18 unchanged sentences
The advisor is a wholly-owned subsidiary of Franklin Resources, Inc., which together with its various subsidiaries operates as "Franklin Templeton”.
−Removed: The Company invests in commercial real estate debt investments, which may include first mortgage loans, subordinated mortgage loans, mezzanine loans and participations in such loans.
−Removed: The Company also originates conduit loans which the Company intends to sell through its TRS into commercial mortgage-backed securities ("CMBS") securitization transactions.
−Removed: 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.
−Removed: 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.
−Removed: As of December 31, 2023, the Company has fully disposed of all of its ARM Agency Securities and is continuing to reinvest the proceeds from the sale of these securities in its other businesses.
−Removed: 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, typically subject to triple net leases.
+Added: The Company primarily focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgage loans, subordinated mortgage loans, mezzanine loans and participations in such loans.
+Added: Secondarily, the Company's real estate securities business focuses on investing in and asset managing real estate securities.
+Added: Historically this business has focused primarily on commercial mortgage-backed securities ("CMBS"), commercial real estate collateralized loan obligation bonds and single asset single borrower bonds (collectively "CMBS bonds"), collateralized debt obligations ("CDOs") and other securities.
+Added: The Company also originates conduit loans which the Company intends to sell through its TRS into CMBS securitization transactions.
+Added: The Company also owns real estate that was either acquired by the Company through foreclosure, deed-in-lieu of foreclosure or that was purchased for investment.
Investment Objectives
4 unchanged sentences
We expect that our portfolio of debt investments will be secured by real estate located within and outside the United States and diversified by property type and geographic location.
−Removed: Our second strategy is to invest in real estate securities, such as CMBS, CRE CLO Bonds, senior unsecured debt of publicly-traded REITs and CDO notes.
+Added: Our second strategy is to invest in real estate securities, such as CMBS, CMBS bonds, senior unsecured debt of publicly-traded REITs and CDO notes.
Our third strategy is to originate conduit loans and sell them through our TRS business into CMBS securitization transactions.
6 unchanged sentences
Our underwriting process involves comprehensive financial, structural, operational, and legal due diligence to assess any risks in connection with making such investments so that we can optimize pricing and structuring.
−Removed: By originating loans directly, we are able to structure and underwrite loans that satisfy our standards, establish a direct relationship with the borrower, and utilize our own documentation.
+Added: By originating loans directly, we are able to structure and underwrite loans that satisfy our standards, establish a direct relationship with the borrower, and utilize our own preferred documentation.
Described below are some of the types of loans we may originate or acquire.
−Removed: In addition, although we generally prefer the benefits of new origination, market conditions can create situations where holders of commercial real estate debt may be in distress and are therefore willing to sell at prices that compensate the buyer for the lack of control typically associated with directly structured investments.
+Added: In addition, although we generally prefer the benefits of new origination, market conditions can create situations where holders of commercial real estate debt may be in distress and are therefore willing to sell to us at prices that compensate us for the lack of control typically associated with directly structured investments.
First Mortgage Loans
11 unchanged sentences
We may originate or acquire current-pay subordinated mortgage loans or B-notes backed by high quality properties that fit our investment strategy.
−Removed: We may create subordinated mortgage loans by tranching our directly originated first mortgage loans generally through syndications of senior first mortgages or buy such assets directly from third party originators.
−Removed: Due to the limited opportunities in this part of the capital structure, we believe there are certain situations that allow us to directly originate or to buy subordinated mortgage investments from third parties on favorable terms.
+Added: We may create subordinated mortgage loans by tranching our directly originated first mortgage loans generally through syndications of senior first mortgages or we may buy such assets directly from third party originators.
We may offer bridge financing products to borrowers who are typically seeking short-term capital to be used in an acquisition, development or refinancing of a given property.
12 unchanged sentences
Equity participation can also take the form of a conversion feature, sometimes referred to as a "kicker," which permits the lender to convert a loan or preferred equity investment into common equity in the borrower at a negotiated premium to the current net asset value of the borrower.
−Removed: We expect to generate additional revenues from these equity participations as a result of excess cash flows being distributed or as appreciated properties are sold or refinanced.
+Added: We expect to generate additional revenues from any equity participations in which we invest as a result of excess cash flows being distributed or as appreciated properties are sold or refinanced.
Real Estate Securities
−Removed: In addition to our focus on origination of and investments in commercial real estate debt, we may also acquire real estate securities, such as CMBS, CRE CLO Bonds, CDO notes, and equity investments in entities that own commercial real estate.
−Removed: CMBS & CRE CLO Bonds
−Removed: CMBS and CRE CLO Bonds are securities that are collateralized by, or evidence ownership interests in, a single commercial mortgage loan or a partial or entire pool of mortgage loans secured by commercial properties.
−Removed: CMBS and CRE CLO Bonds are generally pass-through certificates that represent beneficial ownership interests in common law trusts whose assets consist of defined portfolios of one or more commercial mortgage loans.
+Added: In addition to our focus on origination of and investments in commercial real estate debt, we may also acquire real estate securities, such as CMBS, CMBS bonds, CDO notes, and equity investments in entities that own commercial real estate.
+Added: CMBS & CMBS Bonds
+Added: CMBS and CMBS bonds are securities that are collateralized by, or evidence ownership interests in, a single commercial mortgage loan or a partial or entire pool of mortgage loans secured by commercial properties.
+Added: CMBS and CMBS bonds are generally pass-through certificates that represent beneficial ownership interests in common law trusts whose assets consist of defined portfolios of one or more commercial mortgage loans.
They are typically issued in multiple tranches whereby the more senior classes are entitled to priority distributions of specified principal and interest payments from the trust’s underlying assets.
The senior classes are often securities which, if rated, would have ratings ranging from low investment grade “BBB-” to higher investment grades “A,” “AA” or “AAA.” The junior, subordinated classes typically would include one or more non-investment grade classes which, if rated, would have ratings below investment grade “BBB.” Losses and other shortfalls from expected amounts to be received on the mortgage pool are borne first by the most subordinate classes, which receive payments only after the more senior classes have received all principal and/or interest to which they are entitled.
−Removed: We may invest in senior or subordinated, investment grade or non-investment grade CMBS and CRE CLO Bonds, as well as unrated CMBS and CRE CLO Bonds.
+Added: We may invest in senior or subordinated, investment grade or non-investment grade CMBS and CMBS bonds, as well as unrated CMBS and CMBS bonds.
Unsecured Publicly-Traded REIT Debt Securities
16 unchanged sentences
The Company originates Conduit loans which the Company intends to sell through its TRS into CMBS securitization transactions at a profit.
−Removed: The Conduit loans are typically fixed-rate commercial real estate loans and are long (up to ten years) term, and are predominantly current-pay loans.
+Added: The Conduit loans are typically fixed-rate commercial real estate loans and are long-term (up to ten years), and are predominantly current-pay loans.
Ownership of Properties and Other Possible Investments
10 unchanged sentences
Our financing strategy primarily includes the use of secured repurchase agreement facilities for loans, securities and securitizations.
−Removed: We have also raised capital through private placements of our equity securities.
+Added: We also may raise capital through public or private offerings of our equity securities, including through our effective shelf registration statement or our “at-the-market” sales program.
In addition to our current mix of financing sources, we may also access additional forms of financings, including credit facilities, and public or private secured and unsecured debt issuances by us or our subsidiaries.
46 unchanged sentences
We are not incorporating our website or any information from the website into this Form 10-K.
+Added: We routinely use our investor relations website, at www.fbrtreit.com, as a primary channel for disclosing key information to our investors.
+Added: We may use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD.
+Added: Accordingly, investors should monitor our investor relations website, in addition to following our press releases, filings with the SEC, public conference calls, presentations, and webcasts.
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.