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Item 9A. Controls and Procedures

2026-02-25 compared with 2025-02-26 · 1013 added, 385 removed, 1454 unchanged (49% of the section changed)

13 unchanged sentences

In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013).

In accordance with guidance issued by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting for the first fiscal year in which the acquisition occurred.

Management has accordingly excluded processes and controls of NewPoint that have not yet been converted to the Company's systems or processes from its assessment of internal control over financial reporting for the year ended December 31, 2025.

Assets and revenues associated with those processes and procedures as of December 31, 2025 include 12% and 16% of total assets and revenues, respectively.

Based on its assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was effective.

3 unchanged sentences

During the quarter ended December 31, 2025, 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.

As noted above, Management has excluded processes and controls of NewPoint that have not yet been converted to the Company's systems or processes from its assessment of internal control over financial reporting for the year ended December 31, 2025.

Other Information.

49 unchanged sentences

3 to Articles Supplementary of Franklin BSP Realty Trust, Inc., effective January 16, 2025, 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 17, 2025).

3.8 Amendment No.

4 to Articles Supplementary of Franklin BSP Realty Trust, Inc., dated January 20, 2026, 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 21, 2026).

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

(incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on June 16, 2022)

4.1 Amended and Restated Agreement of Limited Partnership of Benefit Street Partners Realty Operating Partnership, L.P., dated as of December 31, 2014 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 6, 2015).

4.2 Amendment No.

1 to the Amended and Restated Agreement of Limited Partnership of Benefit Street Partners Realty Operating Partnership, L.P., dated as of February 9, 2017 (incorporated by reference to Exhibit 4.2 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).

4.1 Description of Securities of the Registrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 16, 2023).

4.2* Second Amended and Restated Limited Liability Company Agreement of FBRT OP LLC, dated as of July 1, 2025.

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).

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(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).

10.6 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.

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 March 30, 2021).

10.7 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.

10.6 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.

10.9 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).

10.7† Form of Director Restricted Stock Award Agreement under Franklin BSP Realty Trust, Inc.

6 unchanged sentences

Bank National Association as custodian (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 27, 2024)

19.1* Insider Trading Policy

10.10 Indenture, dated as of October 15, 2025, by and among BSPRT 2025-FL12 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 of the Registrant’s Current Report on Form 8-K filed with the SEC on October 17, 2025)

10.11 Purchase and Sale Agreement, dated as of March 9, 2025, by and among New Point Holdings JV LLC, each of the members of NewPoint Holdings JV LLC, FBRT OP LLC, FBRT Sub REIT TRS LLC, Franklin BSP Realty Trust, Inc., and certain other parties named therein (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 10, 2025).

19.1 Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2 024, filed with the SEC on February 26, 2025)

21* Subsidiaries of the Registrant

23.1* Consent of PricewaterhouseCoopers LLP

23.2* Consent of Ernst & Young LLP

31.1* Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a - 14(a) or 15(d) - 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Franklin BSP Realty Trust, Inc.

February 26, 2025 By /s/ Richard J.

February 25, 2026 By /s/ Michael Comparato

Michael Comparato

Chief Executive Officer

1 unchanged sentence

Name Capacity Date

/s/ Michael Comparato Chief Executive Officer February 25, 2026

Michael Comparato

/s/ Richard J.

Byrne Chairman and Chief Executive Officer February 26, 2025

Byrne (Principal Executive Officer)

Byrne Chairman February 25, 2026

/s/ Jerome S.

14 unchanged sentences

Report of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP (PCAOB ID 238 )

Report of Independent Registered Public Accounting Firm, Ernst & Young LLP (PCAOB ID 42)

Consolidated Balance Sheets

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Opinions on the Financial Statements and Internal Control over Financial Reporting

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

and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income, of changes in stockholders’ equity and of cash flows for the years then ended, including the related notes and financial statement schedule listed in the accompanying index as of December 31, 2024 (collectively referred to as the "consolidated financial statements").

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

and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive income, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedule listed in the accompanying index as of December 31, 2025 (collectively referred to as the "consolidated financial statements.

We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

12 unchanged sentences

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

As described in Management’s Annual Reporting on Internal Control over Financial Reporting, management has excluded NewPoint Holdings JV LLC from its assessment of internal control over financial reporting as of December 31, 2025, because it was acquired by the Company in a purchase business combination during 2025.

We have also excluded NewPoint Holdings JV LLC from our audit of internal control over financial reporting.

NewPoint Holdings JV LLC is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 12% and 16%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2025.

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 (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain

to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) 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;

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) 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

1 unchanged sentence

The general allowance for credit losses for the Company’s loans carried at amortized cost, such as loans held for investment, represents a lifetime estimate of expected credit losses.

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

For loans held for investment which management identifies reasonable doubt as to whether the collection of contractual components can be satisfied, a specific allowance for credit losses analysis is performed and management may elect to use the fair value of the collateral at the reporting date as a practical expedient.

In measuring the general allowance for credit losses for loans held for investment, the Company primarily applies a probability of default (“PD”)/loss given default (“LGD”) model for loans that are collectively assessed and the allowance for credit losses is calculated as the product of the PD, LGD and exposure at default (“EAD”) estimates.

The Company’s model to determine the general allowance for credit losses principally utilizes historical loss rates, forecasting loss parameters based on a projected macroeconomic scenario using a probability-based statistical approach over a reasonable and supportable forecast period of twelve months, followed by an immediate reversion to average historical losses.

If a loan is determined to have a specific allowance for credit losses, it is recorded by applying the practical expedient for collateral dependent loans.

The specific allowance for credit losses 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.

The estimated fair value of underlying collateral requires judgments, which may include assumptions regarding capitalization rates and discount rates or other factors deemed relevant by management.

The principal considerations for our determination that performing procedures relating to the allowance for credit losses for commercial mortgage loans, held for investment is a critical audit matter are (i) the significant judgment by management when developing the allowance for credit losses;

(ii) a high degree of auditor judgement, subjectivity, and effort in performing procedures and evaluating (a) management’s projected macroeconomic scenario used when developing the general allowance for credit losses and (b) management’s assumptions related to capitalization rates and discount rates used when developing the fair value estimate of the underlying collateral used in the specific allowance for credit losses;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

The estimated fair value of the underlying collateral requires judgments such as, 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 management.

The principal considerations for our determination that performing procedures relating to the allowance for credit losses for commercial mortgage loans held for investment is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the underlying collateral used to determine the specific allowance for credit losses for commercial mortgage loans held for investment;

(ii) a high degree of auditor judgement, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to capitalization rates and discount rates;

(iii) a high degree of audit effort in performing procedures related to the general allowance for credit losses;

and (iv) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the allowance for credit losses for commercial mortgage loans, held for investment, including controls over management’s projected macroeconomic scenario used in the general allowance for credit losses and assumptions used in developing the fair value estimate of the underlying collateral used in the specific allowance for credit losses.

These procedures included testing the effectiveness of controls relating to the allowance for credit losses for commercial mortgage loans held for investment, including controls over management’s significant assumptions related to capitalization rates and discount rates used when developing the fair value estimate of the underlying collateral used to determine the specific allowance for credit losses.

These procedures also included, among others, (i) testing management’s process for developing the allowance for credit losses for commercial mortgage loans held for investment;

(ii) testing the completeness and accuracy of data used in developing the allowance for credit losses;

and(iii) the involvement of professionals with specialized skill and knowledge to assist in evaluating (a) the appropriateness of the model used by management for the general allowance for credit losses and the methodology used by management for the specific allowance for credit losses, (b) the reasonableness of the projected macroeconomic scenario when estimating the general allowance for credit losses, and (c) the reasonableness of management’s assumptions related to capitalization rates and discount rates used when estimating the fair value of the underlying collateral used when developing the specific allowance for credit losses.

(ii) testing the completeness and accuracy of certain data used when developing the allowance for credit losses;

and (iii) the involvement of professionals with specialized skill and knowledge to assist in evaluating (a) the appropriateness of the PD and LGD model used by management when developing the general allowance for credit losses, (b) the appropriateness of the methodology used by management when developing the fair value estimate of the underlying collateral used when determining the

specific allowance for credit losses, (c) the probability of default and loss given default estimates, including management’s selected projected macroeconomic scenario when estimating the general allowance for credit losses, and (d) the reasonableness of the capitalization rates and discount rates assumptions used when developing the fair value estimate of the underlying collateral used when determining the specific allowance for credit losses.

Acquisition of NewPoint Holdings JV LLC – Valuation of Agency Licenses

As described in Notes 2 and 3 to the consolidated financial statements, on July 1, 2025, the Company completed the acquisition of NewPoint Holdings JV LLC (“NewPoint”) for an aggregate purchase price of $427.8 million.

Of the acquired intangible assets, $73 million of agency licenses were recorded.

The fair value of the acquired agency licenses was estimated using a discounted cash flow method which involves projecting revenue and servicing fees associated with the license, while accounting for related expenses.

The significant unobservable input used to discount the future cash flows to present value is the discount rate.

The principal considerations for our determination that performing procedures relating to the valuation of the agency licenses acquired in the acquisition of NewPoint is a critical audit matter are (i) the significant judgement by management when developing the fair value estimate of the agency licenses acquired;

(ii) a high degree of auditor judgement, subjectivity, and effort in performing procedures and evaluating management’s significant unobservable input related to the discount rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the agency licenses acquired.

These procedures also included, among others, (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the agency licenses acquired;

and (iii) testing the completeness and accuracy of certain underlying data used in the discounted cash flow method.

Professionals with specialized skill and knowledge were used to assist in evaluating (a) the appropriateness of the discounted cash flow method and (b) the reasonableness of the discount rate unobservable input used when developing the fair value estimate of the agency licenses acquired.

/s/ PricewaterhouseCoopers LLP

2 unchanged sentences

We have served as the Company’s auditor since 2023.

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements

We have audited the statements of operations, comprehensive income, stockholders’ equity and cash flows of Franklin BSP Realty Trust, Inc.

(the Company) for the year ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

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 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 audits in accordance with the standards of the PCAOB.

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.

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.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

/s/ Ernst & Young LLP

We served as the Company’s auditor from 2017-2022.

New York, New York

March 16, 2023

Except for Note 16, as to which the date is

February 26, 2025

FRANKLIN BSP REALTY TRUST, INC.

4 unchanged sentences

Restricted cash 17,889 12,421

Investment securities, held to maturity (1)

Commercial mortgage loans, held for investment, net of allowance for credit losses of $ 38,302 and $ 78,083 as of December 31, 2025 and 2024, respectively (2)

1 unchanged sentence

Commercial mortgage loans, held for sale, measured at fair value (3)

360,718 87,270

Real estate securities, available for sale, measured at fair value, amortized cost of $ 151,946 and $ 202,894 as of December 31, 2025 and 2024, respectively (4)

151,662 202,973

Mortgage servicing rights, net 212,216 —

Accrued interest receivable 41,468 42,225

Receivable for loan repayment (5)

50,619 157,582

Accrued interest receivable 42,225 42,490

Prepaid expenses and other assets 45,112 17,526

Intangible lease asset, net of amortization 39,834 42,793

Real estate owned, net of depreciation 99,265 113,160

Real estate owned, held for sale 198,883 222,890

Equity method investment 13,395 —

Equity method investments 71,682 13,395

Intangible assets, net of amortization 115,553 39,834

Goodwill 92,048 —

Derivative instruments, measured at fair value 11,315 —

Loans eligible for repurchase 17,911 —

Total assets $ 6,057,250 $ 6,002,386

3 unchanged sentences

Repurchase agreements - real estate securities 187,371 236,608

Mortgage note payable 23,998 23,998

Other financings 12,865 12,865

Unsecured debt 185,466 81,395

Derivative instruments, measured at fair value 713 —

Mortgage note payable 23,998 23,998

Allowance for loss sharing 19,484 —

Accrued compensation 43,662 —

Liability for loans eligible for repurchase 17,911 —

Interest payable 16,110 12,844

2 unchanged sentences

Due to affiliates 12,054 14,106

Intangible lease liability, held for sale 1,291 12,297

Derivative instruments, measured at fair value 6,951 713

Other liabilities 29,657 11,653

Total liabilities $ 4,436,025 $ 4,392,581

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________________________

(1) Includes pledged assets of $ 20.2 million as of December 31, 2025.

(2) Includes pledged assets of $ 855.2 million and $ 268.7 million as of December 31, 2025 and 2024, respectively.

(2) Includes pledged assets of $ 61.1 million and zero as of December 31, 2024 and 2023, respectively.

(3) Includes pledged assets of $ 329.2 million and $ 61.1 million as of December 31, 2025 and 2024, respectively.

(4) Includes pledged assets of $ 151.7 million and $ 180.7 million as of December 31, 2025 and 2024, respectively.

(5) Includes $ 50.5 million and $ 157.0 million of cash held by the servicer related to the CLOs as of December 31, 2025 and 2024, respectively.

8 unchanged sentences

Net interest income 141,953 187,605 246,929

Gain/(loss) on sales, including fee-based services, net 57,599 13,125 3,917

Mortgage servicing rights 28,570 — —

Servicing revenue, net 12,516 — —

Gain/(loss) on derivatives ( 200 ) ( 211 ) 858

Revenue from real estate owned 29,633 22,849 17,021

Total income $ 270,071 $ 223,368 $ 268,725

Compensation and benefits $ 53,739 $ — $ —

Asset management and subordinated performance fee 24,497 25,958 33,847

2 unchanged sentences

Professional fees 29,207 14,508 15,270

Share-based compensation 8,173 4,761 2,519

Depreciation and amortization 5,630 7,128 5,408

Other expenses 45,919 21,472 11,135

Depreciation and amortization 9,593 5,630 7,128

Share-based compensation 9,118 8,173 4,761

Total expenses $ 186,370 $ 86,444 $ 87,822

1 unchanged sentence

(Provision)/benefit for credit losses $ 11,850 $ ( 35,699 ) $ ( 33,738 )

Realized gain/(loss) on extinguishment of debt — 2,201 ( 5,167 )

Realized gain/(loss) on real estate securities, available for sale 143 80 —

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

Realized gain/(loss) on sale of commercial mortgage loans, held for investment — 138 —

Realized gain/(loss) on sale of commercial mortgage loans, held for sale, measured at fair value 13,125 3,873 2,358

Realized gain/(loss) on sale of commercial mortgage loans, held for sale ( 246 ) — —

Realized gain/(loss) on real estate securities, available for sale 112 143 80

Realized gain/(loss) on extinguishment of debt ( 7,660 ) — 2,201

Gain/(loss) on other real estate investments ( 3,371 ) ( 7,983 ) ( 7,089 )

Unrealized gain/(loss) on commercial mortgage loans, held for sale, measured at fair value — 44 ( 511 )

Income/(loss) from equity method investments 3,583 — —

Trading gain/(loss) — — ( 605 )

Unrealized gain/(loss) on derivatives 1,050 ( 140 ) ( 15,840 )

Realized gain/(loss) on derivatives ( 1,261 ) 998 60,033

Total other income/(loss) $ 4,268 $ ( 43,401 ) $ ( 39,151 )

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$ ( 363 ) $ 782 $ ( 1,093 )

Amounts related to cash flow hedges:

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

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

Comprehensive (income)/loss attributable to non-controlling interest ( 1,814 ) 3,475 706

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(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 Non-Controlling Interest Total Equity

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

Number of Shares Par Value

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Share-based compensation 481,189 — 4,761 — — — 4,761 — 4,761

Shares canceled for tax withholding on vested equity rewards ( 57,021 ) — ( 812 ) — — — ( 812 ) — ( 812 )

Series I Preferred stock converted into common stock 299,200 3 4,997 — — — 5,000 — 5,000

Offering costs — — ( 269 ) — — — ( 269 ) — ( 269 )

Series F Preferred stock converted into common stock 39,733,299 397 710,034 — — — ( 710,431 ) — — —

Series C Preferred stock converted into common stock 119,538 1 1,996 — — — — 1,997 — 1,997

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

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Common stock repurchases ( 391,863 ) ( 4 ) ( 4,863 ) — — — ( 4,867 ) — ( 4,867 )

Common stock issued through distribution reinvestment plan 61,866 1 768 — — — — 769 — 769

Share-based compensation 819,710 2 8,171 — — — 8,173 — 8,173

Shares canceled for tax withholding on vested equity rewards ( 112,971 ) — ( 1,508 ) — — — ( 1,508 ) — ( 1,508 )

Series I Preferred stock converted into common stock 299,200 3 4,997 — — — — 5,000 — 5,000

Offering costs — — ( 269 ) — — — — ( 269 ) — ( 269 )

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

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Realized (gain)/loss on extinguishment of debt 7,660 — ( 2,201 )

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

Realized (gain)/loss on sale of available for sale securities, measured at fair value ( 113 ) ( 143 ) ( 80 )

Realized (gain)/loss on sale of commercial mortgage loans, held for sale, measured at fair value ( 18,109 ) ( 13,125 ) ( 3,873 )

Realized (gain)/loss on sale of commercial mortgage loans, held for sale 246 — —

Realized (gain)/loss on sale of commercial mortgage loans, held for investment — ( 138 ) —

Unrealized (gain)/loss on commercial mortgage loans, held for sale, measured at fair value — — ( 44 )

(Income)/loss from equity method investments ( 3,583 ) — —

Unrealized (gain)/losses on derivative instruments 200 ( 1,050 ) 140

6 unchanged sentences

Proceeds from sale or repayment of commercial mortgage loans, held for sale, measured at fair value 3,803,908 284,300 121,976

Origination and purchase of commercial mortgage loans, held for sale ( 7,000 ) — —

Proceeds from sale of commercial mortgage loans, held for sale 40,710 — —

Distributions from equity method investments 1,876 — —

MSR impairment and amortization 22,035 — —

Mortgage banking activities ( 23,544 ) — —

Changes in assets and liabilities:

4 unchanged sentences

Interest payable 2,112 ( 2,539 ) 2,910

Accrued compensation 9,012 — —

Other liabilities ( 9,284 ) — —

Net cash provided by operating activities $ 291,940 $ 57,233 $ 197,387

2 unchanged sentences

Principal repayments received on commercial mortgage loans, held for investment 1,468,430 1,507,438 1,065,538

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

Purchase of equity method investments ( 9,800 ) ( 13,395 ) —

Distributions from equity method investments 834 — —

Proceeds from sale of real estate owned, held for sale 60,931 34,375 39,755

Purchase of real estate owned and capital expenditures ( 324 ) ( 1,151 ) ( 663 )

Proceeds from sale of commercial mortgage loans, held for sale — — 9,344

Proceeds from sale of commercial mortgage loans, held for investment 33,420 — —

Purchase of real estate securities ( 79,503 ) ( 223,768 ) ( 220,630 )

Proceeds from sale or paydown of real estate securities 120,042 418,791 3,731,716

Principal collateral on mortgage investments — 17,702 545,416

Proceeds from sale/(purchase) of derivative instruments 1,763 211 ( 1,165 )

Net cash (used in)/provided by investing activities $ ( 155,475 ) $ 380,807 $ 3,097,265

FRANKLIN BSP REALTY TRUST, INC.

3 unchanged sentences

2025 2024 2023

Purchase of real estate owned and capital expenditures ( 1,587 ) ( 324 ) ( 1,151 )

Proceeds from sale of commercial mortgage loans, held for investment 35,184 33,420 —

Purchase of NewPoint Holdings JV LLC ( 297,308 ) — —

Payment of software development costs ( 360 ) — —

Purchase of real estate securities, available for sale ( 132,313 ) ( 79,503 ) ( 223,768 )

Proceeds from sale or paydown of real estate securities, available for sale 183,966 120,042 418,791

Purchases of investment securities, held to maturity ( 11,400 ) — —

Proceeds from sale of investment securities, held to maturity 8,800 — —

Principal collateral on mortgage investments — — 17,702

Proceeds from sale/(purchase) of derivative instruments ( 171 ) 1,763 211

Net cash (used in)/provided by investing activities $ 380,806 $ ( 155,475 ) $ 380,807

Cash flows from financing activities:

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Repayments of repurchase agreements and revolving credit facilities - commercial mortgage loans ( 4,671,698 ) ( 862,571 ) ( 981,317 )

Borrowings on repurchase agreements - real estate securities 222,845 870,014 18,457,406

Repayments of repurchase agreements - real estate securities ( 160,292 ) ( 1,135,967 ) ( 22,196,183 )

Net borrowings (paydowns) on repurchase agreements - real estate securities, less than 90 days maturity ( 49,237 ) 62,553 ( 265,953 )

Borrowings on other financings — — 59,707

Repayments on other financings — ( 23,669 ) ( 99,474 )

Borrowings on unsecured debt 107,000 — —

Repayments of unsecured debt — — ( 13,367 )

Payments of deferred financing costs ( 15,855 ) ( 9,309 ) ( 12,905 )

Cash collateral received on interest rate swaps — — 56,767

Proceeds from interest rate swap settlements — — 8,478

Distributions to non-controlling interest ( 7,417 ) ( 16,189 ) ( 1,987 )

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Cash, cash equivalents and restricted cash, end of period $ 185,181 $ 196,864 $ 343,687

FRANKLIN BSP REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For the Years Ended December 31,

2025 2024 2023

Supplemental disclosures of cash flow information:

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Distribution payable 38,935 36,237 36,133

Commercial mortgage loans transferred from held for sale to held for investment — — 9,296

Loans transferred to real estate owned 307,546 77,305 115,978

Loans transferred from commercial mortgage loans, held for investment to commercial mortgage loans, held for sale 33,909 — —

Loans transferred from commercial mortgage loans, held for investment to real estate owned, held for sale 197,397 307,546 77,305

Modification accounted for as repayment and new loan 60,000 42,235 —

FRANKLIN BSP REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For the Years Ended December 31,

2024 2023 2022

Seller-based financing on sales of real estate owned, held for sale 168,899 94,917 —

Reclassification of assets held for investment to held for sale — 114,512 —

Reclassification of liabilities held for investment to held for sale — 13,664 —

Reclassification of real estate owned assets held for investment to held for sale 11,494 — 114,512

Reclassification of real estate owned liabilities held for investment to held for sale — — 13,664

Conversion of preferred stock to common stock — — 5,000

Exchange of preferred stock — — 94,748

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

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Note 1 - Organization and Business Operations

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.

Franklin BSP Realty Trust, Inc., (the "Company") is a real estate finance company that is organized as a Maryland corporation.

The Company has elected to be taxed as a real estate investment trust (a “REIT”) for U.S.

federal income tax purposes since 2013.

The Company believes that it has qualified as a REIT and intends to continue to meet the requirements for qualification and taxation as a REIT.

Substantially all of the Company's business is conducted through Benefit Street Partners Realty Operating Partnership, L.P.

(the “OP”), a Delaware limited partnership.

The Company is the sole general partner and directly or indirectly holds all of the units of limited partner interests in the OP.

In addition, the Company, through one or more subsidiaries which are treated as a taxable REIT subsidiary (a “TRS”), is indirectly subject to U.S.

The Company’s operations are organized into two business units:

(i) Commercial Real Estate Financing, and (ii) Agency Business.

Commercial Real Estate Financing

The Commercial Real Estate Financing unit 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.

Secondarily, this unit also invests in and asset manages real estate securities, with a historical focus 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.

Through this unit the Company also originates conduit loans which the Company intends to sell through its taxable REIT subsidiary ("TRS") into CMBS securitization transactions, and owns real estate that was either acquired by the Company through foreclosure, deed-in-lieu of foreclosure or that was purchased for investment.

Agency Business

On July 1, 2025, through a wholly owned subsidiary, we acquired NewPoint Holdings JV LLC, which now comprises our Agency Business unit.

Through this unit, we originate, sell and service a range of multifamily finance products under programs offered by government-sponsored enterprises (“GSEs”), such as the Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) and by government agencies (“Agencies”), such as the Government National Mortgage Association (“Ginnie Mae”) and the Federal Housing Administration, a division of the U.S.

Department of Housing and Urban Development (together with Ginnie Mae, “HUD”).

We retain the servicing rights and asset management responsibilities on substantially all loans we originate and sell under the GSE and HUD programs.

We are an approved Fannie Mae Delegated Underwriting and Servicing (“DUS”) lender, a Freddie Mac Program Plus Seller/Servicer, a Multifamily Accelerated Processing (“MAP”) and Section 232 LEAN lender for HUD and a Ginnie Mae issuer.

Additionally, the Company services external portfolios of commercial real estate financing products.

The Company believes that it has qualified as a REIT since 2013 and intends to continue to meet the requirements for qualification and taxation as a REIT.

As of December 31, 2025, substantially all of the Company's business is conducted through FBRT OP LLC (the “OP”), a Delaware limited liability company.

As of December 31, 2025, the Company is the managing member of the OP and directly or indirectly holds 91 % of the common units of membership interest in the OP.

In addition, the Company, through subsidiaries which are treated as taxable REIT subsidiaries (“TRS”), is indirectly subject to U.S.

federal, state and local income taxes.

The Company has no employees.

Benefit Street Partners L.L.C.

serves as the Company's advisor (the "Advisor") pursuant to an advisory agreement, as amended on August 18, 2021 (the "Advisory Agreement").

The Advisor, an investment adviser registered with the SEC, is a credit-focused alternative asset management firm.

The Company is externally-managed by Benefit Street Partners L.L.C.

(the "Advisor") pursuant to an advisory agreement, as amended on August 18, 2021 (the "Advisory Agreement").

Established in 2008, the Advisor's credit platform manages funds for institutions and high-net-worth investors across various credit funds and complementary strategies including high yield, levered loans, private/opportunistic debt, liquid credit, structured credit and commercial real estate debt.

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The Advisor is a wholly-owned subsidiary of Franklin Resources, Inc., which together with its various subsidiaries operates as "Franklin Templeton.”

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.

Secondarily, the Company's real estate securities business focuses on investing in and asset managing real estate securities.

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.

The Company also originates conduit loans which the Company intends to sell through its TRS into CMBS securitization transactions.

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.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Note 2 - Summary of Significant Accounting Policies

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

For the twelve months ended December 31, 2023 and 2022, $ 3.8 million and $ 1.4 million, respectively, related to rental income was reclassified from Prepaid expenses and other assets to Straight line rental income in the consolidated statement of cash flows.

For the year ended December 31, 2024 and 2023, $ 222.8 million and $ 870.0 million, of Borrowings on repurchase agreements - real estate securities and $ 160.3 million and $ 1,136.0 million of Repayments of repurchase agreements - real estate securities were combined to be presented as a net result in Net borrowings (paydowns) on repurchase agreements - real estate securities, less than 90 days maturity in the consolidated statements of cash flows.

For the year ended December 31, 2024 $ 1.3 million was reclassified from Intangible lease liability, held for sale to Other Liabilities on the consolidated balance sheets.

For the year ended December 31, 2024 $ 10.4 million was reclassified from Accrued Expenses and Accounts Payable to Other Liabilities on the consolidated balance sheets.

For the years ended December 31, 2024 and 2023 $ 13.1 million, and $ 3.9 million, respectively, was reclassified from Realized gain/(loss) on sale of commercial mortgage loans, held for sale, measured at fair value to Gain/(loss) on sales, including fee-based services, net on the consolidated statements of operations.

For the years ended December 31, 2024 and 2023, Unrealized gain/(loss) on derivatives and Realized gain/(loss) on derivatives were combined and reclassified to Gain/(loss) on derivatives, resulting in net $ 0.2 million, and $ 0.9 million, respectively, being reclassified on the consolidated statements of operations.

Use of Estimates

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Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

Principles of Consolidation

12 unchanged sentences

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.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Acquisition Expenses

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Restricted Cash

Restricted cash primarily consists of cash pledged as margin on repurchase agreements and derivative transactions.

The duration of this restricted cash generally matches the duration of the related repurchase agreements or derivative transaction.

Restricted cash primarily consists of cash pledged as margin on repurchase agreements and derivative transactions, the duration of which generally matches the duration of the related repurchase agreements or derivative transactions, and cash reserves that are a requirement of Fannie Mae Delegated Underwriting and Servicing (DUS) program.

Investment Securities, held to maturity

Investment securities, held to maturity, consist of U.S.

Treasury securities.

These investment securities are pledged as collateral to satisfy reserve requirements of the Fannie Mae DUS program.

The Company classifies these debt securities as held-to-maturity (“HTM”).

HTM debt securities are those debt securities in which the Company has the ability and intent to hold the security until maturity.

HTM debt securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts, less allowance for credit losses.

The Company includes accrued interest as part of the HTM debt security amortized cost basis.

Commercial Mortgage Loans

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The accretion of guaranteed loan commitment fees is recognized in Interest income in the consolidated statements of operations.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

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.

1 unchanged sentence

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

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.

These commercial mortgage loans are included in the Commercial mortgage loans, held for sale, measured at fair value in the consolidated balance sheets.

Interest income received on commercial mortgage loans, held for sale, measured at fair value is recorded on the accrual basis of accounting and is included in Interest income in the consolidated statements of operations.

Held for Sale, Measured at Fair Valu e - 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 Agency and Conduit business under the fair value option.

These commercial mortgage loans are included in Commercial mortgage loans, held for sale, measured at fair value in the consolidated balance sheets.

Interest income received on these loans is recorded on the accrual basis of accounting and is included in Interest income in the consolidated statements of operations.

Costs to originate these investments are expensed when incurred.

For loans issued to GSE's and Agencies (“Agency Loans”), the Company also retains the rights to service the loans ("MSRs"), and receives fees for such servicing during the life of the loans, which generally last seven years or more.

Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the adjusted value of the related mortgage loans sold.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Sales of Agency Loans are considered transfers of financial assets, which are accounted for as sales when control over the assets have been transferred.

The criteria for control to be transferred are (1) the assets have been isolated, put presumptively beyond the reach of the Company, even in bankruptcy, (2) the transferee has the right to pledge or exchange the transferred financial assets, and (3) the Company does not maintain effective control over the transferred financial assets.

The Company has determined that all loans sold have met these specific conditions.

Mortgage Servicing Rights, net

The Company originates, sells, and services multifamily, healthcare, and senior-living related loans under programs offered by government and government-sponsored enterprises.

These loans are generally held for short periods and minimal interest income is earned from these activities.

Instead, the Company receives origination fees when it closes the loans and sale premiums when it sells the loans.

Upon sale, the Company typically retains the MSRs and earns servicing fees over the life of the loans, which often extend seven years or longer.

When the Company commits to originate a loan with a borrower and sell it to an investor, income for the related MSR is recognized as a derivative asset.

The asset is recognized at fair value based on the discounted expected net cash flows associated with the servicing of the loan.

Once funded, the holding period for mortgage loans originated by the Company is approximately 30 days.

Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the adjusted value of the related mortgage loans sold.

Once sold, the Company retains the servicing rights and the value allocated to the associated MSR is reclassed and capitalized as an individual originated MSR ("OMSR") asset on the consolidated balance sheets.

The Company utilizes the amortization method to account for MSRs, under which the MSRs are amortized over the period of net servicing income or loss.

Amortization of MSRs is recorded as a reduction of Servicing revenues, net in the consolidated statements of operations.

MSRs are initially recorded at fair value and subsequently carried at amortized cost.

The following assumptions were used in estimating the fair value of the capitalized MSRs:

• Discount Rate:

We used discount rates ranging from 8 % to 14 %, representing a weighted average discount rate of 10 %, based on management's best estimate of the market to determine the present value of MSRs.

• Servicing Cost:

The difference between estimated future cash flows and future cost to service a loan by a market participant for the estimated life of the MSR.

• Estimated Life:

Estimated MSR life is based on stated yield-maintenance or prepayment-protection terms of the underlying loans.

The fair value of MSRs from loans we originate and sell are estimated considering market prices for similar MSRs, when available, and by estimating the present value of the future net cash flows of the capitalized MSRs, net of adequate compensation for servicing.

Adequate compensation is based on the market rate of similar servicing contracts.

The MSR portfolio is evaluated for impairment at each reporting period by comparing the aggregate carrying amount of the MSRs to their aggregate fair value.

For purposes of impairment evaluation, the MSRs are stratified based on the predominant risk characteristics of the underlying loans, which the Company has identified as loan type, and prepayment or default behavior, which vary by Agency.

If the carrying value of an MSRs strata exceeds fair value, a valuation allowance is established.

The Company utilizes an independent third-party valuation expert to assist in determining the estimated fair value of our MSR portfolio on a quarterly basis.

The Company writes off MSRs related to loans that were repaid prior to their expected maturity and loans that are determined to be unrecoverable.

The write-off is recorded as a direct, permanent, reduction to the carrying value of MSRs and is included as a component of Servicing revenue, net in the consolidated statements of operations.

Revenue Recognition

Interest Income

Interest income is accrued based on the actual coupon rate adjusted for accretion of any purchase discounts, the amortization of any purchase premiums and the accretion of any deferred fees, in accordance with GAAP.

The Company may place loans as non-performing when the loan becomes 90 days past due or there is reasonable doubt about collection.

When a loan is designated as non-performing status and put on non-accrual or cost recovery status, interest is only recorded as interest income or applied against the amortized cost basis of the loan, respectively, when received.

A loan may be placed back on accrual status if we determine it is probable that we will collect all payments which are contractually due.

Revenue from Real Estate Owned

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Revenue from real estate owned represents income associated with the operations of commercial real estate properties, primarily base rent and reimbursements from property operating expenses.

We recognize fixed rental income on a straight line basis over the non-cancelable lease term.

Income for these activities is recognized when collection is reasonably assured and as the services under the arrangement have been provided.

Servicing Fees, net

Servicing fees are earned for servicing mortgage loans, including all activities related to servicing the loans, and are recognized as services are provided over the life of the related mortgage loan.

Servicing fees include the net fees earned on borrower prepayment penalties, other ancillary fees, and any write-offs related to loans repaid prior to their expected maturity.

Gain on sales, including fee-based service, net

Gains on sales include loan origination fees, gain on the sale of loans, changes to the fair value of mortgage loans held for sale and derivative financial instruments attributable to the loan commitments and forward sale commitments, and other miscellaneous loan fees.

Loan origination fees and gain on the sale of loans originated are recognized when the Company commits to make a loan to a borrower.

Goodwill and Other Intangible Assets

The Company typically uses independent third party valuation specialists to assist us in estimating the fair value and estimated useful lives of intangible assets.

The Company has intangible assets consisting of both finite and indefinite lived intangibles.

Finite lived intangibles include above-market and below-market in-place leases, developed technology, and non-compete agreements.

Indefinite lived intangibles include agency licenses.

Intangible lease assets or liabilities related to above-market and below-market in-place leases are recorded based on the present value of the difference between the contractual rent amounts and management’s estimate of market rates measured over a period equal to the remaining terms of the leases, including lease renewals where applicable.

Key assumptions in the estimated fair values of in-place leases includes estimated direct costs to obtain the "in place" tenant, such as commissions and tenant improvements, and opportunity costs associated with lost rentals, which are calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease.

Developed technology intangible assets are recorded based on the cost the Company would incur in rebuilding the technology.

Key assumptions include the costs to replace the technology plus the developer's profit and entrepreneurial incentive.

Non-compete intangible assets are recorded based on the present value of the projected revenue differences tied to such arrangement.

Key assumptions in calculating the value of such intangible asset include projected revenue, the selected discount rate, and the terms of the agreement.

The Company's agency licenses are deemed to have an indefinite life due to their continuous economic value.

The key assumptions in the determination of the value of the licenses include the projected revenue and servicing fees, the selected discount rate, and the time period over which revenue would be generated.

Finite lived intangibles are amortized over their estimated useful lives on a straight-line basis.

Intangible assets deemed to have indefinite lives are not amortized and instead are assessed for impairment annually when events or circumstances indicate that the carrying value may be impaired.

Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired.

The Company does not amortize goodwill and tests for impairment at least annually.

The Company tests for impairment by assessing qualitative factors to determine whether it is more likely than not that the fair value of the Company is less than its carrying amount.

Such qualitative factors include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of the Company and other relevant Company specific factors.

Key assumptions considered in assessing overall financial performance include, but are not limited to rate lock volume, forecasted or actual EBITDA, forecasted or actual revenue, net cash generated and growth in MSR value.

If the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company will perform the goodwill impairment test.

A goodwill impairment will be recorded if the carrying value of the Company exceeds its fair value as a result of the goodwill impairment test.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Allowance for Loss Sharing

Mortgage loans originated and sold by the Company to Fannie Mae under the Fannie Mae DUS program are subject to the terms and conditions of the Loss Sharing Addendum to the Multifamily Selling and Servicing Agreement, effective August 1, 2019 and amended effective June 15, 2021.

Under the Loss Sharing Agreement, the Company is responsible for absorbing certain losses incurred by Fannie Mae with respect to loans originated under the DUS program.

The compensation for this risk of loss is a component of servicing fees on the loan.

When a loan is sold under the Fannie Mae DUS program, the Company undertakes an obligation to partially guarantee the performance of the loan.

On the date the Company commits to make a loan to a borrower, a liability for the current expected credit losses related to the loan is recognized in Allowance for loss sharing on the consolidated balance sheets.

The estimate of expected credit losses is determined based on detailed loan-specific characteristics, including loan-to-value (LTV) ratio, vintage year, loan term, property type, occupancy, and geographic location.

The evaluation also considers the financial performance of the borrower, expected payments of principal and interest, as well as qualitative factors, utilizing both internal and external information.

This approach incorporates past events, current conditions, and forward-looking information through the use of projected macroeconomic scenarios over reasonable and supportable forecasts.

Subsequent changes (favorable and unfavorable) in expected credit losses each period are recognized immediately in (Provision)/benefit for credit losses in the consolidated statement of operations as allowance for loss sharing expense or a reversal of provision for loss sharing.

Mortgage Loan Repurchase

When a loan is sold under the Fannie Mae DUS and Ginnie Mae programs, the Company retains an option to repurchase individual delinquent loans that meet certain criteria.

Loans are considered delinquent when a payment has been missed for four consecutive months.

At the Company’s option, and without Fannie Mae’s or Ginnie Mae’s prior authorization, the Company may repurchase the delinquent loan for an amount equal to 100% of the remaining unpaid principal balance of the loan plus applicable interest and the Company’s share of delinquency resolution costs.

Under FASB ASC Topic 860, Transfers and Servicing, (“ASC 860”), once the Company has the unilateral ability to repurchase the delinquent loan and that ability has a more-than-trivial benefit to the Company, the Company is deemed to have regained effective control of the loan and is required to recognize the loan on its consolidated balance sheets with an offsetting liability, regardless of the Company’s intent to repurchase the loan.

Historically the Company has not elected the option to repurchase eligible loans.

At December 31, 2025, there were three delinquent Ginnie Mae loans with an unpaid principal balance of $ 17.9 million eligible to be repurchased by the Company.

During the year ended December 31, 2025, the Company did not exercise its option to repurchase any delinquent loans and it is not probable that the Company will be required to repurchase these delinquent loans.

Loans meeting the criteria for the repurchase option are included in the Loan repurchase option asset with an offsetting Loan repurchase option liability on the consolidated balance sheets.

Servicing Fee Payable

The Company provides additional payments to certain employees, both current and former, and third-party consultants by providing them with a percentage of the servicing fee revenue that is earned by the Company, which is initially recorded as a liability when the Company commits to make a loan to a borrower (“the servicing fee payable”).

The initial fair value of the liability represents the expected net cash payments over the life of the related mortgage loan that are discounted at a rate that reflects the credit and liquidity risk of the related MSR.

The Company incurs an expense over the life of each loan as long as the related loan is performing.

If a particular loan is not performing, the recipient will not receive any additional compensation on that loan, and if a loss sharing event is triggered, the recipient will not receive any portion of the additional compensation on other loans.

The servicing fee payable to current employees is included within Accrued compensation on the consolidated balance sheets.

The initial fair value of the related expense and the changes in the fair value of the servicing fee payable over the life of the related mortgage loan for current employees is included within Compensation and benefits , on a net basis, in the consolidated statement of operations in the period in which the change occurs.

The changes in the fair value of the servicing fee payable over the life of the related mortgage loan for former employees and third-party consultants is included within Professional fees, on a net basis, in the consolidated statement of operations in the period in which the change occurs.

Deferred Compensation Plans (Nonqualified)

The nonqualified deferred compensation plans are liability-classified cash based plans that are intended to promote the interest of the Company by creating incentives for employees in the form of long term compensation awards.

Awards may be

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

granted annually and generally vest over a period of four years.

Certain employees participate in the Deferred Cash Plan (“DC Plan”) and the Profit Incentive Plan provided by the Company.

All long-term incentive (“LTI”) plans attribute expected future benefits to a period of service greater than one year.

The Company accrues the cost of such awards issued under the LTI plans over the period of the employee’s service in a systematic and rational manner such that at the end of the period the aggregate amount accrued equals the value of the benefits expected to be provided to the employee in exchange for the employee’s service to that date.

Operating Leases

The Company's lease portfolio primarily contains real estate operating leases, which are accounted for in accordance with Topic 842, Leases.

The Company determines if an arrangement is or contains a lease at contract inception.

When a lease exists, The Company records a right-of-use ("ROU") asset and lease liability, which are initially recognized based on the discounted future lease payments over the term of the lease.

Variable lease payments are not included in the measurement of ROU assets and lease liabilities.

As the rate implicit in the Company's leases is not easily determinable, the Company’s applicable incremental borrowing rate is used in calculating the present value of the sum of the lease payments.

Tenant improvement allowances are netted against the associated ROU asset and accreted over the leasehold period.

Our leases generally include options to extend or terminate use of the underlying assets.

These options are included in the lease term used to determine ROU assets and lease liability when The Company is reasonably certain they will be exercised.

The Company elected the practical expedient related to lease and non-lease components, which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component.

Operating lease expense is recognized on a straight-line basis over the lease term with the expense recorded in Other expenses the consolidated statements of operations.

Real estate owned

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Intangible Lease Assets and Liabilities Lease Term

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

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

10 unchanged sentences

Net proceeds received are net of direct selling costs associated with the disposition of the real estate owned asset.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

Intangible Lease Assets and Liabilities of Acquired Properties

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If a financial asset’s risk characteristics change, the Company evaluates whether it is appropriate to continue to keep the financial instrument in its existing pool or evaluate it individually.

In measuring the general allowance for credit losses for financial instruments such as loans held for investment and 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 to determine the general allowance for credit losses principally utilizes historical loss rates derived from a commercial mortgage backed securities database with historical losses from 2002 to 2021 provided by a reputable third party, forecasting the loss parameters based on a projected macroeconomic scenario using a probability-based statistical approach over a reasonable and supportable forecast period of twelve months, followed by an immediate reversion to average historical losses.

Specific allowance for credit losses

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 provision for credit losses.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2025

In measuring the general allowance for credit losses for financial instruments such as loans held for investment and 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”) estimates.

Specific allowance for credit losses

For loans held for investment 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.

2 unchanged sentences

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.

The estimated fair value of the underlying collateral requires 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.

The estimated fair value of the underlying collateral requires judgments, which may 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.

17 unchanged sentences

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 provision for credit losses.

Changes in the provision for credit losses for the Company’s financial instruments are recorded in (Provision)/benefit for credit losses in the consolidated statements of operations with a corresponding offset to the financial instrument’s amortized cost recorded in 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.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2025

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

Non-performing status

23 unchanged sentences

however, our recognition generally follows the entity’s distribution priorities, which may change upon the achievement of certain investment return thresholds.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Equity method investments are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

If impairment is identified, a loss is recognized for the amount by which the carrying value exceeds the estimated fair value.

Our impairment analyses can include current plans, intended holding periods, and other relevant facts and circumstances that exist at the time the analysis is performed.

Repurchase Agreements

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Interest paid in accordance with repurchase agreements is recorded in Interest expense in the consolidated statements of operations.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

Deferred Financing Costs

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Deferred financing costs are amortized over the terms of the respective financing agreement using the effective interest rate method and included in Interest expense in the consolidated statements of operations.

Unamortized deferred financing costs are generally realized in Realized gain/(loss) on extinguishment of debt in the consolidated statements of operations when the associated debt is refinanced or repaid before maturity.

Unamortized deferred financing costs are generally realized in Gain/(loss) on other real estate investments in the consolidated statements of operations when the associated debt is refinanced or repaid before maturity.

Offering and Related Costs

4 unchanged sentences

Offering costs for the preferred stock were expensed in the consolidated statement of operations.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

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 grant in the future, from time to time, 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.

2021 Equity Incentive Plan (the “2021 Incentive Plan”), pursuant to which the Company has granted and may grant in the future, from time to time, equity awards to the Company’s directors, officers and 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.

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

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

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

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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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Derivatives and Hedging Activities

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

The Company also enters into loan commitments with borrowers on loan originations whereby the interest rate on the prospective loan is determined prior to funding.

In general, the Company simultaneously enters into forward sale commitments with investors in order to hedge against the interest rate exposure on loan commitments.

The forward sale commitment with the investor locks in the interest rate and price for the sale of the loan.

The terms of the loan commitment with the borrower and the forward sale commitment with the investor are matched with the objective of hedging interest rate risk.

Loan commitments and forward sale commitments are considered derivative instruments.

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

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.

The estimated fair value of loan commitments includes values attributable to loan origination fees, premiums on the sale of loans, the fair value of the MSR, and changes in fair value due to interest rate movements between the date of the rate lock and period end.

The estimated fair value of forward sale commitments includes the changes in fair value due to interest rate movements between the rate lock and period end.

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 and (Gain)/loss on sales, including fee-based servicing , in the accompanying consolidated statements of operations based on the nature of the derivative.

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 in the consolidated balance sheets.

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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 2021 Incentive Plan or upon conversion of the outstanding shares of the Company’s Series H Preferred Stock and Series I Preferred Stock (when it was outstanding), except when doing so would be anti-dilutive.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Reportable Segments

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• 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, CMBS bonds, CDO notes, and other securities.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

• 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 business also focuses on investing in and asset managing real estate securities, historically focusing on CMBS, CMBS bonds, CDO notes, and other securities.

• The Agency Business focuses on originating, selling, and servicing loans under programs offered by GSE’s and Agencies, such as Fannie Mae, Freddie Mac, Ginnie Mae, and HUD.

Additionally, the business services external portfolios of commercial real estate financing products.

• The commercial real estate conduit business, operated through the Company's TRS, 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 TRS may also hold certain mezzanine loans that don't qualify as good REIT assets due to any potential loss from foreclosure.

2 unchanged sentences

Redeemable Convertible Preferred Stock

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

The Company’s outstanding classes of redeemable convertible preferred stock are classified outside of permanent equity in the consolidated balance sheets as they qualify as mezzanine equity given the potential redemption options.

Series H Preferred Stock

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

On January 16, 2025, the Articles Supplementary relating to the Series H Preferred Stock was amended such that the mandatory conversion date was extended by one year, to January 21, 2026.

On January 20, 2026, the Company, following approval of the sole holder, amended the Articles Supplementary relating to the Series H Preferred Stock to extend the mandatory conversion date for the Series H Preferred Stock, which was set to occur on January 21, 2026, to January 21, 2028.

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 21, 2028;

provided that the Company and the holder(s) of all of the then outstanding Series H Preferred Stock may mutually agree in writing prior to the mandatory conversion date to one or more one-year extensions of the mandatory conversion date.

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 2027, upon 10 business days’ advance notice to the Company.

2 unchanged sentences

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.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Series I Preferred Stock

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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.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

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.

2 unchanged sentences

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” or ASU 2023-07.

ASU 2023-07 enhances the disclosures required for reportable segments on an annual and interim basis.

The amendments require expanded disclosures around significant segment expenses and identification of the Company's chief operating decision maker.

For the year ended December 31, 2024, the Company adopted and implemented the amendments and related disclosure requirements.

Refer to Note 16 - Segment Reporting for details.

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740):

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ASU 2023-09 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2024 and early adoption is permitted.

We do not expect the adoption of ASU 2023-09 to have a material impact on our consolidated financial statements.

For the year ended December 31, 2025, the Company adopted and implemented the amendments and related disclosure requirements, which were applied prospectively.

Refer to Note 24 - Income Taxes for details.

In March 2024, the FASB issued ASU, 2024-01 “Compensation — Stock Compensation (Topic 718):

2 unchanged sentences

ASU 2024-01 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2024 and early adoption is permitted.

We do not expect the adoption of ASU 2024-01 to have a material impact on our consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02 “Codification Improvements — Amendments to Remove References to the Concepts Statements,” or ASU 2024-02.

ASU 2024-02 amended certain definitions in the FASB guidance.

ASU 2024-02 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2024 and early adoption is permitted.

We do not expect the adoption of ASU 2024-02 to have a material impact on our consolidated financial statements.

For the year ended December 31, 2025, the Company adopted ASU 2024-01 and the adoption did not have a material impact on the Company's consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40).

ASU 2024-03 requires disaggregated disclosures of certain categories of expenses that are included on the face of the income statement.

The standard is to be adopted prospectively, with the option to apply retrospectively.

The Company is currently assessing the impact that ASU 2024-03 will have on the consolidated financial statements.

In September 2025, the FASB issued ASU, 2025-06 “Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40),” or ASU 2025-06.

ASU 2025-06 modernizes the accounting for software costs.

ASU 2025-06 is effective on a prospective basis, with options for modified transition and retrospective application, for annual periods beginning after December 15, 2027 and early adoption is permitted.

The Company is currently assessing the impact that ASU 2025-06 will have on the consolidated financial statements.

FRANKLIN BSP REALTY TRUST, INC.

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December 31, 2025

Note 3 - Commercial Mortgage Loans

Note 3 - Business Combinations

Acquisition of NewPoint

On July 1, 2025 (the “Acquisition Date”), the Company completed the acquisition ("the Transaction") of NewPoint Holdings JV LLC (“NewPoint”), a commercial real estate finance company offering lending solutions nationwide to investors in multifamily, affordable housing, seniors housing, healthcare, and manufactured housing properties.

The Transaction is expected to expand the Company's presence in the multifamily lending sector, with the opportunity to enhance its diversified mortgage finance platform and capitalize on agency capabilities.

The Company purchased 100 % of the outstanding equity interests of NewPoint for an aggregate purchase price of $ 427.8 million, comprised of $ 336.9 million in cash and $ 90.9 million of equity, in the form of 8,385,951 Class A units of the OP ("OP Units") issued as consideration.

The OP Units were valued based on the closing market price of the Company's common shares on the acquisition date.

The Company operates the acquired business through a taxable REIT subsidiary.

The Company accounted for the Transaction as a business combination under the acquisition method of accounting, which requires allocation of the total consideration transferred to the assets acquired and liabilities assumed based on their fair values as of the Acquisition Date, with the excess of the consideration transferred over those fair values recorded as goodwill.

Determining the fair value of the assets acquired requires significant judgments, assumptions, and estimates about future events, which the Company believes are reasonable.

Use of different estimates and judgments could produce materially different results.

The Company may refine such estimates and adjust the assets acquired and liabilities assumed over the measurement period, which will not exceed one year from the Acquisition Date.

The following is a preliminary purchase price allocation, which is subject to change as the Company finalizes its analysis over certain items such as intangible assets, MSRs, and other items.

The allocation of the purchase consideration as of July 1, 2025, subject to future measurement period adjustments, is as follows (dollars in thousands):

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Total Purchase Price $ 427,774

Cash and cash equivalents 25,357

Restricted cash 14,205

Investment securities, held to maturity 17,843

Commercial mortgage loans, held for sale, measured at fair value 422,011

Mortgage servicing rights, net 211,545

Derivative assets 4,268

Accrued Interest Receivable 4,475

Prepaid expenses and other assets 23,434

Equity method investments 47,614

Loan repurchase option asset 13,197

Intangible assets - agency licenses 72,500

Intangible assets - other 9,500

Goodwill 92,048

Total assets acquired $ 957,997

Repurchase agreements - commercial mortgage loans 413,797

Allowance for loss sharing 23,586

Accrued compensation 34,650

Interest Payable 1,154

Loan repurchase option liability 13,197

Accounts payable and accrued expenses 15,929

Other liabilities 27,910

Total liabilities assumed $ 530,223

Total purchase consideration $ 427,774

During the year ended December 31, 2025, the Company made measurement period adjustment resulting in a $ 1.2 million increase in deferred tax liabilities primarily resulting from adjustments to state deferred taxes.

The purchase price exceeded the estimated fair value of the assets acquired and liabilities assumed and, as a result of the purchase allocation, the Company recorded goodwill of $ 92.0 million, which has been allocated to the Agency Business segment.

The goodwill recognized is attributable primarily to anticipated growth opportunities and synergies resulting from the Transaction, which provides the Company with an expanded presence in the multifamily sector and the ability to originate and service agency mortgage loans.

The amount of goodwill expected to be deductible for tax purposes is approximately $ 61.7 million.

The fair value of the identifiable tangible assets and liabilities acquired in the Transaction approximated their carrying values at the Acquisition Date.

The Company used independent third-party valuation specialists to assist in determining the fair value of certain intangible assets acquired and liabilities assumed, which are classified as Level III.

Provisional estimates of fair value are established at the time of the acquisition.

There are significant estimates used in determining the fair values of certain intangible assets acquired, which consist of mortgage servicing rights, licenses, developed technology, and non-compete agreements.

Mortgage servicing rights:

When a mortgage loan is sold, the Company retains the right to service the loan and recognizes the MSR at fair value.

The initial fair value represents expected net cash flows from servicing, borrower prepayment penalties, placement fees on escrows, interim cash balances, delinquency rates, late charges and ancillary fees that are discounted at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the underlying loan.

After initial recognition, the MSRs will be amortized using the amortization method.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

The fair value of the licenses were estimated using a discounted cash flow method, which involves projecting revenue and servicing fees associated with the license, while accounting for related expenses.

The significant unobservable input used to discount the future cash flows to present value is the discount rate of 11.5 %.

These licenses are considered to have indefinite useful lives, reflecting their continuous economic value.

Key assumptions are drawn from management’s projections and legal guidance.

Developed technology:

The fair value was estimated based on a replacement cost method of the cost approach, which estimates the cost the Company would incur in rebuilding the technology.

Under this method, fair value is equal to the replacement cost of the technology plus developer’s profit and entrepreneurial incentive, which are the key assumptions embedded into the valuation.

The technology is amortized over five years based upon the estimated economic benefits received.

Non-compete agreements:

The fair value of the non-compete agreements were estimated using a discounted cash flow method, which calculates the present value of projected revenue differences attributable to the agreement, adjusted for operating expenses.

The significant unobservable input used to discount the future cash flows to present value is the discount rate of 11.5 %.

Key assumptions are based on management input and the terms of the non-compete agreement.

The agreements are amortized over a period of nine to 12 months.

The estimates above directly impact the amount of identified intangible assets recognized and the related amortization expenses in future periods.

Intangible assets acquired had a weighted average useful economic life of 2.7 years.

As of December 31, 2025, aggregate intangible assets relating to the Transaction of $ 78.2 million were recorded in Intangible assets, net on the consolidated balance sheets.

The Company may record certain measurement period adjustments, which will be made in the period in which the amounts are determined.

The current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the Acquisition Date.

For the year ended December 31, 2025, the Company recognized acquisition-related expenses of $ 3.7 million and $ 5.1 million in Other Expenses and Professional Fees, respectively, on the consolidated statement of operations.

The Company's consolidated financial statements for the year ended December 31, 2025 include the operations of NewPoint from the Acquisition Date.

The following table presents NewPoint's revenue and earnings as reported in the Company's consolidated statement of operations (dollars in thousands):

Year ended December 31, 2025

Revenue $ 77,337

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

Supplemental Pro Forma Combined Information (unaudited)

The following unaudited pro forma combined financial information presents the combined results of operations of the Company, as if the Transaction occurred on January 1, 2024.

The unaudited proforma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the Transaction had taken place on the date indicated or of results that may occur in the future (dollars in thousands):

Year ended December 31,

Total Income $ 334,907 $ 333,471

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

94,168 81,513

The unaudited pro forma financial information is based on historical information of the Company and NewPoint, along with certain material, non-recurring pro forma adjustments.

The material, non-recurring pro forma adjustments primarily consist of (i) incremental amortization expense based on the preliminary fair values of the intangible assets acquired;

(ii) recognition of non-controlling interest to reflect the reclassification of the OP units;

(iii) a change in the valuation methodology of mortgaging servicing rights from fair value to the amortization method;

(iv) increased provision for credit loss expense due to revised loss estimation methodology, (v) non-recurring transaction costs;

and (vi) income tax impact of the aforementioned pro forma adjustments.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Note 4 - Commercial Mortgage Loans, Held for Investment

The following table presents a summary of the Company's commercial mortgage loans, held for investment, carrying values by class (dollars in thousands):

20 unchanged sentences

( 197,396 ) ( 307,546 )

Transfer to held for sale ( 33,909 ) —

Cost recovery ( 1,488 ) ( 1,870 )

3 unchanged sentences

Specific (provision)/benefit for credit losses ( 5,748 ) ( 36,019 )

Write offs from specific allowance for credit losses 4,801 26,558

Charge offs from specific allowance for credit losses 32,860 4,801

Allowance for credit losses, end of period $ ( 38,302 ) $ ( 78,083 )

2 unchanged sentences

(1) Other items primarily consist of purchase discounts or premiums and deferred origination expenses.

(2) In February 2024, the Company, through deed-in-lieu of foreclosure, acquired a multifamily property located in San Antonio, TX, and assumed the senior mortgage note which the Company originated in November 2021.

At the time of the deed-in-lieu of foreclosure, the amortized cost of the loan was $ 42.2 million and contractual interest was satisfied.

Subsequently thereafter, the property was sold to a third party.

In connection with the sale, the senior mortgage note was assumed by the buyer and immediately modified, resulting in a $ 5.9 million principal paydown.

As a result, the modification was accounted for as a new loan for GAAP purposes and the sale of the real estate owned transaction resulted in a net gain of $ 6.0 thousand recorded in Gain/(loss) on other real estate investments in the consolidated statement of operations.

(2) For additional details on properties obtained through foreclosure or deed-in-lieu of foreclosure see Note 5 - Real Estate Owned.

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Specific Allowance for Credit Losses

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 loan.

The Company has 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 loan.

As such, these loans receivable are measured at fair value on a nonrecurring basis using significant unobservable inputs and are classified as Level 3 assets in the fair value hierarchy.

2 unchanged sentences

The significant unobservable input used for the market approach is the estimated fair value less cost to sell based on a negotiated price from an anticipated buyer.

In June 2022, the Company originated a first mortgage loan with a commitment of $ 60.8 million secured by two multifamily properties in North Carolina.

The loan was identified by management as non-performing and placed on non-accrual status, with an amortized cost of $ 58.0 million as of March 31, 2024.

The Company recorded a specific allowance for credit losses of $ 0.7 million on this loan for the quarter ended March 31, 2024.

In May 2024, the Company, through deed-in-lieu of foreclosure, acquired the properties which are recorded in Real estate owned, held for sale in the consolidated balance sheets.

See Note 5 - Real Estate Owned for additional details.

In March 2021, the Company originated a first mortgage loan with a commitment of $ 48.5 million secured by an office property in Colorado.

1 unchanged sentence

The Company recorded a specific allowance for credit losses of $ 26.7 million on this loan for the year ended December 31, 2024.

In December 2019, the Company originated a first mortgage loan with a commitment of $ 33.0 million secured by an office property in Georgia.

The loan was identified by management as non-performing and placed on cost recovery status, with an amortized cost of $ 22.8 million as of December 31, 2024.

The Company recorded a specific allowance for credit losses of $ 1.3 million on this loan for the year ended December 31, 2024.

In July 2019, the Company originated a first mortgage loan with a commitment of $ 20.9 million secured by a hospitality property in Texas.

During the third quarter of 2024, the loan was paid off resulting in a loss of $ 0.4 million.

The Company recorded a specific allowance for credit losses of $ 0.4 million during the third quarter of 2024, and subsequently wrote off this specific allowance for credit losses in the same quarter.

In February 2025, the Company, through deed-in-lieu of foreclosure, acquired the property which is recorded in Real estate owned, held for sale in the consolidated balance sheets.

See Note 5 - Real Estate Owned for additional details.

The Company charged off the specific allowance for credit losses at the time of the deed-in-lieu of foreclosure.

In November 2021, the Company originated a first mortgage loan with a commitment of $ 66.7 million secured by a multifamily property in Texas.

1 unchanged sentence

The Company recorded a specific allowance for credit losses of $ 3.2 million on this loan for the year ended December 31, 2024.

In January 2025, the Company, through foreclosure, acquired the property which was subsequently sold in February 2025.

See Note 5 - Real Estate Owned for additional details.

The Company charged off the specific allowance for credit losses at the time of the foreclosure.

In December 2021, the Company originated a first mortgage loan with a commitment of $ 23.0 million secured by a multifamily property in Pennsylvania.

The loan was identified by management as non-performing and placed on non-accrual status, with an amortized cost of $ 21.7 million as of December 31, 2025.

The Company recorded a specific allowance for credit losses of $ 2.0 million on this loan as of December 31, 2025.

In May 2022, the Company originated a first mortgage loan with a commitment of $ 42.3 million secured by a multifamily property in Texas.

The loan was identified by management as non-performing and placed on non-accrual status, with an amortized cost of $ 36.8 million as of March 31, 2025.

The Company recorded a specific allowance for credit losses of $ 0.5 million on this loan as of March 31, 2025, and an additional $ 1.4 million specific allowance for credit losses in the second quarter as a result of the property's decrease in fair market value.

In April 2025, the Company acquired the property through foreclosure, which is recorded in Real estate owned, held for sale in the consolidated balance sheets.

See Note 5 - Real Estate Owned for additional details.

The Company charged off the specific allowance for credit losses at the time of the foreclosure.

In May 2022, the Company originated a first mortgage loan with a commitment of $ 32.8 million secured by a multifamily property in Texas.

In October 2025, the loan was identified by management as non-performing and placed on non-accrual status, with a specific reserve for credit losses of $ 1.1 million.

In December 2025, the Company, through foreclosure, acquired the property and charged off the specific allowance for credit losses at the time of the foreclosure.

See Note 5 - Real Estate Owned for additional details.

In November 2021, the Company originated a first mortgage loan with a commitment of $ 39.0 million secured by a multifamily property in Arizona.

The loan was identified by management as non-performing and placed on cost recovery status, with an amortized cost of $ 36.8 million as of December 31, 2025.

The Company recorded a specific allowance for credit losses of $ 1.2 million on this loan as of December 31, 2025.

In June 2022, the Company originated a first mortgage loan with a commitment of $ 46.0 million secured by a multifamily property in North Carolina.

The loan was identified by management as non-performing and placed on cost recovery status, with an amortized cost of $ 44.5 million as of December 31, 2025.

The Company recorded a specific allowance for credit losses of $ 0.9 million on this loan as of December 31, 2025.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

General Allowance for Credit Losses

The Company recorded a decrease in its general allowance for credit losses during the year ended December 31, 2025 of $ 13.5 million.

The primary driver for the lower reserve balance is due to a more favorable macro-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, 2023 of $ 21.4 million.

The primary driver for the higher reserve balance is due to a more pessimistic and conservative macro-economic outlook since the end of the prior year slightly offset by a decrease in the overall portfolio of commercial mortgage loans, held for investment as of December 31, 2023.

The primary driver for the lower reserve balance is due to performance improvement of our portfolio since the end of the prior year.

The Company recorded a decrease in its general allowance for credit losses during the year ended December 31, 2024 of $ 0.3 million.

The primary driver for the lower reserve balance was due to portfolio turnover along with a more favorable macro-economic outlook since the end of the prior year.

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

5 unchanged sentences

________________________

(1) Comprised of four mortgage loans, two of which were collateralized by office properties and the other two by multifamily properties.

Both office properties have been designated as non-performing and placed on cost recovery status.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

(1) Comprised of two mortgage loans, one of which was collateralized by an office property and the other by a multifamily property.

Both mortgage loans have been designated as non-performing and placed on cost recovery status.

Non-performing Status

7 unchanged sentences

________________________

(1) As of December 31, 2024 and 2023, the Company had three and two loans, respectively, designated as non-performing.

(1) As of December 31, 2025 and 2024, the Company had seven and three loans, respectively, designated as non-performing.

As of December 31, 2025, four non-performing loans were placed on cost recovery status, one of which was collateralized by an office property with no specific allowance for credit losses and the other three by multifamily properties, with a combined specific allowance for credit losses of $ 4.1 million .

As of December 31, 2025, three non-performing loans, collateralized by multifamily properties, were placed on non-accrual status with no specific allowance for credit losses.

As of December 31, 2024, the three non-performing loans were placed on cost recovery status, two of which were collateralized by office properties with a specific allowance for credit losses of $ 26.7 million and $ 1.3 million and the other by a multifamily property with a specific allowance for credit losses of $ 3.2 million.

As of December 31, 2023, the two non-performing loans were placed on non-accrual status and were collateralized by multifamily properties.

No specific allowances for credit losses were determined for the two loans designated as non-performing as of December 31, 2023.

Loan Credit Characteristics, Quality and Vintage

As part of the Company's process for monitoring the credit quality of its commercial mortgage loans, excluding those held for sale, measured at fair value, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its loans.

The loans are scored on a scale of 1 to 5 as described in Note 2 - Summary of Significant Accounting Policies.

Commercial mortgage loans, held for investment in the consolidated balance sheets, are assigned an initial risk rating of 2 .

The loans are scored on a scale of 1 to 5 as follows:

Investment Rating

Summary Description

1 Very Low Risk - Investment exceeding fundamental performance expectations and/or capital gain expected.

Trends and risk factors since time of investment are favorable.

2 Low Risk - Performing consistent with expectations and a full return of principal and interest expected.

Trends and risk factors are neutral to favorable.

3 Average Risk - Performing investments requiring closer monitoring.

Trends and risk factors show some deterioration.

4 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.

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

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

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, 2025 and 2024, the weighted average risk rating of loans was 2.4 and 2.3 , respectively.

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December 31, 2025

Note 5 - Commercial Mortgage Loans, Held for Sale

Commercial Mortgage Loans, Held for sale, Measured at Fair Value

As of December 31, 2024, the contractual principal balance outstanding of commercial mortgage loans, held for sale, measured at fair value was $ 87.3 million which was comprised of three loans.

As of December 31, 2024, 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.

As of December 31, 2023 the Company did not hold any commercial mortgage loans, held for sale, measured at fair value.

The following tables present 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, 2024

Loan Collateral Type Par Value Percentage

Multifamily $ 17,270 19.8 %

Mixed Use 70,000 80.2 %

Total $ 87,270 100.0 %

Our commercial mortgage loans, held for sale, measured at fair value are comprised of both Agency loans and non-Agency loans.

Our Agency loans held for sale are typically sold within 60 days of loan origination, while non-Agency loans are generally expected to be sold to third parties or securitized within 180 days of loan origination.

The following table shows the aggregate unpaid principal balance and fair value of our mortgage loans, held for sale, measured at fair value (dollars in thousands):

December 31, 2025 December 31, 2024

Aggregate UPB Fair Value Aggregate UPB Fair Value

Agency loans $ 324,162 $ 331,218 $ — $ —

Non-Agency loans 29,500 29,500 87,270 87,270

Total commercial mortgage loans, held for sale, measured at fair value $ 353,662 $ 360,718 $ 87,270 $ 87,270

As of December 31, 2025 and December 31, 2024, respectively, there were no loans that were 90 days or more past due or on a non-accrual status.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Loan Region Par Value Percentage

Mideast $ 75,000 85.9 %

Southwest 12,270 14.1 %

Note 6 - Mortgage Servicing Rights

Mortgage Servicing Rights (“MSRs”) represent servicing rights retained by the Company for loans it originates and sells.

The servicing fees are collected from the monthly payments made by the borrowers.

The Company generally receives other remuneration including rights to various loan fees such as late charges, collateral re-conveyance charges, loan prepayment penalties, and other ancillary fees.

In addition, the Company earns placement fees on funds held pending remittance related to its collection of loan principal and escrow balances.

As of December 31, 2025, the Company had a servicing portfolio consisting of 1,042 loans with an unpaid principal balance of $ 21.6 billion for which it owns MSRs.

Activity related to MSRs for the December 31, 2025, was as follows (in thousands):

Year Ended December 31, 2025

Beginning balance, as of January 1, 2025 $ —

Acquired MSRs at July 1, 2025 211,545

Additions 26,295

Amortization ( 19,434 )

Impairment ( 2,590 )

Prepayments and write-offs ( 3,600 )

Ending balance, as of December 31, 2025 $ 212,216

The discount rates used to determine the present value of the MSRs, at recognition, were between 8 % - 14 % (representing a weighted average discount rate of 10 %) as of December 31, 2025.

The weighted average estimated life remaining of the MSRs was 6.4 years as of December 31, 2025.

Contractual servicing fees, including late fees, and ancillary fees were $ 22.9 million for the year ended December 31, 2025, and are included in servicing fees, net in the consolidated statement of operations.

At December 31, 2025, $ 2.6 million of MSR were considered impaired.

The expected amortization of capitalized MSRs recorded at December 31, 2025 is as follows (in thousands):

Year Amortization

Thereafter 85,312

Total $ 212,216

Based on scheduled maturities, actual amortization may vary from these estimates.

FRANKLIN BSP REALTY TRUST, INC.

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December 31, 2025

Note 4 - Investment Securities

Note 7 - Real Estate Securities

Real Estate Securities, Available For Sale, Measured at Fair Value

8 unchanged sentences

December 31, 2024 $ 202,894 $ 295 $ ( 216 ) $ 202,973

As of December 31, 2025, the Company held 10 CMBS bonds with an amortized cost basis of $ 151.9 million and a net unrealized loss of $ 0.3 million, seven of which were held in a gross unrealized loss position of $ 0.4 million.

As of December 31, 2024, the Company held 11 CMBS bonds with an amortized cost basis of $ 202.9 million and a net unrealized gain of $ 0.1 million, four of which were held in a gross unrealized loss position of $ 0.2 million.

As of December 31, 2023, the Company held seven CMBS bonds with an amortized cost basis of $ 243.3 million and a net unrealized loss of $ 0.7 million, five of which were held in a gross unrealized loss position of $ 0.8 million.

As of December 31, 2025 and 2024, zero positions had an unrealized loss for a period greater than twelve months.

12 unchanged sentences

August 2023 Office Portland, OR 16,479 2,065 — ( 120 ) 18,424

October 2023 Multifamily Lubbock, TX 1,618 10,076 185 ( 336 ) 11,543

$ 19,915 $ 86,324 $ 2,929 $ ( 9,903 ) $ 99,265

7 unchanged sentences

August 2023 Office Portland, OR 16,479 2,065 — ( 69 ) 18,475

October 2023 Multifamily Lubbock, TX 1,618 10,076 185 ( 24 ) 11,855

October 2023 (2)

Multifamily Lubbock, TX 1,618 10,076 185 ( 336 ) 11,543

$ 21,533 $ 96,400 $ 3,113 $ ( 7,886 ) $ 113,160

2 unchanged sentences

Refer to Note 18 - Related Party Transactions and Arrangements for details.

(2) The Company reclassified this property from held for investment to held for sale in September 2025.

Depreciation expense for the years ended December 31, 2025 and 2024 totaled $ 2.5 million and $ 2.7 million, respectively.

4 unchanged sentences

Various $ 2,980 $ 217

Denver, CO 17,267 1,321

Multifamily (3)

4 unchanged sentences

Various $ 14,472 $ 1,291

Multifamily (3)

Various 211,024 4,528

$ 225,496 $ 5,819

FRANKLIN BSP REALTY TRUST, INC.

3 unchanged sentences

Refer to Note 18 - Related Party Transactions and Arrangements.

During the year ended December 31, 2024, the Company recorded a loss of $ 10.7 million related to the portfolio, consisting of a $ 9.7 million write-down of assets and a $ 1.0 million loss on the sale of 19 properties.

As of December 31, 2024, the Company's real estate owned, held for sale assets include the remaining four retail properties in the Walgreens Portfolio.

The respective write-downs and losses on sale are recorded within Gain/(loss) on other real estate investments in the Company's consolidated financial statements of operations.

(2) During the year ended December 31, 2024, the Company obtained 11 multifamily properties, in various locations throughout the United States, through foreclosure or deed-in-lieu of foreclosure and subsequently sold three of the properties.

The Company recognized a net gain of $ 2.7 million included within Gain/(loss) on other real estate investments in the Company's consolidated financial statements of operations related to the foreclosure and sale of these properties.

As of December 31, 2024, the Company's real estate owned held for sale assets includes eight multifamily properties that previously collateralized five commercial mortgage loans.

During the year ended December 31, 2025, the Company sold three properties within the Walgreens Portfolio.

In addition, the Company received $ 5.6 million related to settled litigation regarding the Walgreens Portfolio.

As a result, the Company recorded a net gain of $ 3.4 million for the year ended December 31, 2025 related to the legal settlement and property sales included within Gain/(loss) on other real estate investments in the Company's consolidated financial statements of operations.

As of December 31, 2025, the Company's real estate owned, held for sale assets includes one remaining retail property in the Walgreens Portfolio.

(2) During the year ended December 31, 2025, the Company obtained one office property, in Denver, CO, through deed-in-lieu of foreclosure and recognized a net loss of $ 1.7 million, included within Gain/(loss) on other real estate investments, in the Company's consolidated financial statements of operations related to the foreclosure of this property.

(3) During the year ended December 31, 2025, the Company obtained five multifamily properties, through foreclosure or deed-in-lieu of foreclosure, in various locations throughout the United States and reclassified one property located in Lubbock, Texas from held for investment to held for sale.

In addition, the Company sold ten multifamily properties within the held for sale portfolio.

During the year ended December 31, 2025, the Company recognized a net loss of $ 5.1 million included within Gain/(loss) on other real estate investments in the Company's consolidated financial statements of operations related to the foreclosure, sales, and fair value write-down of these properties.

As of December 31, 2025, the Company's real estate owned, held for sale assets included four multifamily properties that previously collateralized four commercial mortgage loans.

As of December 31, 2025, the Company has designated certain properties included within the real estate owned business segment as held for sale in accordance with ASC 360.

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December 31, 2025

Note 9 - Equity Method Investments

55 Riverwalk Aker/BSP Venture LLC - The Company holds a 21.01 % interest in 55 Riverwalk Aker/BSP Venture LLC (the "55 Riverwalk JV"), a joint venture that is a mixed-use development property consisting of a multifamily apartment complex and retail shopping stores.

The 55 Riverwalk JV was formed on December 20, 2024, where the Company made an initial investment of $ 13.3 million.

The Company has received total distributions of $ 0.4 million as of December 31, 2025.

The equity investment in 55 Riverwalk JV has a carrying value of $ 13.5 million on the consolidated balance sheets as of December 31, 2025.

Garfield PG JV HoldCo LLC - The Company holds a 28.87 % interest in Garfield PG JV HoldCo LLC (the "Garfield JV"), a joint venture that is an industrial property for warehousing and distribution.

The Garfield JV was formed on May 22, 2025, where the Company made an initial investment of $ 9.8 million.

The Company has received total distributions of $ 0.8 million as of December 31, 2025.

The equity investment in Garfield JV has a carrying value of $ 8.6 million on the consolidated balance sheets as of December 31, 2025.

NewPoint JV LLC - Through the acquisition of NewPoint on July 1, 2025, the Company holds a 7.08 % ownership interest in NewPoint JV LLC (the “Bridge JV”), a joint venture with the purpose of investing in multifamily bridge loans.

The Company has received total distributions of $ 1.5 million as of December 31, 2025.

The Company has a total commitment of $ 25.0 million which was completely funded as of December 31, 2025.

The equity investment in Bridge JV has a carrying value of $ 24.2 million on the consolidated balance sheets as of December 31, 2025.

NewPoint + MORE Capital Affordable Fund LLC - Through the acquisition of NewPoint on July 1, 2025, the Company holds a 29.34 % ownership interest in NewPoint + MORE Capital Affordable Fund LLC (the “Affordable JV”), a joint venture with the purpose of investing in multifamily affordable debt instruments through its subsidiary, NewPoint Impact Fund I LP.

The Company has a total capital commitment of $ 30.0 million to Affordable JV, of which $ 7.4 million was unfunded as of December 31, 2025.

The Company has received no distributions as of December 31, 2025.

The equity investment in Affordable JV has a carrying value of $ 25.3 million on the consolidated balance sheets as of December 31, 2025.

The following table provides a summary of the combined financial position of the Company’s equity method investments as of December 31, 2025 (dollars in thousands):

December 31, 2025

Total Assets $ 1,450,001

Total Liabilities 918,504

Net Assets/Member's Equity 531,497

The following provides a summary of the combined results of operations of the Company’s equity method of investments for the year-ended December 31, 2025 (dollars in thousands):

Year Ended December 31, 2025

Total Revenue/Investment Income $ 86,448

Unrealized Gain/(Loss) from Investments 153

Total Expenses 63,154

Net Income/(Loss) 23,447

Net Income/(Loss) attributable to the Company 3,583

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Note 10 - Leases

Intangible Lease Assets and Liabilities, Held for Investment

The following table summarizes the Company's identified intangible lease assets (primarily in-place leases) and liabilities (primarily below-market leases) recognized in the consolidated balance sheets as of December 31, 2024 and 2023 (dollars in thousands):

Identified intangible assets:

December 31, 2024 December 31, 2023

Gross amount $ 49,285 $ 49,285

Accumulated amortization ( 9,451 ) ( 6,492 )

Total, net $ 39,834 $ 42,793

The Company leases office space, classified as operating leases, in the normal course of business at varying lengths through 2033.

Leases are negotiated with third parties and, in some instances, contain renewal, expansion and termination options.

As of December 31, 2025, the Company recorded ROU assets of $ 8.4 million and operating lease liabilities of $ 10.5 million within Prepaid expenses and other assets and other liabilities , respectively, on the consolidated balance sheets.

All lease commencement dates are recorded as of July 1, 2025 in conjunction with the acquisition of NewPoint.

Year Ended December 31, 2025 Year Ended December 31, 2024

Operating lease cost $ 1,226 $ —

Variable lease cost 419 —

Net lease cost $ 1,645 $ —

Other Information

Operating cash outflows from operating leases 1,382 —

Weighted-average remaining lease term 5.5

Weighted-average discount rate 6.7 %

Operating lease cost is included in Other expenses in the consolidated statement of operations.

The discount rate was determined by using the Company's incremental borrowing rate.

The following table shows future minimum payments under the Company's operating leases as of December 31, 2025 (dollars in thousands):

Future Minimum Payments December 31, 2025

2031 and beyond 2,246

Total Lease Payments 12,629

imputed interest ( 2,116 )

Total $ 10,513

Rental Income

1 unchanged sentence

Rental income is included in Revenue from real estate owned in the consolidated statements of operations.

The following table summarizes the Company's schedule of future minimum rents on its real estate owned, held for investment properties, to be received under the lease (dollars in thousands):

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

The following table summarizes the Company's schedule of future minimum rents on its real estate owned, held for investment properties, to be received under the leases (dollars in thousands):

Future Minimum Rents December 31, 2025

2025 $ 10,425

2031 and beyond 79,083

4 unchanged sentences

Amortization expense for the years ended December 31, 2025 and 2024 totaled $ 2.9 million and $ 3.0 million, respectively.

Amortization of acquired below (above) market leases, net of acquired above-market leases, resulted in a decrease to rental revenues of $ 0.9 million for the year ended December 31, 2023.

The following table summarizes the Company's expected amortization of other identified intangible assets, net over the next five years, exclusive of intangible assets that are held for sale, assuming no further acquisitions or dispositions (dollars in thousands):

The following table summarizes the Company's expected amortization of other identified intangible assets, exclusive of intangible assets that are held for sale, assuming no further acquisitions or dispositions (dollars in thousands):

Amortization Expense - Other identified intangible assets December 31, 2025

2031 and beyond 22,560

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2025

Note 11 - Goodwill & Other Intangible Assets

Changes in the carrying amount of goodwill by reporting segment were as follows (dollars in thousands):

Balance at December 31, 2024 $ — $ —

Goodwill acquired during the period (1)

92,048 92,048

Balance at December 31, 2025 $ 92,048 $ 92,048

________________________

(1) Represents goodwill related to the NewPoint acquisition.

Intangible Assets

The following table summarizes the carrying value of the Company’s intangible assets, as described in Note 2 - Summary of Significant Accounting Policies, as of December 31, 2025 and December 31, 2024 (dollars in thousands):

December 31, 2025 December 31, 2024

Carrying Value Accumulated Amortization Total Carrying Value Accumulated Amortization Total

Indefinite lived intangibles:

Agency License Intangibles $ 72,500 $ — $ 72,500 $ — $ — $ —

Finite lived intangibles:

Non-compete Agreements $ 5,200 $ ( 3,317 ) $ 1,883 $ — $ — $ —

Software development 4,660 ( 444 ) 4,216 — — —

Intangible lease assets 49,192 ( 12,238 ) 36,954 49,285 ( 9,451 ) 39,834

Total $ 131,552 $ ( 15,999 ) $ 115,553 $ 49,285 $ ( 9,451 ) $ 39,834

Amortization expense for the years ended December 31, 2025 and 2024 totaled $ 6.6 million and $ 2.9 million, respectively.

The following table summarizes the Company's expected other identified intangible assets, net amortization over the next five years (dollars in thousands):

Weighted Avg.

Life (in Years) 2026 2027 2028 2029 2030

Non-compete Agreements 0.3 $ 1,883 $ — $ — $ — $ —

Software development 4.5 932 932 932 932 488

Intangible lease assets 12.8 2,880 2,880 2,880 2,880 2,880

Total $ 5,695 $ 3,812 $ 3,812 $ 3,812 $ 3,368

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Note 12 - Debt

9 unchanged sentences

WF Repo Facility (5)

400,000 — 6,246 N/A 10/2025

Barclays Revolver Facility (8)

250,000 75,172 1,749 5.22 % 10/2027

Barclays Revolver Facility (6)

100,000 — 438 N/A 09/2026

Barclays Repo Facility (7)

500,000 82,602 8,889 5.59 % 03/2028

Churchill Repo Facility 225,000 — 139 N/A N/A

Churchill Repo Facility (8)

— — 555 N/A N/A

BAML WH Line of Credit (9)

500,000 9,399 1,210 5.17 % 06/2026

Fifth Third WH Line of Credit (9)

400,000 44,007 3,169 5.02 % 07/2026

Fifth Third Line of Credit (10)

100,000 15,000 1,265 6.53 % 08/2026

JPM WH Line of Credit (11)

700,000 222,831 5,892 5.04 % 01/2026

PNC WH Line of Credit (12)

500,000 47,924 1,628 4.99 % 12/2026

ASAP WH Line of Credit (13)

100,000 — — N/A N/A

Total/Weighted average $ 4,000,000 $ 1,087,087 $ 53,500 5.70 %

6 unchanged sentences

Unsecured Debt (18)

Junior Note I N/A $ 17,085 $ 1,630 8.35 % 10/2035

Junior Note II N/A 39,588 3,602 7.92 % 12/2035

Junior Note III N/A 24,722 2,251 7.92 % 09/2036

Senior Notes (16)(17)

N/A $ 107,000 $ 6,158 Various (16)(17)

Various (16)(17)

Junior Note I (18)

N/A 17,500 1,458 7.60 % 10/2035

Junior Note II (18)

N/A 40,000 3,195 7.28 % 12/2035

Junior Note III (18)

N/A 25,000 1,997 7.28 % 09/2036

Total/Weighted average N/A $ 189,500 $ 12,808 7.81 %

13 unchanged sentences

WF Repo Facility (5)

400,000 71,730 9,580 7.85 % 10/2025

Barclays Revolver Facility (8)

400,000 — 6,246 N/A 10/2025

Barclays Revolver Facility (6)

100,000 75,805 965 9.25 % 09/2026

Barclays Repo Facility (7)

500,000 76,073 13,642 6.28 % 03/2025

Churchill Repo Facility 225,000 — 30 N/A N/A

Churchill Repo Facility (8)

225,000 — 139 N/A N/A

Total/Weighted average $ 2,075,000 $ 329,811 $ 38,169 7.27 %

4 unchanged sentences

Other financings (15)

N/A $ 36,534 $ 5,330 7.36 % Various (6)

N/A $ 12,865 $ 1,070 6.00 % 07/2028

Unsecured debt (18) :

8 unchanged sentences

Additionally, the Repo and Revolving Credit 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, 2024 and 2023, the Company is in compliance with all debt covenants.

As of both December 31, 2025 and 2024, the Company is in compliance with all debt covenants.

(3) On February 6th, 2026, the Company upsized the capacity of the JPM MRA by $ 250.0 million to a total of $ 750.0 million.

There are two one-year extension options.

(4) On January 4, 2024, the Company extended the maturity date to January 5, 2026, with a one-year extension option.

Additionally, the committed financing was decreased from $ 600 million to $ 350 million.

(4) On October 9th, 2025, the Company extended the maturity date to January 5th, 2027.

(5) On October 10th, 2025, the Company extended the maturity date to October 25th, 2027 and reduced the facility capacity to $ 250 million.

There are three one-year extension options remaining.

(6) There is one one-year extension option.

(7) On February 21, 2025, the Company extended the maturity date to March 14, 2028, with a one-year extension option remaining.

(8) On October 21, 2025, the Company terminated the Churchill MRA.

(9) Collateralized by a first lien on the Company’s interest in the mortgage loans that it originates.

Advances cannot exceed 100 % of the principal amounts of the mortgage loans originated by the Company and must be repaid at the earlier of the sale or other disposition of the mortgage loans or at the expiration date of the Line of Credit.

(10) Operating line that is secured by an equity interest in NewPoint Real Estate Capital LLC ("NPREC").

(11) On January 31, 2026, the Company extended the maturity date to January 29th, 2027.

(12) Collateralized by a first lien on the Company’s interest in the mortgage loans that it originates.

(13) The Company has a $ 100.0 million ASAP agreement with Fannie Mae providing us with a warehousing credit facility for mortgage loans that are to be sold to Fannie Mae and serviced under the Fannie Mae DUS program.

The ASAP agreement is not a committed line, has no expiration date and bears interest at SOFR plus 1.50 %, with a 0.25 % SOFR floor.

(14) Relates to a mortgage note payable in Jeffersonville JV, a consolidated joint venture.

The loan has a principal amount of $ 112.7 million of which $ 88.7 million of the loan is owned by the Company and was eliminated in our consolidated financial statements (see Note 8 - Real Estate Owned).

On October 1, 2024, the Company extended the maturity date to October 25, 2025, with a one-year extension option remaining.

(6) Comprised of one and two note-on-note financings via participation agreements for the year ended December 31, 2024 and 2023, respectively.

From inception of the loan, the Company's outstanding loans could increase as a result of future fundings, leading to an increase in amount outstanding via the participation agreement.

The weighted average contractual maturity date of these loans for the year ended December 31, 2023 was August 2025.

(7) The notes are currently redeemable, in whole or in part, without penalty, at the Company’s option.

Interest paid on unsecured debt totaled $ 7.5 million for the year ended December 31, 2024, compared to $ 7.7 million for the year ended December 31, 2023, respectively.

(8) On September 19, 2024, the Company extended the maturity date to September 19, 2026, with a one-year extension option.

Additionally, the committed financing was decreased from $ 250 million to $ 100 million.

(9) As of December 31, 2024, there are two one-year extension options.

On February 21, 2025, the Company extended the maturity date to March 14, 2028, with a one-year extension option remaining.

FRANKLIN BSP REALTY TRUST, INC.

1 unchanged sentence

December 31, 2025

(15) Comprised of one note-on-note financing via a participation agreement.

From inception of the loan, the Company's outstanding loans could increase as a result of future fundings, leading to an increase in amount outstanding via the participation agreement.

The contractual maturity date of this loan is July 2028.

(16) During the second quarter of 2025, the Company issued $ 82.0 million of 8.25 % fixed-rate senior unsecured notes.

These notes mature on April 25, 2030.

(17) During the second quarter of 2025, the Company issued $ 25.0 million of floating-rate senior unsecured notes.

As of December 31, 2025, the interest rate on these notes was SOFR + 4.00 %.

These notes mature on April 25, 2028.

(18) The notes are currently redeemable, in whole or in part, without penalty, at the Company’s option.

Interest paid on unsecured junior debt totaled $ 6.6 million and $ 7.5 million as of December 31, 2025 and 2024, respectively.

Repurchase Agreements - Real Estate Securities

1 unchanged sentence

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.

Below is a summary of the Company's MRAs as of December 31, 2024 and 2023 (dollars in thousands):

Below is a summary of the Company's MRAs which were included in Repurchase agreements - real estate securities in the Company's consolidated balance sheets as of December 31, 2025 and 2024 (dollars in thousands):

As of December 31, 2025

6 unchanged sentences

Lucid Prime Fund 54,718 1,644 65,324 4.67 % 15

Santander Securities 99,753 1,294 119,880 4.60 % 14

Total/Weighted Average $ 187,371 $ 8,014 $ 225,844 4.65 % 16

6 unchanged sentences

66,057 4,452 74,042 5.10 % 21

Lucid Prime Fund 26,965 1,209 30,865 5.24 % 16

Total/Weighted Average $ 236,608 $ 13,230 $ 256,052 5.30 % 15

5 unchanged sentences

Collateralized Loan Obligation

The following tables represent the terms of the notes issued by 2021-FL6 Issuer, 2021-FL7 Issuer, 2022-FL8 Issuer, 2022-FL9 Issuer, 2023-FL10 Issuer and 2024-FL11 Issuer (collectively the “CLOs”), as of December 31, 2024 and 2023, respectively:

The following tables represent the terms of the notes issued by 2022-FL8 Issuer, 2023-FL10 Issuer, 2024-FL11 Issuer and 2025-FL12 Issuer (collectively the “CLOs”), as of December 31, 2025 and 2024, respectively:

December 31, 2025

4 unchanged sentences

2022-FL8 Issuer

38 Term SOFR 1.64 % $ 584,500 $ 344,411 $ 454,686 3/15/2036

2021-FL7 Issuer

30 Term SOFR 1.90 % 722,250 392,826 563,852 12/21/2038

2022-FL8 Issuer

21 AVG SOFR 2.07 % 960,000 370,348 609,074 2/15/2037

1 unchanged sentence

32 Term SOFR 2.68 % 717,243 553,214 715,694 9/15/2035

2024-FL11 Issuer 38 Term SOFR 1.99 % 886,176 886,176 1,024,380 7/15/2039

2025-FL12 Issuer

50 Term SOFR 1.67 % 947,189 947,189 1,046,909 4/17/2043

2024-FL11 Issuer 27 Term SOFR 1.99 % 886,176 886,176 1,016,286 7/15/2039

$ 3,510,608 $ 2,756,927 $ 3,396,057

December 31, 2023

As of December 31, 2024

CLO Facility Number of Loans in pool (1)

10 unchanged sentences

38 Term SOFR 2.94 % 670,637 519,537 647,683 5/15/2039

2023-FL10 Issuer (3)

41 Term SOFR 2.59 % 717,243 717,243 892,536 9/15/2035

2024-FL11 Issuer 27 Term SOFR 1.99 % 886,176 886,176 1,016,286 7/15/2039

13 unchanged sentences

December 31, 2025

On September 26, 2024, BSPRT 2024-FL11 Issuer, LLC, a wholly-owned indirect subsidiary of the Company, entered into an indenture with the OP, as advancing agent, U.S.

On October 15, 2025, the Company called all of the outstanding notes issued by BSPRT 2021-FL6 Issuer, Ltd., BSPRT 2021-FL7 Issuer, Ltd.

and BSPRT 2022-FL9 Issuer, Ltd., all of which were wholly owned indirect subsidiaries of the Company.

The outstanding principal of the notes on the date of the call were $ 184.4 million, $ 309.6 million, and $ 367.4 million, respectively.

The Company recognized all the remaining unamortized deferred financing costs of $ 7.6 million recorded within the Realized gain/(loss) on extinguishment of debt in the consolidated statements of operations, which was a non-cash charge.

On October 15, 2025, BSPRT 2025-FL12 Issuer, LLC, a wholly-owned indirect subsidiary of the Company, entered into an indenture with a subsidiary of the OP, as advancing agent, U.S.

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

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December 31, 2025

Note 13 - Allowance for Loss Sharing

In connection with the Company's July 1, 2025 acquisition of NewPoint, the Company assumed risk-sharing obligations on substantially all loans originated under the Fannie Mae DUS program.

Servicing fees for risk-sharing loans include compensation for the risk-sharing obligations and are larger than the servicing fees received for loans with no risk-sharing obligations.

When a loan is sold under the Fannie Mae DUS program, the Company undertakes an obligation to partially guarantee the performance of the loan.

A liability is recognized for the fair value of the guarantee obligation undertaken for the non-contingent aspect of the guarantee and is removed only upon either the expiration or settlement of the guarantee.

At December 31, 2025, we had $ 1.7 million of guarantee obligations included in the allowance for loss-sharing obligations.

In addition to and separately from the fair value of the guarantee, the Company estimates an allowance for loss-sharing under CECL over the contractual period in which we are exposed to credit risk.

The general reserve related to loss-sharing was based on a collective pooling basis with similar risk characteristics, a reasonable and supportable forecast and a reversion period based on our average historical losses through the remaining contractual term of the portfolio.

In instances where payment under the loss-sharing obligations of a loan is determined to be probable and estimable (as the loan is probable of, or is, in foreclosure), we record a liability for the estimated loss-sharing specific reserve.

At December 31, 2025, our allowance for loss-sharing obligations related to the specific reserve was $ 9.3 million.

At December 31, 2025, our allowance for loss-sharing obligations, associated with expected losses under CECL, was $ 8.4 million, and represented 0.11 % of our Fannie Mae servicing portfolio.

During 2025, we recorded a decrease in CECL reserves of $ 1.8 million.

At December 31, 2025, the unpaid principal balance outstanding of loans sold with loss sharing under the DUS program was approximately $ 7.9 billion.

The Company’s internal credit risk rating process is used to classify loans and commitments according to the degree of credit risk associated with the ability of the borrower to repay.

If payment is required under this program, the Company would not have a contractual interest in the collateral underlying the commercial mortgage loan on which the loss occurred, although the value of the collateral is taken into account in determining the Company’s share of such losses.

A summary of the Company’s allowance for loss sharing for 2025 is as follows (dollars in thousands):

General Reserve Specific Reserve Total

Balance at January 1, 2025 $ — $ — $ —

Allowance acquired in acquisition

11,919 11,667 23,586

Write-offs — — —

Provision/(benefit) for loss sharing ( 1,768 ) ( 2,334 ) ( 4,102 )

Balance at December 31, 2025 $ 10,151 $ 9,333 $ 19,484

As of December 31, 2025, the maximum quantifiable allowance for loss sharing associated with the Company’s guarantees under the Fannie Mae DUS agreement and the Loss Sharing Agreement was $ 1.2 billion from a total recourse at risk pool of $ 7.9 billion.

The maximum quantifiable allowance for loss sharing is not representative of the actual loss the Company would incur.

The Company would be liable for this amount only if all of the loans it services for Fannie Mae, for which the Company retains some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement.

Treasury securities classified as HTM, the Company does not record an allowance for credit losses as treasury securities are exempt from CECL reserves and allowances.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Note 14 - Earnings Per Share

4 unchanged sentences

Year Ended December 31,

Numerator 2024 2023 2022

Basic Numerator 2025 2024 2023

Net income/(loss) $ 84,085 $ 92,403 $ 144,509

3 unchanged sentences

Participating securities' share in earnings 2,066 1,806 1,162

Net income/(loss) attributable to common shareholders (for basic and diluted earnings per share) $ 67,079 $ 117,060 $ ( 27,310 )

Year Ended December 31,

Denominator 2024 2023 2022

Net income/(loss) attributable to common shareholders $ 53,212 $ 67,079 $ 117,060

Diluted Numerator

Basic Earnings (Loss) $ 53,212 $ 67,079 $ 117,060

Net income/(loss) from non-controlling interest - OP Units 1,877 — —

Diluted net income/(loss) applicable to common stockholders $ 55,089 $ 67,079 $ 117,060

Weighted-average common shares outstanding for basic earnings per share 81,965,156 81,846,170 82,307,970

6 unchanged sentences

Additionally, the effect of the weighted average dilutive shares excluded the common equivalent of convertible preferred shares for the years ended December 31, 2025, 2024 and 2023 of 5,370,498 , 5,370,498 , and 5,385,254 , shares respectively, as the effect was anti-dilutive.

(2) The effect of the weighted average dilutive shares included OP Units for the year ended December 31, 2025 of 4,227,438 as the effect was dilutive.

FRANKLIN BSP REALTY TRUST, INC.

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(1) As declared by the Company's board of directors.

(2) On January 16, 2025, the Series H Preferred Stock was amended such that the mandatory conversion date was extended by one year , to January 21, 2026.

(2) On January 14, 2026, the Series H Preferred Stock was amended such that the mandatory conversion date was extended by two years , to January 21, 2028.

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 2025, upon 10 business days’ advance notice to the Company.

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 and including the month prior to the mandatory conversion date, upon 10 business days’ advance notice to the Company.

(3) Common stock includes shares issued pursuant to the Company's DRIP and unvested restricted shares.

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The share repurchase program does not obligate the Company to acquire any particular amount of common stock.

The Company's share repurchase program will remain open until at least December 31, 2025, or until the capital committed to the applicable repurchase program has been exhausted, whichever is sooner.

The Company share repurchase program will remain open until it expires 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.

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The direct stock purchase component allows stockholders, subject to the Company's approval, to purchase shares of common stock directly from us.

For the year ended December 31, 2024, 0 and 163,952 shares of common stock were issued by the Company and purchased in the open market, respectively, by the DRIP administrator and allocated to DRIP participants.

For the years ended December 31, 2025 and 2024 160,137 and 163,952 shares of common stock were issued by the Company and purchased in the open market, respectively, by the DRIP administrator and allocated to DRIP participants.

under the dividend reinvestment component of DRIP.

At-the-Market Sales Agreement

On November 8, 2024, the Company entered into an amendment to the sales agreement dated April 14, 2023 as amended the ("Sales Agreement") establishing its $ 200 million at-the-market offering program (the "ATM program") with a financial syndicate as sales agents (the "Agents").

Pursuant to the sales agreement dated April 14, 2023 (as amended on November 8, 2024, the "Sales Agreement"), the Company maintains a $ 200 million at-the-market offering program (the "ATM program") with a financial syndicate as sales agents (the "Agents").

Pursuant to the Sales Agreement, the Company may offer and sell shares of the Company's common stock, from time to time, and at various prices, through the Agents.

Sales of the common stock, if any, made through the Agents may be made in "at the market" offerings (as defined in Rule 415 under the Securities Act of 1933, as amended), by means of ordinary brokers' transactions on the New York Stock Exchange or otherwise, at market prices prevailing at the time of sale, in block transactions, in negotiated transactions, in any manner permitted by applicable law or as otherwise as may be agreed by the Company and any Agent.

As of December 31, 2024, the Company has not sold any shares of common stock under the ATM program, and common stock with an aggregate sales price of $ 200 million remains available for issuance.

As of December 31, 2025, the Company had not sold any shares of common stock under the ATM program, and common stock with an aggregate sales price of $ 200 million remains available for issuance pursuant to the ATM program.

Non-Controlling Interest

In connection with the NewPoint Transaction, the Company issued 8,385,951 OP Units, providing those unit holders interest in the OP.

The OP Unit holders have the right to redeem their OP Units, for either shares of common stock or cash, at the Company's option and subject to certain restrictions.

In the event OP Units are redeemed, one OP Unit is equal to one share of the Company’s common stock, or cash equal to the fair value of a share of the Company’s common stock at the time of redemption.

When an OP Unit holder redeems an OP Unit, non-controlling interests in the OP is reduced and the Company’s equity is increased.

As of December 31, 2025, the non-controlling interest OP Unit holders owned 8,385,951 OP Units.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Note 16 - Commitments and Contingencies

8 unchanged sentences

$ 413,879 $ 371,509

________________________

(1) The balance relates to four loans that were subject to modification as of December 31, 2023.

The borrowers are generally required to meet or maintain certain metrics in order to qualify for the unfunded commitment amounts.

Litigation and Regulatory Matters

Unfunded Commitments Under Commercial Mortgage Loans, Held for Sale

Commitments to extend credit by the Company are generally agreements to lend to a customer as long as there is no violation of any condition established in the contract.

Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

Occasionally, the commitments may expire without being drawn upon;

therefore, the total commitment amounts do not necessarily represent future cash requirements.

As of December 31, 2025, the Company had $ 41.3 million and $ 544.9 million of unfunded commitments to fund loans and sell loans, net, respectively.

Mortgage Impairment Insurance

As of December 31, 2025, the Company carried mortgage impairment and mortgagees’ errors and omissions insurance each with a limit of $ 50 million.

Mortgage impairment insurance provides the Company with hazard insurance coverage for mortgage loan collateral in the event of a catastrophe for which the borrowers insurance does not provide sufficient coverage to protect the Company from loss on loans originated under the Fannie Mae DUS program.

Mortgage Bankers Bond

As of December 31, 2025, the Company carried a mortgage bankers bond, combining the fidelity bond and mortgagees errors and omissions insurance, with a limit of $ 60 million.

Office Leases

The Company executes lease arrangements for all of its office space in the normal course of business.

All such lease arrangements are accounted for as operating leases.

The Company initially recognizes a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset for the lease term.

The lease liability is measured at the present value of the lease payments over the lease term.

The ROU asset is measured at the lease liability amount, adjusted for lease prepayments, accrued rent, lease incentives received, and the lessee’s initial direct costs.

These operating leases do not provide an implicit discount rate;

therefore, the Company uses its incremental borrowing rate to calculate lease liabilities.

The Company’s lease agreements often include options to extend or terminate the lease.

Lease costs are recognized on a straight-line basis over the term of the lease, which includes options to extend when it is reasonably certain that such options will be exercised and the Company knows what the lease payments will be during the optional periods.

Litigation and Regulatory Proceedings

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.

Please refer to "Part I, Item 3.

Legal Proceedings" for more details about the Company's ongoing litigation matters.

FRANKLIN BSP REALTY TRUST, INC.

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December 31, 2025

Entry into a Material Definitive Agreement

On March 9, 2025, the Company, along with two wholly owned subsidiaries, entered into a definitive purchase and sale agreement with NewPoint;

each of the holders of issued and outstanding membership interests of NewPoint (the "Existing Equityholders");

Meridian Bravo Investment Company, LLC and BMC Holdings DE LLC, in their capacity as the joint representatives of the Existing Equityholders.

The Company purchased all of NewPoint's issued and outstanding membership interests and units (the "Purchased Interests") in exchange for an aggregate amount of $ 336.9 million paid in cash and the issuance of 8,385,951 OP Units, to the Existing Equityholders.

The Company financed the cash portion of the purchase price through a combination of existing cash and the issuance of new debt and/or equity.

The acquisition closed on July 1, 2025.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Note 17 - Servicing Revenue

The components of servicing revenue are as follows (in thousands):

Year Ended December 31,

Servicing and ancillary fees $ 23,084 $ —

Placement fees on escrows 15,056 —

MSR payoffs ( 3,600 ) —

MSR amortization ( 19,434 ) —

MSR impairment ( 2,590 ) —

Total servicing revenue, net $ 12,516 $ —

As of December 31, 2025 and December 31, 2024, the weighted average servicing fee was 9.2 basis points and 0 basis points, respectively.

At December 31, 2025 and December 31, 2024, total escrow and reserve balances were approximately $ 921 million and $ 0 , respectively, none of which are included in our consolidated balance sheets.

These escrows are maintained in separate accounts at several federally insured depository institutions, which may exceed FDIC insured limits.

We earn placement fees on the total escrow deposits, which is generally based on a market rate of interest negotiated with the financial institutions that hold the escrow deposits.

Placement fees earned on total escrows, net of interest paid to the borrower, is included as a component of servicing revenue, net in the consolidated statements of income as noted in the table above.

Product type concentrations that impact our servicing revenue are as follows ($ in millions):

Product Type Considerations

December 31, 2025 December 31, 2024

UPB % of Total Effective Service Fee Rate UPB % of Total Effective Service Fee Rate

Fannie Mae $ 7,860 16 % 0.21 % $ — — % — %

Ginnie Mae 5,125 11 % 0.17 % — — % — %

Freddie Mac 8,649 18 % 0.08 % — — % — %

Bridge 836 2 % 0.08 % — — % — %

Affordable 425 1 % 0.13 % — — % — %

Private Label 24,951 52 % 0.02 % — — % — %

Total/Weighted Average $ 47,846 100 % 0.07 % $ — — % — %

Geographic concentrations that impact our servicing revenue are as follows:

Geographic Considerations

December 31, 2025 December 31, 2024

% of Total % of Total

New York 15.2 % — %

Texas 11.0 % — %

Maryland 8.5 % — %

California 7.2 % — %

Virginia 5.8 % — %

Florida 5.7 % — %

New Jersey 5.4 % — %

Total 100.0 % — %

________________________

(1) No other individual state represented 5% or more of the total.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Note 18 - Related Party Transactions and Arrangements

6 unchanged sentences

• The Company reimburses the Advisor for insourced expenses incurred by the Advisor on the Company's behalf related to selecting, evaluating, originating and acquiring investments in an amount up to 0.5 % of the principal amount funded by the Company to originate or acquire commercial mortgage loans and up to 0.5 % of the anticipated net equity funded by the Company to acquire real estate securities investments.

The table below shows the costs incurred due to arrangements with our Advisor and its affiliates during the years ended December 31, 2024, 2023 and 2022 and the associated payable as of December 31, 2024 and 2023 (dollars in thousands):

Year Ended December 31, Payable as of December 31,

• NewPoint, a subsidiary of the Company, has entered into a loan referral agreement with the Advisor that provides for the sharing of certain fees.

Under the terms of this agreement, the Advisor pays NewPoint a referral fee for directing floating-rate bridge loan opportunities to the Advisor’s commercial real estate platform.

The referral fee is equal to 0.10% of the total loan commitment amount.

The table below shows the costs incurred due to arrangements with our Advisor and its affiliates during the years ended December 31, 2025, 2024 and 2023 and the associated (payable)/receivable as of December 31, 2025 and 2024 (dollars in thousands):

Year Ended December 31, (Payable)/Receivable as of December 31,

2025 2024 2023 2025 2024

5 unchanged sentences

1,474 1,301 1,192 ( 2,275 ) ( 2,347 )

Total related party fees and reimbursements $ 37,962 $ 50,720 $ 41,320 $ 14,106 $ 19,316

Referral Fee Income 371 — — 371 —

________________________

(1) Total acquisition fees and expenses paid during the years ended December 31, 2024, 2023 and 2022 were $ 10.0 million, $ 5.8 million and $ 11.7 million respectively, of which $ 9.0 million, $ 4.6 million and $ 10.3 million were capitalized in Commercial mortgage loans, held for investment and Real estate securities, available for sale, measured at fair value in the consolidated balance sheets for the years ended December 31, 2024, 2023 and 2022.

(1) Total acquisition expenses paid during the years ended December 31, 2025, 2024 and 2023 were $ 6.4 million, $ 10.0 million and $ 5.8 million respectively, of which $ 5.4 million, $ 9.0 million and $ 4.6 million were capitalized in Commercial mortgage loans, held for investment and Real estate securities, available for sale, measured at fair value in the consolidated balance sheets for the years ended December 31, 2025, 2024 and 2023.

(2) These are related to reimbursable costs incurred related to the increase in loan origination activities and are included in Other expenses in the consolidated statements of operations.

(3) As of December 31, 2024 and 2023, the related party payables include $ 2.3 million and $ 0.7 million, respectively, of payments made by the Advisor to third party vendors on behalf of the Company.

(3) As of December 31, 2025 and December 31, 2024, the related party payables included (i) $ 1.8 million and $ 2.3 million, respectively, of payments made by the Advisor to third party vendors on behalf of the Company and (ii) $ 0.2 million of fees per the fee arrangement agreement between the Advisor and the Company.

There were no fees incurred per the fee arrangement agreement as of December 31, 2024.

The payables as of December 31, 2025 and 2024 in the table above are included in Due to affiliates in the consolidated balance sheets.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Other Transactions

5 unchanged sentences

The Company's $ 88.7 million mortgage note payable to Jeffersonville JV is eliminated in consolidation (see Note 12 - Debt).

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

Pursuant to the Company's 2021 Incentive Plan, in the first quarter of 2025, 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.

As of December 31, 2024, our commercial mortgage loans, held for investment, includes an aggregate of $ 39.6 million carrying value of loans to affiliates of our Advisor.

As of December 31, 2025 and 2024, our commercial mortgage loans, held for investment, includes an aggregate of $ 37.1 million and $ 39.6 million, respectively, carrying value of loans to affiliates of our Advisor.

The Company recognized $ 2.7 million and $ 7.5 million in interest income from these loans for the year ended December 31, 2025 and 2024, respectively, in the consolidated statements of operations.

2 unchanged sentences

The Company entered into a joint venture agreement and formed the Walgreens JV to acquire 75.618 % ownership interest in the Walgreens Portfolio, while the affiliated fund has 24.242 % interest.

On December 20, 2024, the Company, three affiliates of the Company, and an unrelated third party entered into the 55 Riverwalk Aker/BSP Venture LLC (the "55 Riverwalk JV") to acquire a $ 158.5 million mixed use development property consisting of a multifamily apartment complex and retail shopping stores located in West New York, NJ.

The Company has a 21.01 % interest in the 55 Riverwalk JV while the affiliated funds and the unrelated third party have 73.99 % and 5.00 % interest, respectively.

Note 12 - Share-Based Compensation

The Company's 2021 Incentive plan provides 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.

As of December 31, 2024 , there w ere 3,706,994 sh ares of common stock remaining available for issuance under the Company's 2021 Incentive Plan.

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.

Service-based Restricted Stock and Restricted Stock Units

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.

Restricted Stock and RSU activity issued under the 2021 Incentive Plan for the year ended December 31, 2024 is summarized below:

Shares Outstanding Weighted Average Grant Date Fair Value

2021 Incentive Plan

Unvested equity awards outstanding as of December 31, 2023 809,257 $ 14.11

Grants 819,710 13.20

Vested ( 350,269 ) 14.23

Unvested equity awards outstanding as of December 31, 2024 1,278,698 $ 13.58

T he Company recognized compensation expense associated with equity awards of $ 8.2 million, $ 4.8 million, and $ 2.5 million during the years ended December 31, 2024, 2023, and 2022 respectively, which is included in Share-based compensation in the consolidated statements of operations.

Unrecognized estimated compensation expense for these awards totaled $ 9.7 million as of December 31, 2024 that will be expensed over a weighted average period of 1.8 years.

Restricted Stock and RSUs granted in 2024 and 2023 had a weighted average grant date fair value of $ 13.20 and $ 14.20 , respectively.

The fair value of Restricted Stock and RSUs that vested during the years ended December 31, 2024 and 2023 was $ 5.0 million and $ 2.7 million, respectively.

Note 13 - Fair Value of Financial Instruments

GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair values.

GAAP establishes market-based or observable inputs as the preferred source of values, followed by

FRANKLIN BSP REALTY TRUST, INC.

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December 31, 2025

valuation models using management assumptions in the absence of market inputs.

Note 19 - Fair Value of Financial Instruments

GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair values.

GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs.

The three levels of the hierarchy are described below:

13 unchanged sentences

The Company obtains third party pricing for determining the fair value of each CMBS investment, resulting in a Level II classification.

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.

Commercial mortgage loans, held for sale, measured at fair value in the Company's Agency and Conduit portfolios are initially recorded at transaction price, which are considered to be the best initial estimate of fair value.

The Company engages the services of a third party independent valuation firm to determine fair value of certain investments held by the Company.

2 unchanged sentences

The Company classified the commercial mortgage loans held for sale, measured at fair value as Level III.

Other real estate investments, measured at fair value on the consolidated balance sheets are valued using unobservable inputs.

The Company engaged the services of a third party independent valuation firm to determine fair value of certain investments, including preferred equity 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.

The Company generally classifies its other real estate investments, measured at fair value as Level III.

Derivative instruments, measured at fair value

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The Company classified its credit default swaps as Level II.

Loan commitments and forward sale commitments in the Company's Agency portfolio are initially recorded at transaction price, which are considered to be the best initial estimate of fair value.

The Company engages the services of a third party independent valuation firm to determine fair value of certain investments held by the Company.

Loan commitments and forward sale commitments that are entered in the last month of the reporting period are held and marked to the transactions price.

The Company classified the loan commitments and forward sale commitments as Level III.

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 year ended December 31, 2024.

There were no material transfers between levels within the fair value hierarchy during the years ended December 31, 2025 and December 31, 2024.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

The following table presents the Company's financial instruments carried at fair value on a recurring basis in the consolidated balance sheets by its level in the fair value hierarchy as of December 31, 2025 (dollars in thousands).

The Company did not have any liabilities carried at fair value as of December 31, 2023.

December 31, 2025

2 unchanged sentences

Real estate securities, available for sale, measured at fair value $ 151,662 $ — $ 151,662 $ —

Commercial mortgage loans, held for sale, measured at fair value 87,270 — — 87,270

Options 183 183 — —

Treasury notes 891 891 — —

Commercial mortgage loans, held for sale, measured at fair value - Non-Agency 29,500 — — 29,500

Commercial mortgage loans, held for sale, measured at fair value - Agency 331,218 — — 331,218

Forward sale commitments 797 — — 797

Loan commitments 10,518 — — 10,518

Total assets, at fair value $ 523,695 $ — $ 151,662 $ 372,033

Liabilities, at fair value

Treasury notes $ 28 $ 28 $ — $ —

Credit default swaps 714 — 714 —

Forward sale commitments 6,209 — — 6,209

Total liabilities, at fair value $ 6,951 $ 28 $ 714 $ 6,209

3 unchanged sentences

Real estate securities, available for sale, measured at fair value $ 202,973 $ — $ 202,973 $ —

Commercial mortgage loans, held for sale, measured at fair value - Non-Agency 87,270 — — 87,270

Treasury notes 891 891 — —

Options 183 183 — —

Total assets, at fair value $ 291,317 $ 1,074 $ 202,973 $ 87,270

Liabilities, at fair value

Credit default swaps $ 1,787 $ — $ 1,787 $ —

Total liabilities, at fair value $ 1,787 $ — $ 1,787 $ —

FRANKLIN BSP REALTY TRUST, INC.

3 unchanged sentences

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, 2025 (dollars in thousands).

The Company did no t hold any applicable positions as of December 31, 2023.

December 31, 2025

Asset Category Fair Value Valuation Methodologies Unobservable Inputs (1)

Weighted Average (2)

Commercial mortgage loans, held for sale, measured at fair value - Non-Agency $ 29,500 Discounted Cash Flow Yield 6.56 % 6.42 % - 7.25 %

Commercial mortgage loans, held for sale, measured at fair value - Agency 331,218 Discounted Cash Flow Discount rate 4.81 % 4.07 % - 6.28 %

Loan commitments and forward sale commitments, net 5,106 Discounted Cash Flow Discount rate 4.81 % 4.07 % - 6.28 %

December 31, 2024

Asset Category Fair Value Valuation Methodologies Unobservable Inputs (1)

Weighted Average Range

Commercial mortgage loans, held for sale, measured at fair value $ 87,270 Discounted Cash Flow Yield 7.02 % 6.96 % - 7.58 %

Commercial mortgage loans, held for sale, measured at fair value - Non-Agency $ 87,270 Discounted Cash Flow Yield 7.02 % 6.96 % - 7.58 %

Commercial mortgage loans, held for sale, measured at fair value - Agency — Discounted Cash Flow Discount rate — —

Loan commitments and forward sale commitments, net — Discounted Cash Flow Discount rate — —

______________________

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December 31, 2025

Commercial mortgage loans, held for sale, measured at fair value

Commercial mortgage loans, held for sale, measured at fair value - Non-Agency Commercial mortgage loans, held for sale, measured at fair value - Agency Loan Commitments Forward Sale Commitments

Beginning balance, January 1, 2025 $ 87,270 $ — $ — $ —

2 unchanged sentences

Sales / paydowns ( 487,529 ) ( 3,316,379 ) ( 26,711 ) —

Total realized and unrealized gain/(loss) included in earnings:

Realized gain/(loss) on sale of commercial mortgage loan, held for sale 13,125

Unrealized gain/(loss) on commercial mortgage loans, held for sale and other real estate investments —

Realized and unrealized gain/(loss) included in earnings 18,109 — — —

Transfers out of Level III (1)

1 unchanged sentence

________________________

(1) There were no transfers in or out of Level III as of December 31, 2024.

(1) There were no transfers out of Level III as of December 31, 2025.

FRANKLIN BSP REALTY TRUST, INC.

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December 31, 2024

Real estate securities, trading, measured at fair value Commercial mortgage loans, held for sale, measured at fair value

Commercial mortgage loans, held for sale, measured at fair value - Non-Agency Commercial mortgage loans, held for sale, measured at fair value - Agency Loan Commitments Forward Sale Commitments

Beginning balance, January 1, 2024 $ — $ — $ — $ —

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Sales / paydowns ( 284,300 ) — — —

Total realized and unrealized gain/(loss) included in earnings:

Realized gain/(loss) on sale of commercial mortgage loan, held for sale — 3,873

Unrealized gain/(loss) on commercial mortgage loans, held for sale and other real estate investments — 44

Trading gain/(loss) ( 605 ) —

Realized and unrealized gain/(loss) included in earnings 13,125 — — —

Transfers out of Level III (1)

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At the time of acquisition, we determined the fair value of the net real estate assets, using either the market approach, the income approach, or a combination thereof.

As of December 31, 2024, the Walgreens Portfolio was written down to estimated fair value less cost to sell for impairment purposes using either the market approach or the income approach.

In addition, the Company determined the fair value of its eight multifamily properties, obtained through foreclosure or deed-in-lieu of foreclosure, based on a combination of the market approach and the income approach.

The Company determined the fair value of its four multifamily properties, one office property and one remaining retail property in the Walgreens Portfolio, obtained through foreclosure or deed-in-lieu of foreclosure, based on a combination of the market approach and the income approach.

The significant unobservable input used for the income approach is the exit capitalization rate assumptions, which ranged from 5.00 % - 9.50 %.

The significant unobservable input used for the market approach is the estimated fair value less cost to sell based on a negotiated price from an anticipated buyer.

As of December 31, 2024, the Company's Real estate owned, held for sale assets and liabilities, had a fair value of $ 221.6 million, net, that represented the remaining four retail properties in the Walgreens Portfolio and eight multifamily properties.

As of December 31, 2023 the Company's real estate owned, held for sale assets and liabilities, had a fair value of $ 91.4 million, net, representing the remaining 23 retail properties in the Walgreens Portfolio and four multifamily properties.

As of December 31, 2025, the Company's Real estate owned, held for sale assets and liabilities, had a fair value of $ 198.9 million, net, that represented the one remaining retail property in the Walgreens Portfolio, four multifamily properties and one office property.

As of December 31, 2024, the Company's real estate owned, held for sale assets and liabilities, had a fair value of $ 221.6 million, net, representing the remaining four retail properties in the Walgreens Portfolio and eight multifamily properties.

Mortgage servicing rights, net on the consolidated balance sheets are valued at fair value at inception, and thereafter on a non-recurring basis and are carried at the lower of amortized costs or fair value.

That is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value measurement when there is evidence of impairment and for disclosure purposes.

The Company's MSRs do not trade in an active, open market with readily observable prices and are classified as Level III.

While sales of multifamily MSRs do occur on occasion, precise terms and conditions vary with each transaction and are not readily available.

Accordingly, the Company engages the services of a third party independent valuation firm to determine the estimated fair value who use discounted cash flow models that calculate the present value of estimated future net servicing income.

The model considers contractually specified servicing fees, prepayment assumptions, estimated placement fee revenue from escrow deposits, and other economic factors.

The Company periodically reassesses and adjusts, when necessary, the underlying inputs and assumptions that a market participant would consider in valuing MSR assets.

FRANKLIN BSP REALTY TRUST, INC.

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Asset III $ 4,421,436 $ 4,411,871 III $ 4,986,750 $ 4,935,380

Pledged investment securities Asset I 20,483 21,175 I — —

Collateralized loan obligations (2)

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Unsecured debt Liability III 185,466 178,900 III 81,395 69,800

Mortgage servicing rights, net Asset III 212,216 213,572 III — —

________________________

(1) The carrying value is gross of $ 78.1 million and $ 47.2 million of allowance for credit losses as of December 31, 2024 and 2023, respectively.

(1) The carrying value is gross $ 38.3 million and $ 78.1 million of allowance for credit losses as of December 31, 2025 and 2024, respectively.

(2) Depending upon the significance of the fair value inputs utilized in determining these fair values, our collateralized loan obligations are classified in either Level II or Level III of the fair value hierarchy.

Beginning in the third quarter of 2023, the transfers from Level III to Level II were a result of the availability of current and reliable market data provided by third party pricing services or other valuation techniques which utilized observable inputs.

Repurchase agreements - commercial mortgage loans of $ 329.8 million and $ 299.7 million as of December 31, 2024 and 2023, respectively, and repurchase agreements - real estate securities of $ 236.6 million and $ 174.1 million as of December 31, 2024 and 2023, respectively, are not carried at fair value and do not include accrued interest, which are presented in Note 7 – Debt.

Repurchase agreements - commercial mortgage loans of $ 1.1 billion and $ 329.8 million as of December 31, 2025 and 2024, respectively, and repurchase agreements - real estate securities of $ 187.4 million and $ 236.6 million as of December 31, 2025 and 2024, respectively, are not carried at fair value and do not include accrued interest, which are presented in Note 12 – 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.

Pledged investment securities are comprised of treasury securities for which fair value is generally estimated using discounted cash flow analysis.

The Company estimates the fair value of the collateralized loan obligations using external broker quotes.

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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.

The following derivative instruments were outstanding as of December 31, 2024 (dollars in thousands):

As of December 31, 2023, there were no derivative instruments outstanding.

The following derivative instruments were outstanding as of December 31, 2025 and December 31, 2024 (dollars in thousands):

December 31, 2025 December 31, 2024

Fair Value Fair Value

Contract type Notional Assets

As of December 31, 2024

Liabilities Notional Assets

Credit default swaps $ 31,500 $ — $ 714 $ 80,000 $ — $ 1,787

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The following table indicates the net realized and unrealized gains and losses on derivatives, by primary underlying risk exposure, as included in the consolidated statements of operations for the year ended December 31, 2025, 2024 and 2023:

December 31, 2024 Year Ended

December 31, 2023 Year Ended

December 31, 2022

Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023

Contract type Unrealized

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Derivative instruments, at fair value $ — $ — $ — $ — $ — $ —

December 31, 2024

Derivative instruments, at fair value $ 1,186 $ 1,186 $ — $ — $ — $ —

Gross Amounts Not Offset on the Balance Sheet

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Repurchase agreements, real estate securities 236,608 — 236,608 236,608 — —

Derivative instruments, at fair value 1,899 1,186 713 — 713 —

________________________

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Note 22 - Segment Reporting

Effective July 1, 2025, in order to better align with the manner in which the CODM (as defined below) reviews financial performance and allocates resources, the Company combined the real estate debt business and the real estate securities business into one reportable segment, Real Estate Debt and Other Real Estate Investments.

Additionally, following the acquisition of the NewPoint business, the Company added the Agency Business as a new reportable segment to reflect the distinct nature of its agency-related origination and servicing activities.

Prior period segment results have been recast to conform to this new presentation.

These changes affect only the presentation of the Company’s reportable segments and have no impact on its consolidated financial position, results of operations, or cash flows.

The Company conducts its business through the following segments:

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

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

The business also focuses on investing in and asset managing real estate securities, historically focusing on CMBS, CMBS bonds, CDO notes, and other securities.

• The Agency Business focuses on originating, selling, and servicing loans under programs offered by GSE’s and Agencies, such as Fannie Mae, Freddie Mac, Ginnie Mae, and HUD.

Additionally, the business services external portfolios of commercial real estate financing products.

The TRS may also hold certain mezzanine loans that don't qualify as good REIT assets due to any potential loss from foreclosure.

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The following table represents the Company's operations by segment for the years ended December 31, 2025, 2024 and 2023 (dollars in thousands):

December 31, 2024 Total Real Estate Debt and Other Real Estate Investments Real Estate Securities TRS Real Estate Owned

December 31, 2025 Total Real Estate Debt and Other Real Estate Investments Agency Business Conduit Real Estate Owned

Interest income $ 430,280 $ 407,155 $ 12,797 $ 6,523 $ 3,805

Mortgage Servicing Rights 28,570 — 28,570 — —

Servicing Revenue 12,516 — 12,516 — —

Revenue from real estate owned 29,633 — 20 — 29,613

Interest expense ( 288,327 ) ( 265,396 ) ( 13,898 ) ( 660 ) ( 8,373 )

Compensation and benefits ( 53,739 ) — ( 53,739 ) — —

Administrative services expenses ( 13,346 ) ( 8,551 ) ( 609 ) ( 4,186 ) —

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Interest income $ 526,076 $ 519,342 $ — $ 5,553 $ 1,181

Mortgage Servicing Rights — — — — —

Servicing Revenue — — — — —

Revenue from real estate owned 22,849 — — — 22,849

Interest expense ( 338,471 ) ( 335,718 ) — ( 721 ) ( 2,032 )

Compensation and benefits — — — — —

Administrative services expenses ( 9,707 ) ( 4,582 ) — ( 5,125 ) —

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Interest income $ 552,506 $ 547,439 $ — $ 2,244 $ 2,823

Mortgage Servicing Rights — — — — —

Servicing Revenue — — — — —

Revenue from real estate owned 17,021 — — — 17,021

Interest expense ( 305,577 ) ( 302,445 ) — ( 1,150 ) ( 1,982 )

Compensation and benefits — — — — —

Administrative services expenses ( 14,440 ) ( 8,313 ) — ( 6,127 ) —

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________________________

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

(1) For each reportable segment, other segment items category includes:

Real Estate Debt - specific and general allowance for credit losses, and gains/(losses) associated with debt extinguishment.

Real Estate Securities - gains/(losses) associated with sales of CMBS bonds and divestment of trading securities.

TRS - gains/(losses) associated with fair value measurements and securitizations or sales of held for sale loans, fair value measurements and terminations of derivative instruments, and (provisions)/benefits on taxable income.

• Real Estate Debt - specific and general allowance for credit losses, gains/(losses) associated with debt extinguishment, and gains/(losses) associated with sales of CMBS bonds and divestment of trading securities

• Agency Business - allowance for loss sharing provision, gains/(losses) associated with sales of Agency loans, gains/(losses) related to movements in the fair value of forward sale commitments, and (provisions)/benefits on taxable income.

• Conduit - gains/(losses) associated with fair value measurements and securitizations or sales of held for sale loans, fair value measurements and terminations of derivative instruments, and (provisions)/benefits on taxable income.

• Real Estate Owned - gains/(losses) associated with other real estate investments resulting from foreclosure or sale.

(2) Stock compensation expense is allocated to each segment based on total income per segment and included within other segment items.

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 are derived from an agreed upon reimbursable amount based on employee time charged and allocated to the business segments.

FRANKLIN BSP REALTY TRUST, INC.

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December 31, 2025

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 are derived from an agreed upon reimbursable amount based on employee time charged and allocated to the business segments.

Note 23 - Share-Based Compensation

As of December 31, 2025 , there w ere 2,880,113 sh ares of common stock remaining available for issuance under the Company's 2021 Incentive Plan.

The Board may amend, suspend or terminate the 2021 Incentive Plan at any time;

Service-based Restricted Stock and Restricted Stock Units

In accordance with the 2021 Incentive Plan, in 2025 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.

Restricted Stock and RSU activity issued under the 2021 Incentive Plan for the year ended December 31, 2025 is summarized below:

Shares Outstanding Weighted Average Grant Date Fair Value

2021 Incentive Plan

Unvested equity awards outstanding as of December 31, 2024 1,278,698 $ 13.58

Grants 826,881 12.64

Forfeitures ( 51,299 ) 12.88

Vested ( 618,897 ) 13.71

Unvested equity awards outstanding as of December 31, 2025 1,435,383 $ 13.01

T he Company recognized compensation expense associated with equity awards of $ 9.1 million, $ 8.2 million, and $ 4.8 million during the years ended December 31, 2025, 2024, and 2023 respectively, which is included in Share-based compensation in the consolidated statements of operations.

Unrecognized estimated compensation expense for these awards totaled $ 10.4 million as of December 31, 2025 that will be expensed over a weighted average period of 1.7 years.

Restricted Stock and RSUs granted in December 31, 2025, 2024, and 2023 had a weighted average grant date fair value of $ 12.64 , $ 13.20 , and $ 14.20 , respectively.

The fair value of Restricted Stock and RSUs that vested during the years ended December 31, 2025, 2024, and 2023 was $ 8.5 million, $ 5.0 million, and $ 2.7 million, respectively.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

Note 24 - Income Taxes

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Total (provision)/benefit for income taxes for the years ended December 31, 2025, 2024 and 2023 were $( 3.9 ) million, $( 1.1 ) million and $ 2.8 million, respectively.

For the reporting period, the Company paid $ 881,967 in federal income taxes, and $ 51,313 in state and local income taxes to various jurisdictions including New York State and New York City.

As of December 31, 2025, our taxable REIT subsidiaries have an estimated $ 21.0 million of federal net operating loss ("NOL") carryforwards and $ 3.8 million of state and local NOL carryforwards.

The NOL carryforwards are subject to certain limitations.

The Company has analyzed and determined that future earnings of the Company's TRS are sufficient to support a conclusion that valuation allowance is not necessary as of December 31, 2024.

The Company has analyzed and determined that future earnings of the Company's TRS are sufficient to support a conclusion that valuation allowance for federal NOLs is not necessary as of December 31, 2025.

The Company has also evaluated its state NOLs and recorded a valuation allowance for the states where it is more likely than not that it will be realized.

NewPoint and the commercial real estate conduit business are operated through the Company’s TRS, which is subject to U.S.

federal, state and local income taxes.

In general, the TRS may hold assets that the REIT cannot hold directly and may engage in real estate or non-real estate-related activities.

Current and deferred taxes are recorded on the portion of earnings (losses) recognized by us with respect to our interest in the TRS.

Deferred income tax assets and liabilities are calculated based on temporary differences between our GAAP consolidated financials statements and the federal, state, local tax basis of assets and liabilities as of the consolidated balance sheets.

We evaluate the realizability of our deferred tax assets (e.g., net operating loss and capital loss carryforwards) and recognize a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all our deferred tax assets will not be realized.

When evaluating the realizability of our deferred tax assets, we consider estimates of expected future taxable income, existing and projected book/tax differences, tax planning strategies available and the general and industry specific economic outlook.

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.

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Total (provision)/benefit for income taxes $ ( 3,884 ) $ ( 1,120 ) $ 2,757

The tax characteristics of $ 1.42 distributions per share of common stock declared during 2024 was $ 1.42 ordinary income.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

A reconciliation of our effective income tax rate, as well as our effective income tax rate as a percentage of pre-tax income, to the U.S.

federal statutory rate is as follows (dollars in thousands):

Rate Reconciliation - Consolidated for F/S

2025 2024 2023

Pretax Income

Federal Statutory Rate $ 18,473 21.00 % 21.00 % 21.00 %

REIT non-taxable income ( 15,482 ) ( 17.60 ) % ( 20.09 ) % ( 22.88 ) %

State and local taxes, net of federal benefit 553 0.63 % 0.29 % ( 0.07 ) %

Other 340 0.40 % — % — %

Effective Income Tax Rate $ 3,884 4.43 % 1.20 % ( 1.95 ) %

The significant components of our deferred tax assets and liabilities of our TRS Consolidated Group are as follows (in thousands):

Deferred Tax Assets

Net operating loss carryforwards $ 4,291 $ 3,452

Interest expense carryforwards 205 —

Intangible Assets 1,842 —

Total Deferred Tax Assets $ 6,344 $ 3,460

Valuation allowance ( 244 ) —

Total Deferred Tax Assets, Net $ 6,100 $ 3,460

Deferred Tax Liabilities

Contributed Assets - Built in Gain $ 7,145 $ —

Mortgage Servicing Rights 5,821 —

Deferred Tax Liabilities, Net $ 12,973 $ 1

Net DTA/(DTL) $ ( 6,873 ) $ 3,459

As of December 31, 2025, the Company had federal net operating loss carryforwards of $ 21.0 million that do not expire.

As of December 31, 2025, the Company had state net operating loss carryforwards of $ 3.8 million that begin to expire in 2030.

The Company’s income tax returns are subject to examination by tax authorities generally for a period of three to four years after filing, depending on the jurisdiction.

Accordingly, tax years 2021-2024 remain open to examination.

The tax characteristics of $ 1.42 distributions per share of common stock declared during 2025 was $ 0.84 ordinary income and $ 0.58 return of capital.

The tax characteristics of the $ 1.88 per share of Series E Preferred Stock declared during 2025 was $ 1.88 ordinary income.

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The ordinary income per share of each stockholder represents the ordinary dividend that may be eligible for the 20% deduction applicable to qualified REIT dividends under Internal Revenue Code Section 199A.

FRANKLIN BSP REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025

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.

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The Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K.

The following activity took place subsequent to the year ended December 31, 2024:

Investment Activity:

We obtained, through foreclosure, two multifamily properties, both located in Texas.

The loans had a combined amortized cost basis of $ 104.9 million as of December 31, 2024.

One of these two properties was subsequently sold on February 12, 2025 for a purchase price of $ 63.8 million and was financed with a loan originated by the Company.

We also sold a previously foreclosed multifamily property, located in North Carolina, for a purchase price of $ 12.9 million.

Conduit Activity :

We sold two of our commercial mortgage loans, held for sale into the CMBS securitization market.

The loans had a fair value of $ 82.3 million as of December 31, 2024.

Based on this evaluation, there were no subsequent events from December 31, 2025 through the date the financial statements were issued.

FRANKLIN BSP REALTY TRUST, INC.

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Fixed 4.25 % - 9.00 %

2025 - 2030 I/O $ 3,555,248 $ 3,547,417 $ 93,108

2026 - 2031 I/O & P/I $ 3,397,052 $ 3,387,269 $ 21,716

Senior loans Hospitality / Diversified + 3.25 % - 5.30 %

Fixed 5.99 % - 8.50 %

2027 - 2031 I/O & P/I 507,525 506,944 —

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Fixed 11.99 %

2026 - 2029 I/O 338,015 336,457 —

2026 - 2031 I/O & P/I 309,522 308,633 —

Senior loans Office / Diversified + 2.25 % - 4.50 %

Fixed 5.15 % - 5.50 %

2026 - 2027 I/O & P/I 58,259 56,411 21,095

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2026 - 2029 I/O 42,163 42,117 —

Senior loans Retail / Diversified Fixed 5.50 % - 6.00 %

Senior loans Healthcare / Diversified + 3.75 % - 4.70 %

2029 I/O 30,354 30,204 —

Senior loans Manufactured Housing / Diversified + 4.25 %

2025 - 2028 I/O & P/I 25,175 25,114 —

Senior loans Manufactured Housing / Florida

2028 I/O 24,784 24,784 —

Senior loans Senior Housing / New York + 3.50 % - 4.25 %

2029 I/O 18,628 18,523 —

Senior loans Retail / Wisconsin Fixed 5.50 %

2026 I/O 1,986 1,988 —

Total senior loans $ 4,390,273 $ 4,376,873 $ 42,811

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2028 - 2029 I/O 7,619 7,614 —

Mezzanine loans Mixed Use / New York Fixed 16.00 %

2025 I/O 7,527 7,491 —

Mezzanine loans Industrial / California Fixed 15.00 %

2029 I/O 2,180 2,171 —

Total mezzanine loans $ 45,238 $ 44,563 $ —

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federal income tax purposes is approximately $ 4.6 billion.

For the activity within the Company's loan portfolio during the years ended December 31, 2024 and 2023, refer to Note 3 - Commercial Mortgage Loans on the consolidated financial statements of Form 10-K.

For the activity within the Company's loan portfolio during the years ended December 31, 2025 and 2024, refer to Note 4 - Commercial Mortgage Loans, Held for Investment on the consolidated financial statements 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