Benefit Street Partners’ REIT Franklin BSP Realty Trust Closes $1B CRE CLO

Benefit Street Partners, a New York-based private-credit fund, has closed a $1 billion CLO offering sponsored by its real estate investment trust (REIT), Franklin BSP Realty Trust. 

BSPRT 2024-FL11 (FL11) is a $1.024 billion CLO that features a 36-month reinvestment period and includes $100 million reserved for a 180-day “ramp-up” period of multifamily acquisitions. The security features an initial advance rate of 86.5 percent and an average interest rate of secured overnight financing rate (SOFR) + 1.99 percent. 

The SOFR currently stands at 4.84 percent as of Friday. 

Michael Comparato, president of Franklin BSP Realty Trust, said in a statement that his REIT has been “very active” in originating middle market loans and that many of them have been included in the FL11 collateral pool. 

“Strong investor interest led to significant oversubscription across all bond classes, and we are very appreciative of the continued support of our offerings by some of the largest institutional investors in the world,” said Comparato. 

Structuring was managed by Barclays Capital, while J.P. Morgan Securities and Wells Fargo Securities together worked as the CLO’s co-lead managers and joint bookrunners. 

CLOs securitizes a pool of CRE assets, are usually nonstabilized and financed by floating-rate debt. A CLO structures its bonds as investment grade (or above) assets, with protections in place for investors, particularly the CLO originator remaining as the controlling class bondholder and actively managing the security. The originator can pick and choose which assets should remain in the CLO up until a certain point, swapping out nonperforming assets for performing ones to reduce credit risk for themselves and their investors. 

Last year, CRE CLO issuance dropped from $28.9 billion in September 2022 to $4.8 billion by September 2023, a decline of 83 percent, according to CREFC. 

Brian Pascus can be reached at bpascus@commercialobserver.com