Business Context and Reporting Period
This Form 8-K was filed by Benefit Street Partners Realty Trust, Inc. (now Franklin BSP Realty Trust, Inc.) on January 19, 2018. The filing reports the entry into a Material Definitive Agreement: an Amended and Restated Advisory Agreement with Benefit Street Partners, L.L.C. (the "Advisor").
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures for the reporting period. It focuses exclusively on the terms of the advisory agreement.
- Asset Management Fee: 1.5% of Equity.
- Performance Fee: 15% of Total Return over a 6% per annum hurdle (subordinated).
- Acquisition/Disposition Fees: None.
- Advisor Equity Commitment: Minimum purchase price of $10 million in Company equity securities.
Material Changes
The primary material change is the amendment and restatement of the Advisory Agreement originally dated September 29, 2016. Key structural changes include:
- Term: Initial term of three years with automatic one-year renewals unless terminated.
- Termination Rights: The Company may terminate for "Cause" without a fee. Without cause, termination is permitted after a term expires upon 180 days' notice if two-thirds of independent directors determine performance is unsatisfactory or fees are unfair, subject to a termination fee.
- Exclusivity: The Advisor is restricted from managing other REITs in the Company's significant investment regions or providing fixed-rate conduit lending services to others during the term.
Guidance, Outlook, and Risks
The filing contains no forward-looking financial guidance or outlook. Management commentary is limited to the negotiation process, noting that the Nominating and Corporate Governance Committee, consisting solely of independent directors, engaged independent legal counsel (Vinson & Elkins LLP) to negotiate the terms. The primary risk disclosed relates to the potential obligation to pay a termination fee if the Company elects not to renew the agreement without cause under specific conditions.
Investor Verification Checklist
- Verify the exact definition of "Equity" and "Total Return" in the attached Exhibit 10.1 to understand fee calculation bases.
- Confirm the specific conditions and limitations attached to the $10 million equity commitment by the Advisor.
- Review the detailed definition of "Cause Event" to understand termination rights without penalty.
- Examine the specific conditions under which the termination fee is calculated and payable.