamily 34,731 34,731 1 month LIBOR 3.00 % Interest Only 2/9/2023

Senior Debt 13 Hospitality 8,285 8,285 1 month LIBOR + 4.85% Amortizing Balloon 1/9/2023

Senior Debt 14 Office 7,125 7,125 1 month LIBOR + 3.90% Interest Only 2/9/2022

Senior Debt 5 Hospitality 22,116 22,116 1 month LIBOR 3.50 % Interest Only 3/9/2023

Senior Debt 16 Retail 11,924 11,924 1 month LIBOR + 3.95% Interest Only 4/9/2022

Senior Debt 17 Office 42,631 42,601 1 month LIBOR + 3.50% Interest Only 5/9/2022

Senior Debt 18 Retail 8,203 8,203 1 month LIBOR + 8.00% Interest Only 9/9/2022

Senior Debt 19 Hospitality 10,580 10,570 1 month LIBOR + 4.50% Interest Only 6/9/2022

Senior Debt 20 Hospitality 19,900 19,884 1 month LIBOR + 4.15% Interest Only 6/9/2022

Senior Debt 21 Office 39,650 39,597 1 month LIBOR + 4.01% Interest Only 6/9/2022

Senior Debt 22 Hospitality 20,930 20,900 1 month LIBOR + 3.75% Interest Only 8/9/2022

Senior Debt 23 Hospitality 13,000 12,982 1 month LIBOR + 2.94% Interest Only 10/9/2022

Senior Debt 24 Hospitality 4,987 4,988 1 month LIBOR + 4.25% Interest Only 7/9/2023

Senior Debt 25 Hospitality 12,750 12,734 1 month LIBOR + 4.45% Interest Only 8/9/2022

Senior Debt 26 Hospitality 10,845 10,845 1 month LIBOR + 4.50% Interest Only 2/9/2022

Senior Debt 27 Retail 9,400 9,388 1 month LIBOR + 4.20% Interest Only 9/9/2022

Senior Debt 28 Hospitality 34,053 34,053 1 month LIBOR + 3.99% Amortizing Balloon 11/9/2022

Senior Debt 29 Industrial 56,933 56,933 1 month LIBOR + 3.75% Interest Only 12/9/2021

Senior Debt 6 Office 18,683 18,683 1 month SOFR 4.75 % Interest Only 9/9/2023

Senior Debt 7 Office 7,035 7,035 1 month LIBOR 3.90 % Interest Only 2/9/2023

Senior Debt 8 Office 43,886 43,886 1 month SOFR 3.56 % Interest Only 5/9/2023

Senior Debt 9 Hospitality 9,531 9,531 1 month SOFR 5.57 % Interest Only 4/9/2023

Senior Debt 10 Hospitality 19,352 19,352 1 month SOFR 3.84 % Interest Only 8/9/2023

Senior Debt 11 Hospitality 12,980 12,980 1 month SOFR 3.02 % Interest Only 10/9/2023

Senior Debt 12 Hospitality 4,988 4,988 1 month LIBOR 4.25 % Interest Only 7/9/2023

Senior Debt 32 Multifamily 15,342 15,309 1 month LIBOR + 2.75% Interest Only 12/9/2022

Senior Debt 33 Multifamily 27,650 27,601 1 month LIBOR + 3.15% Interest Only 12/9/2022

Senior Debt 34 Multifamily 27,094 27,064 1 month LIBOR + 2.70% Interest Only 12/9/2022

Senior Debt 35 Multifamily 9,016 9,016 1 month LIBOR + 3.95% Interest Only 12/9/2022

Senior Debt 36 Multifamily 25,000 24,999 1 month LIBOR + 3.30% Interest Only 1/9/2023

Senior Debt 13 Hospitality 31,597 31,597 1 month SOFR 5.25 % Amortizing Balloon 11/9/2024

Senior Debt 14 Office 15,188 15,188 1 month SOFR 4.00 % Interest Only 12/9/2023

Senior Debt 15 Office 25,802 25,748 1 month LIBOR 4.35 % Interest Only 1/9/2024

Senior Debt 38 Multifamily 15,150 15,128 1 month LIBOR + 3.10% Interest Only 2/9/2023

Senior Debt 16 Office 63,811 63,789 1 month LIBOR 3.70 % Interest Only 2/9/2023

Senior Debt 40 Multifamily 11,739 11,723 1 month LIBOR + 3.15% Interest Only 8/9/2022

Senior Debt 17 Multifamily 10,807 10,807 1 month SOFR 4.25 % Interest Only 8/9/2023

Senior Debt 18 Office 36,362 36,356 1 month LIBOR 2.70 % Interest Only 2/9/2023

Senior Debt 19 Manufactured Housing 1,331 1,331 5.50 % Interest Only 5/9/2025

Description Property Type Face Amount Carrying Amount Interest

Terms Maturity Date

Senior Debt 43 Multifamily 7,060 7,054 1 month LIBOR + 4.75% Interest Only 5/9/2022

Senior Debt 44 Industrial 17,038 16,983 1 month LIBOR + 6.25% Interest Only 7/9/2023

Senior Debt 45 Multifamily 4,300 4,289 1 month LIBOR + 5.50% Interest Only 2/9/2023

Senior Debt 20 Manufactured Housing 7,680 7,671 1 month LIBOR 4.50 % Interest Only 8/9/2023

Senior Debt 47 Mixed Use 30,465 30,326 1 month LIBOR + 5.15% Interest Only 8/9/2023

Senior Debt 48 Hospitality 27,000 26,921 1 month LIBOR + 6.50% Interest Only 9/9/2023

Senior Debt 49 Multifamily 50,000 49,911 1 month LIBOR + 6.69% Interest Only 9/9/2022

Senior Debt 21 Self Storage 29,895 29,858 1 month LIBOR 5.00 % Interest Only 9/9/2023

Senior Debt 51 Multifamily 14,183 14,150 1 month LIBOR + 4.75% Interest Only 9/9/2022

Senior Debt 52 Manufactured Housing 3,400 3,393 1 month LIBOR + 5.00% Interest Only 9/9/2022

Senior Debt 53 Multifamily 27,550 27,500 1 month LIBOR + 5.75% Interest Only 9/9/2022

Senior Debt 22 Multifamily 14,550 14,550 1 month SOFR 4.83 % Interest Only 3/9/2023

Senior Debt 23 Manufactured Housing 5,020 5,013 1 month LIBOR 5.25 % Interest Only 10/9/2023

2 unchanged sentences

Senior Debt 26 Office 35,000 34,932 1 month LIBOR 5.21 % Interest Only 10/9/2023

Senior Debt 58 Self Storage 11,600 11,574 1 month LIBOR + 4.76% Interest Only 11/9/2022

Senior Debt 59 Manufactured Housing 5,000 4,957 1 month LIBOR + 5.90% Interest Only 5/9/2023

Senior Debt 27 Office 12,750 12,729 1 month LIBOR 5.00 % Interest Only 11/9/2023

Senior Debt 28 Multifamily 38,927 38,864 1 month LIBOR 4.45 % Interest Only 11/9/2023

Senior Debt 62 Multifamily 37,674 37,539 1 month LIBOR + 4.45% Interest Only 11/9/2023

Senior Debt 63 Multifamily 8,763 8,730 1 month LIBOR + 5.50% Interest Only 11/9/2023

Senior Debt 64 Retail 11,963 11,928 1 month LIBOR + 4.87% Interest Only 5/9/2022

Senior Debt 65 Multifamily 5,730 5,712 1 month LIBOR + 5.00% Interest Only 6/9/2023

Senior Debt 66 Multifamily 18,800 18,658 1 month LIBOR + 4.00% Interest Only 12/9/2024

Senior Debt 29 Industrial 14,985 14,955 1 month LIBOR 4.50 % Interest Only 12/9/2023

Senior Debt 68 Office 11,981 11,932 1 month LIBOR + 5.50% Interest Only 1/9/2024

Senior Debt 30 Multifamily 12,280 12,253 1 month LIBOR 4.55 % Interest Only 2/9/2024

1 unchanged sentence

Senior Debt 32 Office 12,971 12,969 1 month LIBOR 5.00 % Interest Only 1/9/2023

Senior Debt 72 Multifamily 54,500 54,422 1 month LIBOR + 3.80% Interest Only 2/9/2023

Senior Debt 73 Multifamily 11,672 11,620 1 month LIBOR + 3.50% Interest Only 2/9/2024

Senior Debt 74 Multifamily 21,000 20,956 1 month LIBOR + 4.95% Interest Only 8/9/2022

Senior Debt 33 Office 43,751 43,622 1 month LIBOR 3.94 % Interest Only 3/9/2024

12 unchanged sentences

Senior Debt 45 Multifamily 19,536 19,510 1 month LIBOR 3.60 % Interest Only 4/9/2024

Description Property Type Face Amount Carrying Amount Interest

Terms Maturity Date

Senior Debt 46 Multifamily 43,096 43,084 1 month LIBOR 2.95 % Interest Only 4/9/2026

Senior Debt 89 Multifamily 18,277 18,200 1 month LIBOR + 5.25% Interest Only 4/9/2024

Senior Debt 90 Multifamily 17,985 17,938 1 month LIBOR + 3.60% Interest Only 4/9/2024

Senior Debt 91 Multifamily 41,823 41,808 1 month LIBOR + 2.95% Interest Only 4/9/2026

Senior Debt 47 Hospitality 25,785 25,759 1 month LIBOR 5.60 % Interest Only 5/9/2023

4 unchanged sentences

Senior Debt 52 Multifamily 35,466 35,455 1 month LIBOR 2.95 % Interest Only 4/9/2026

Senior Debt 98 Multifamily 34,998 34,984 1 month LIBOR + 2.95% Interest Only 4/9/2026

Description Property Type Face Value Amortized Cost Index Spread Payment

Terms Maturity Date

Senior Debt 53 Multifamily 33,588 33,579 1 month LIBOR 2.95 % Interest Only 4/9/2026

3 unchanged sentences

Senior Debt 57 Office 6,742 6,730 1 month LIBOR 5.25 % Interest Only 11/9/2023

Senior Debt 104 Multifamily 12,792 11,546 1 month LIBOR + 6.50% Interest Only 6/9/2024

Senior Debt 58

Multifamily 111,226 110,462 1 month LIBOR 6.50 % Interest Only 6/9/2024

Senior Debt 59 Multifamily 11,069 11,037 1 month LIBOR 3.15 % Interest Only 7/9/2024

1 unchanged sentence

Senior Debt 61 Hospitality 33,000 32,883 1 month LIBOR 6.25 % Interest Only 6/9/2024

Senior Debt 108 Multifamily 31,900 31,716 1 month LIBOR + 3.15% Interest Only 7/9/2026

Senior Debt 109 Multifamily 37,260 37,164 1 month LIBOR + 3.40% Interest Only 6/9/2024

Senior Debt 62

10 unchanged sentences

Senior Debt 72 Multifamily 10,268 10,226 1 month LIBOR 3.75 % Interest Only 10/9/2024

Senior Debt 121 Multifamily 66,650 66,002 1 month LIBOR + 3.25% Interest Only 10/9/2024

Senior Debt 122 Multifamily 18,750 18,688 1 month LIBOR + 2.95% Interest Only 10/9/2024

Senior Debt 123 Multifamily 9,099 9,036 1 month LIBOR + 3.75% Interest Only 10/9/2024

Senior Debt 73 Hospitality 32,527 32,305 1 month SOFR 6.73 % Interest Only 2/9/2024

Senior Debt 74 Multifamily 26,698 26,610 1 month LIBOR 3.20 % Interest Only 10/9/2024

7 unchanged sentences

Senior Debt 82 Multifamily 65,741 65,619 1 month LIBOR 2.85 % Interest Only 11/9/2023

Description Property Type Face Amount Carrying Amount Interest

Terms Maturity Date

Senior Debt 83 Multifamily 30,600 30,573 1 month LIBOR 2.65 % Interest Only 11/9/2023

3 unchanged sentences

Senior Debt 87 Multifamily 46,221 46,027 1 month LIBOR 2.75 % Interest Only 11/9/2025

Senior Debt 138 Multifamily 46,080 45,821 1 month LIBOR + 2.75% Interest Only 11/9/2025

Senior Debt 88 Multifamily 86,000 85,745 1 month SOFR 3.24 % Interest Only 3/9/2024

Senior Debt 89 Multifamily 29,821 29,730 1 month LIBOR 2.90 % Interest Only 12/9/2024

15 unchanged sentences

Senior Debt 105 Multifamily 78,050 77,724 1 month SOFR 3.45 % Interest Only 1/9/2027

Senior Debt 156 Multifamily 77,870 77,632 1 month LIBOR + 3.21% Interest Only 1/9/2025

Senior Debt 106 Multifamily 80,714 80,552 1 month SOFR 3.21 % Interest Only 1/9/2025

Senior Debt 107 Multifamily 24,000 23,939 1 month SOFR 3.10 % Interest Only 1/9/2024

Senior Debt 108 Retail 31,000 30,894 1 month SOFR 3.29 % Interest Only 1/9/2025

Senior Debt 109 Multifamily 37,793 37,531 1 month SOFR 3.55 % Interest Only 11/9/2023

Description Property Type Face Value Amortized Cost Index Spread Payment

Terms Maturity Date

Senior Debt 110 Multifamily 22,965 22,891 1 month SOFR 2.95 % Interest Only 2/9/2024

Senior Debt 111 Multifamily 10,669 10,637 1 month SOFR 3.30 % Interest Only 2/9/2024

Senior Debt 112 Multifamily 47,444 47,323 1 month SOFR 2.86 % Interest Only 1/9/2024

Senior Debt 113 Multifamily 36,824 36,729 1 month SOFR 2.86 % Interest Only 1/9/2024

Senior Debt 114 Hospitality 10,493 10,452 1 month SOFR 5.30 % Interest Only 2/9/2025

Senior Debt 115 Retail 22,377 22,268 1 month SOFR 4.95 % Interest Only 4/9/2024

Senior Debt 116 Multifamily 82,000 81,884 1 month SOFR 3.20 % Interest Only 2/9/2024

Senior Debt 117 Industrial 55,000 54,832 1 month SOFR 3.50 % Interest Only 3/9/2024

Senior Debt 118 Multifamily 39,004 38,870 1 month SOFR 3.10 % Interest Only 3/9/2024

Senior Debt 119 Multifamily 34,823 34,711 1 month SOFR 2.95 % Interest Only 3/9/2024

Senior Debt 120 Mixed Use 19,000 18,942 1 month SOFR 3.42 % Interest Only 3/9/2024

Senior Debt 121 Multifamily 85,500 85,373 1 month SOFR 3.15 % Interest Only 3/9/2024

Senior Debt 122 Multifamily 31,282 31,228 1 month SOFR 3.30 % Interest Only 4/9/2024

Senior Debt 123

Hospitality — — 1 month SOFR 7.05 % Interest Only 6/9/2025

Senior Debt 124

Multifamily — — 1 month SOFR 6.75 % Interest Only 8/9/2024

Senior Debt 125 Hospitality 43,344 43,265 1 month SOFR 4.90 % Interest Only 4/9/2023

Senior Debt 126 Hospitality 11,250 11,152 1 month SOFR 5.22 % Interest Only 11/9/2025

Senior Debt 127 Multifamily 5,132 4,699 1 month SOFR 7.02 % Interest Only 6/9/2024

Senior Debt 128 Multifamily 27,722 27,595 1 month SOFR 6.05 % Interest Only 6/9/2023

Senior Debt 129 Multifamily 56,616 56,384 1 month SOFR 3.95 % Interest Only 5/9/2025

Senior Debt 130 Multifamily 28,650 28,465 1 month SOFR 4.00 % Interest Only 11/9/2024

Senior Debt 131 Multifamily 50,137 49,812 1 month SOFR 6.70 % Interest Only 3/9/2024

Senior Debt 132 Multifamily 12,242 12,192 1 month SOFR 3.55 % Interest Only 5/9/2024

Senior Debt 133

Retail 63,640 60,304 1 month SOFR 4.50 % Interest Only 5/9/2023

Senior Debt 134 Industrial 23,050 22,930 1 month SOFR 4.90 % Interest Only 9/9/2024

Senior Debt 135 Multifamily 19,441 19,366 1 month SOFR 3.50 % Interest Only 6/9/2024

Senior Debt 136 Multifamily 17,600 17,569 1 month SOFR 4.55 % Interest Only 5/9/2023

Senior Debt 137 Multifamily 28,640 28,503 1 month SOFR 3.65 % Interest Only 6/9/2024

Senior Debt 138 Multifamily 16,843 16,756 1 month SOFR 3.65 % Interest Only 6/9/2024

Senior Debt 139 Multifamily 70,750 70,503 1 month SOFR 3.80 % Interest Only 6/9/2024

Senior Debt 140 Multifamily 81,271 80,939 1 month SOFR 3.95 % Interest Only 6/9/2024

Senior Debt 141 Multifamily 43,651 43,475 1 month SOFR 3.95 % Interest Only 6/9/2024

Senior Debt 142 Multifamily 56,547 56,311 1 month SOFR 3.95 % Interest Only 6/9/2024

Senior Debt 143 Multifamily 20,325 20,237 1 month SOFR 3.95 % Interest Only 6/9/2024

Senior Debt 144 Multifamily 128,324 127,678 1 month SOFR 3.95 % Interest Only 6/9/2024

Senior Debt 145 Multifamily 56,000 55,800 1 month SOFR 3.80 % Interest Only 6/9/2024

Senior Debt 146 Multifamily 11,675 11,647 1 month SOFR 4.45 % Interest Only 11/9/2024

Senior Debt 147 Multifamily 69,200 68,622 1 month SOFR 3.45 % Interest Only 6/9/2024

Senior Debt 148 Multifamily 173,389 172,791 1 month SOFR 6.52 % Interest Only 4/16/2023

Senior Debt 149 Hospitality 29,644 29,366 1 month SOFR 6.94 % Interest Only 8/9/2025

Senior Debt 150 Hospitality 13,410 13,314 1 month SOFR 5.75 % Interest Only 4/9/2024

Senior Debt 151 Manufactured Housing 10,550 10,479 1 month SOFR 4.75 % Interest Only 9/9/2024

Senior Debt 152 Multifamily 47,293 47,142 1 month SOFR 4.20 % Interest Only 1/9/2025

Senior Debt 153 Multifamily 51,000 50,753 1 month SOFR 3.75 % Interest Only 12/9/2024

Senior Debt 154 Multifamily 15,150 15,074 1 month SOFR 4.25 % Interest Only 1/9/2025

Senior Debt 155 Hospitality 28,300 28,163 1 month SOFR 5.25 % Interest Only 1/9/2024

Senior Debt 156 Hospitality 16,970 16,970 5.99 % Amortizing Balloon 10/6/2023

Mezzanine Loan 1 Multifamily 6,500 6,488 1 month LIBOR + 10.25% Interest Only 9/9/2022

Mezzanine Loan 2 Multifamily 3,000 3,000 1 month LIBOR + 9.20% Interest Only 3/9/2022

Mezzanine Loan 1 Multifamily 3,000 3,000 1 month SOFR 9.23 % Interest Only 9/9/2023

Mezzanine Loan 2 Multifamily 10,000 9,982 1 month SOFR 16.29 % Interest Only 7/9/2023

Mezzanine Loan 3 Retail 3,000 2,989 1 month SOFR 12.00 % Interest Only 1/9/2025

Mezzanine Loan 4 Mixed Use 1,000 997 1 month SOFR 11.00 % Interest Only 3/9/2024

Mezzanine Loan 5 Hospitality 1,350 1,344 1 month SOFR 9.25 % Interest Only 11/9/2025

$ 5,288,974 $ 5,269,776

For the activity within the Company's loan portfolio during the years ended December 31, 2022 and December 31, 2021, refer to Note 3 - Commercial Mortgage Loans on the consolidated financials of Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures