Broadmark Realty Capital Announces Third Quarter 2021 Results
Broadmark Realty Capital Inc. (NYSE: BRMK) reported strong financial results for Q3 2021, reflecting record loan originations of $337 million amid a robust construction market. Total revenue reached $30.6 million, while net income was $21.7 million or $0.16 per diluted share. The company achieved a total loan portfolio of $1.5 billion across 17 states, with interest income at $22.8 million. A monthly dividend of $0.07 per share was declared, payable on November 15, 2021. The company maintains a low-leverage balance sheet with no debt outstanding as of September 30, 2021.
- Record loan originations of $337 million in Q3 2021.
- Total revenue of $30.6 million for Q3 2021.
- Net income of $21.7 million, or $0.16 per diluted share.
- Strong loan portfolio of $1.5 billion across 17 states.
- Monthly dividend of $0.07 per share declared.
- Principal outstanding on loans in default was $162.6 million.
– Produced Record for New Loan Originations –
Third Quarter 2021 Financial Highlights
-
Total revenue of
$30.6 million September 30, 2021 . -
Net income attributable to common stockholders of
$21.7 million $0.16 -
Distributable earnings prior to realized loss on investments, a non-GAAP financial measure, of
$24.6 million $0.19
Third Quarter 2021 Loan Portfolio Highlights
-
New originations and amendments totaling
$337.0 million 59.0% . -
Interest income of
$22.8 million $7.7 million -
Originated the Company's first loans in
Nevada andMinnesota with additional state expansion planned for the fourth quarter. -
Total loan portfolio of
$1.5 billion District of Columbia .
Loan Portfolio
As of
Balance Sheet Activity and Liquidity
At
Dividend
On
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
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: 13723798
The playback can be accessed through
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:
- the magnitude, duration and severity of the novel coronavirus (“COVID-19”) pandemic;
- disruptions in the Company’s business operations, including construction lending activity, relating to COVID-19;
- adverse impact of COVID-19 on the value of the Company’s goodwill;
- the impact of actions taken by governments, businesses, and individuals in response to COVID-19;
- the current and future health and stability of the economy and residential housing market, including any extended slowdown in the real estate markets as a result of COVID-19;
- changes in laws or regulations applicable to the Company’s business, employees lending activities, including current and future laws, regulations and orders that limit the Company’s ability to operate in light of COVID-19;
- defaults by borrowers in paying debt service on outstanding indebtedness;
- the adequacy of collateral securing the Company’s loans and declines in the value of real estate property securing the Company’s loans;
- 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;
- increased competition from entities engaged in construction lending activities;
- 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,
About
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data, unaudited)
|
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|
|
|
||
Assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
37,376 |
|
|
$ |
223,375 |
|
Mortgage notes receivable, net |
|
|
923,521 |
|
|
|
798,486 |
|
Interest and fees receivable, net |
|
|
14,766 |
|
|
|
14,357 |
|
Investment in real property, net |
|
|
52,470 |
|
|
|
8,473 |
|
Right-of-use assets |
|
|
6,114 |
|
|
|
— |
|
|
|
|
136,965 |
|
|
|
136,965 |
|
Other assets |
|
|
7,566 |
|
|
|
5,663 |
|
Total assets |
|
$ |
1,178,778 |
|
|
$ |
1,187,319 |
|
|
|
|
|
|
|
|
||
Liabilities and Equity |
|
|
|
|
|
|
||
Accounts payable and accrued liabilities |
|
$ |
7,987 |
|
|
$ |
4,946 |
|
Lease liabilities |
|
|
8,100 |
|
|
|
— |
|
Dividends payable |
|
|
9,289 |
|
|
|
7,952 |
|
Total liabilities |
|
$ |
25,376 |
|
|
$ |
12,898 |
|
Commitments and contingencies |
|
|
|
|
|
|
||
Preferred stock, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
132 |
|
|
|
132 |
|
Additional paid in capital |
|
|
1,216,192 |
|
|
|
1,213,987 |
|
Accumulated deficit |
|
|
(62,922 |
) |
|
|
(39,698 |
) |
Total equity |
|
|
1,153,402 |
|
|
|
1,174,421 |
|
Total liabilities and equity |
|
$ |
1,178,778 |
|
|
$ |
1,187,319 |
|
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data, unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
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||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
$ |
22,846 |
|
|
$ |
21,844 |
|
|
$ |
66,481 |
|
|
$ |
68,577 |
|
Fee income |
|
|
7,748 |
|
|
|
7,139 |
|
|
|
22,764 |
|
|
|
21,244 |
|
Total revenue |
|
$ |
30,594 |
|
|
$ |
28,983 |
|
|
$ |
89,245 |
|
|
$ |
89,821 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in fair value of warrant liabilities |
|
|
1,244 |
|
|
|
1,948 |
|
|
|
(2,490 |
) |
|
|
5,094 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for (reversal of) credit losses, net |
|
|
2,607 |
|
|
|
(2,932 |
) |
|
|
5,373 |
|
|
|
5,724 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and employee benefits |
|
|
4,025 |
|
|
|
5,160 |
|
|
|
11,254 |
|
|
|
11,397 |
|
General and administrative |
|
|
3,521 |
|
|
|
3,199 |
|
|
|
9,810 |
|
|
|
9,977 |
|
Total expenses |
|
|
10,153 |
|
|
|
5,427 |
|
|
|
26,437 |
|
|
|
27,098 |
|
Income before income taxes |
|
|
21,685 |
|
|
|
25,504 |
|
|
|
60,318 |
|
|
|
67,817 |
|
Income tax provision |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net income |
|
$ |
21,685 |
|
|
$ |
25,504 |
|
|
$ |
60,318 |
|
|
$ |
67,817 |
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.16 |
|
|
$ |
0.19 |
|
|
$ |
0.45 |
|
|
$ |
0.51 |
|
Diluted |
|
$ |
0.16 |
|
|
$ |
0.19 |
|
|
$ |
0.45 |
|
|
$ |
0.51 |
|
Weighted-average shares of common stock outstanding, basic and diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
132,658,661 |
|
|
|
132,282,252 |
|
|
|
132,575,852 |
|
|
|
132,156,844 |
|
Diluted |
|
|
132,752,471 |
|
|
|
132,316,746 |
|
|
|
132,663,437 |
|
|
|
132,207,605 |
|
RECONCILIATION OF NET INCOME TO DISTRIBUTABLE EARNINGS
(in thousands, except for per share amounts)
Definition of Distributable Earnings
The Company has elected to present “distributable earnings,” a supplemental non-GAAP financial measure 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
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. As such, distributable earnings is 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
Distributable earnings does 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 this measure 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) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to common stockholders |
|
$ |
21,685 |
|
|
$ |
25,504 |
|
|
$ |
60,318 |
|
|
$ |
67,817 |
|
Adjustments for non-distributable earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation expense |
|
|
891 |
|
|
|
1,913 |
|
|
|
2,552 |
|
|
|
3,794 |
|
New public company expenses(1) |
|
|
— |
|
|
|
684 |
|
|
|
953 |
|
|
|
2,750 |
|
Non-capitalized transaction and other one-time expenses(2) |
|
|
489 |
|
|
|
— |
|
|
|
489 |
|
|
|
— |
|
Change in fair value of warrant liabilities |
|
|
(1,244 |
) |
|
|
(1,948 |
) |
|
|
2,490 |
|
|
|
(5,094 |
) |
Depreciation and amortization |
|
|
146 |
|
|
|
103 |
|
|
|
577 |
|
|
|
(682 |
) |
Provision for (reversal of) credit losses, net |
|
|
2,607 |
|
|
|
(2,932 |
) |
|
|
5,373 |
|
|
|
5,724 |
|
Distributable earnings prior to realized
|
|
$ |
24,574 |
|
|
$ |
23,324 |
|
|
$ |
72,752 |
|
|
$ |
74,309 |
|
Realized credit losses(3) |
|
|
(695 |
) |
|
|
— |
|
|
|
(2,096 |
) |
|
|
(1,233 |
) |
Distributable earnings |
|
$ |
23,879 |
|
|
$ |
23,324 |
|
|
$ |
70,656 |
|
|
$ |
73,076 |
|
Distributable earnings per diluted share of
|
|
$ |
0.19 |
|
|
$ |
0.18 |
|
|
$ |
0.55 |
|
|
$ |
0.56 |
|
Distributable earnings per diluted share of
|
|
$ |
0.18 |
|
|
$ |
0.18 |
|
|
$ |
0.53 |
|
|
$ |
0.55 |
|
Weighted-average number of shares of common
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
132,658,661 |
|
|
|
132,282,252 |
|
|
|
132,575,852 |
|
|
|
132,156,844 |
|
Diluted |
|
|
132,752,471 |
|
|
|
132,316,746 |
|
|
|
132,663,437 |
|
|
|
132,207,605 |
|
(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 liquidation of the Private REIT. |
(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/20211108006030/en/
Investor Relations
InvestorRelations@broadmark.com
206-623-7782
Media Relations
646-277-1249
Source:
FAQ
What are the Q3 2021 financial results for Broadmark Realty Capital (BRMK)?
How much was the loan origination volume for Broadmark Realty Capital in Q3 2021?
What is the dividend declared by Broadmark Realty Capital for November 2021?
What is the loan portfolio size of Broadmark Realty Capital (BRMK) as of Q3 2021?
What was the status of loans in default for Broadmark Realty Capital in Q3 2021?
