Benefit Street Partners Realty Trust merges, changes name to Franklin BSP Realty Trust

Have you suffered losses investing in Benefit Street Partners Realty Trust Inc. (BSP Realty Trust)? If so, the securities attorneys at The White Law Group may be able to help you recover your losses through FINRA arbitration. 

Benefit Street Partners Realty Trust, Inc., a real estate finance company, originates, acquires, and manages a portfolio of commercial real estate debt investments secured by properties located in the United States and internationally, according to Bloomberg. 

According to reports, Benefit Street Partners Realty Trust and Capstead Mortgage Corp. have completed their previously announced merger.   

According to filings with the SEC, the new combined company, Franklin BSP Realty Trust Inc. started trading on the same stock exchange under the ticker symbol FBRT, at the open of trading October 19, 2021. The stock closed on the first day of trading at $17.10 per share. Shares of Benefit Street Partners were originally sold for $25 per share.

According to Market Watch, shares of FBRT closed yesterday at $13.98. 

Benefits Street Partners and its advisor have committed to a 6-month lock-up for approximately 94% of the current shares of BSPRT common stock and a committed common stock repurchase plan of up to $100 million to support the combined company’s stock price beginning four weeks after closing, up to $35 million of which will be funded by BSP and Franklin Templeton. 

At the effective time of the merger, each issued and outstanding share of common stock of Capstead was converted into the right to receive 0.3288 newly issued shares of Franklin common stock; cash consideration of 21 cents per share from Franklin; and cash consideration of 73 cents per share Franklin’s external manager, Benefit Street Partners LLC.  

Each outstanding share of Capstead’s 7.50% series E cumulative redeemable preferred stock was converted into the right to receive one newly issued share of Franklin’s 7.50% series E cumulative redeemable preferred stock. 

Shareholders have been waiting some time for an opportunity to liquidate their share. On March 30, 2020 Benefit Street Partner Realty Trust suspended its distribution reinvestment and stock repurchase plan, effective immediately. No reason was given for the suspension in a filing with Securities and Exchange Commission, but other non-traded REITs made similar suspensions in response to the Covid-19 global pandemic. 

How Does a Merger Affect Shareholders?  

Companies often merge as part of a strategic effort to boost shareholder value, often by creating new business lines and/or gaining greater market share. However, the economic environment at the time of the merger, size of the companies and management of the merger process all play a part in future returns for shareholders.   

Shareholders may experience a significant loss of voting power, and while the spike in trading volume tends to inflate share prices, if economic conditions are not favorable at the time of the merger, shareholders may see significant losses. 

Non-Traded REITs are Complex, High-Risk Investments 

The White Law Group is investigating the liability that FINRA registered brokerage firms may have for improperly selling high-risk REITs to their clients. 

Non-traded REITs are complicated and often risky investments which should only be sold to high-net worth and sophisticated investors. According to the Benefit Street Partners’ prospectus, “Investing in our common stock involves a high degree of risk. You should purchase these securities only if you can afford a complete loss of your investment.” 

Notwithstanding the risks of investing in REITs, brokerage firms continue to push this type of investment because of the high commissions associated with their sale and creation.  Brokerage firms generally make between 7-10% for selling a REIT, which is far in excess of the typical commission for more traditional investment types. 

To speak with a securities attorney regarding your investment in Benefit Street Partners Realty Trust, please call The White Law Group at (888)637-5510 for a free consultation. 

The White Law Group is a national securities fraud, securities arbitration and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. 

For more information on The White Law Group, visit the firm’s website at http://whitesecuritieslaw.com. To learn more about the investigation, please see: Benefit Street Partners Realty Trust – Tender Offer