- Board of Directors Approves $75 Million
Stock Repurchase Plan -
Broadmark Realty Capital Inc. (NYSE: BRMK) (the
“Company”), an internally managed secured real estate finance
company, today announced operating results for the quarter ended
September 30, 2022.
“The Board of Directors is taking decisive action to ensure a
disciplined approach in this rapidly changing economic environment.
We are focused on capital preservation and ensuring we are
positioned to capture opportunities that emerge. While it will take
time to accomplish our primary goal to unlock value and grow, we
have always focused on mitigating risk through prudent and
disciplined underwriting. Maintaining this approach will be key in
our strategies to effectively navigate the headwinds of economic
uncertainty,” stated Jeff Pyatt, Broadmark’s Interim Chief
Executive Officer. “With an industry-leading fortress balance sheet
and an enterprise leverage ratio of roughly 8%, we have the
financial strength to address and remedy our non-performing loans,
while positioning the business to take advantage of opportunities
to rebuild long-term value.”
Third Quarter 2022 Financial and Loan
Portfolio Highlights
- Closed new originations and amendments of $137.9 million, with
a weighted average yield of 12.9% and at a weighted average
loan-to-value of 59.7%.
- Received $197.8 million of loan payoffs during the third
quarter of 2022.
- Total revenue of $27.1 million for the quarter, comprised of
interest income of $20.7 million and fee income of $6.4
million.
- Net income attributable to common stockholders of $2.6 million,
or $0.02 per diluted common share.
- Distributable earnings prior to realized loss on investments, a
non-GAAP financial measure, of $18.0 million, or $0.14 per diluted
common share.
- Principal outstanding on loans in contractual default placed on
non-accrual status of $115.4 million as of September 30, 2022.
Balance Sheet Activity and
Liquidity
At September 30, 2022, the Company had cash and cash equivalents
of $61.1 million and a fully undrawn $135.0 million revolving
credit facility, or $196.1 million in total liquidity, with $530.4
million of unfunded loan commitments on balance sheet. During the
quarter, the Company drew $25.0 million on the credit facility and
repaid the balance in full upon receipt of loan payoffs.
Stock Repurchase Program
On November 7, 2022, the Company’s Board of Directors approved a
stock repurchase program authorizing the Company to repurchase up
to $75.0 million of its common stock. Repurchases under the stock
repurchase program may be made at management’s discretion from time
to time on the open market, in privately negotiated transactions or
otherwise, in each case subject to compliance with all Securities
and Exchange Commission rules and other legal requirements, and may
be made in part under one or more Rule 10b5-1 plans, which permit
stock repurchases at times when the Company might otherwise be
precluded from doing so.
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: 13729481 The playback can
be accessed through November 21, 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;
- the current and future health and stability of the economy and
residential housing market;
- availability of origination and acquisition opportunities
acceptable to the Company;
- increased competition from entities engaged in construction
lending activities;
- 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;
- 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
https://ir.broadmark.com/investor-resources/investor-email-alerts/default.aspx.
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 is a specialty real estate finance company, providing
financing solutions generally in the $2 to $75 million range per
transaction. The company provides smart, reliable, rapid solutions
across the entire debt capital stack, including senior,
subordinate, and participation investments with fixed and floating
rate structures available. Broadmark invests in a variety of new
construction and existing properties across all asset classes
throughout the United States, including hotel, industrial, medical,
mixed-use, office, retail, self-storage, warehouse, multifamily,
senior living, student housing, condos, larger scaled
single-family, townhome, and multiplex. It has the competitive
advantage of being an internally managed balance sheet lender, and
the company’s proactive approach delivers dedicated in-house
underwriting, asset management, loan servicing, and draw
administration. More information can be found at Broadmark Realty
Capital Specialty Real Estate Investments.
BROADMARK REALTY CAPITAL
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
data, unaudited)
September 30,
2022
December 31, 2021
Assets
Cash and cash equivalents
$
61,141
$
132,889
Mortgage notes receivable, net
911,664
901,350
Interest and fees receivable, net
17,184
17,526
Investment in real property, net
93,506
68,067
Right-of-use assets
5,714
6,016
Goodwill
136,965
136,965
Other assets
6,301
8,342
Total assets
$
1,232,475
$
1,271,155
Liabilities and stockholders'
equity
Senior unsecured notes, net
$
97,646
$
97,223
Dividends payable
9,305
9,291
Accounts payable and accrued
liabilities
13,671
8,180
Lease liabilities
7,643
7,993
Total liabilities
$
128,265
$
122,687
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value,
100,000,000 shares authorized, no shares issued and outstanding at
September 30, 2022 and December 31, 2021
—
—
Common stock, $0.001 par value,
500,000,000 shares authorized, 132,914,051 and 132,716,338 shares
issued and outstanding at September 30, 2022 and December 31,
2021, respectively
132
132
Additional paid in capital
1,219,754
1,216,957
Accumulated deficit
(115,676
)
(68,621
)
Total stockholders' equity
1,104,210
1,148,468
Total liabilities and stockholders'
equity
$
1,232,475
$
1,271,155
BROADMARK REALTY CAPITAL
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except share
and per share data, unaudited)
Three Months Ended
Nine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Revenues:
Interest income
$
20,685
$
22,846
$
66,927
$
66,481
Fee income
6,443
7,748
18,590
22,764
Total revenues
$
27,128
$
30,594
$
85,517
$
89,245
Expenses:
Compensation and employee benefits
3,972
3,920
12,970
10,916
General and administrative
3,429
2,905
9,832
8,321
Real property management expenses, net
1,542
—
2,625
108
Interest expense
2,242
721
6,477
1,719
Total expenses
11,185
7,546
31,904
21,064
Impairment:
Provision for credit losses, net
12,288
2,607
16,729
5,373
Other (expense) income:
Change in fair value of warrant
liabilities
415
1,244
593
(2,490
)
Gain on sale of real property
25
—
984
—
Impairment on real property
(1,485
)
—
(1,831
)
—
Total other (expense) income
(1,045
)
1,244
(254
)
(2,490
)
Income before provision for income
taxes
2,610
21,685
36,630
60,318
Income tax provision
—
—
—
—
Net income
$
2,610
$
21,685
$
36,630
$
60,318
Earnings per common share:
Basic
$
0.02
$
0.16
$
0.28
$
0.45
Diluted
$
0.02
$
0.16
$
0.28
$
0.45
Weighted-average shares of common stock
outstanding, basic and diluted:
Basic
132,884,407
132,658,661
132,867,288
132,575,852
Diluted
132,906,780
132,752,471
132,936,411
132,663,437
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 nine months ended September 30, 2022 and 2021,
provision for credit losses, net was $16.7 and $5.4 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
Nine Months Ended
(dollars in thousands, except share and
per share data)
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Net income attributable to common
stockholders
$
2,610
$
21,685
$
36,630
$
60,318
Adjustments for non-distributable
earnings:
Stock-based compensation expense
1,259
891
3,263
2,552
New public company expenses(1)
—
—
—
953
Non-capitalized transaction and other
one-time expenses(2)
462
489
2,066
489
Change in fair value of warrant
liabilities
(415
)
(1,244
)
(593
)
2,490
Depreciation and amortization
265
146
752
577
Impairment on real property
1,485
—
1,831
—
Provision for credit losses, net
12,288
2,607
16,729
5,373
Distributable earnings prior to
realized loss on investments:
$
17,954
$
24,574
$
60,678
$
72,752
Realized credit losses(3)
(1,796
)
(695
)
(4,207
)
(2,096
)
Distributable earnings:
$
16,158
$
23,879
$
56,471
$
70,656
Distributable earnings per diluted share
of common stock prior to realized loss on investments
$
0.14
$
0.19
$
0.46
$
0.55
Distributable earnings per diluted share
of common stock
$
0.12
$
0.18
$
0.42
$
0.53
Weighted-average number of shares of
common stock outstanding, basic and diluted
Basic
132,884,407
132,658,661
132,867,288
132,575,852
Diluted
132,906,780
132,752,471
132,936,411
132,663,437
(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 expenses incurred 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20221107005879/en/
Investor Relations InvestorRelations@broadmark.com
206-623-7782
Media Relations media@broadmark.com
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