Franklin BSP Realty Trust, a publicly registered non-traded real estate investment trust formerly known as Benefit Street Partners Realty Trust Inc., has determined the final exchange ratio and cash consideration in anticipation of its upcoming merger with Capstead Mortgage Corporation (NYSE: CMO), a publicly traded residential mortgage REIT. The REIT also increased the size of its board, completed a reverse stock split, and declared an interim fourth quarter 2021 dividend.
As previously reported, the combined company is expected to be the fourth largest commercial mortgage REIT with nearly $2 billion of pro forma equity. The REIT’s common stock will trade on the NYSE under the new ticker symbol “FBRT” upon closing, which is expected around October 19, 2021.
Capstead stockholders will receive 0.3288 newly issued shares of Franklin BSP Realty Trust for each share of Capstead stock held, as well as per share cash consideration of $0.21 from Franklin BSP Realty Trust, and advisor cash consideration of $0.73 from Benefit Street Partners. The total consideration to Capstead common stockholders represents a 15.75 percent premium to the Capstead adjusted book value per share, the company said.
Following the merger, Franklin BSP Realty Trust stockholders will own approximately 64 percent of the common equity of the combined company, and Capstead stockholders will own approximately 36 percent.
On Tuesday, Franklin BSP Realty Trust also completed a one-for-ten reverse stock split, where each outstanding share of common stock automatically combined into one-tenth of one share of common stock.
The REIT also completed a stock dividend on the outstanding shares at a rate of nine shares of newly issued Series F convertible preferred stock for each share of Franklin BSP Realty Trust common stock outstanding following the reverse stock split.
Thus, Franklin BSP Realty Trust stockholders now own 10 percent of their holdings in common stock and 90 percent of their holdings in Series F preferred stock. Each share of Series F preferred stock will automatically convert into one share of common stock on the six-month anniversary of the listing on the New York Stock Exchange.
In addition, the REIT increased the size of the board from five to eight directors and appointed three Capstead directors, Pat Augustine, Michelle Goolsby and Gary Keiser, effective when the merger closes.
On October 11, 2021, the board of Franklin BSP Realty Trust declared an interim fourth quarter 2021 dividend on its common stock and Series F preferred stock of $0.07 per share. The dividend will be paid around October 18, 2021 to stockholders of record as of October 13, 2021.
The board also declared an interim fourth quarter of 2021 dividend of $20.94 per share on Series A, Series C, and Series D convertible preferred stock.
Formerly known as Realty Finance Trust and managed by AR Global, Benefit Street took over as the company’s new advisor in late September 2016. Benefit Street is a wholly-owned subsidiary of Franklin Templeton, an independent asset manager with more than $1.5 trillion of assets under management as of June 30, 2021. As of Septmeber 30, 2021, the REIT, which focuses on commercial mortgage loans, had more than $3 billion of assets.