- Completes New Originations and Amendments
of $189.6 Million - - Total Active Loan Portfolio of $1.6
Billion Across 20 States -
Broadmark Realty Capital Inc. (NYSE: BRMK) (the
“Company”), an internally managed secured real estate finance
company, today announced operating results for the quarter ended
March 31, 2022.
Brian Ward, the Company’s Chief Executive Officer, commented,
“In the first quarter, we completed total originations that
approached $190 million, at an average unlevered yield in excess of
10.0%. While the broader commercial real estate lending markets
remain fiercely competitive, we continue to be selective with our
investments as global, macro-economic risks escalate. Specifically,
we are pursuing prudent, high-yield investments in the smaller- to
middle-market space that we expect will generate strong returns for
our shareholders as we move ahead. We also remain well-positioned
with our balance sheet at an enterprise leverage ratio of roughly
8%, which allows us to take advantage of future opportunities that
may arise. As such, rising rates do not materially impact our
balance sheet, and our shorter-duration loans operate as a natural
hedge against rapid rate movements. Our fortress balance sheet
offers a material difference and our balanced approach to risk and
return, together with significant financial capacity, puts us in an
ideal position for future growth through all parts of the
cycle.”
First Quarter 2022 Financial and Loan
Portfolio Highlights
- Total revenue of $29.9 million for the quarter ended March 31,
2022, comprised of interest income of $24.1 million and fee income
of $5.8 million.
- Net income attributable to common stockholders of $18.1
million, or $0.14 per diluted common share.
- Distributable earnings prior to realized loss on investments, a
non-GAAP financial measure, of $22.1 million, or $0.17 per diluted
common share.
- New originations and amendments of $189.6 million, at a
weighted average loan-to-value of 61.8%.
Balance Sheet Activity and
Liquidity
At March 31, 2022, the Company had cash and cash equivalents of
$97.4 million and a fully undrawn $135.0 million credit facility,
or $232.4 million in total liquidity, with $591.9 million of
unfunded loan commitments on balance sheet.
Loan Portfolio
As of March 31, 2022, a total of 26 loans were in contractual
default, entailing $187.8 million in total commitment, or 11.8% of
the portfolio based on total commitment. During the first quarter
of 2022, the Company resolved $36 million of loans in contractual
default.
Completion of Leadership Transition
Plan
As previously announced, on March 1, 2022, Brian P. Ward joined
the Company as Chief Executive Officer and a member of its Board of
Directors. Mr. Ward previously served as Chief Executive Officer of
Trimont Real Estate Advisors, a commercial real estate asset
management firm with aggregate invested capital under management of
$168 billion.
Dividend
On March 15, 2022, the Company’s Board of Directors declared a
cash dividend of $0.07 per common share payable on April 15, 2022
to stockholders of record as of March 31, 2022, and on April 18,
2022, the Board of Directors declared a cash dividend of $0.07 per
common share payable on May 16, 2022 to stockholders of record as
of April 29, 2022.
Additional Information
The Company has posted supplemental financial information to
provide additional disclosure on its website at www.broadmark.com.
These materials can be found on the Investors section of the
website under the “Financials” tab.
Conference Call and Webcast
Information
The Company will host a live conference call and webcast today
at 5:00 p.m. Eastern time. To listen to the live webcast, go to the
Investors section of the Company’s website at www.broadmark.com at
least 15 minutes prior to the scheduled start time in order to
register and install any necessary audio software.
To Participate in the Telephone Conference Call: Dial in
at least 15 minutes prior to start time. Domestic: 1-877-407-9039
International: 1-201-689-8470
Conference Call Playback: Domestic: 1-844-512-2921
International: 1-412-317-6671 Passcode: 13728555 The playback can
be accessed through May 23, 2022.
Forward Looking
Statements
This press release contains certain “forward-looking statements”
within the meaning of the federal securities laws. Forward-looking
statements relate to expectations, beliefs, projections, future
plans and strategies, anticipated events or trends and similar
expressions concerning matters that are not historical facts.
Forward-looking statements reflect the Company’s current views with
respect to, among other things, capital resources, portfolio
performance and projected results of operations. In some cases, you
can identify these forward-looking statements by the use of
terminology such as “outlook,” “believes,” “expects,” “potential,”
“continues,” “may,” “will,” “should,” “could,” “seeks,”
“approximately,” “predicts,” “intends,” “plans,” “estimates,”
“anticipates” or the negative version of these words or other
comparable words or phrases. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of their respective dates.
These forward-looking statements are based largely on the
Company’s current beliefs, assumptions and expectations concerning
future developments and their potential effects on the Company.
There can be no assurance that future developments affecting the
Company will be those that it has anticipated. Factors that may
cause actual results to vary from the Company’s forward-looking
statements include, but are not limited to:
- mitigation of loan default rates and ability to timely resolve
loans in contractual default status with positive economic
outcomes;
- the adequacy of collateral securing the Company's loans and
declines in the value of real estate property securing the
Company's loans;
- increased competition from entities engaged in construction
lending activities;
- availability of origination and acquisition opportunities
acceptable to the Company;
- potential mismatches in the timing of asset repayments and the
maturity of the associated financing agreements;
- disruptions in the Company's business operations, including
construction lending activity, relating to the COVID-19
pandemic;
- the current and future health and stability of the economy and
residential housing market, including potential impacts on the real
estate markets as a result of COVID-19;
- general economic uncertainty and the effect of general economic
conditions on the real estate and real estate capital markets in
particular;
- general and local commercial and residential real estate
property conditions;
- changes in U.S. federal government policies;
- changes in U.S. federal, state and local governmental laws and
regulations that impact the Company's business, assets or
classification as a real estate investment trust;
- the Company's ability to pay, maintain or grow the dividend in
the future;
- changes in interest rates;
- the availability of, and costs associated with, sources of
liquidity;
- compliance with covenants contained in the Company's debt
documents;
- the adequacy of the Company's policies, procedures and systems
for managing risk effectively;
- the ability to manage future growth;
- changes in personnel and availability of qualified personnel;
and
- other factors set forth in the Company's periodic filings with
the Securities and Exchange Commission.
Should one or more of these risks or uncertainties materialize,
or should any of the assumptions prove incorrect, actual results
may vary in material respects from those projected in these
forward-looking statements. The Company undertakes no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
may be required under applicable securities laws.
The Company uses its website and social media channels as
channels of distribution of Company information. The information
that the Company posts through these channels may be deemed
material. Accordingly, the Company encourages investors and others
interested in the Company to routinely monitor these channels, in
addition to following the Company’s press releases, Securities and
Exchange Commission filings and public conference calls and
webcasts. In addition, you may automatically receive email alerts
and other information about the Company when you enroll your email
address by visiting the “Email Alerts” section of the Company’s
website at http://ir.broadmark.com/resources/email-alerts. The
contents of the Company’s website and social media channels are
not, however, incorporated by reference into this press
release.
About Broadmark Realty Capital
Broadmark Realty Capital Inc. (NYSE: BRMK) is a specialty real
estate finance company, providing financing solutions generally in
the $2 to $50 million range across the entire debt capital stack
for commercial and residential real estate opportunities throughout
the United States. Broadmark is particularly well equipped to
address complex financing requirements that require rapid response,
investing across a variety of market conditions and economic
cycles.
BROADMARK REALTY CAPITAL INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands, except share data,
unaudited)
March 31, 2022
December 31, 2021
Assets
Cash and cash equivalents
$
97,407
$
132,889
Mortgage notes receivable, net
931,431
901,350
Interest and fees receivable, net
19,517
17,526
Investment in real property, net
63,586
68,067
Right-of-use assets
5,917
6,016
Goodwill
136,965
136,965
Other assets
8,121
8,342
Total assets
$
1,262,944
$
1,271,155
Liabilities and stockholders'
equity
Senior unsecured notes, net
$
97,360
$
97,223
Dividends payable
9,297
9,291
Accounts payable and accrued
liabilities
9,094
8,180
Lease liabilities
7,879
7,993
Total liabilities
$
123,630
$
122,687
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value,
100,000,000 shares authorized, no shares issued and outstanding at
March 31, 2022 and December 31, 2021
—
—
Common stock, $0.001 par value,
500,000,000 shares authorized, 132,793,442 and 132,716,338 shares
issued and outstanding at March 31, 2022 and December 31, 2021,
respectively
132
132
Additional paid in capital
1,217,614
1,216,957
Accumulated deficit
(78,432
)
(68,621
)
Total stockholders' equity
1,139,314
1,148,468
Total liabilities and stockholders'
equity
$
1,262,944
$
1,271,155
BROADMARK REALTY CAPITAL INC. CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share and
per share data, unaudited)
Three Months Ended
March 31, 2022
March 31, 2021
Revenues:
Interest income
$
24,110
$
22,017
Fee income
5,763
7,451
Total revenues
$
29,873
$
29,468
Expenses:
Compensation and employee benefits
5,078
3,446
General and administrative
2,851
2,653
Interest expense
2,115
280
Total expenses
10,044
6,379
Impairment:
Provision for credit losses, net
1,747
2,708
Other (expense) income:
Change in fair value of warrant
liabilities
(8
)
—
Income before provision for income
taxes
18,074
20,381
Income tax provision
—
—
Net income
$
18,074
$
20,381
Earnings per common share:
Basic
$
0.14
$
0.15
Diluted
$
0.14
$
0.15
Weighted-average shares of common stock
outstanding, basic and diluted:
Basic
132,769,876
132,550,227
Diluted
132,836,771
132,678,812
BROADMARK REALTY CAPITAL INC. RECONCILIATION
OF NET INCOME TO DISTRIBUTABLE EARNINGS (in thousands, except for
per share amounts, unaudited)
Definition of Distributable Earnings
The Company has elected to present “distributable earnings” and
“distributable earnings prior to realized loss on investments”,
supplemental non-GAAP financial measures used by management to
evaluate the Company’s operating performance. The Company defines
distributable earnings as net income attributable to common
stockholders adjusted for: (i) impairment recorded on the Company’s
investments; (ii) unrealized gains or losses on the Company’s
investments (including provision for credit losses) and warrant
liabilities; (iii) new public company transition expenses; (iv)
non-capitalized transaction-related and other one-time expenses;
(v) non-cash stock-based compensation; (vi) depreciation and
amortization including amortization of the Company’s intangible
assets; and (vii) deferred taxes, which are subject to variability
and generally not indicative of future economic performance or
representative of current operations.
During the three months ended March 31, 2022 and 2021, provision
for credit losses, net was $1.7 and $2.7 million, respectively,
which has been excluded from distributable earnings consistent with
other unrealized gains (losses) pursuant to the Company’s policy
for reporting distributable earnings. The Company expects to
recognize such potential credit losses in distributable earnings if
and when such amounts are deemed nonrecoverable upon a realization
event. This is generally upon charge-off of principal at the time
of loan repayment or upon sale of real property owned by the
Company and the amount of proceeds is less than the principal
outstanding at the time of foreclosure.
Management believes that the adjustments to compute
“distributable earnings” specified above allow investors and
analysts to readily identify and track the operating performance of
the Company’s assets, assist in comparing the operating results
between periods, and enable investors to evaluate the Company’s
current performance using the same measure that management uses to
operate the business. Distributable earnings excludes certain
recurring items, such as unrealized gains and losses (including
provision for credit losses) and non-capitalized
transaction-related expenses, because they are not considered by
management to be part of the Company’s primary operations for the
reasons described herein. However, management has elected to also
present distributable earnings prior to realized loss on
investments because it believes the Company’s investors use such
measure to evaluate and compare the performance of the Company and
its peers. As such, distributable earnings and distributable
earnings prior to realized loss on investments are not intended to
reflect all of the Company’s activity and should be considered as
only one of the factors used by management in assessing the
Company’s performance, along with GAAP net income which is
inclusive of all of the Company’s activities.
As a REIT, the Company is required to distribute at least 90% of
its annual REIT taxable income and to pay tax at regular corporate
rates to the extent that it annually distributes less than 100% of
such taxable income. Given these requirements and its belief that
dividends are generally one of the principal reasons stockholders
invest in its common stock, the Company generally intends to
attempt to pay dividends to its stockholders in an amount equal to
its net taxable income, if and to the extent authorized by the
Company’s board of directors. Distributable earnings and
distributable earnings prior to realized loss on investments are
one of many factors considered by the Company’s board of directors
in declaring dividends and, while not direct measures of taxable
income, over time, the measures can be considered useful indicators
of the Company’s dividends.
Distributable earnings and distributable earnings prior to
realized loss on investments do not represent, and should not be
considered as a substitute for, or superior to, net income or as a
substitute for, or superior to, cash flows from operating
activities, each as determined in accordance with GAAP, and the
Company’s calculation of these measures may not be comparable to
similarly entitled measures reported by other companies.
The table below is a reconciliation of distributable earnings to
the most directly comparable GAAP financial measure:
Three Months Ended
(dollars in thousands, except share and
per share data)
March 31, 2022
March 31, 2021
Net income attributable to common
stockholders
$
18,074
$
20,381
Adjustments for non-distributable
earnings:
Stock-based compensation expense
985
737
New public company expenses(1)
—
664
Non-capitalized transaction and other
one-time expenses(2)
1,027
—
Change in fair value of warrant
liabilities
8
—
Depreciation and amortization
219
163
Provision for credit losses, net
1,747
2,708
Distributable earnings prior to
realized loss on investments:
$
22,060
$
24,653
Realized credit losses(3)
(2,451
)
(1,401
)
Distributable earnings:
$
19,609
$
23,252
Distributable earnings per diluted share
of common stock prior to realized loss on investments
$
0.17
$
0.19
Distributable earnings per diluted share
of common stock
$
0.15
$
0.18
Weighted-average number of shares of
common stock outstanding, basic and diluted
Basic
132,769,876
132,550,227
Diluted
132,836,771
132,678,812
(1)
Expenses directly related to
professional fees in connection with our new public company
reporting procedures, the design and implementation of internal
controls under Section 404 of the Sarbanes-Oxley Act and the
implementation of the CECL standard.
(2)
Includes other one-time expenses
primarily related to the various costs associated with the search
for and hiring of our new CEO.
(3)
Represents credit losses recorded
in the provision for credit losses and recognized in distributable
earnings upon charge-off of principal at the time of loan repayment
or upon sale of real property where proceeds received are less than
the principal outstanding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220509006072/en/
Investor Relations InvestorRelations@broadmark.com
206-623-7782
Media Relations Jason Chudoba 646-277-1249
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