Broadmark Realty Capital Inc. (NYSE: BRMK) (the
“Company”), an internally managed secured real estate finance
company, today announced operating results for the quarter ended
June 30, 2022.
“We closed on over $196 million of investments in the second
quarter, at a weighted average yield greater than 10.0%. We
accomplished this while remaining selective and disciplined with
our underwriting to ensure we effectively navigate the rapidly
changing and challenging capital markets and macro-economic
environment,” stated Brian Ward, the Company's Chief Executive
Officer. “While we would prefer the pace of originations to
accelerate, and see our capital as well positioned for further
disruptions in the markets, we understand the importance in this
rising rate and inflationary period to stay focused on solid
credit, and smaller- to middle-market investments that align risk
with return. Importantly, we have a low-levered, fortress balance
sheet, with an enterprise leverage ratio of roughly 8%, which
provides us with material resources to take advantage of future
opportunities to capture long-term value for our shareholders.”
Second Quarter 2022 Financial and Loan
Portfolio Highlights
- Total revenue of $28.5 million for the quarter ended June 30,
2022, comprised of interest income of $22.1 million and fee income
of $6.4 million.
- Net income attributable to common stockholders of $15.9
million, or $0.12 per diluted common share.
- Distributable earnings prior to realized loss on investments, a
non-GAAP financial measure, of $20.7 million, or $0.16 per diluted
common share.
- New originations and amendments of $196.7 million, at a
weighted average loan-to-value of 62.0%.
- As of June 30, 2022, the principal outstanding on loans in
contractual default placed on non-accrual status was $91.7
million.
Balance Sheet Activity and
Liquidity
At June 30, 2022, the Company had cash and cash equivalents of
$36.0 million and a fully undrawn $135.0 million revolving credit
facility, or $171.0 million in total liquidity, with $578.5 million
of unfunded loan commitments on balance sheet. Subsequent to
quarter-end, the Company drew $20.0 million on the credit facility
and repaid the balance in full upon receipt of loan payoffs.
Dividend
On June 15, 2022, the Company’s Board of Directors declared a
cash dividend of $0.07 per common share payable on July 15, 2022 to
stockholders of record as of June 30, 2022, and on July 18, 2022,
the Board of Directors declared a cash dividend of $0.07 per common
share payable on August 15, 2022 to stockholders of record as of
July 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 August 22, 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)
June 30, 2022
December 31, 2021
Assets
Cash and cash equivalents
$
35,958
$
132,889
Mortgage notes receivable, net
957,226
901,350
Interest and fees receivable, net
17,496
17,526
Investment in real property, net
93,210
68,067
Right-of-use assets
5,816
6,016
Goodwill
136,965
136,965
Other assets
6,998
8,342
Total assets
$
1,253,669
$
1,271,155
Liabilities and stockholders'
equity
Senior unsecured notes, net
$
97,503
$
97,223
Dividends payable
9,301
9,291
Accounts payable and accrued
liabilities
10,759
8,180
Lease liabilities
7,762
7,993
Total liabilities
$
125,325
$
122,687
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value,
100,000,000 shares authorized, no shares issued and outstanding at
June 30, 2022 and December 31, 2021
—
—
Common stock, $0.001 par value,
500,000,000 shares authorized, 132,858,587 and 132,716,338 shares
issued and outstanding at June 30, 2022 and December 31, 2021,
respectively
132
132
Additional paid in capital
1,218,590
1,216,957
Accumulated deficit
(90,378
)
(68,621
)
Total stockholders' equity
1,128,344
1,148,468
Total liabilities and stockholders'
equity
$
1,253,669
$
1,271,155
BROADMARK REALTY CAPITAL
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except share
and per share data, unaudited)
Three Months Ended
Six Months Ended
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Revenues:
Interest income
$
22,132
$
21,618
$
46,242
$
43,635
Fee income
6,384
7,565
12,147
15,016
Total revenues
$
28,516
$
29,183
$
58,389
$
58,651
Expenses:
Compensation and employee benefits
3,920
3,550
8,998
6,996
General and administrative
3,309
2,816
6,545
5,416
Real property management expenses, net
1,074
55
941
108
Interest expense
2,120
718
4,235
998
Total expenses
10,423
7,139
20,719
13,518
Impairment:
Provision for credit losses, net
2,694
58
4,441
2,766
Other (expense) income:
Change in fair value of warrant
liabilities
186
(3,734
)
178
(3,734
)
Gain on sale of real property
707
—
959
—
Impairment on real property
(346
)
—
(346
)
—
Total other (expense) income
547
(3,734
)
791
(3,734
)
Income before provision for income
taxes
15,946
18,252
34,020
38,633
Income tax provision
—
—
—
—
Net income
$
15,946
$
18,252
$
34,020
$
38,633
Earnings per common share:
Basic
$
0.12
$
0.14
$
0.26
$
0.29
Diluted
$
0.12
$
0.14
$
0.26
$
0.29
Weighted-average shares of common stock
outstanding, basic and diluted:
Basic
132,812,622
132,585,116
132,803,085
132,567,768
Diluted
132,930,721
132,646,389
132,895,582
132,636,425
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 six months ended June 30, 2022 and 2021, provision
for credit losses, net was $4.4 and $2.8 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
Six Months Ended
(dollars in thousands, except share and
per share data)
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Net income attributable to common
stockholders
$
15,946
$
18,252
$
34,020
$
38,633
Adjustments for non-distributable
earnings:
Stock-based compensation expense
1,019
924
2,004
1,661
New public company expenses(1)
—
289
—
953
Non-capitalized transaction and other
one-time expenses(2)
577
—
1,604
—
Change in fair value of warrant
liabilities
(186
)
3,734
(178
)
3,734
Depreciation and amortization
268
268
487
431
Impairment on real property
346
—
346
—
Provision for credit losses, net
2,694
58
4,441
2,766
Distributable earnings prior to
realized loss on investments:
$
20,664
$
23,525
$
42,724
$
48,178
Realized credit losses(3)
40
—
(2,411
)
(1,401
)
Distributable earnings:
$
20,704
$
23,525
$
40,313
$
46,777
Distributable earnings per diluted share
of common stock prior to realized loss on investments
$
0.16
$
0.18
$
0.32
$
0.36
Distributable earnings per diluted share
of common stock
$
0.16
$
0.18
$
0.30
$
0.35
Weighted-average number of shares of
common stock outstanding, basic and diluted
Basic
132,812,622
132,585,116
132,803,085
132,567,768
Diluted
132,930,721
132,646,389
132,895,582
132,636,425
(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 as well as non-capitalized property taxes accrued on
held-for-sale real properties no longer under construction.
(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/20220808005739/en/
Investor Relations InvestorRelations@broadmark.com
206-623-7782 Media Relations Jason Chudoba 646-277-1249
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