Good morning and welcome to the Franklin BSP Realty Trust conference call. All participants will be in listen-only mode. To receive assistance, audio participants may signal a conference specialist by pressing the star key followed by zero. Please note this event is being recorded. I would now like to turn the conference over to Lindsey Crabbe, Director of Investor Relations. Please go ahead.
Good morning. Thank you, Ashia, for hosting our call today. I would like to welcome everyone to the investor conference call to discuss FBRT's acquisition of NewPoint. With me on the call today are Rich Byrne, Chairman and CEO of FBRT; Jerry Baglien, Chief Financial Officer and Chief Operating Officer of FBRT; and Mike Comparato, President of FBRT. This call is being recorded. There will not be a Q&A session after today's prepared remarks. Instead, we encourage you to reach out to the team if you would like additional follow-up. An investor presentation detailing the acquisition is available under the Investor Relations tab on our website. Before we begin, I want to mention that some of today's comments are forward-looking statements and are based on certain assumptions. Those comments and assumptions are subject to inherent risks and uncertainties, as described in our most recently filed SEC periodic reports.
An actual future result may differ materially. The information conveyed on this call is current only as of the date of this call, March 11th, 2025. The company assumes no obligation to update any statements made during this call, including any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. With that, I'll turn the call over to Rich Byrne.
Great. Thanks, Lindsey. Good morning, everyone, and thank you for joining us today. Yesterday evening, we announced FBRT's acquisition of NewPoint Holdings. NewPoint is a prominent commercial real estate finance company with a suite of agency licenses and a large servicing and MSR portfolio. We are thrilled to discuss FBRT's transformational acquisition of NewPoint. This is an exciting step forward in our strategy to enhance long-term stockholder value. This acquisition is highly synergistic. It strengthens our platform, expands our market reach, and positions FBRT for sustained growth. Let me highlight why we believe this deal is so advantageous. First, the NewPoint acquisition represents a natural expansion within our core competency, multifamily lending, adding a scaled CRE agency loan origination and servicing platform to FBRT. This creates a one-stop lending solution for our borrowers within our highest conviction sector.
Second, expanding FBRT's business lines broadens our total addressable market, which should drive future platform growth. Finally, because the acquisition adds a mortgage servicing platform, it enhances income stability and provides a potential avenue for recurring book value per share growth, delivering long-term value to our stockholders. I would like to thank our FBRT team and the NewPoint team for all their hard work through this transaction. We are all very excited about today's news. Momentarily, Mike will highlight the strategic benefits to our platform, and Jerry will cover the financial details of this transaction. First, I want to provide a high-level overview of the deal. For anyone new to our story, FBRT has a $5 billion commercial real estate core portfolio comprised of 155 loans, averaging $32 million each. The portfolio is 99% senior mortgages, with 93% being floating-rate loans.
FBRT has had a long-standing focus on multifamily lending, with loans to multifamily assets currently comprising 71% of our portfolio. We've built our portfolio using very light leverage of 2.6x , and our recourse leverage stands at 0.3x at the end of the fourth quarter. NewPoint is a leading vertically integrated commercial real estate finance company that provides loan origination, servicing, asset management, and a suite of agency products. NewPoint is one of only 19 multifamily originators in the United States, with approval to originate loans by three government-sponsored entities: Fannie Mae, Freddie Mac, and FHA/ HUD. In 2024, NewPoint had approximately $4 billion in production volume, with $2.9 billion attributed to agency lending. The company concluded the year with a substantial servicing portfolio of $54.7 billion.
Adding NewPoint's agency lending platform to FBRT will facilitate an exit strategy for our multifamily bridge loan borrowers and significantly broaden FBRT's market reach. NewPoint's existing servicing portfolio provides FBRT with an immediate long-term predictable cash flow stream. The agency portion of the servicing portfolio is recorded on the balance sheet as an MSR. This MSR portfolio also provides an avenue for future book value growth, as all the agency loans we originate will drive further servicing rights, increasing the size of our portfolio. We expect to build stockholder value through our MSR portfolio each quarter, driven by increased agency loan production and retained servicing rights. Mike, after I'm done, will elaborate on our agency volume projections and how we expect this to flow through the MSR book. We have always been focused on driving long-term value to our stockholders.
We believe this acquisition positions FBRT for sustained growth and provides the potential for our stock to trade at a premium-to-book value, just like the other agency platforms do. With that, I'll turn it over to Mike, who will provide more color on the immediate benefits to our portfolio. Mike.
Thanks, Rich. Good morning, everybody. Thank you for joining us today. Rich used the word already, but I will reiterate it. We believe this is really a transformational day for FBRT. For a decade, we have pursued the addition of an agency lender to our platform. FBRT and the broader BSP real estate platform already boast one of the market's most comprehensive product suites, which includes bridge lending, subordinate lending, construction lending, and CMBS. We believe this acquisition provides the final piece to our puzzle, creating a true one-stop shop for borrowers. I could not be more excited about this opportunity. As everyone is aware, we are extremely bullish on the multifamily sector. Fundamentals at the asset level continue to be strong, and multifamily has a liquidity profile vastly superior to that of any other asset in commercial real estate.
This is why it has always been the cornerstone of our portfolio. The continuing unaffordability of single-family housing across the U.S. is a key driver of demand for multifamily properties. Notwithstanding the current wave of supply the market has been dealing with, we continue to have a housing shortage in the United States. With banks largely on the sidelines for construction lending, multifamily supply is rapidly decreasing, and we believe many markets will return to positive rent growth in the coming years. Rich briefly walked through several of the highlights of the transaction. I would like to spend a little more time discussing the agency platform and the MSRs and how they will benefit our portfolio. The addition of NewPoint's agency platform provides an easy refinance path for our multifamily bridge loan borrowers when they have completed their business plans.
A large majority of our current multifamily portfolio will be eligible for agency financing when their bridge debt reaches maturity. We anticipate strong interest from current borrowers seeking a smooth road to agency financing. The agency platform also opens doors to new borrowers. FBRT's bridge loan offering is now an option for agency borrowers not currently working with us. This should equate to a stronger market presence, positioning us for continued growth. 2023 and 2024 were two low-volume origination years in the agency space due to the higher rate environment. Whether through rates coming back down, cap rates widening, or a little bit of both, we would expect the overall agency market to start gravitating back to historical norms sooner rather than later.
The existing NewPoint origination team will now have a suite of products that they previously did not have, and the BSP origination team will have access to agency execution, which we previously did not have. We believe the combined origination teams of both platforms will be a market leader in the industry. Additionally, with the acquisition comes the benefit of NewPoint's existing servicing portfolio. As Rich mentioned, this is about $55 billion in size. The agency portfolio is $18 billion and will be held as a mortgage servicing right on FBRT's consolidated balance sheet and provide immediate GAAP income. We expect the size of our MSR portfolio to consistently grow quarter over quarter as we retain the servicing rights on the agency loans we write. We expect our origination on our combined platform to outpace our maturities, thus growing the overall assets of the company and, through that, book value.
This acquisition also opens the door to adding additional third-party servicing, as well as CMBS servicing, to the portfolio. We believe the servicing business can be a meaningful growth driver for FBRT earnings and, perhaps most importantly, a predictable and sticky source of recurring revenue. NewPoint's agency licenses are a valuable asset, particularly with our complementary focus on bridge multifamily, and their servicing portfolio adds further diversification to our balance sheet. I cannot reiterate enough how excited I am about this transaction. Again, it is one we've been working on for a decade. Our platform and business model will be incredibly difficult for peers and new entrants to replicate and positions FBRT as a leader in the multifamily middle market space. With that, I'm going to turn it over to Jerry, who will discuss our financing of the acquisition and the combination of operations.
Thanks, Mike, and thank you, everyone, for joining today's call. I just want to first start by echoing the enthusiasm on this transaction that you heard from Mike and Rich. This is a real opportunity for book value growth and distinguishes our platform within the middle market CRE lending sector. I would like to spend a bit of time walking through the transaction summary and more of the mechanics of the deal. The purchase price for the acquisition was $425 million and was split 75/25 between cash and FBRT OP units, respectively. For the cash position of the acquisition, we plan to utilize cash on hand for a portion of the purchase price. Additionally, we plan to opportunistically issue notes ahead of the transaction to increase liquidity for general corporate purposes.
For the 25% equity portion of the deal, we issued approximately 8.4 million units from our operating company, which are economic equivalents to shares of FBRT common stock. The OP units have a 12-month lockup period and can be redeemed for common stock in the future. More details about the purchase price are included in the Purchase and Sale Agreement, which was filed with the SEC yesterday evening. Looking at our path to close and timing, the transaction is subject to customary closing conditions, and we hope to complete the deal in the early third quarter of 2025. Based on our projections, we expect fully converted book value to decrease by approximately $0.26-$0.28, depending on final closing costs, in the third quarter to reflect the dilution from the transaction.
However, we expect to increase fully converted book value by the first half of 2026 and recover the dilution from the transaction by the second half of 2026 through the growth of our servicing portfolio. We expect the acquisition to be accretive to both GAAP earnings per share in the first half of 2026 and fully converted distributable earnings per share in the second half of 2026. We expect to maintain our current dividend level, although we will likely under-earn the dividend during the next several quarters. As I just mentioned, we do expect return to dividend coverage in 2026 on both a GAAP and distributable basis. We believe this strategic acquisition will be a catalyst for significant long-term growth, driving increases in book value and distributable earnings in the future. We are very enthusiastic about the strategic fit and the value it adds to our platform.
I'll now hand it back to Rich for his concluding remarks.
Great. Thanks, Jerry. Thanks, Mike. Just in case it was not abundantly apparent from all of us, we are very excited about this transaction and its potential to create significant long-term value for our shareholders. We truly do believe it is a transformational moment for the company. As Lindsey mentioned, we are not including a Q&A session on this call. We thought it would be much more productive to do this with you individually. Please reach out to Lindsey if you have questions or would like to schedule a follow-up call with us. We really look forward to speaking with all of you. Thank you. With that, we will close the call.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.