Franklin BSP Realty Trust, Inc. - Quarter Report: 2018 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-55188

BENEFIT STREET PARTNERS REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)



Maryland		46-1406086
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

9 West 57th Street, Suite #4920 New York, New York		10019
(Address of Principal Executive Office)		(Zip Code)

(212) 588-6770

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (check one):



Large accelerated filer o	Accelerated filer o
Non-accelerated filer (Do not check if a smaller reporting company) o	Smaller reporting company x
	Emerging growth filer o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of the registrant's common stock, $0.01 par value, outstanding as of October 31, 2018 was 37,673,804.

TABLE OF CONTENTS



	Page
PART I
Item 1. Consolidated Financial Statements and Notes (unaudited)	1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3. Quantitative and Qualitative Disclosures about Market Risk	59
Item 4. Controls and Procedures	59
PART II
Item 1. Legal Proceedings	60
Item 1A. Risk Factors	60
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3. Defaults Upon Senior Securities	60
Item 4. Mine Safety Disclosures	60
Item 5. Other Information	60
Item 6. Exhibits	62
Signatures	63

Table of Contents

PART I

Item 1. Consolidated Financial Statements.

BENEFIT STREET PARTNERS REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except for share and per share data)



	September 30, 2018			December 31, 2017
ASSETS	(Unaudited)
Cash and cash equivalents	$	55,471		$	83,711
Restricted cash	10,570			7,997
Commercial mortgage loans, held for investment, net of allowance of $4,968 and $1,466	2,135,734			1,402,046
Commercial mortgage loans, held-for-sale, measured at fair value	105,976			28,531
Real estate securities, available-for-sale, at fair value	27,048			—
Derivative instruments, at fair value	1,987			132
Receivable for loan repayment ⁽¹⁾	35,453			49,085
Accrued interest receivable	11,606			8,152
Prepaid expenses and other assets	3,545			4,007
Total assets	$	2,387,390		$	1,583,661
LIABILITIES AND STOCKHOLDERS' EQUITY
Collateralized loan obligations	$	983,546		$	826,150
Repurchase agreements - commercial mortgage loans	565,329			65,690
Repurchase agreements - real estate securities	22,272			39,035
Other financing - commercial mortgage loans	—			25,698
Derivative instruments, at fair value	565			357
Interest payable	2,484			1,544
Distributions payable	5,116			3,917
Accounts payable and accrued expenses	6,682			4,510
Due to affiliates	3,315			6,421
Total liabilities	$	1,589,309		$	973,322
Commitment and Contingencies (See Note 8)
Redeemable convertible preferred stock Series A, $0.01 par value, 20,000 authorized, 19,215 issued and outstanding as of September 30, 2018 and none issued and outstanding as of December 31, 2017	95,736			—
Equity:
Preferred stock, $0.01 par value, 49,980,000 authorized, none issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	—			—
Common stock, $0.01 par value, 949,999,000 shares authorized, 37,477,393 and 31,834,072 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	376			320
Additional paid-in capital	796,278			704,101
Accumulated other comprehensive income (loss)	171			—
Accumulated deficit	(94,480		)	(94,082		)
Total stockholders' equity	702,345			610,339
Total liabilities, redeemable convertible preferred stock and stockholders' equity	$	2,387,390		$	1,583,661

⁽¹⁾ Includes $35.5 million and $48.7 million of cash held by servicer related to CLO loan payoffs as of September 30, 2018 and December 31, 2017, respectively.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

BENEFIT STREET PARTNERS REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except for share and per share data)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Interest income:
Interest income	$	42,943		$	22,195		$	106,478		$	61,917
Less: Interest expense	17,120			8,845			50,183			21,990
Net interest income	25,823			13,350			56,295			39,927
Expenses:
Asset management and subordinated performance fee	2,720			2,299			7,227			6,952
Acquisition fees and acquisition expenses	173			1,685			289			4,175
Administrative services expenses	3,501			1,480			9,822			3,285
Professional fees	2,556			1,348			6,803			3,320
Other expenses	774			1,411			3,896			2,773
Total expenses	9,724			8,223			28,037			20,505
Other (income)/loss:
Loan loss provision/(recovery)	1,066			(641		)	3,502			(222		)
Realized (gain)/loss on commercial mortgage loans held-for-sale	20			(378		)	48			1,587
Realized (gain)/loss on commercial mortgage loans held-for-sale, measured at fair value	(3,419		)	—			(9,765		)	—
Realized (gain)/loss on sale of real estate securities	107			—			107			(172		)
Unrealized (gain)/loss on commercial mortgage loans held-for-sale	—			27			—			(220		)
Unrealized (gain)/loss on commercial mortgage loans held-for-sale, measured at fair value	231			—			(474		)	—
Unrealized (gain)/loss on derivatives	(1,272		)	(583		)	(1,162		)	(583		)
Realized (gain)/loss on derivatives	41			18			(1,476		)	18
Total other (income)/loss	$	(3,226	)	$	(1,557	)	$	(9,220	)	$	408
Income/(loss) before taxes	19,325			6,684			37,478			19,014
Provision/(benefit) for income tax	325			(291		)	1,080			(291		)
Net income	$	19,000		$	6,975		$	36,398		$	19,305
Less: Preferred stock dividends	$	(1,255	)	$	—		$	(1,271	)	$	—
Net income applicable to common stock	$	17,745		$	6,975		$	35,127		$	19,305

Basic net income per share	$	0.49		$	0.22		$	1.07		$	0.61
Diluted net income per share	$	0.49		$	0.22		$	1.07		$	0.61
Basic weighted average shares outstanding	35,468,648			31,741,679			32,977,572			31,778,169
Diluted weighted average shares outstanding	38,942,428			31,756,503			34,168,274			31,790,267

The accompanying notes are an integral part of these unaudited consolidated financial statements.

BENEFIT STREET PARTNERS REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018		2017
Net income	$	19,000	$	6,975		$	36,398	$	19,305
Unrealized gain/(loss) on available-for-sale securities	194		(448		)	171		500
Comprehensive income attributable to Benefit Street Partners Realty Trust, Inc.	$	19,194	$	6,527		$	36,569	$	19,805

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

BENEFIT STREET PARTNERS REALTY TRUST, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(Dollars in thousands, except for share data)

(Unaudited)



	Common Stock
	Number of Shares		Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Income		Accumulated Deficit			Total Stockholders' Equity
Balance, December 31, 2017	31,834,072		$	320		$	704,101		$	—	$	(94,082	)	$	610,339
Issuance of common stock	5,888,935		59			96,781			—		—			96,840
Common stock repurchases	(809,023	)	(8		)	(15,077		)	—		—			(15,085		)
Common stock issued through distribution reinvestment plan	557,634		5			10,591			—		—			10,596
Share-based compensation	5,775		—			118			—		—			118
Offering costs	—		—			(236		)	—		—			(236		)
Net income	—		—			—			—		36,398			36,398
Distributions declared	—		—			—			—		(36,796		)	(36,796		)
Other comprehensive income	—		—			—			171		—			171
Balance, September 30, 2018	37,477,393		$	376		$	796,278		$	171	$	(94,480	)	$	702,345

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

BENEFIT STREET PARTNERS REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)



	Nine Months Ended September 30,
	2018			2017
Cash flows from operating activities:
Net income	$	36,398		$	19,305
Adjustments to reconcile net income to net cash provided by operating activities:
Premium amortization and (discount accretion), net	(3,456		)	(1,617		)
Accretion of deferred commitment fees	(1,400		)	(1,887		)
Amortization of deferred financing costs	10,788			3,735
Share-based compensation	118			56
Change in unrealized losses on commercial mortgage loans held-for-sale	(474		)	(220		)
Change in unrealized (gain)/losses on derivative instruments	(1,162		)	(583		)
Loan loss provision/(recovery)	3,502			(222		)
Deferred income taxes	—			(291		)
Origination of commercial mortgage loans, held-for-sale	(444,496		)	(60,950		)
Proceeds from sale of commercial mortgage loans, held-for-sale	377,263			88,352
Realized (gain)/loss from sale of real estate securities	107			—
Realized (gain)/loss from sale of commercial mortgage loans held-for-sale	(9,717		)	1,587
Changes in assets and liabilities:
Accrued interest receivable	(2,054		)	1,240
Prepaid expenses and other assets	(2,553		)	(4,717		)
Accounts payable and accrued expenses	2,172			3,084
Due to affiliates	(3,106		)	519
Interest payable	940			405
Net cash (used in)/provided by operating activities	$	(37,130	)	$	47,796
Cash flows from investing activities:
Origination and purchase of commercial mortgage loans, held for investment	$	(1,278,978	)	$	(565,094	)
Proceeds from commercial mortgage loans, held for sale	2,218
Principal repayments received on commercial mortgage loans, held for investment	556,465			176,138
Purchase of real estate securities	(39,511		)	—
Proceeds from sale of real estate securities	12,456			34,888
Principal repayments received on real estate securities	—			15,000
Purchase of derivative instruments	(520		)	(383		)
Net cash (used in)/provided by investing activities	$	(747,870	)	$	(339,451	)
Cash flows from financing activities:
Proceeds from issuances of redeemable convertible preferred stock	$	96,075		$	—
Proceeds from issuances of common stock	96,840			—
Common stock repurchases	(15,072		)	(20,546		)
Payments of offering costs and fees related to common stock issuances	(236		)	—
Borrowings under collateralized loan obligations	488,000			339,500
Repayments of collateralized loan obligations	(331,656		)	(97,470		)
Borrowings on repurchase agreements - commercial mortgage loans	1,566,956			368,745
Repayments of repurchase agreements - commercial mortgage loans	(1,067,282		)	(307,024		)
Borrowings on repurchase agreements - real estate securities	146,692			343,151
Repayments of repurchase agreements - real estate securities	(163,454		)	(370,754		)
Borrowings on other financing - commercial mortgage loans	—			36,200

BENEFIT STREET PARTNERS REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in thousands)

(Unaudited)



	Nine Months Ended September 30,
	2018			2017
Repayments on other financing - commercial mortgage loans	(26,182		)	(5,274		)
Payments of deferred financing costs	(6,230		)	(6,598		)
Distributions paid	(25,118		)	(31,328		)
Net cash (used in)/provided by financing activities	$	759,333		$	248,602
Net change in cash, cash equivalents and restricted cash	$	(25,667	)	$	(43,053	)
Cash, cash equivalents and restricted cash beginning of period	91,708			123,069
Cash, cash equivalents and restricted cash, end of period	$	66,041		$	80,016

Supplemental disclosures of cash flow information:
Interest paid	$	38,455		$	17,850
Taxes paid	340			—
Supplemental disclosures of non-cash flow information:
Common stock issued through distribution reinvestment plan	10,478			16,349
Loans transferred to commercial real estate loans, held-for-sale, transferred at fair value	—			31,207

Reconciliation of cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	$	55,471		$	72,262
Restricted cash	10,570			7,754
Cash, cash equivalents and restricted cash, end of period	$	66,041		$	80,016

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

Note 1 - Organization and Business Operations

Benefit Street Partners Realty Trust, Inc. (the "Company"), formerly known as Realty Finance Trust, Inc., is a real estate finance company that primarily originates, acquires and manages a diversified portfolio of commercial real estate debt investments secured by properties located within and outside the United States. The Company was incorporated in Maryland on November 15, 2012 and commenced operations on May 14, 2013.

The Company made a tax election to be treated as a real estate investment trust (a "REIT") for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2013. The Company believes that it has qualified as a REIT and intends to continue to meet the requirements for qualification and taxation as a REIT. The Company, through a subsidiary which is treated as a taxable REIT subsidiary (a "TRS") is indirectly subject to U.S federal, state and local income taxes. The majority of the Company's business is conducted through Benefit Street Partners Realty Operating Partnership, L.P. (the “OP”), a Delaware limited partnership. The Company is the sole general partner and directly or indirectly holds all of the units of limited partner interests in the OP.

The Company has no direct employees. Benefit Street Partners L.L.C. serves as the Company's advisor (the "Advisor") pursuant to an Advisory Agreement executed on September 29, 2016 (the “Advisory Agreement”), as amended and restated by the Amended and Restated Advisory Agreement executed on January 19, 2018 (the "Amended and Restated Advisory Agreement"). The Advisor, an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”), is a credit-focused alternative asset management firm. Established in 2008, the Advisor's credit platform manages funds for institutions and high-net-worth investors across various credit funds and complementary strategies including high yield, levered loans, private / opportunistic debt, liquid credit, structured credit and commercial real estate debt. These strategies complement each other as they all leverage the sourcing, analytical, compliance, and operational capabilities that encompass the platform. The Advisor manages the Company's affairs on a day-to-day basis. The Advisor receives compensation and fees for services related to the investment and management of the Company's assets and the operations of the Company. Prior to September 29, 2016, Realty Finance Advisor, LLC ("Former Advisor") was the Company's advisor.

The Company invests in commercial real estate debt investments, which may include first mortgage loans, subordinated mortgage loans, mezzanine loans and participations in such loans. The Company also originates conduit loans which the Company intends to sell through its TRS into commercial mortgage-backed securities ("CMBS") at a profit.

The Company may also invest in commercial real estate securities. Real estate securities may include CMBS, senior unsecured debt of publicly traded REITs, debt or equity securities of other publicly traded real estate companies and collateralized debt obligations ("CDOs").

Note 2 - Summary of Significant Accounting Policies

The accompanying consolidated financial statements and related footnotes are unaudited and have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, the consolidated financial statements may not include all of the information and notes required by GAAP for annual consolidated financial statements. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. In the opinion of management, the interim data includes all adjustments, of a normal and recurring nature, necessary for a fair statement of the results for the periods presented. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the entire year or any subsequent interim periods.

Certain prior-period amounts have been reclassified to conform to current presentation. In the opinion of management, all normal recurring adjustments considered necessary for a fair statement of the results of the periods presented have been included. The current period’s results of operations will not necessarily be indicative of results in any subsequent reporting period.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of, and for the year ended December 31, 2017, which are included in the Company's Annual Report on Form 10-K filed with the SEC on March 16, 2018. There have been no significant changes to the Company's significant accounting policies during the three months and nine months ended September 30, 2018.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members, as well as whether the entity is a variable interest entity ("VIE") for which the Company is the primary beneficiary.

The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company's assets and liabilities are held by the OP.

The Company consolidates all entities that it controls through either majority ownership or voting rights. In addition, the Company consolidates all VIEs of which the Company is considered the primary beneficiary. VIEs are entities in which equity investors (i) do not have the characteristics of a controlling financial interest and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The entity that consolidates a VIE is its primary beneficiary and is generally the entity with (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE.

The accompanying consolidated financial statements include the accounts of collateralized loan obligations ("CLOs") issued and securitized by wholly owned subsidiaries of the Company. The Company has determined the CLOs are VIEs of which the Company's subsidiary is the primary beneficiary. The assets and liabilities of the CLOs are consolidated in the accompanying consolidated balance sheet in accordance with ASC 810, Consolidation.

Acquisition Fees and Acquisition Expenses

Acquisition fees and acquisition expenses paid to the Company's Advisor in connection with the origination and acquisition of commercial mortgage loan investments and acquisition of real estate securities are evaluated based on the nature of the expense to determine if they should be expensed in the period incurred or capitalized and amortized over the life of the investment. The Company capitalizes certain direct costs relating to loan origination and acquisition activities and real estate securities acquisitions. Such costs are amortized over the life of the investment.

Until September 2017; the Company incurred both acquisition fees and acquisition expenses payable to the Advisor. Since September 2017, pursuant to the terms of the Advisory Agreement, the Advisor is no longer entitled to acquisition fees but continues to be entitled to reimbursement for acquisition expenses.

Commercial Mortgage Loans

Held-for-Investment - Commercial mortgage loans that are held for investment are anticipated to be held until maturity and are carried at cost, net of unamortized acquisition expenses, discounts or premiums. Commercial mortgage loans, held for investment purposes, that are deemed to be impaired are carried at amortized cost less a specific allowance for loan losses. Interest income is recorded on the accrual basis and related discounts, premiums and acquisition expenses on investments are amortized over the life of the investment using the effective interest method. Amortization is reflected as an adjustment to interest income in the Company’s consolidated statements of operations. Guaranteed loan exit fees payable by the borrower upon maturity are accreted over the life of the investment using the effective interest method. The accretion of guaranteed loan exit fees is recognized in interest income in the Company's consolidated statements of operations.

Held-for-Sale - Commercial mortgage loans that are intended to be sold in the foreseeable future are reported as held-for-sale and are transferred at fair value and recorded at the lower of cost or fair value with changes recorded through the statements of operations. Unamortized loan origination costs for commercial mortgage loans held-for-sale that are carried at the lower of cost or fair value are capitalized as part of the carrying value of the loans and recognized upon the sale of such loans. Amortization of origination costs ceases upon transfer of commercial mortgage loans to held-for-sale. During the nine months ended September 30, 2018, the Company originated $5.9 million of commercial mortgage loans held-for-sale and sold these loans during the period for net proceeds of approximately $5.9 million.

Held-for-Sale, Accounted for Under the Fair Value Option - The fair value option provides an option to elect fair value as an alternative measurement for selected financial assets, financial liabilities, and written loan commitments. The Company has elected to measure commercial mortgage loans held-for-sale in the Company's TRS under the fair value option. These commercial mortgage loans are included in Commercial mortgage loans, held-for-sale, measured at fair value in the

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

consolidated balance sheet. Interest income received on commercial mortgage loans held-for-sale is recorded on the accrual basis of accounting and is included in interest income in the consolidated statements of operations.

As of September 30, 2018, the fair value amount and the contractual principal outstanding of commercial mortgage loans accounted for under the fair value option was $106.0 million and $105.5 million, respectively. As of December 31, 2017, the fair value amount and the contractual principal outstanding of commercial mortgage loans accounted for under the fair value option was $28.5 million. None of the Company's commercial mortgage loans accounted for under the fair value option are in default or are greater than ninety days past due. For the three and nine months ended September 30, 2018, the Company realized a gain of $3.4 million and $9.8 million, respectively, relating to the sale of commercial mortgage loans that are accounted for under the fair value option. The Company did not have any realized gain or loss relating to the sale of commercial mortgage loans that are accounted for under the fair value option for the three and nine months ended September 30, 2017.

Allowance for Loan Losses

The allowance for loan losses reflects management's estimate of loan losses inherent in the loan portfolio as of the balance sheet date. The reserve is increased or decreased through the loan loss provision or recovery on the Company's consolidated statements of operations and is decreased by charge-offs when losses are confirmed through the receipt of assets, such as cash in a pre-foreclosure sale or upon ownership control of the underlying collateral in full satisfaction of the loan upon foreclosure or when significant collection efforts have ceased. The Company uses a uniform process for determining its allowance for loan losses. The allowance for loan losses includes a general, formula-based component and an asset-specific component.

General reserves are recorded when (i) available information as of each balance sheet date indicates that it is probable a loss has occurred in the portfolio and (ii) the amount of the loss can be reasonably estimated. The Company estimates loss rates based on historical realized losses experienced in the industry, given the fact the Company has not experienced significant losses, and takes into account current collateral and economic conditions affecting the probability and severity of losses when establishing the allowance for loan losses. The Company performs a comprehensive analysis of its loan portfolio and assigns risk ratings to loans that incorporate management's current judgments about their credit quality based on all known and relevant internal and external factors that may affect collectability. The Company considers, among other things, payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographic location as well as national and regional economic factors. This methodology results in loans being segmented by risk classification into risk rating categories that are associated with estimated probabilities of default and principal loss. Ratings range from "1" to "5" with "1" representing the lowest risk of loss and "5" representing the highest risk of loss.

The asset-specific reserve component relates to reserves for losses on individual impaired loans. The Company considers a loan to be impaired when, based upon current information and events, it believes that it is probable that the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. This assessment is made on an individual loan basis each quarter based on such factors as payment status, lien position, borrower financial resources and investment in collateral, collateral type, project economics and geographical location as well as national and regional economic factors. A reserve is established for an impaired loan when the present value of payments expected to be received, observable market prices or the estimated fair value of the collateral (for loans that are dependent on the collateral for repayment) is lower than the carrying value of that loan.

For collateral dependent impaired loans, impairment is measured using the estimated fair value of collateral less the estimated cost to sell. Valuations are performed or obtained at the time a loan is determined to be impaired and designated non-performing, and are updated if circumstances indicate that a significant change in value has occurred. The Advisor generally will use the income approach through internally developed valuation models to estimate the fair value of the collateral for such loans. In more limited cases, the Advisor will obtain external "as is" appraisals for loan collateral.

A loan is also considered impaired if its terms are modified in a troubled debt restructuring ("TDR"). A TDR occurs when a concession is granted and the debtor is experiencing financial difficulties. Impairments on TDR loans are generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loans.

The Company designates non-performing loans at such time as (i) loan payments become 90-days past due; (ii) the loan has a maturity default; or (iii) in the opinion of the Company, it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan. Income recognition will be suspended when a loan is designated non-performing and resumed only when the suspended loan becomes contractually current and performance is demonstrated to have resumed. Any interest received for loans in non-performing status will be applied as a reduction to the unpaid principal balance. A loan will be written off when it is no longer realizable and legally discharged.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

Income Taxes

The Company has conducted its operations to qualify as a REIT for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2013. As a REIT, if the Company meets certain organizational and operational requirements and distributes at least 90% of its "REIT taxable income" (determined before the deduction of dividends paid and excluding net capital gains) to its stockholders in a taxable year, it will not be subject to U.S. federal income tax on the REIT taxable income that it distributes. The Company did not have any undistributed REIT taxable income for the period ended September 30, 2018 and therefore, has not provided for REIT U.S. federal income tax expense. However, even if the Company qualifies for taxation as a REIT, the Company and its subsidiaries may be subject to a variety of taxes, including payroll taxes and certain state and local income, property, excise and franchise taxes. The Company could also be subject to U.S. federal income tax in certain circumstances.

The Company owns a subsidiary that has elected to be treated as a TRS for U.S. federal, state and local income taxes, where applicable, as a C-corporation. TRSs can participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria and are conducted within the parameters of certain limitations established by the Internal Revenue Code ("the Code"). For U.S. federal income tax purposes, the Company’s TRS is not consolidated with the Company, but instead taxed as a separate C-corporation.

For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by the Company with respect to its interest in its TRS. The Company's TRS recognized pre-tax income of approximately $1.4 million and $4.7 million for the three and nine months ended September 30, 2018, respectively, and U.S. federal, state and local income tax expense of $0.3 million and $1.1 million for the three and nine months ended September 30, 2018. These amounts have been included on the accompanying consolidated statements of operations. The Company's TRS did not have any pre-tax income or tax expense for the three and nine months ended September 30, 2017, respectively.

The Company’s tax returns are subject to audit by taxing authorities. As of September 30, 2018, the tax years 2014, 2015, 2016 and 2017 remain open to examination by the major taxing jurisdictions in which the Company is subject to taxes. Under GAAP, a tax benefit related to an income tax position may be recognized when it is more likely than not that the position will be sustained upon examination by the tax authorities based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized upon settlement.

The Company has assessed its tax positions for all open tax years beginning with its taxable year ended December 31, 2014 and concluded that there were no uncertainties to be recognized. The Company’s accounting policy with respect to interest and penalties related to tax uncertainties is to classify these amounts as provision for income taxes.

Enacted on December 22, 2017, the recently passed Tax Cuts and Jobs Act ("TCJA") made many significant changes to the U.S. federal income tax laws applicable to businesses and their owners, including REITs and their stockholders, and may lessen the relative competitive advantage of operating as a REIT rather than as a C corporation. Pursuant to this legislation, as of January 1, 2018, the U.S. federal income tax rate applicable to corporations is reduced to 21%, and the corporate alternative minimum tax is repealed.

In addition, through taxable years ending in 2025, the highest marginal income tax rate applicable to individuals, estates and trusts is reduced to 37% and those taxpayers may deduct up to 20% of certain pass-through income, including ordinary REIT dividends that are not "capital gain dividends" or "qualified dividend income," subject to certain limitations. For taxpayers qualifying for the full deduction, the effective maximum tax rate on ordinary REIT dividends would be 29.6% (excluding the 3.8% net investment income tax).

The reduced corporate tax rate applies to the Company's TRS and any other TRS it forms. Changes in tax rates and tax laws are accounted for in the period of enactment. The amounts recorded in the consolidated statement of operations are provisional. Due to the timing of the enacted legislation, as well as the technical corrections, amendments or administrative guidance that could clarify the treatment of certain provisions, the Company will continue to evaluate its conclusions and update its estimates as necessary.

Commencing in taxable years beginning after December 31, 2017, Section 163(j) of the Code, as amended by TCJA, limits the deductibility of net interest expense paid or accrued on debt properly allocable to a trade or business to 30% of “adjusted taxable income,” ("ATI") subject to certain exceptions. The Company does not expect to be subject to this limitation because it does not expect to have interest expense in excess of the sum of its interest income and 30% of its ATI. However, the limitation could cause the Company’s TRS or any other TRS it forms to have greater taxable income and thus potentially greater corporate tax liability.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

Derivatives and Hedging Activities

In the normal course of business, the Company is exposed to the effect of interest rate changes and may undertake a strategy to limit these risks through the use of derivatives. The Company uses derivatives primarily to economically hedge against interest rates, CMBS spreads and macro market risk in order to minimize volatility. The Company may use a variety of derivative instruments that are considered conventional, such as interest rate swaps, Treasury note futures and credit derivatives on various indices including CMBX and CDX.

The Company recognizes all derivatives on the consolidated balance sheets at fair value. The Company does not designate derivatives as hedges to qualify for hedge accounting for financial reporting purposes and therefore any net payments under, or fluctuations in the fair value of these derivatives have been recognized currently in unrealized gain/(loss) on derivative instruments in the accompanying consolidated statements of operations. The Company records derivative asset and liability positions on a gross basis with any collateral posted with or received from counterparties recorded separately on the Company’s consolidated balance sheets within the Restricted cash line of the consolidated balance sheets. Certain derivatives that the Company has entered into are subject to master netting agreements with its counterparties, allowing for netting of the same transaction, in the same currency, on the same date.

Per Share Data

The Company’s redeemable convertible preferred stock Series A (the "Preferred Stock") is considered a participating security. As such, the Company is required to include the Preferred Stock in the calculation of basic earnings per share and calculate basic earnings per share using the two-class method. The Company’s dilutive earnings per share calculation is computed using the more dilutive result of the treasury stock method, assuming the participating security is a potential common share, or the two-class method, assuming the participating security is not converted. The Company calculates basic earnings per share by dividing net income applicable to common stock for the period by the weighted-average number of shares of common stock outstanding for that period. Diluted earnings per share reflects the potential dilution that could occur from shares outstanding if potential shares of common stock with a dilutive effect have been issued in connection with the restricted stock plan or upon conversion of the outstanding shares of the Company’s Preferred Stock, except when doing so would be anti-dilutive.

Reportable Segments

The Company has determined that it has three reportable segments based on how the chief operating decision maker reviews and manages the business. The three reporting segments are as follows:


•	The real estate debt business which is focused on originating, acquiring and asset managing commercial real estate debt investments, including first mortgage loans, subordinate mortgages, mezzanine loans and participations in such loans.


•	The real estate securities business which is focused on investing in and asset managing commercial real estate securities primarily consist of CMBS and may include unsecured REIT debt, CDO notes and other securities.


•	The real estate conduit operated business through the Company's TRS, which is focused on originating and subsequently selling fixed-rate commercial real estate loans into the CMBS securitization market at a profit.

See Note 13 - Segment Reporting for further information regarding the Company's segments.

Redeemable Convertible Preferred Stock

The Company’s Preferred Stock is classified outside of permanent equity in the consolidated balance sheets. This classification is applicable because, subject to certain conditions, the Preferred Stock is redeemable at the option of the holder of Preferred Stock, outside of the control of the Company. As set forth in the Articles Supplementary (the “Articles Supplementary”) to the Company’s Articles of Amendment and Restatement, the Preferred Stock is redeemable for shares of the Company's common stock, $0.01 par value per share (the "Common Stock") at the option of the shareholder upon a change of control (as defined in the Articles Supplementary) or after the sixth anniversary of the date of issuance. A change in control of the Company outside of the Company’s control is possible if any person acquires more than 50% of the total economic interests or voting power of all securities of the Company, other than in a liquidity event.

Shares of Preferred Stock rank senior to shares of Common Stock with respect to rights to receive dividends and to participate in distributions or payments upon any voluntary or involuntary liquidation, dissolution or winding up of the Company. Dividends payable on each share of Preferred Stock will be equal to the greater of (i) an amount equal to $16.67 per share and (ii) the monthly dividend that would have been paid had such share of Preferred Stock been converted to a share of Common Stock, subject to proration in the event that such share of Preferred Stock was not outstanding for the full month.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

Immediately prior to a “Liquidity Event”, each outstanding share of Preferred Stock shall convert (the “Mandatory Conversion”) into 299.2 shares of Common Stock, subject to anti-dilution adjustments (the “Conversion Rate”). A “Liquidity Event” is defined as (i) the listing of the Common Stock on a national securities exchange or quotation on an electronic inter-dealer quotation system; (ii) a merger or business combination involving the Company pursuant to which outstanding shares Common Stock are exchanged for securities of another company which are listed on a national securities exchange or quoted on an electronic inter-dealer quotation system; or (iii) any other transaction or series of transaction that results in all shares of Common Stock being transferred or exchange for cash or securities which are listed on a national securities exchange or quoted on an electronic inter-dealer quotation system. If there has not been a Liquidity Event within six years from the initial issuance of the Preferred Stock, each holder of Preferred Stock shall have the right to convert all, but not less than all, of the Preferred Stock held by such holder into Common Stock at the Conversion Rate. Each holder also has the option to convert its shares of Preferred Stock into Common Stock upon a change in control (as defined in the Articles Supplementary) of the Company. In addition, neither the Company nor a holder of shares of Preferred Stock may redeem shares of the Preferred Stock until six years from the initial issuance of the Preferred Stock, except in cases of a change in control (as defined in the Articles Supplementary).

Holders of the Preferred Stock are entitled to vote on each matter submitted to a vote of the stockholders of the Company upon which the holders of Common Stock are entitled to vote, upon which the holders of the Preferred Stock and holders of the Common Stock shall vote together as a single class. The number of votes applicable to a share of Preferred Stock will be equal to the number of shares of Common Stock a share of Preferred Stock could have been converted into as of the record date set for purposes of such stockholder vote (rounded down to the nearest whole number of shares of Common Stock). In addition, the affirmative vote of the holders of two-thirds of the outstanding shares of Preferred Stock is required to approve the issuance of any equity securities senior to the Preferred Stock and to take certain actions materially adverse to the holders of the Preferred Stock.

Recently Adopted Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” or ASU 2014-09. ASU 2014-09 broadly amends the accounting guidance for revenue recognition. ASU 2014-09 is effective for the first interim or annual period beginning after December 15, 2017, and is to be applied retrospectively. The Company adopted this guidance on January 1, 2018 and it did not have a material impact on our consolidated financial statements.

In August 2016, the FASB issued guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The Company adopted this guidance on January 1, 2018. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

In November 2016, the FASB issued guidance on the classification of restricted cash in the statement of cash flows. The amendment requires restricted cash to be included in the beginning-of-period and end-of-period total cash amounts. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows. The Company adopted this guidance on January 1, 2018 and applied the guidance retrospectively to our prior period consolidated statement of cash flows.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued guidance that changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. The amendments may be adopted early for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new guidance.

In February 2018, the FASB issued guidance that allows an entity to elect to reclassify the stranded tax effects related to the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income into retained earnings. The amendments become effective for reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of this new guidance.

In August 2018, the FASB issued guidance that is part of the FASB’s disclosure framework project, whose objective and primary focus are to improve the effectiveness of disclosures in the notes to financial statements. The ASU eliminates, amends

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

and adds certain disclosure requirements for fair value measurements. The amendments become effective for reporting periods beginning after December 15, 2019, and early adoption is permitted for adoption of the entire standard or only the provisions that eliminate or modify the requirements. The Company is currently evaluating the impact of this new guidance.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

Note 3 - Commercial Mortgage Loans

The following table is a summary of the Company's commercial mortgage loans, held-for-investment, carrying values by class (dollars in thousands):



	September 30, 2018		December 31, 2017
Senior loans	$	2,113,557	$	1,368,425
Mezzanine loans	27,145		35,087
Total gross carrying value of loans	$	2,140,702	$	1,403,512
Less: Allowance for loan losses	4,968		1,466
Total commercial mortgage loans, held for investment, net	$	2,135,734	$	1,402,046

The following table presents the activity in the Company's allowance for loan losses (dollars in thousands):



	Nine Months Ended September 30, 2018		Year Ended December 31, 2017
Beginning of period	$	1,466	$	2,181
Loan loss provision/(recovery) ⁽¹⁾	3,502		(715		)
Charge-offs	—		—
Recoveries	—		—
Ending allowance for loan losses	$	4,968	$	1,466

⁽¹⁾Includes $4.1 million loan loss provision specifically reserved on one loan in non-performing status as of September 30, 2018.

As of September 30, 2018 and December 31, 2017, the Company's total commercial mortgage loan portfolio, excluding commercial mortgage loans accounted for under the fair value option, was comprised of 100 and 69 loans, respectively.

The following table represents the composition by loan type of the Company's commercial mortgage loans portfolio, excluding commercial mortgage loans, held-for-sale, measured at fair value (dollars in thousands).



	September 30, 2018				December 31, 2017
Loan Type	Par Value		Percentage		Par Value		Percentage
Multifamily	$	875,134	40.7	%	$	505,189	35.9	%
Office	481,086		22.4	%	455,698		32.4	%
Retail	255,856		11.9	%	209,598		14.9	%
Hospitality	336,064		15.6	%	184,025		13.1	%
Industrial	53,871		2.5	%	53,208		3.7	%
Mixed-Use	112,105		5.2	%	—		—	%
Self-Storage	36,057		1.7	%	—		—	%
Total	$	2,150,173	100.0	%	$	1,407,718	100.0	%

As of September 30, 2018 and December 31, 2017, the Company's total commercial mortgage loans, held-for-sale, measured at fair value comprised of 12 and 3 loans, respectively.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

The following table represents the composition by loan type of the Company's commercial mortgage loans, held-for-sale, measured at fair value (dollars in thousands).



	September 30, 2018				December 31, 2017
Loan Type	Par Value		Percentage		Par Value		Percentage
Multifamily	$	27,700	26.3	%	$	28,531	100.0	%
Retail	42,030		39.8	%	—		—	%
Hospitality	23,273		22.1	%	—		—	%
Self-Storage	12,500		11.8	%	—		—	%
Total	$	105,503	100.0	%	$	28,531	100.0	%

Credit Characteristics

As part of the Company's process for monitoring the credit quality of its commercial mortgage loans, excluding those held-for-sale, measured at fair value, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its loans. The loans are scored on a scale of 1 to 5 as follows:



Investment Rating		Summary Description
1		Investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since time of investment are favorable.
2		Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable.
3		Performing investments requiring closer monitoring. Trends and risk factors show some deterioration.
4		Underperforming investment with the potential of some interest loss but still expecting a positive return on investment. Trends and risk factors are negative.
5		Underperforming investment with expected loss of interest and some principal.

All commercial mortgage loans, excluding loans classified as commercial mortgage loans, held-for-sale, measured at fair value within the consolidated balance sheet, are assigned an initial risk rating of 2.0. As of September 30, 2018 and December 31, 2017, the weighted average risk rating of loans was 2.1 and 2.2, respectively. As of September 30, 2018 the Company had one loan with an unpaid principal balance of $16.8 million and fair value of $12.1 million in non-performing status. The Company applied six months of interest received of $0.6 million on this loan as a reduction to the unpaid principal balance. During the three and nine months ended September 30, 2018, the Company recorded $1.3 million and $4.1 million respectively, of asset-specific reserve included in loan loss provision/(recovery) on the consolidated statement of operations. As of December 31, 2017, the Company did not have any loans that were past due on their payments, in non-performing status or impaired.

For the nine months ended September 30, 2018 and year ended December 31, 2017, the activity in the Company's commercial mortgage loans, held-for-investment portfolio was as follows (dollars in thousands):



	Nine Months Ended September 30, 2018			Year Ended December 31, 2017
Balance at Beginning of Year	$	1,402,046		$	1,046,556
Acquisitions and originations	1,286,948			837,861
Principal repayments	(542,833		)	(381,933		)
Discount accretion and premium amortization	3,284			2,554
Loans transferred to commercial real estate loans, held-for-sale	(2,250		)	(100,005		)
Net fees capitalized into carrying value of loans	(7,959		)	(3,702		)
Loan loss recovery/(provision)	(3,502		)	715
Balance at End of Period	$	2,135,734		$	1,402,046

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

Note 4 - Real Estate Securities

The following is a summary of the Company's real estate securities, CMBS (in thousands):



		Weighted Average
	Number of Investments	Interest Rate		Maturity	Par Value		Fair Value
September 30, 2018	2	4.7	%	December 2023	$	26,750	$	27,048
December 31, 2017	—	—	%	N/A	—		—

The Company classified its CMBS as available-for-sale as of September 30, 2018. The investment is reported at fair value in the consolidated balance sheet with changes in fair value recorded in Accumulated other comprehensive income or loss.

During the quarter ended September 30, 2018, the Company purchased and subsequently sold $15.8 million par amount of CMBS, and recognized a loss of $0.1 million.

The following table shows the amortized cost, unrealized gains/losses and fair value of the Company's CMBS investments as of September 30, 2018 and December 31, 2017 (in thousands):



	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
September 30, 2018	$	26,877	$	171	$	—	$	27,048
December 31, 2017	—		—		—		—

As of September 30, 2018, the Company held two CMBS positions with an aggregate carrying value of $26.9 million, and a net unrealized gain of $0.2 million. As of December 31, 2017, the Company held no CMBS positions.

The following table provides information on the amounts of gains (losses) on the Company's real estate securities, CMBS, available-for-sale (dollars in thousands):



	Three Months Ended September 30,					Nine months ended September 30,
	2018		2017			2018		2017
Unrealized gain (loss) available-for-sale securities	$	194	$	(448	)	$	171	$	19
Reclassification of net (gain) loss on available-for-sale securities included in net income (loss)	—		—			—		481
Unrealized gain (loss) available-for-sale securities, net of reclassification adjustment	$	194	$	(448	)	$	171	$	500

The amounts reclassified for net (gain) loss on available-for-sale securities are included in the realized (gain) loss on sale of real estate securities in the Company's consolidated statements of operations.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

Note 5 - Debt

Repurchase Agreements - Commercial Mortgage Loans

The Company entered into repurchase facilities with JPMorgan Chase Bank, National Association (the "JPM Repo Facility"), Goldman Sachs Bank USA (the "GS Repo Facility"), U.S Bank National Association (the "USB Repo Facility"), and Credit Suisse AG (the "CS Repo Facility" ) and together with JPM Repo Facility, GS Repo Facility, USB Repo Facility (the "Repo Facilities").

Advances under the JPM Repo Facility currently accrue interest at per annum rates generally equal to the sum of (i) the applicable LIBOR index rate plus (ii) a margin of 2.40%. Borrowings under the GS Repo Facility accrue interest at per annum rates generally equal to the sum of (i) a spread over LIBOR of between 2.35% to 2.85%, depending on the attributes of the purchased asset, and (ii) 0.50%. Borrowings under the USB Repo Facility accrue interest at per annum rates generally equal to the sum of (i) the applicable LIBOR index rate plus (ii) a margin between 2.25% to 3.00%, depending on the attributes of the purchased assets. Borrowings under the CS Repo Facility accrue interest at per annum rates generally equal to the sum of (i) the applicable LIBOR index rate plus (ii) a margin of 2.50% depending on the attributes of the purchased assets.

The Company entered into a repurchase facility with Barclays Bank PLC (the "Barclays Facility") on September 19, 2017. Borrowings under the Barclays Facility accrue interest, at the Company's option, at per annum rates equal to (i) a spread over the Base Rate of 1.75% or (ii) a spread over the Eurodollar Rate of 2.75%, and provides for quarterly interest-only payments, with all principal and interest outstanding being due on the maturity date.

The details of the Company's Repo Facilities and the Barclays Facility at September 30, 2018 and December 31, 2017 are as follows (dollars in thousands):



As of September 30, 2018							Ending Weighted Average Interest Rate		Term Maturity
Repurchase Facility	Committed Financing		Amount Outstanding		Interest Expense ⁽¹⁾		Ending Weighted Average Interest Rate		Term Maturity
JPM Repo Facility ⁽²⁾	$	520,000	$	241,282	$	6,601	4.32	%	1/30/2020
GS Repo Facility ⁽³⁾	250,000		—		415		N/A		12/27/2018
USB Repo Facility ⁽⁴⁾	100,000		14,651		502		3.91	%	6/15/2020
CS Repo Facility ⁽⁵⁾	300,000		309,396		5,301		4.37	%	6/19/2019
Barclays Facility ⁽⁶⁾	100,000		—		1,145		N/A		9/19/2019
Total	$	1,270,000	$	565,329	$	13,964

__________________________

⁽¹⁾ For the nine months ended September 30, 2018. Includes amortization of deferred financing costs.

⁽²⁾On January 30, 2018 the committed financing amount was upsized from $300 million to $520 million and the maturity date was amended to January 30, 2020. Includes a one-year extension at the Company's option.

⁽³⁾ Includes a one-year extension at the Company’s option, which may be exercised upon the satisfaction of certain conditions.

⁽⁴⁾ Includes two one-year extensions at the option of an indirect wholly-owned subsidiary of the Company, which may be exercised upon the satisfaction of certain conditions.

⁽⁵⁾ On July 19, 2018, the committed financing amount was upsized from $250 million to $300 million. On June 20, 2018, the Company exercised the extension option upon the satisfaction of certain conditions, and extended the term maturity to June 19, 2019. In September 2018, the CS Repo Facility lender agreed to a temporary increase to the committed financing amount on one specific pledged asset.

⁽⁶⁾ On July 30, 2018, the committed financing amount was upsized from $75 million to $100 million. Includes a one-year extension at the Company's option.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)



As of December 31, 2017							Ending Weighted Average Interest Rate		Term Maturity
Repurchase Facility	Committed Financing		Amount Outstanding		Interest Expense ⁽¹⁾		Ending Weighted Average Interest Rate		Term Maturity
JPM Repo Facility ⁽²⁾	$	300,000	$	42,042	$	7,064	3.48	%	6/12/2019
GS Repo Facility ⁽³⁾	250,000		13,500		3,213		3.74	%	12/27/2018
CS Repo Facility ⁽⁵⁾	250,000		10,148		58		N/A		8/30/2018
USB Repo Facility ⁽⁴⁾	100,000		—		163		N/A		6/15/2020
Barclays Facility ⁽⁶⁾	75,000		—		14		N/A		9/19/2019
Total	$	975,000	$	65,690	$	10,512

_______________________

⁽¹⁾ For the nine months ended September 30, 2017. Includes amortization of deferred financing costs.

⁽²⁾ Includes a one-year extension at the Company's option.

⁽³⁾ Includes a one-year extension at the Company’s option, which may be exercised upon the satisfaction of certain conditions.

⁽⁴⁾ Includes two one-year extensions at the option of an indirect wholly-owned subsidiary of the Company, which may be exercised upon the satisfaction of certain conditions.

⁽⁵⁾Prior to the end of each calendar quarter, the Company may request an extension of the termination date for an additional 364 days from the end of such calendar quarter subject to the satisfaction of certain conditions and approvals.

⁽⁶⁾Includes a one-year extension at the Company's option.

We expect to use the advances from the Repo Facilities and the Barclays Facility to finance the acquisition or origination of eligible loans, including first mortgage loans, subordinated mortgage loans, mezzanine loans and participation interests therein.

The Repo Facilities generally provide that in the event of a decrease in the value of the Company's collateral, the lenders can demand additional collateral. Should the value of the Company’s collateral decrease as a result of deteriorating credit quality, resulting margin calls may cause an adverse change in the Company’s liquidity position. As of September 30, 2018 and December 31, 2017, the Company is in compliance with all debt covenants.

Other financing - Commercial Mortgage Loans

The Company entered into a financing arrangement with Pacific Western Bank for term financing (“PWB Financing”) on May 17, 2017. The PWB Financing provided the Company with $36.2 million and is collateralized by a portfolio asset of $54.2 million. The PWB Financing accrued interest at per annum rates equal to the sum of (i) the applicable LIBOR index rate plus (ii) a margin of 4.0%. The PWB Financing had a maturity date of June 9, 2019. The Company paid off the outstanding balance in June 2018. As of December 31, 2017, the Company had $26.2 million of outstanding principal under the PWB Financing. The Company incurred $1.2 million of interest expense on the PWB Financing for the nine months ended September 30, 2018, including amortization of deferred financing costs.

Repurchase Agreements - Real Estate Securities

The Company has entered into various Master Repurchase Agreements (the "MRAs") that allow the Company to sell real estate securities while providing a fixed repurchase price for the same real estate securities in the future. The repurchase contracts on each security under an MRA generally mature in 30-90 days and terms are adjusted for current market rates as necessary.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

Below is a summary of the Company's MRAs as of September 30, 2018 and December 31, 2017 (dollars in thousands):



							Weighted Average
Counterparty	Amount Outstanding		Accrued Interest		Collateral Pledged		Interest Rate		Days to Maturity
As of September 30, 2018
JP Morgan Securities LLC	$	22,272	$	5	$	26,750	2.91	%	26
Total	$	22,272	$	5	$	26,750	2.91	%	26

							Weighted Average
	Amount Outstanding		Accrued Interest		Collateral Pledged ^(*)		Interest Rate		Days to Maturity
As of December 31, 2017
JP Morgan Securities LLC	$	39,035	$	11	$	56,044	3.32	%	26
Total	$	39,035	$	11	$	56,044	3.32	%	26

_______________________

* Includes $56.0 million Tranche C of RFT 2015-FL1 CLO held by the Company, which is eliminated within the Real estate securities, at fair value line of the consolidated balance sheets as of December 31, 2017.

Collateralized Loan Obligations

On February 15, 2018, the Company called all of the outstanding notes issued by RFT 2015-FL1,a wholly owned indirect subsidiary of the Company. The outstanding principal of the notes on the date of the call was $145 million. The Company recognized all the remaining unamortized deferred financing costs of $6.4 million recorded within the Interest expense line of the consolidated statements of operations, which was a non-cash charge.

As of September 30, 2018 and December 31, 2017 the notes issued by BSPRT 2017-FL1 Issuer, a wholly owned indirect subsidiary of the Company, are collateralized by interests in a pool of 20 mortgage assets having a total principal balance of $319.0 million (the “2017-FL1 Mortgage Assets”) originated by a subsidiary of the Company. The sale of the 2017-FL1 Mortgage Assets to BSPRT 2017-FL1 Issuer is governed by a Mortgage Asset Purchase Agreement dated as of June 29, 2017, between the Company and BSPRT 2017-FL1 Issuer.

As of September 30, 2018 and December 31, 2017 the notes issued by BSPRT 2017-FL2 Issuer, a wholly owned indirect subsidiary of the Company, are collateralized by interests in a pool of 17 mortgage assets having a total principal balance of $341.9 million (the “2017-FL2 Mortgage Assets”) originated by a subsidiary of the Company and $8.2 million of cash held by the servicer related to loan payoffs, . The sale of the 2017-FL2 Mortgage Assets to BSPRT 2017-FL2 Issuer is governed by a Mortgage Asset Purchase Agreement dated as of November 29, 2017, between the Company and BSPRT 2017-FL2 Issuer.

On April 5, 2018, BSPRT 2018-FL3 Issuer, Ltd. (the “Issuer”) and BSPRT 2018-FL3 Co-Issuer, LLC (the “Co-Issuer”), both wholly owned indirect subsidiaries of the Company, collateralized by interests in a pool of 39 mortgage assets having a principal balance of $582.8 million (the "2018-FL3 Mortgage Assets") and $27.3 million of of cash held by the servicer related to loan payoffs, entered into an indenture with the OP, as advancing agent, U.S. Bank National Association as note administrator and U.S. Bank National Association as trustee, which governs the issuance of approximately $546 million principal balance secured floating rate notes (the “Notes”), of which $488 million were purchased by third party investors and $58 million purchased by a wholly owned subsidiary of the OP. In addition, concurrently with the issuance of the Notes, the Issuer also issued 64,050,000 Preferred Shares, par value of $0.001 per share and with an aggregate liquidation preference and notional amount equal to $1,000 per share (the “Preferred Shares”), which were not offered as part of closing the indenture. For U.S. federal income tax purposes, the Issuer and Co-Issuer are disregarded entities.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

The Company, through its wholly-owned subsidiaries, holds the preferred equity tranches of BSPRT 2017-FL1, BSPRT 2017-FL2 and BSPRT 2018-FL3 of approximately $191 million. The following table represents the terms of the notes issued by BSPRT 2017-FL1 Issuer, BSPRT 2017-FL2 Issuer and BSPRT 2018-FL3, respectively (dollars in thousands):

CLO Facility

As of September 30, 2018

Par Value Issued

Par Value Outstanding ⁽¹⁾⁽²⁾

Interest Rate

Maturity Date

2017-FL1 Issuer

Tranche A

223,600

124,489

1M LIBOR + 135

7/1/2027

2017-FL1 Issuer

Tranche B

48,000

1M LIBOR + 240

7/1/2027

2017-FL1 Issuer

Tranche C

67,900

1M LIBOR + 425

7/1/2027

2017-FL2 Issuer

Tranche A

237,970

147,376

1M LIBOR + 82

10/15/2034

2017-FL2 Issuer

Tranche A-S

36,357

1M LIBOR + 110

10/15/2034

2017-FL2 Issuer

Tranche B

26,441

1M LIBOR + 140

10/15/2034

2017-FL2 Issuer

Tranche C

25,339

1M LIBOR + 215

10/15/2034

2017-FL2 Issuer

Tranche D

35,255

1M LIBOR + 345

10/15/2034

2018-FL3 Issuer

Tranche A

286,700

1M LIBOR + 105

3/15/2028

2018-FL3 Issuer

Tranche A-S

77,775

1M LIBOR + 135

3/15/2028

2018-FL3 Issuer

Tranche B

41,175

1M LIBOR + 165

3/15/2028

2018-FL3 Issuer

Tranche C

39,650

1M LIBOR + 255

3/15/2028

2018-FL3 Issuer

Tranche D

42,700

1M LIBOR + 345

3/15/2028

1,188,862

999,157

CLO Facility

As of December 31, 2017

Par Value Issued

Par Value Outstanding ⁽¹⁾⁽³⁾

Interest Rate

Maturity Date

2015-FL1 Issuer

Tranche A

231,345

79,109

1M LIBOR + 175

8/1/2030

2015-FL1 Issuer

Tranche B

42,841

1M LIBOR + 388

8/1/2030

2015-FL1 Issuer

Tranche C

76,044

20,000

1M LIBOR + 525

8/1/2030

2017-FL1 Issuer

Tranche A

223,600

1M LIBOR + 135

7/1/2027

2017-FL1 Issuer

Tranche B

48,000

1M LIBOR + 240

7/1/2027

2017-FL1 Issuer

Tranche C

67,900

1M LIBOR + 425

7/1/2027

2017-FL2 Issuer

Tranche A

237,970

1M LIBOR + 82

10/15/2034

2017-FL2 Issuer

Tranche A-S

36,357

1M LIBOR + 110

10/15/2034

2017-FL2 Issuer

Tranche B

26,441

1M LIBOR + 140

10/15/2034

2017-FL2 Issuer

Tranche C

25,339

1M LIBOR + 215

10/15/2034

2017-FL2 Issuer

Tranche D

35,255

1M LIBOR + 345

10/15/2034

1,051,092

842,812

________________________

⁽¹⁾ Excludes $16.0 million of Tranche E notes and $14.9 million of Tranche F notes issued by BSPRT 2017-FL2 Issuer, held by the Company, which are eliminated within the collateralized loan obligation line of the consolidated balance sheets as of September 30, 2018 and December 31, 2017.

⁽²⁾ Excludes $36.6 million of Tranche E notes and $21.4 million of Tranche F notes issued by BSPRT 2018-FL3 Issuer, held by the Company, which are eliminated within the collateralized loan obligation line of the consolidated balance sheets as of September 30, 2018.

⁽³⁾ Excludes $56.0 million of Tranche C notes issued by RFT 2015-FL1 Issuer, held by the Company, which is eliminated within the collateralized loan obligation line of the consolidated balance sheets as of December 31, 2017.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

The below table reflects the total assets and liabilities of the Company's three CLOs. The CLOs are considered VIEs and are consolidated into the Company's consolidated financial statements as of September 30, 2018 and December 31, 2017 as the Company is the primary beneficiary of the VIE. The Company is the primary beneficiary of the CLOs because (i) the Company has the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the right to receive benefits from the VIEs or the obligation to absorb losses of the VIEs that could be significant to the VIE.



Assets (dollars in thousands)	September 30, 2018		December 31, 2017
Cash ⁽¹⁾	$	35,768	$	49,017
Commercial mortgage loans, held for investment, net of allowance ⁽²⁾	1,239,811		1,033,427
Accrued interest receivable	3,768		4,212
Total assets	$	1,279,347	$	1,086,656

Liabilities
Notes payable ⁽³⁾⁽⁴⁾	$	1,072,344	$	912,800
Interest payable	1,765		1,462
Total liabilities	$	1,074,109	$	914,262

________________________

⁽¹⁾ Includes $35.5 million and $48.7 million of cash held by the servicer related to CLO loan payoffs as of September 30, 2018 and December 31, 2017.

⁽²⁾ The balance is presented net of allowance for loan loss of $0.6 million and $1.3 million as of September 30, 2018 and December 31, 2017, respectively.

⁽³⁾ Includes $16.0 million of Tranche E notes and $14.9 million of Tranche F notes issued by 2017-FL2 Issuer held by the Company as of September 30, 2018 and December 31, 2017; $36.6 million of Tranche E notes and $21.4 million of Tranche F notes issued by 2018-FL3 Issuer held by the Company as of September 30, 2018. The notes held by the Company are eliminated within the Collateral loan obligations line of the consolidated balance sheets. Includes $55.8 million of Tranche C of Company issued CLO held by the Company as of December 31, 2017.

⁽⁴⁾ The balance is presented net of deferred financing cost and discount of $15.6 million and $16.9 million as of September 30, 2018 and December 31, 2017, respectively.

Note 6 - Net Income Per Share

The Company uses the two-class method in calculating basic and diluted EPS. The below table represents the Company's earnings per share and distribution per share for the three and nine months ended September 30, 2018 and 2017 (dollars in

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

thousands, except share amounts):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
Net income	$	19,000		$	6,975	$	36,398		$	19,305
Less: Preferred stock dividends	(1,255		)	—		(1,271		)	—
Less: Preferred stock undistributed income	(451		)	—		—			—
Net income applicable to common stock	$	17,294		$	6,975	$	35,127		$	19,305
Basic weighted-average shares outstanding	35,468,648			31,741,679		32,977,572			31,778,169
Basic net income per share	0.49			0.22		1.07			0.61

Net income	$	19,000		$	6,975	$	36,398		$	19,305
Basic weighted-average shares outstanding	35,468,648			31,741,679		32,977,572			31,778,169
Unvested restricted shares	14,209			14,824		10,007			12,098
Conversion of redeemable convertible preferred stock - weighted	3,459,571			—		1,180,695			—
Diluted weighted average shares outstanding	38,942,428			31,756,503		34,168,274			31,790,267
Diluted net income per share	0.49			0.22		1.07			0.61

Note 7 - Stock Transactions

As of September 30, 2018 and December 31, 2017, the Company had 37,477,393 and 31,834,072 shares of common stock outstanding, respectively, including shares issued pursuant to the Dividend Reinvestment Plan ("DRIP") and unvested restricted shares held by the Company’s independent directors.

Private Placements

Since February 2018 the Company has been conducting offerings of its common stock and Series A preferred stock in offerings exempt from the registration requirements of the Securities Act. The following table summarizes the sales of common stock in these offerings (dollars in thousands, except share amounts):



As of September 30, 2018	Total
Closing Date	Shares Issued	Purchase Price
June 25, 2018	834,537	$	13,723
July 13, 2018	1,669,074	27,446
August 20, 2018	3,370,362	55,421
September 10, 2018	14,962	250
Total	5,888,935	$	96,840

The following table summarizes the sales of Series A preferred stock in these offerings (dollars in thousands, except share amounts):



As of September 30, 2018	Total
Closing Date	Shares Issued	Purchase Price⁽¹⁾
June 25, 2018	2,256	$	11,278
July 13, 2018	4,498	22,554
August 20, 2018	9,083	45,619
August 28, 2018	3,378	17,000
Total	19,215	$	96,451

________________________

⁽¹⁾ Purchase price is $5,000 per share of Series A preferred stock plus accrued dividends as of the date of settlement.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

As of September 30, 2018, the Company had binding purchase commitments for $20 million of common stock at $16.71 per share and $15.1 million of Series A preferred stock at $5,000 per share plus accrued dividends. Pursuant to the applicable subscription agreements, the Company can determine the timing of the closing of these commitments in its sole discretion.

Distributions

In order to maintain its election to qualify as a REIT, the Company must currently distribute, at a minimum, an amount equal to 90% of its taxable income, without regard to the deduction for distributions paid and excluding net capital gains. The Company must distribute 100% of its taxable income (including net capital gains) to avoid paying corporate U.S. federal income taxes. The Company's distributions are payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The Company's board of directors may reduce the amount of distributions paid or suspend distribution payments at any time, and therefore, distributions payments are not assured.

For the three months ended September 30, 2018 and 2017, the Company declared daily common stock distributions equivalent to $1.44 per annum per share and $2.0625 per annum per share, respectively. As of September 30, 2018 and December 31, 2017, the Company had declared but unpaid common stock distributions of $5.1 million and $3.9 million, respectively. These amounts are included in Distributions payable on the Company’s unaudited Consolidated Balance Sheets. The Company distributed $35.0 million during the nine months ended September 30, 2018, comprised of $24.4 million in cash and $10.6 million in shares of common stock issued under the DRIP. The Company distributed $32.6 million during the nine months ended September 30, 2017, comprised of $21.2 million in cash and $11.4 million in shares of common stock issued under the DRIP.

The Company maintains a DRIP which permits shareholders to reinvest their distributions in stock of the Company. The purchase price of DRIP investments is currently the lesser of (i) the Company’s most recent estimated per-share NAV, as approved by the Company’s board of directors from time to time, and (ii) the Company’s most recent book value per share, computed in accordance with GAAP. The DRIP price for September 2018 through October 2018 was $18.95, which was the GAAP book value as of June 30, 2018. Starting with November 2018 distributions reinvested in December 2018, the DRIP offer price will be $18.75, which is the estimated per-share NAV as of September 30, 2018.

Share Repurchase Program

The Company's board of directors unanimously approved an amended and restated share repurchase program (the “SRP”), which became effective on February 28, 2016. The SRP enables stockholders to sell their shares to the Company. Subject to certain conditions, stockholders that purchased shares of the Company's common stock or received their shares from the Company (directly or indirectly) through one or more non-cash transactions and have held their shares for a period of at least one year, may request that the Company repurchase their shares of common stock so long as the repurchase otherwise complies with the provisions of Maryland law. Repurchase requests made following the death or qualifying disability of a stockholder will not be subject to any minimum holding period.

On August 10, 2017, the Company's board of directors amended the SRP to provide that the repurchase price per share for requests will be equal to (a) the lesser of (i) the Company’s most recent estimated per-share NAV, as approved by the Company’s board of directors from time to time, and (ii) the Company’s most recent book value per share, computed in accordance with GAAP, multiplied by (b) a percentage equal to (i) 92.5%, if the person seeking repurchase has held his or her shares for a period greater than one year and less than two years; (ii) 95%, if the person seeking repurchase has held his or her shares for a period greater than two years and less than three years; (iii) 97.5%, if the person seeking repurchase has held his or her shares for a period greater than three years and less than four years; or (iv) 100%, if the person seeking repurchase has held his or her shares for a period greater than four years or in the case of requests for death or qualifying disability.

Repurchase requests related to death or a qualifying disability must satisfy certain conditions, each of which are assessed by and at the sole discretion of the Company, including the following conditions. In the case of death, the shareholder must be a natural person (or a revocable grantor trust) and the Company must receive a written notice from the estate of the shareholder, the recipient of the shares through bequest or inheritance, or the trustee in the case of a revocable grantor trust. In the case of a “qualifying disability”, the shareholder must be a natural person (or a revocable grantor trust) and the Company must receive a written notice from the shareholder, or the trustee in the case of a revocable grantor trust, that the condition was not pre-existing on the date the shares were acquired. In order for a disability to be considered a “qualifying disability”, the shareholder must receive and provide evidence (the shareholder application and the notice of final determination) of disability based upon a physical or mental condition or impairment made by a government agency responsible for reviewing and determining disability retirement benefits (e.g. the Social Security Administration).

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

Repurchases pursuant to the SRP, when requested, generally will be made semiannually (each six-month period ending June 30 or December 31, a “fiscal semester”). Repurchases for any fiscal semester will be limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year, with a maximum for any fiscal year of 5.0% of the weighted average number of shares of common stock outstanding during the previous fiscal year. Funding for repurchases pursuant to the SRP for any given fiscal semester will be limited to proceeds received during that same fiscal semester through the issuance of common stock pursuant to any DRIP in effect from time to time, provided that the Company's board of directors has the power, in its sole discretion, to determine the amount of shares repurchased during any fiscal semester as well as the amount of funds to be used for that purpose. Any repurchase requests received during such fiscal semester will be paid at the price, computed as described above on the last day of such fiscal semester. Due to these limitations, the Company cannot guarantee that the Company will be able to accommodate all repurchase requests made during any fiscal semester or fiscal year. However, a stockholder may withdraw its request at any time or ask that the Company honors the request when funds are available. Pending repurchase requests will be honored on a pro rata basis. The Company will generally pay repurchase proceeds, less any applicable tax or other withholding required by law, by the 31st day following the end of the fiscal semester during which the repurchase request was made.

For any repurchases made for the fiscal semester ending December 31, 2018, the repurchase price per share will be based on the estimated per-share NAV as of September 30, 2018 of $18.75.

When a stockholder requests redemption and the redemption is approved, the Company will reclassify such obligation from equity to a liability based on the settlement value of the obligation. Shares repurchased under the SRP will have the status of authorized but unissued shares.

The following table reflects the number of shares repurchased under the SRP cumulatively through September 30, 2018:



	Number of Requests	Number of Shares Repurchased	Average Price per Share
Cumulative as of December 31, 2017	2,125	1,991,391	$	21.36
January 1 - January 31, 2018⁽¹⁾	889	421,809	18.56
February 1 - February 28, 2018	—	—	—
March 1 - March 31, 2018	—	—	—
April 1 - April 30, 2018	—	—	—
May 1 - May 31, 2018	—	—	—
June 1 - June 30, 2018	—	—	—
July 1 - July 31, 2018	831	387,214	18.74
August 1 - August 31, 2018	—	—	—
September 1 - September 30, 2018	—	—	—
Cumulative as of September 30, 2018	3,845	2,800,414	$	20.65

________________________

⁽¹⁾ Reflects shares repurchased in January 2018 pursuant to repurchase requests submitted for the fiscal semester ended December 31, 2017. As permitted under the SRP, the Board authorized repurchases up to the amount of proceeds reinvested through our DRIP. As a result, redemption requests in the amount of 185,689 shares were not fulfilled.

Note 8 - Commitments and Contingencies

Unfunded Commitments for Commercial Mortgage Loans

As of September 30, 2018 and December 31, 2017, the Company had the below unfunded commitments to the Company's borrowers (dollars in thousands):

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)



Funding Expiration	September 30, 2018		December 31, 2017
2018	$	6,277	$	36,475
2019	45,378		26,465
2020	173,162		20,598
2021	104,635		—
Total	$	329,452	$	83,538

Litigation and Regulatory Matters

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. The Company has no knowledge of material legal or regulatory proceedings pending or known to be contemplated against the Company at this time.

Note 9 - Related Party Transactions and Arrangements

Advisory Agreement Fees and Reimbursements

Pursuant to the Advisory Agreement, the Company makes or was required to make the following payments and reimbursements to the Advisor:

•The Company reimburses the Advisor’s costs of providing services pursuant to the Advisory Agreement, except the salaries and benefits paid by the Advisor to the Company’s executive officers.

•The Company pays the Advisor, or its affiliates, a monthly asset management fee equal to one-twelfth of 1.5% of stockholder’s equity as calculated pursuant to the Advisory Agreement.

•The Company will pay the Advisor an annual subordinated performance fee calculated on the basis of total return to stockholders, payable monthly in arrears, such that for any year in which total return on stockholders’ capital exceeds 6.0% per annum, our Advisor will be entitled to 15.0% of the excess total return; provided that in no event will the annual subordinated performance fee payable to our Advisor exceed 10.0% of the aggregate total return for such year.

•Until September 2017, the Company paid its Advisor an acquisition fee of 1.0% of the principal amount funded by us to originate or acquire commercial mortgage loans and 1.0% of the anticipated net equity funded by the Company to acquire real estate securities.

•The Company reimburses the Advisor for insourced expenses incurred by the Advisor on the Company‘s behalf related to selecting, evaluating, originating and acquiring investments in an amount up to 0.5% of the principal amount funded by the Company to originate or acquire commercial mortgage loans and up to 0.5% of the anticipated net equity funded by the Company to acquire real estate securities investments.

Until September 29, 2016, the Former Advisor served as the Company's advisor. Prior to January 2016, the Company paid dealer-manager fees and selling commissions to an affiliate ("Former Dealer Manager") of the Former Advisor.

The table below shows the compensation and reimbursement payable to the Former Advisor, its affiliates, entities under common control with the Former Advisor and the Former Dealer Manager for services relating to the Company's public offering as of September 30, 2018 and December 31, 2017 (dollars in thousands):



	Payable as of
	September 30, 2018		December 31, 2017
Total commissions and fees incurred from the Former Dealer Manager	$	—	$	—
Total compensation and reimbursement for services provided by the Former Advisor, its affiliates, entities under common control with the Former Advisor and the Former Dealer Manager	480		480

The payables as of September 30, 2018 and December 31, 2017 in the table above are included in Due to affiliates on the Company's consolidated balance sheets.

The table below shows the costs incurred due to arrangements with our Advisor and its affiliates during the three and nine months ended September 30, 2018 and September 30, 2017, and the associated payable as of September 30, 2018 and December 31, 2017 (dollars in thousands):

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)



	Three Months Ended September 30,				Nine Months Ended September 30,				Payable as of
	2018		2017		2018		2017		September 30, 2018		December 31, 2017
Acquisition fees and expenses⁽¹⁾	$	173	$	1,685	$	289	$	4,175	$	—	$	—
Administrative services expenses	3,501		1,480		9,822		3,285		1,299		3,480
Asset management and subordinated performance fee	2,720		2,299		7,227		6,952		1,220		2,315
Other related party expenses⁽²⁾	315		87		785		183		316		146
Total	$	6,709	$	5,551	$	18,123	$	14,595	$	2,835	$	5,941

________________________

⁽¹⁾ Total acquisition fees and expenses paid during the three and nine months ended September 30, 2018 were $2.4 million and $6.6 million, respectively, of which $2.2 million and $6.3 million were capitalized within the commercial mortgage loans, held for investment line of the Company's consolidated balance sheet. For the three and nine months ended September 30, 2017 total acquisition fees and expenses paid during were $3.0 million and $9.0 million, respectively, of which $1.3 million and $4.8 million were capitalized.

⁽²⁾ Included in other expenses in the Company's consolidated statement of operations.

The payables as of September 30, 2018 and December 31, 2017 in the table above are included in Due to affiliates on the Company's consolidated balance sheets.

Purchases of Common Stock and Preferred Stock

Refer to Note 7 - Stock Transactions for a description of the Company’s private placements. Officers of the Company and other employees of the Advisor and its affiliates (“Manager Investors”) have acquired common stock and Series A preferred stock in these private placements on substantially the same terms applying to purchases by third party accredited investors unaffiliated with the Company or the Advisor. As of September 30, 2018, the Manager Investors have acquired in these private placements 1,893,569 shares of common stock for an aggregate purchase price of $31.6 million and 105 shares of Series A preferred stock for an aggregate purchase price (which includes accrued dividends) of $0.5 million. As of September 30, 2018, the remaining commitments of Manager Investors for preferred stock was $0.05 million. There were no remaining Manager Investors commitments for common stock as of September 30, 2018.

Other Transactions

On February 22, 2018, the Company purchased commercial mortgage loans, held-for-sale from an entity that is an affiliate of our Advisor, for an aggregate purchase price of $27.8 million. The purchase of the commercial mortgage loans and the $27.8 million purchase price were approved by the Company’s board of directors. On April 18, 2018, the Company sold $23.3 million of these commercial mortgage loans into a CMBS securitization. The remaining $4.5 million of these commercial mortgage loans are recorded in commercial mortgage loans, held-for-sale, measured at fair value on the consolidated balance sheet as of September 30, 2018.

In December 2017, the Company purchased a commercial mortgage loan from an entity that is an affiliate of our Advisor, for an aggregate purchase price of $17.1 million and is included in Commercial mortgage loans, held-for-investment in the consolidated balance sheet. The purchase of the commercial mortgage loan and the $17.1 million purchase price were approved by the Company’s board of directors and the Nominating and Corporate Governance Committee, which consists solely of independent directors.

Note 10 - Fair Value of Financial Instruments

GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair values. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:


•	Level I - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.


•	Level II - Inputs (other than quoted prices included in Level I) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)


•	Level III - Unobservable inputs that reflect the entity's own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the above hierarchy requires significant judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter.

The Company has implemented valuation control processes to validate the fair value of the Company's financial instruments measured at fair value including those derived from pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs wherever possible. In the event that observable inputs are not available, the control processes are designed to assure that the valuation approach utilized is appropriate and consistently applied and the assumptions are reasonable.

Financial Instruments Measured at Fair Value on a Recurring Basis

CMBS, recorded in real estate securities, held-for-sale, measured at fair value on the consolidated balance sheet as of September 30, 2018, are valued utilizing both observable and unobservable market inputs. These factors include projected future cash flows, ratings, subordination levels, vintage, remaining lives, credit issues, recent trades of similar real estate securities and the spreads used in the prior valuation. Depending upon the significance of the fair value inputs used in determining these fair values, these real estate securities are classified in either Level II or Level III of the fair value hierarchy. As of September 30, 2018, the Company obtained broker quotes for determining the fair value of each CMBS investment. As the broker quotes were both limited and non-binding, the Company has classified the CMBS as Level III. As of December 31, 2017 the Company had no CMBS.

Commercial mortgage loans held-for-sale, measured at fair value in the Company's TRS are initially recorded at transaction proceeds, which are considered to be the best initial estimate of fair value. The Company engaged the services of a third party independent valuation firm to determine fair value of investments held by the Company. Fair value is determined using a discounted cash flow model that primarily considers changes in interest rates and credit spreads, weighted average life and current performance of the underlying collateral. The Company classified the commercial mortgage loans held-for-sale, measured at fair value as Level III.

The fair value for Treasury note futures is derived using observable market prices. Treasury note futures trade on the Chicago Mercantile Exchange (“CME”). The future contracts are liquid and are centrally cleared through the CME. Treasury note futures are generally categorized in Level I of the fair value hierarchy.

The fair value for credit default swaps and interest rate swaps contracts are derived using pricing models that are widely accepted by marketplace participants. Credit default swaps and interest rate swaps are traded in the OTC market. The pricing models take into account multiple inputs including specific contract terms, interest rate yield curves, interest rates, credit curves, recovery rates, and/or current credit spreads obtained from swap counterparties and other market participants. Most inputs into the models are not subjective as they are observable in the marketplace or set per the contract. Valuation is primarily determined by the difference between the contract spread and the current market spread. The contract spread (or rate) is generally fixed and the market spread is determined by the credit risk of the underlying debt or reference entity. If the underlying indices are liquid and the OTC market for the current spread is active, credit default swaps and interest rate swaps are categorized in Level II of the fair value hierarchy. If the underlying indices are illiquid and the OTC market for the current spread is not active, credit default swaps are categorized in Level III of the fair value hierarchy. The credit default swaps and interest rate swaps are generally categorized in Level II of the fair value hierarchy.

A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets. The Company's policy with respect to transfers between levels of the fair value hierarchy is to recognize transfers into and out of each level as of the beginning of the reporting period. There were no transfers between levels within fair value hierarchy during the quarter ended September 30, 2018 and December 31, 2017.

The following table presents information about the Company’s financial instruments carried at fair value on a recurring basis in the consolidated balance sheets by its level in the fair value hierarchy as of September 30, 2018 and December 31, 2017 (dollars in thousands):

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)



	Total		Level I		Level II			Level III
September 30, 2018
Assets, at fair value
Commercial mortgage loans, held-for-sale ⁽¹⁾	$	105,976	$	—	$	—		$	105,976
Real estate securities	27,048		—		—			27,048
Credit default swaps	319		—		319			—
Interest rate swaps	375		—		375			—
Treasury note futures	1,293		1,293		—			—
Total assets, at fair value	$	135,011	$	1,293	$	694	—	$	133,024

Liabilities, at fair value
Credit default swaps	$	565	$	—	$	565		$	—
Total liabilities, at fair value	$	565	$	—	$	565		$	—

December 31, 2017
Assets, at fair value
Commercial mortgage loans, held-for-sale ⁽¹⁾	28,531		—		—			28,531
Treasury note futures	132		132		—			—
Total assets, at fair value	$	28,663	$	132	$	—		$	28,531

Liabilities, at fair value
Credit default swaps	$	357	$	—	$	357		$	—
Total liabilities, at fair value	$	357	$	—	$	357		$	—

________________________

⁽¹⁾ Loans held in the Company's TRS, reported within Commercial mortgage loans, held-for-sale, measured at fair value on the consolidated balance sheets.

Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level III category. As a result, the unrealized gains and losses for assets and liabilities within the Level III category may include changes in fair value that were attributable to both observable and unobservable inputs. The following table summarizes the valuation method and significant unobservable inputs used for the Company’s financial instruments that are categorized within Level III of the fair value hierarchy as of September 30, 2018 and December 31, 2017 (dollars in thousands).



Asset Category	Fair Value	Valuation Methodologies	Unobservable Inputs ⁽¹⁾	Weighted Average ⁽²⁾	Range
September 30, 2018
Commercial mortgage loans, held-for-sale, measured at fair value	$105,976	Discounted Cash Flow	Yield	5.30%	4.4% - 13.5%
Real estate securities, available-for-sale, at fair value	27,048	Broker Quotes	Yield	4.93%	4.1% - 5.6%
December 31, 2017
Commercial mortgage loans, held-for-sale, measured at fair value	$28,531	Discounted Cash Flow	Yield	4.93%	4.8% - 5.3%

⁽¹⁾ In determining certain of these inputs, the Company evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparable companies and company specific developments including exit strategies and realization opportunities. The Company has determined that market participants would take these inputs into account when valuing the investments.

⁽²⁾ Inputs were weighted based on the fair value of the investments included in the range.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

The following table presents additional information about the Company’s financial instruments which are measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017 for which the Company has used Level III inputs to determine fair value (dollars in thousands):



	September 30, 2018
	Commercial Mortgage Loans, held-for-sale, measured at fair value			Real Estate Securities
Beginning balance, January 1, 2018	$	28,531		$	—
Transfers into Level III	—			—
Realized gain on sale of commercial mortgage loan held-for-sale	9,765			—
Realized gain (loss) on sale of real estate securities	—			(107		)
Unrealized gain (loss)	474			—
Unrealized gain (loss) included in OCI ⁽¹⁾	—			171
Purchases	440,815			39,511
Sales / paydowns	(373,609		)	(12,456		)
Discount accretion/(premium amortization)	—			(71		)
Transfers out of Level III	—			—
Ending balance, September 30, 2018	$	105,976		$	27,048

	December 31, 2017
	Commercial Mortgage Loans, held-for-sale, measured at fair value			Real Estate Securities
Beginning balance, January 1, 2017	$	—		$	49,049
Transfers into Level III	—			—
Realized gain on sale of real estate securities	—			172
Realized gain on sale of commercial mortgage loan held-for-sale	4,523			—
Net accretion	—			167
Unrealized gain (loss) included in OCI ⁽¹⁾	—			500
Purchases	156,101			—
Sales	(132,093		)	(34,888		)
Cash repayments/receipts	—			(15,000		)
Transfers out of Level III	—			—
Ending balance, December 31, 2017	$	28,531		$	—

________________________

⁽¹⁾ Unrealized gains included in Other comprehensive income ("OCI") are attributable to assets held at September 30, 2018 and December 31, 2017.

Financial Instruments Not Measured at Fair Value

The fair values of the Company's commercial mortgage loans, held-for-investment and collateralized loan obligations, which are not reported at fair value on the consolidated balance sheets are reported below as of September 30, 2018 and December 31, 2017 (dollars in thousands):



		Level	Carrying Amount		Fair Value
September 30, 2018
Commercial mortgage loans, held-for-investment ⁽¹⁾	Asset	III	$	2,140,702	$	2,136,052
Collateralized loan obligation	Liability	II	983,546		1,002,313
December 31, 2017
Commercial mortgage loans, held-for-investment ⁽¹⁾	Asset	III	$	1,403,512	$	1,396,406
Collateralized loan obligation	Liability	II	826,150		842,812

________________________

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

⁽¹⁾ The carrying value is gross of $5.0 million and $1.5 million of allowance for loan losses as of September 30, 2018 and December 31, 2017, respectively.

The fair value of the commercial mortgage loans, held-for-investment is estimated using a discounted cash flow analysis, based on the Advisor's experience with similar types of investments. The Company estimates the fair value of the collateralized loan obligations using external broker quotes.

Note 11 - Derivative Instruments

The Company uses derivative instruments primarily to economically manage the fair value variability of fixed rate assets caused by interest rate fluctuations and overall portfolio market risk.

As of September 30, 2018, the net premiums paid on derivative instrument assets were $0.3 million.

The following derivative instruments were outstanding as of September 30, 2018 and December 31, 2017 (dollars in thousands):



			Fair Value
Contract type	Notional		Assets⁽¹⁾		Liabilities⁽¹⁾

As of September 30, 2018
Credit default swaps	$	80,000	$	319	$	565
Interest rate swaps	18,000		375		—
Treasury note futures	126,382		1,293		—
Total	$	224,382	$	1,987	$	565

As of December 31, 2017
Credit default swaps	$	30,000	$	32	$	357
Treasury note futures	43,906		100		—
Total	$	73,906	$	132	$	357

_______________________

⁽¹⁾ Shown as derivative instruments, at fair value, in the accompanying consolidated balance sheets.

The following tables indicate the net realized and unrealized losses on derivatives, by primary underlying risk exposure, as included in loss on derivative instruments in the consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017(dollars in thousands).



	Three Months Ended September 30, 2018									Nine Months Ended September 30, 2018
	Unrealized Gain/(Loss)			Realized Gain/(Loss)			Total			Unrealized Gain/(Loss)			Realized Gain/(Loss)		Total
Contract type
Credit default swaps	$	(316	)	$	(64	)	$	(380	)	$	(106	)	$	29	$	(77	)
Interest rate swaps	84			195			279			74			709		783
Treasury note futures	1,504			(172		)	1,332			1,194			738		1,932
Total	$	1,272		$	(41	)	$	1,231		$	1,162		$	1,476	$	2,638

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)



	Three Months Ended September 30, 2017									Nine Months Ended September 30, 2017
	Unrealized Gain/(Loss)			Realized Gain/(Loss)			Total			Unrealized Gain/(Loss)			Realized Gain/(Loss)			Total
Contract type
Credit default swaps	$	(171	)	$	(18	)	$	(189	)	$	(171	)	$	(18	)	$	(189	)
Treasury note futures	754						754			754			—			754
Total	$	583		$	(18	)	$	565		$	583		$	(18	)	$	565

Note 12 - Offsetting Assets and Liabilities

The Company's consolidated balance sheets use a gross presentation of derivative instruments, repurchase agreements and collateral pledged. The table below provides a gross presentation, the effects of offsetting and a net presentation of the Company's derivative instruments and repurchase agreements within the scope of ASC 210-20, Balance Sheet—Offsetting, as of September 30, 2018 and December 31, 2017 (dollars in thousands):



							Gross Amounts Not Offset on the Balance Sheet
Assets	Gross Amounts of Recognized Assets		Gross Amounts Offset on the Balance Sheet		Net Amount of Assets Presented on the Balance Sheet			Financial Instruments		Cash Collateral Pledged		Net Amount
September 30, 2018
Derivative instruments, at fair value	$	1,987	$	—	$	1,987		$	—	$	—	$	1,987
December 31, 2017
Derivative instruments, at fair value	$	132	$	—	$	132		$	—	$	—	$	132



							Gross Amounts Not Offset on the Balance Sheet
Liabilities	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Balance Sheet		Net Amount of Liabilities Presented on the Balance Sheet			Financial Instruments		Cash Collateral Pledged ⁽²⁾		Net Amount
September 30, 2018
Repurchase agreements, commercial mortgage loans	$	565,329	$	—	$	565,329		$	779,745	$	5,010	$	—
Repurchase agreements - real estate securities	22,272		—		22,272			26,750		69		—
Derivative instruments, at fair value	565		—		565			—		5,167		—
December 31, 2017
Repurchase agreements, commercial mortgage loans	$	65,690	$	—	$	65,690		$	163,235	$	5,005	$	—
Repurchase agreements, real estate securities ⁽¹⁾	39,035		—		39,035			56,044		—		—
Derivative instruments, at fair value	357		—		357			—		2,961		—

________________________

⁽¹⁾ Includes $56.0 million of Tranche C of Company issued CLO held by the Company, which eliminates within the real estate securities, at fair value line of the consolidated balance sheets as of December 31, 2017.

⁽²⁾ These cash collateral amounts are recorded within the Restricted cash balance on the consolidated balance sheets.

Note 13 - Segment Reporting

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

The Company conducts its business through the following reporting segments:


•	The real estate debt business focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgage loans, subordinate mortgages, mezzanine loans and participations in such loans.


•	The real estate securities business focuses on investing in and asset managing commercial real estate securities primarily consisting of CMBS and may include unsecured REIT debt, CDO notes and other securities.


•	The real estate conduit business operated through the Company's TRS, which is focused on generating risk-adjusted returns by originating and subsequently selling fixed-rate commercial real estate loans into the CMBS securitization market at a profit.

The following table represents the Company's operations by segment for the three and nine months ended September 30, 2018 and 2017 (dollars in thousands):



Three Months Ended September 30, 2018	Total		Real Estate Debt		Real Estate Securities			TRS
Interest income	$	42,943	$	41,046	$	270		$	1,627
Interest expense	17,120		15,694		192			1,234
Net income (loss)	19,000		17,275		(29		)	1,754
Total assets as of September 30, 2018	2,387,390		2,246,251		27,647			113,492
Three Months Ended September 30, 2017
Interest income	22,195		21,795		269			131
Interest expense	8,845		8,386		409			50
Net income	6,975		7,588		(22		)	(591		)
Total assets as of December 31, 2017	1,583,661		1,517,021		389			66,251



Nine Months Ended September 30, 2018	Total		Real Estate Debt		Real Estate Securities			TRS
Interest income	$	106,478	$	101,073	$	317		$	5,088
Interest expense	50,183		46,813		378			2,992
Net income (loss)	36,398		30,997		(168		)	5,569
Total assets as of September 30, 2018	2,387,390		2,246,251		27,647			113,492
Nine Months Ended September 30, 2017
Interest income	61,917		60,435		1,351			131
Interest expense	21,990		20,686		1,254			50
Net income	19,305		19,627		269			(591		)
Total assets as of December 31, 2017	1,583,661		1,517,021		389			66,251

For the purposes of the table above, any expenses not associated with a specific segment have been allocated to the business segments using a percentage derived by using the sum of commercial mortgage loans, net and real estate securities, at fair value as the denominator and commercial mortgage loans, net and real estate securities, at fair value as the numerators.

Note 14 - Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except for the following transactions:

Determination of Net Asset Value per Share

On November 7, 2018, the Company’s board of directors unanimously determined an estimated NAV per share of the Company’s common stock of $18.74 as of September 30, 2018. The estimated NAV per share is based upon the estimated value of the Company’s assets less the Company’s liabilities as of September 30, 2018. An independent third-party valuation firm was engaged to value the Company’s investment portfolio. The Advisor calculated the estimated NAV per share based in part on this valuation and recommended to the board of directors the estimated NAV per share calculated by the Advisor. The valuation was

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

performed in accordance with the provisions of Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Investment Program Association in April 2013.

As a result of the approval by the board of directors of the estimated NAV per share as of September 30, 2018, and pursuant to the terms of the DRIP and SRP, the Company (i) will offer shares pursuant to the DRIP at a purchase price of $18.75, beginning with November 2018 distributions which are reinvested in December 2018; and (ii) will repurchase shares pursuant to the SRP at a repurchase price of $18.75, subject to discounts in certain circumstances and subject to the terms and conditions of the SRP.

Private Placements

Subsequent to September 30, 2018, the Company sold an additional $1.5 million of common stock to accredited investors at $16.71 per share. The Company also entered into binding purchase commitments with Manager Investors for $2.0 million of common stock at $16.71 per share, with additional accredited investors for $2.9 million of common stock at $16.71 per share, and with accredited investors for $35 million of Series A preferred stock at $5,000 per share plus accrued dividends. Pursuant to the applicable subscription agreements, the Company can determine the timing of the closing of these commitments in its sole discretion

Advisor Transaction

On October 24, 2018, the Advisor announced that it had entered into a definitive agreement with Franklin Resources, Inc. and Templeton International, Inc. (collectively, “Franklin Templeton”), whereby Franklin Templeton has agreed, subject to the satisfaction of the closing conditions contained in the agreement, to acquire the Advisor (the “Transaction”). The consummation of the Transaction is expected to occur in early 2019. Upon consummation of the Transaction, the key senior management of the Advisor will continue to operate in the same professional capacity as prior to the Transaction. The Transaction will not impact the terms of the Amended and Restated Advisory Agreement and the Transaction will not result in any changes to the executive officers of the Company.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying financial statements of Benefit Street Partners Realty Trust, Inc., the notes thereto, and other financial information included elsewhere in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the U.S. Securities and Exchange Commission (the "SEC") on March 16, 2018.

As used herein, the terms "we," "our" and "us" refer to Benefit Street Partners Realty Trust, Inc., a Maryland corporation, and, as required by context, to Benefit Street Partners Realty Operating Partnership, L.P., a Delaware limited partnership, which we refer to as the "OP," and to its subsidiaries. We are externally managed by Benefit Street Partners L.L.C. (our "Advisor").

The forward-looking statements contained in this Quarterly Report on Form 10-Q may include, but are not limited to, statements as to:


•	our business and investment strategy;


•	our ability to make investments in a timely manner or on acceptable terms;


•	current credit market conditions and our ability to obtain long-term financing for our investments in a timely manner and on terms that are consistent with what we project when we invest;


•	the effect of general market, real estate market, economic and political conditions, including the recent economic slowdown and dislocation in the global credit markets;


•	our ability to make scheduled payments on our debt obligations;


•	our ability to generate sufficient cash flows to make distributions to our stockholders;


•	our ability to generate sufficient debt and equity capital to fund additional investments


•	our ability to refinance our existing financing arrangements;


•	the degree and nature of our competition;


•	the availability of qualified personnel;


•	we may be deemed to be an investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), and thus subject to regulation under the Investment Company Act; and


•	our ability to maintain our qualification as a real estate investment trust ("REIT"); and


•	other factors set forth under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2017.

In addition, words such as "anticipate," "believe," "expect" and "intend" indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason.

Our investors should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Overview

We were incorporated in Maryland on November 15, 2012 and commenced business operations on May 14, 2013. We have conducted our operations to qualify as a REIT for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2013. Substantially all of our business is conducted through the OP, a Delaware limited partnership. We are the sole general partner and directly or indirectly hold all of the units of limited partner interests in the OP.

We primarily originate, acquire and manage a diversified portfolio of commercial real estate debt investments secured by properties located within and outside of the United States. Commercial real estate debt investments may include first mortgage loans, subordinated mortgage loans, mezzanine loans and participations in such loans. We also originate conduit loans which we intend to sell through a subsidiary, which is treated as a taxable REIT subsidiary (a "TRS"), into CMBS securitization transactions at a profit. Additionally, we operate a real estate securities business that focuses on investing in and asset managing commercial real estate securities primarily consisting of commercial mortgage backed securities ("CMBS') and may include unsecured REIT debt, collateralized debt obligation ("CDO") notes and other securities.

We have no direct employees. We are managed by Benefit Street Partners L.L.C., which we refer to as our Advisor, pursuant to an advisory agreement dated January 19, 2018. Our Advisor manages our affairs on a day-to-day basis and receives compensation and fees for services related to the investment and management of our assets and our operations. The Advisor, an SEC-registered investment adviser, is a credit-focused alternative asset management firm. The Advisor manages funds for institutions and high-net-worth investors across various credit funds and complementary strategies including high yield, levered loans, private / opportunistic debt, liquid credit, structured credit and commercial real estate debt. These strategies complement

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each other as they all leverage the sourcing, analytical, compliance, and operational capabilities that encompass the Advisor’s robust platform.

Estimated Per Share NAV

On November 7, 2018, our board of directors unanimously approved and established an estimated per share net asset value (“NAV”) of $18.74. The estimated per share NAV is based upon the estimated value of our assets less our liabilities as of September 30, 2018 (the “Valuation Date”). This valuation was performed in accordance with the provisions of Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Investment Program Association in April 2013. We believe that there have been no material changes between the Valuation Date and the date of this filing that would impact the estimated per share NAV.

With the unanimous approval of our board of directors, we engaged an independent third-party valuation firm to estimate the fair value of our loans. The valuation firm estimated the value of our loan portfolio by applying a discounted cash flow analysis to each loan to determine a range of estimated valuations. To estimate the Company’s NAV, the Advisor adjusted the loan portfolio valuation prepared by the valuation advisor by adding the amounts of cash and other tangible assets reflected on our balance sheet (as computed in accordance with GAAP) and subtracting our liabilities as reflected on our balance sheet (computed in accordance with GAAP). Based in part on these valuation ranges, the Advisor estimated that the Company’s NAV as of September 30, 2018 ranged from $17.94 to $19.52, with a midpoint estimated NAV of $18.75 (the “Midpoint Valuation”).

The Advisor recommended our board of directors approve the Midpoint Valuation as our estimated per share NAV. As with any methodology used to estimate value, the methodologies employed to estimate the NAV were based upon a number of estimates and assumptions that may not be accurate or complete. If different judgments, assumptions or opinions were used, a different estimate would likely result.

We believe that the method used to determine the estimated per share NAV of the Company’s common stock is the methodology most commonly used by public, non-listed REITs to estimate per share NAV. The estimated per share NAV does not represent the per share amount a third party would pay to acquire us, or the price at which our common stock would trade in the event we were listed on a national securities exchange. For example, the estimated per share NAV of the Company’s common stock does not reflect a liquidity discount for the fact that the shares are not currently traded on a national securities exchange and other costs that may be incurred in connection with a liquidity event. Our estimated per share NAV does not reflect the conversion of any Series A redeemable convertible preferred stock stock.

The estimated per share NAV was determined at a moment in time and as of the Valuation Date and the values of our assets and liabilities will change over time as a result of changes relating to the individual loans in our portfolio as well as changes and developments in the real estate and capital markets generally, including changes in interest rates. Stockholders should not rely on the estimated per share NAV in making a decision to buy or sell shares of our common stock.

Significant Accounting Policies and Use of Estimates

A summary of our significant accounting policies is set forth in Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in this Quarterly Report on Form 10-Q. A full disclosure of our significant accounting polices is disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.

Portfolio

As of September 30, 2018 and December 31, 2017, our commercial mortgage loans, held-for-investment portfolio consisted of 100 and 69 loans, respectively. The commercial mortgage loans held for investment had a total carrying value, net of allowance for loan losses, of $2,135.7 million and $1,402.0 million, respectively. As of September 30, 2018 and December 31, 2017, our total commercial mortgage loans, held-for-sale, measured at fair value comprised of 12 and 3 loans, with a fair value of $106.0 million and $28.5 million, respectively. We had two CMBS investments as of September 30, 2018 with a total fair value of $27.0 million and no CMBS investments as of December 31, 2017. For our commercial mortgage loans, excluding commercial mortgage loans accounted for under the fair value option, we currently estimate loss rates based on historical realized losses experienced in the industry and take into account current collateral and economic conditions affecting the probability or severity of losses when establishing the allowance for loan losses. We recorded a general allowance for loan losses as of September 30, 2018 and December 31, 2017 in the amount of $5.0 million and $1.5 million, respectively. As of September 30, 2018, we had one loan with an unpaid principal balance of $16.8 million and fair value of $12.1 million in non-performing status. We applied six months of interest received totaling $0.6 million as a reduction to the unpaid principal balance. In the three and nine months ended September 30, 2018, we recorded $1.3 million and $4.1 million respectively, of asset-specific reserve included in loan loss provision/(recovery) on the consolidated statement of operations. As of December 31, 2017, we did not have any loans that were past due on their payments, in non-performing status or impaired.

As of September 30, 2018 and December 31, 2017, our commercial mortgage loans, excluding commercial mortgage loans accounted for under the fair value option, had a weighted average coupon of 6.6% and 6.7%, and a weighted average life of 1.5

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and 1.3 years, respectively. Our CMBS investments had a weighted average coupon of 4.7% and a remaining life of 5.2 years as of September 30, 2018.

The following charts summarize our commercial mortgage loans held-for- investment portfolio as a percentage of par value, by the collateral type, geographical region and coupon rate type as of September 30, 2018 and December 31, 2017:

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An investments region classification is defined according to the below map based on the location of investments' secured property.

The following charts show the par value by contractual maturity year for the commercial mortgage loans held for investment, in our portfolio as of September 30, 2018 and December 31, 2017.

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The following table shows selected data from our commercial mortgage loans held-for-investment portfolio as of September 30, 2018 (dollars in thousands):



Loan Type	Property Type	Par Value	Interest Rate ⁽¹⁾	Effective Yield	Loan to Value ⁽²⁾
Mezzanine Loan 1	Multifamily	$4,000	12.00%	12.0%	74.5%
Mezzanine Loan 2	Office	7,000	12.00%	12.0%	78.3%
Mezzanine Loan 3	Multifamily	3,480	9.50%	9.5%	84.3%
Mezzanine Loan 4	Office	10,000	10.00%	10.0%	78.7%
Mezzanine Loan 5	Multifamily	3,000	1 month LIBOR + 13.00%	15.2%	77.7%
Senior Debt 1	Office	31,250	1 month LIBOR + 4.50%	6.7%	71.1%
Senior Debt 2	Retail	9,450	1 month LIBOR + 4.90%	7.1%	69.2%
Senior Debt 3	Office	38,385	1 month LIBOR + 5.25%	7.4%	72.1%
Senior Debt 4	Retail	11,684	1 month LIBOR + 4.50%	6.7%	74.8%
Senior Debt 5	Hospitality	16,800	1 month LIBOR + 4.90%	7.1%	74.0%
Senior Debt 6	Retail	14,600	1 month LIBOR + 4.25%	6.4%	65.0%
Senior Debt 7	Office	10,700	1 month LIBOR + 4.65%	6.8%	70.8%
Senior Debt 8	Industrial	20,215	1 month LIBOR + 4.25%	6.4%	68.0%
Senior Debt 9	Retail	7,500	1 month LIBOR + 5.00%	7.2%	59.0%
Senior Debt 10	Multifamily	4,885	1 month LIBOR + 3.85%	6.0%	76.8%
Senior Debt 11	Multifamily	6,298	1 month LIBOR + 3.95%	6.1%	77.5%
Senior Debt 12	Multifamily	5,894	1 month LIBOR + 4.05%	6.2%	80.0%
Senior Debt 13	Industrial	33,655	1 month LIBOR + 4.00%	6.2%	65.0%
Senior Debt 14	Office	12,000	1 month LIBOR + 4.75%	6.9%	54.1%
Senior Debt 15	Office	35,000	1 month LIBOR + 5.00%	7.2%	79.0%
Senior Debt 16	Office	29,398	1 month LIBOR + 4.25%	6.4%	73.3%
Senior Debt 17	Office	20,530	1 month LIBOR + 5.35%	7.5%	48.2%
Senior Debt 18	Retail	13,700	1 month LIBOR + 4.75%	6.9%	62.6%
Senior Debt 19	Retail	28,900	1 month LIBOR + 4.73%	6.9%	73.1%
Senior Debt 20	Retail	12,953	1 month LIBOR + 5.00%	7.2%	73.3%
Senior Debt 21	Retail	15,750	1 month LIBOR + 5.25%	7.4%	70.5%
Senior Debt 22	Multifamily	17,657	1 month LIBOR + 7.10%	9.3%	76.4%
Senior Debt 23	Hospitality	12,600	1 month LIBOR + 5.50%	7.7%	61.6%

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Loan Type	Property Type	Par Value	Interest Rate ⁽¹⁾	Effective Yield	Loan to Value ⁽²⁾
Senior Debt 24	Hospitality	13,025	1 month LIBOR + 5.50%	7.7%	71.2%
Senior Debt 25	Retail	22,587	1 month LIBOR + 5.00%	7.2%	60.9%
Senior Debt 26	Multifamily	26,000	1 month LIBOR + 5.25%	7.4%	69.7%
Senior Debt 27	Hospitality	14,900	1 month LIBOR + 6.25%	8.4%	69.0%
Senior Debt 28	Office	12,830	1 month LIBOR + 4.45%	6.6%	64.2%
Senior Debt 29	Office	10,400	1 month LIBOR + 5.50%	7.7%	74.0%
Senior Debt 30	Multifamily	39,700	1 month LIBOR + 5.50%	7.7%	76.0%
Senior Debt 31	Multifamily	25,500	1 month LIBOR + 4.85%	7.0%	83.1%
Senior Debt 32	Retail	7,500	1 month LIBOR + 5.25%	7.4%	70.5%
Senior Debt 33	Office	56,928	1 month LIBOR + 4.50%	6.7%	69.2%
Senior Debt 34	Multifamily	46,612	1 month LIBOR + 4.50%	6.7%	73.8%
Senior Debt 35	Hospitality	8,875	1 month LIBOR + 6.20%	8.4%	67.7%
Senior Debt 36	Office	25,120	1 month LIBOR + 4.15%	6.3%	69.5%
Senior Debt 37	Multifamily	34,875	1 month LIBOR + 3.75%	5.9%	71.2%
Senior Debt 38	Office	12,400	1 month LIBOR + 4.00%	6.2%	69.7%
Senior Debt 39	Hospitality	10,600	1 month LIBOR + 5.00%	7.2%	61.6%
Senior Debt 40	Office	20,620	1 month LIBOR + 4.25%	6.4%	68.6%
Senior Debt 41	Hospitality	7,700	1 month LIBOR + 5.75%	7.9%	77.0%
Senior Debt 42	Multifamily	17,653	1 month LIBOR + 3.62%	5.8%	69.5%
Senior Debt 43	Multifamily	13,740	1 month LIBOR + 4.75%	6.9%	63.9%
Senior Debt 44	Hospitality	57,075	1 month LIBOR + 5.19%	7.4%	51.8%
Senior Debt 45	Multifamily	13,481	1 month LIBOR + 4.50%	6.7%	68.4%
Senior Debt 46	Multifamily	26,111	1 month LIBOR + 4.50%	6.7%	22.4%
Senior Debt 47	Hospitality	10,250	1 month LIBOR + 5.25%	7.4%	60.7%
Senior Debt 48	Hospitality	15,280	1 month LIBOR + 4.41%	6.6%	48.1%
Senior Debt 49	Multifamily	16,635	1 month LIBOR + 3.60%	5.8%	80.5%
Senior Debt 50	Multifamily	11,841	1 month LIBOR + 3.30%	5.5%	70.9%
Senior Debt 51	Multifamily	27,300	1 month LIBOR + 3.50%	5.7%	75.0%
Senior Debt 52	Office	24,350	1 month LIBOR + 4.65%	6.8%	56.4%
Senior Debt 53	Hospitality	21,000	1 month LIBOR + 4.00%	6.2%	54.8%
Senior Debt 54	Office	19,450	1 month LIBOR + 3.70%	5.9%	58.9%
Senior Debt 55	Multifamily	19,683	1 month LIBOR + 4.25%	6.4%	75.0%
Senior Debt 56	Multifamily	15,218	1 month LIBOR + 3.65%	5.8%	77.0%
Senior Debt 57	Multifamily	42,000	1 month LIBOR + 3.70%	5.9%	63.7%
Senior Debt 58	Hospitality	13,500	1 month LIBOR + 4.75%	6.9%	59.9%
Senior Debt 59	Hospitality	15,000	1 month LIBOR + 4.95%	7.1%	52.6%
Senior Debt 60	Hospitality	24,872	1 month LIBOR + 4.00%	6.2%	68.0%
Senior Debt 61	Hospitality	20,232	1 month LIBOR + 4.40%	6.6%	72.7%
Senior Debt 62	Multifamily	31,750	1 month LIBOR + 3.60%	5.8%	83.6%
Senior Debt 63	Self-Storage	4,120	1 month LIBOR + 4.05%	6.2%	45.5%
Senior Debt 64	Self-Storage	6,496	1 month LIBOR + 5.05%	7.2%	55.8%
Senior Debt 65	Retail	50,732	1 month LIBOR + 4.25%	6.4%	87.1%
Senior Debt 66	Multifamily	7,500	1 month LIBOR + 4.25%	6.4%	80.6%
Senior Debt 67	Office	23,000	1 month LIBOR + 3.65%	5.8%	66.5%
Senior Debt 68	Self-Storage	7,306	1 month LIBOR + 5.05%	7.2%	57.6%
Senior Debt 69	Multifamily	76,128	1 month LIBOR + 3.50%	5.7%	71.8%
Senior Debt 70	Multifamily	39,570	1 month LIBOR + 4.75%	6.9%	70.4%
Senior Debt 71	Self-Storage	2,400	1 month LIBOR + 4.05%	6.2%	37.6%
Senior Debt 72	Multifamily	10,500	1 month LIBOR + 5.54%	7.7%	64.4%
Senior Debt 73	Self-Storage	6,310	1 month LIBOR + 5.05%	7.2%	59.1%
Senior Debt 74	Multifamily	20,226	1 month LIBOR + 3.15%	5.3%	79.7%
Senior Debt 75	Multifamily	11,590	1 month LIBOR + 3.75%	5.9%	85.9%
Senior Debt 76	Multifamily	66,000	1 month LIBOR + 3.75%	5.9%	76.8%

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Loan Type	Property Type	Par Value	Interest Rate ⁽¹⁾	Effective Yield	Loan to Value ⁽²⁾
Senior Debt 77	Multifamily	17,250	1 month LIBOR + 4.25%	6.4%	70.0%
Senior Debt 78	Retail	31,000	1 month LIBOR + 4.95%	7.1%	85.4%
Senior Debt 79	Hospitality	22,355	1 month LIBOR + 4.00%	6.2%	68.8%
Senior Debt 80	Hospitality	34,000	1 month LIBOR + 4.50%	6.7%	36.2%
Senior Debt 81	Mixed-Use	96,704	1 month LIBOR + 4.00%	6.2%	67.0%
Senior Debt 82	Mixed-Use	15,401	1 month LIBOR + 4.75%	6.9%	49.0%
Senior Debt 83	Multifamily	11,120	1 month LIBOR + 3.50%	5.7%	74.6%
Senior Debt 84	Multifamily	16,283	1 month LIBOR + 3.30%	5.5%	83.1%
Senior Debt 85	Office	18,700	1 month LIBOR + 3.75%	5.9%	70.0%
Senior Debt 86	Office	50,000	1 month LIBOR + 4.23%	6.4%	59.6%
Senior Debt 87	Self-Storage	3,300	1 month LIBOR + 6.00%	8.2%	58.9%
Senior Debt 88	Multifamily	7,250	1 month LIBOR + 4.00%	6.2%	75.6%
Senior Debt 89	Multifamily	99,305	1 month LIBOR + 3.10%	5.3%	79.1%
Senior Debt 90	Office	13,025	1 month LIBOR + 3.40%	5.6%	67.5%
Senior Debt 91	Retail	29,500	6.25%	6.3%	68.5%
Senior Debt 92	Multifamily	25,500	1 month LIBOR + 3.50%	5.7%	73.3%
Senior Debt 93	Multifamily	13,600	1 month LIBOR + 3.53%	5.7%	65.4%
Senior Debt 94	Self-Storage	6,125	1 month LIBOR + 5.50%	7.7%	68.1%
Senior Debt 95	Hospitality	18,000	5.75%	5.8%	52.9%
		$2,150,173		6.6%	68.8%

________________________

⁽¹⁾ Our floating rate loan agreements contain the contractual obligation for the borrower to maintain an interest rate cap to protect against rising interest rates. In a simple interest rate cap, the borrower pays a premium for a notional principal amount based on a capped interest rate (the "cap rate"). When the floating rate exceeds the cap rate, the borrower receives a payment from the cap counterparty equal to the difference between the floating rate and the cap rate on the same notional principal amount for a specified period of time. When interest rates rise, the value of an interest rate cap will increase, thereby reducing the borrower's exposure to rising interest rates.

⁽²⁾ Loan to value percentage is from metrics at origination.

The following table shows selected data from our commercial mortgage loans, held-for-sale, measured at fair value (dollars in thousands):



Loan Type	Property Type	Par Value	Interest Rate	Effective Yield	Loan to Value ⁽¹⁾
Mezzanine Loan 6	Multifamily	$2,600	1 month LIBOR + 9.50%	11.7%	77.9%
TRS Senior 1	Hospitality	4,023	5.64%	5.6%	52.9%
TRS Senior 2	Retail	6,955	5.65%	5.7%	68.0%
TRS Senior 3	Retail	12,550	5.08%	5.1%	73.3%
TRS Senior 4	Multifamily	4,500	5.53%	5.5%	66.0%
TRS Senior 5	Hospitality	19,250	5.15%	5.2%	67.5%
TRS Senior 6	Retail	7,600	5.71%	5.7%	48.4%
TRS Senior 7	Self-Storage	12,500	4.62%	4.6%	43.0%
TRS Senior 8	Retail	12,825	5.21%	5.2%	72.5%
TRS Senior 9	Multifamily	10,100	5.36%	5.4%	67.3%
TRS Senior 10	Multifamily	10,500	4.78%	4.8%	65.6%
TRS Senior 11	Retail	2,100	5.44%	5.4%	53.2%
		$105,503		5.3%	63.7%

________________________

⁽¹⁾ Loan to value percentage is from metrics at origination.

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The following table shows selected data from our real estate securities, available-for-sale, at fair value (dollars in thousands):



Type	Par Value	Interest Rate	Effective Yield
CMBS 1	$13,250	1M LIBOR + 2.95%	5.1%
CMBS 2	13,500	1M LIBOR + 2.10%	4.3%
	$26,750		4.7%

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Results of Operations

Comparison of the Three Months Ended September 30, 2018 to the Three Months Ended September 30, 2017

We conduct our business through the following segments:


•	The real estate debt business focuses on originating, acquiring and asset managing commercial real estate debt investments, including first mortgage loans, subordinate mortgages, mezzanine loans and participations in such loans.


•	The real estate securities business focuses on investing in and asset managing commercial real estate securities primarily consisting of CMBS and may include unsecured REIT debt, CDO notes and other securities.


•	The real estate conduit business operated through the Company's TRS, which is focused on generating risk-adjusted returns by originating and subsequently selling fixed-rate commercial real estate loans into the CMBS securitization market at a profit.

Net Interest Income

Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt and real estate securities segments.

The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the three months ended September 30, 2018 and 2017 (dollars in thousands):



	Three Months Ended September 30,
	2018							2017
	Average Carrying Value⁽¹⁾			Interest Income / Expense⁽²⁾		WA Yield / Financing Cost⁽³⁾⁽⁴⁾		Average Carrying Value⁽¹⁾			Interest Income / Expense⁽²⁾		WA Yield / Financing Cost⁽³⁾⁽⁴⁾
Interest-earning assets:
Real estate debt	$	2,006,833		$	41,046	8.2	%	$	1,261,191		$	21,795	6.9	%
Real estate conduit	118,375			1,627		5.5	%	11,722			131		4.5	%
Real estate securities	29,561			270		3.7	%	12,749			269		8.4	%
Total	$	2,154,769		$	42,943	8.0	%	$	1,285,662		$	22,195	6.9	%
Interest-bearing liabilities:
Repurchase agreements - commercial mortgage loans	$	456,636		$	6,194	5.4	%	$	237,017		$	2,784	4.7	%
Other financing - commercial mortgage loans	—			—		N/A		34,681			472		5.4	%
Repurchase agreements - real estate securities	23,056			192		3.3	%	47,477			409		3.4	%
Collateralized loan obligations	1,086,901			10,592		3.9	%	523,227			5,180		4.0	%
Derivative instruments	—			142		N/A		—			—		N/A
Total	$	1,566,593		$	17,120	4.4	%	$	842,402		$	8,845	4.2	%
Net interest income/spread				$	25,823	3.6	%				$	13,350	2.7	%
Average leverage %⁽⁵⁾	72.7		%					65.5		%
Weighted average levered yield⁽⁶⁾						10.6	%						8.7	%

________________________

⁽¹⁾ Based on amortized cost for real estate debt and real estate securities and principal amount for repurchase agreements. Amounts are calculated based on daily averages for three months ended September 30, 2018 and 2017, respectively.

⁽²⁾ Includes the effect of amortization of premium or accretion of discount and deferred fees.

⁽³⁾ Calculated as interest income or expense divided by average carrying value.

⁽⁴⁾ Annualized.

⁽⁵⁾ Calculated by dividing total average interest-bearing liabilities by total average interest-earning assets.

⁽⁶⁾ Calculated by taking the sum of (i) the net interest spread multiplied by the average leverage and (ii) the weighted average yield interest-earning assets.

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Interest Income

Interest income earned during the three months ended September 30, 2018 was $20.7 million higher compared to the three months ended September 30, 2017. The increase in interest income was due to an increase in the 1 Month LIBOR, the benchmark index for our loans, and an increase of $869.1 million in the average carrying value of our interest-earning assets. As of September 30, 2018, our loans had a total gross carrying value of $2,246.7 million and our CMBS investments had a fair value of $27.0 million, while as of September 30, 2017, our loans had a total gross carrying value of $1,379.2 million. As of September 30, 2017, the Company did not have any CMBS investments.

Interest income earned at the TRS during the three months ended September 30, 2018 was $1.6 million compared to $0.1 million for the three months ended September 30, 2017. The $1.5 million increase in interest income was due to the formation of the TRS in September 2017.

Interest Expense

Interest expense for the three months ended September 30, 2018 was $8.3 million higher compared to the three months ended September 30, 2017. The increase in interest expense was due to an increase in the 1 Month LIBOR, the benchmark index for our financing lines, and an increase of $724.2 million in the average carrying value of our interest-bearing liabilities, of which approximately $563.7 million is an increase due to one CLO issued in 2018.

Interest expense at the TRS for the three months ended September 30, 2018 was $1.2 million compared to $0.1 million for the three months ended September 30, 2017. The $1.1 million increase in interest expense was due to the formation of the TRS in September 2017.

Realized Gain/Loss on Commercial Mortgage Loans Held-for-Sale

Realized gain on commercial mortgage loans held-for-sale, measured at fair value, at the TRS for the three months ended September 30, 2018 was $3.4 million compared to $0.0 million for the three months ended September 30, 2017. The $3.4 million increase in realized gain was due to the sale of fixed-rate commercial real estate loans into the CMBS securitization market during the three months ended September 30, 2018, versus no comparable transaction in the three months ended September 30, 2017 due to the formation of the TRS in September 2017.

Expenses from Operations

Expenses from operations for the three months ended September 30, 2018 and 2017 were made up of the following (dollars in thousands):



	Three Months Ended September 30,
	2018		2017
Asset management and subordinated performance fee	$	2,720	$	2,299
Acquisition fees and acquisition expenses	173		1,685
Administrative services expenses	3,501		1,480
Professional fees	2,556		1,348
Other expenses	774		1,411
Total expenses	$	9,724	$	8,223

For the three months ended September 30, 2018, expenses were primarily related to asset management and subordinated performance fees, professional fees and administrative services expenses. Asset management and subordinated performance increased by $0.4 million due to an increase in the company's equity base. The entire amount in the asset management and subordinated performance fee line for the three months ended September 30, 2018 and three months ended September 30, 2017 is composed of asset management fees, as there were no subordinated performance fees incurred in either period due to applicable conditions not having been satisfied.

During the three months ended September 30, 2018 and September 30, 2017, we incurred $3.5 million and $1.5 million of administrative services expenses, respectively, an increase of approximately $2.0 million; additionally, during the three months ended September 30, 2018 and September 30, 2017 we incurred $2.6 million and $1.3 million of professional fees, respectively, an increase of approximately $1.2 million. The increases in administrative services expenses and professional fees are due to increases in overall company growth, origination activities and the addition of the TRS.

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Comparison of the Nine Months Ended September 30, 2018 to the Nine Months Ended September 30, 2017

Net Interest Income

Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt and real estate securities segments.

The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the nine months ended September 30, 2018 and 2017 (dollars in thousands):



	Nine Months Ended September 30,
	2018							2017
	Average Carrying Value⁽¹⁾			Interest Income / Expense⁽²⁾		WA Yield / Financing Cost⁽³⁾⁽⁴⁾		Average Carrying Value⁽¹⁾			Interest Income / Expense⁽²⁾		WA Yield / Financing Cost⁽³⁾⁽⁴⁾
Interest-earning assets:
Real estate debt	$	1,759,578		$	101,073	7.7	%	$	1,153,065		$	60,435	7.0	%
Real estate conduit	106,951			5,088		6.3	%	3,950			131		4.4	%
Real estate securities	11,218			317		3.8	%	25,424			1,351		7.1	%
Total	$	1,877,747		$	106,478	7.6	%	$	1,182,439		$	61,917	7.0	%
Interest-bearing liabilities:
Repurchase agreements - commercial mortgage loans	$	320,814		$	13,964	5.8	%	$	301,665		$	10,511	4.6	%
Other financing - commercial mortgage loans	11,867			1,215		13.7	%	17,555			712		5.4	%
Repurchase agreements - real estate securities	15,222			378		3.3	%	54,928			1,254		3.0	%
Collateralized loan obligations	977,477			34,342		4.7	%	335,683			9,513		3.8	%
Derivative instruments	—			284		N/A		—			—		N/A
Total	$	1,325,380		$	50,183	5.0	%	$	709,831		$	21,990	4.1	%
Net interest income/spread				$	56,295	2.6	%				$	39,927	2.9	%
Average leverage %⁽⁵⁾	70.6		%					60.0		%
Weighted average levered yield⁽⁶⁾						9.4	%						8.7	%

________________________

⁽¹⁾ Based on amortized cost for real estate debt and real estate securities and principal amount for repurchase agreements. Amounts are calculated based on daily averages for nine months ended September 30, 2018 and 2017, respectively.

⁽²⁾ Includes the effect of amortization of premium or accretion of discount and deferred fees.

⁽³⁾ Calculated as interest income or expense divided by average carrying value.

⁽⁴⁾ Annualized.

⁽⁵⁾ Calculated by dividing total average interest-bearing liabilities by total average interest-earning assets.

⁽⁶⁾ Calculated by taking the sum of (i) the net interest spread multiplied by the average leverage and (ii) the weighted average yield interest-earning assets.

Interest Income

Interest income earned during the nine months ended September 30, 2018 was $44.6 million higher compared to the nine months ended September 30, 2017. The increase in interest income was due to an increase in the 1 Month LIBOR, the benchmark index for our loans, and an increase of $695.3 million in the average carrying value of our interest-earning assets. As of September 30, 2018, our loans had a total gross carrying value of $2,246.7 million and two CMBS investments had a fair value of $27.0 million, while as of September 30, 2017, our loans had a total gross carrying value of $1,379.2 million. As of September 30, 2017, the Company did not have any CMBS investments.

Interest income earned at the TRS during the nine months ended September 30, 2018 was $5.1 million compared to $0.1 million for the nine months ended ended September 30, 2017. The $5.0 million increase in interest income was due to the formation of the TRS in September 2017.

Interest Expense

Interest expense for the nine months ended September 30, 2018 was $28.2 million higher compared to the nine months ended September 30, 2017. The increase in interest expense was due to an increase in the 1 Month LIBOR, the benchmark

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index for our financing lines and an increase of $615.0 million in the average carrying value of our interest-bearing liabilities, of which approximately $641.8 million is an increase due to one CLO issued in 2018 and a non-cash charge of $6.4 million related to the call of RFT 2015-FL1 CLO on February 15, 2018, partially offset by a $39.7 million decrease in the average carrying value of repurchase agreements on real estate securities.

Interest expense at the TRS for the nine months ended September 30, 2018 was $3.0 million compared to $0.1 million for the nine months ended September 30, 2017. The $2.9 million increase in interest expense was due to minimal activity in 2017 due to the formation of the TRS in September 2017.

Realized Gain/Loss on Commercial Mortgage Loans Held-for-Sale

Realized loss on commercial mortgage loans held-for-sale for the nine months ended September 30, 2018 was $48.0 thousand compared to $1.6 million for the nine months ended September 30, 2017. The $1.5 million decrease in realized loss was due to only one realized transaction for commercial mortgage loans held-for-sale during nine months ended September 30, 2018 versus seven realized transactions during the nine months ended September 30, 2017.

Realized gain on commercial mortgage loans held-for-sale, measured at fair value at the TRS for the nine months ended September 30, 2018 was $9.8 million compared to no realized gains for the nine months ended September 30, 2017. The $9.8 million increase in realized gain was due to the sale of fixed-rate commercial real estate loans into the CMBS securitization market during the nine months ended September 30, 2018 versus no comparable transactions in the nine months ended September 30, 2017 due to the formation of the TRS in September 2017.

Expenses from Operations

Expenses from operations for the nine months ended September 30, 2018 and 2017 were made up of the following (dollars in thousands):



	Nine Months Ended September 30,
	2018		2017
Asset management and subordinated performance fee	$	7,227	$	6,952
Acquisition fees and acquisition expenses	289		4,175
Administrative services expenses	9,822		3,285
Professional fees	6,803		3,320
Other expenses	3,896		2,773
Total expenses	$	28,037	$	20,505

For the nine months ended September 30, 2018, expenses were primarily related to asset management and subordinated performance fees, professional fees and administrative services expenses. During the nine months ended September 30, 2018 and September 30, 2017, we incurred $7.2 million and $7.0 million of asset management and subordinated performance fees, respectively, an increase of $0.3 million due to increased equity. The entire $7.2 million and $7.0 million in the asset management and subordinated performance fee line for the nine months ended September 30, 2018 and nine months ended September 30, 2017 is composed of asset management fees, as there were no subordinated performance fees incurred in either period due to applicable conditions not having been satisfied.

During the nine months ended September 30, 2018 and September 30, 2017, we incurred $9.8 million and $3.3 million of administrative services expenses, respectively, an increase of approximately $6.5 million; additionally, during the nine months ended September 30, 2018 and September 30, 2017 we incurred $6.8 million and $3.3 million of professional fees, respectively, an increase of approximately $3.5 million. The increases in administrative services expenses and professional fees are due to increase in overall company growth, origination activities and the addition of the TRS.

Liquidity and Capital Resources

Our principal demands for cash will be funding our loan investments, payment of fees and reimbursements to the Advisor, the payment of our operating and administrative expenses, continuing debt service obligations, and distributions to our stockholders. We currently believe that we have sufficient liquidity and capital resources available for all anticipated uses, including the origination of loan investments, required debt service and the payment of cash dividends.

We expect to use additional debt and equity financing as a source of capital. Our board of directors currently intends to operate at a leverage level of between one to three times book value of equity. However, our board of directors may change this target without shareholder approval. In addition, in 2018 we have entered into binding commitments with accredited investors for the sale of $228.3 million of common and preferred equity, and as of September 30, 2018, have an aggregate of $35.1 million of committed equity capital commitments available to close at our discretion. We anticipate that our debt and equity

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financing sources and our anticipated cash generated from operations will be adequate to fund our operating and administrative expenses, continuing debt service obligations and the payment of distributions.

In addition to our current mix of financing sources, we may also access additional forms of financings, including credit facilities, securitizations, public and private, secured and unsecured debt issuances by us or our subsidiaries, or through capital recycling initiatives whereby we sell certain assets in our portfolio and reinvest the proceeds in assets with more attractive risk-adjusted returns.

Collateralized Loan Obligation

On October 12, 2018 (the “Closing Date”), two consolidated subsidiaries of the Company, BSPRT 2018-FL4 Issuer, Ltd. (the “Issuer”) and BSPRT 2018-FL4 Co-Issuer, LLC (the “Co-Issuer” and together with the Issuer, the “Co-Issuers”), issued notes with an aggregate principal amount of approximately $868.4 million, evidencing a commercial real estate mortgage securitization, and sold such Notes in a private placement. The notes were issued pursuant to an indenture (the “Indenture”), dated as of the Closing Date, by and among the Co-Issuers, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent (the “Advancing Agent”) and U.S. Bank National Association, as trustee (in such capacity, the “Trustee”), as note administrator (in such capacity, the “Note Administrator”), as custodian and in other capacities. The Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

The net proceeds of the sale of the Offered Notes will be used primarily to repay borrowings under the Company’s current credit facilities, fund future loans and investments and for general corporate purposes.

The aggregate principal amounts of the following seven classes of Notes (each, a “Class”) were issued pursuant to the terms of the Indenture: (i) $ 416,827,000 Class A Senior Secured Floating Rate Notes due 2035 (the “Class A Notes”); (ii) $ 73,813,000 Class A-S Second Priority Secured Floating Rate Notes due 2035 (the “Class A-S Notes”); (iii) $ 56,446,000 Class B Third Priority Secured Floating Rate Notes due 2035 (the “Class B Notes”); (iv) $ 68,385,000 Class C Fourth Priority Secured Floating Rate Notes due 2035 (the “Class C Notes”); (v) $ 57,531,000 Class D Fifth Priority Secured Floating Rate Notes due 2035 (the “Class D Notes”); (vi) $ 28,223,000 Class E Sixth Priority Secured Floating Rate Notes due 2035 (the “Class E Notes”); (vii) $ 35,821,000 Class F Seventh Priority Secured Floating Rate Notes due 2035 (the “Class F Notes”) and (viii) $33,650,000 Class G Eighth Priority Floating Rate Notes due 2035 (the “Class G Notes”). A wholly-owned subsidiary of the Company retained the preferred equity of the Issuer.

The Offered Notes are secured by a portfolio (the “Portfolio”) comprising (i) eight commercial or multifamily real estate whole loans and 24 fully-funded senior or pari passu participations in certain other commercial or multifamily real estate whole loans with an aggregate principal balance of approximately $738.1 million as of the Closing Date, and (ii) $130.3 million as of the Closing Date to fund the acquisition of additional mortgage assets during the ramp-up acquisition period. Through its ownership of the equity of the Issuer, the Company intends to own the Portfolio until its maturity and will account for the issuance of the Offered Notes on its balance sheet as a financing.

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The Portfolio was purchased by the Issuer on the Closing Date from a consolidated subsidiary of the Company, and such seller made certain representations and warranties to the Issuer with respect to the mortgage assets it sold. If any such representations or warranties are materially inaccurate, the Issuer may compel the seller to repurchase the affected mortgage assets from it for an amount not exceeding par plus accrued interest and certain additional charges, if then applicable.

The Issuer, the Advancing Agent, the Note Administrator and the Trustee entered into a servicing agreement (the “Servicing Agreement”) with Situs Asset Management LLC (the “Servicer”) and Situs Holdings, LLC (the “Special Servicer”), pursuant to which the Servicer agreed to act as the servicer for the mortgage assets and the Special Servicer agreed to act as special servicer for the mortgage assets.

In connection with its duties under the Servicing Agreement, the Servicer will be entitled to a monthly servicing fee equal to 0.04% per annum of the outstanding principal balance of each mortgage asset and a monthly investor reporting fee in the amount of $1,000. The Servicer will also be entitled to retain all late payment charges and similar fees (to the extent not payable to the Special Servicer) and all income and gain realized from the investment of funds deposited in the accounts maintained by the Servicer, subject to the terms of the Servicing Agreement.

In connection with its duties under the Servicing Agreement, the Special Servicer will be entitled to a monthly special servicing fee equal to 0.25% per annum of the outstanding principal balance of each specially serviced mortgage asset and additional special servicing compensation in the form of (i) a workout fee with respect to each corrected mortgage asset equal to 1.00% of each collection of interest and principal for so long as it remains a corrected mortgage asset and (ii) a liquidation fee equal to 1.00% of any liquidation proceeds or full or discounted payoff of a specially serviced mortgage asset; provided that the Special Servicer will be entitled to receive only a liquidation fee or a workout fee, but not both, with respect to any mortgage asset. The Special Servicer will also be entitled to reimbursement of expenses, as permitted under the Servicing Agreement.

The Notes represent limited recourse obligations of the Issuer, payable solely from the cash flow generated by the Portfolio and any other assets of the Company, including the proceeds of any sale of assets by the Company, and the Offered Notes also represent non-recourse obligations of the Co-Issuer. To the extent that cash flow from the Portfolio and other pledged assets is insufficient to make payments in respect of the Notes, none of the shareholders, members, officers, directors, managers or incorporators of the Issuer, the Co-Issuer, the Note Administrator, the Trustee, the Servicer, the Special Servicer, the Placement Agents, any of their respective affiliates or any other person or entity will have any obligation to pay any further amounts in respect of the Notes.

The Offered Notes have initial interest rates as follows: 1.050% plus one-month LIBOR for the Class A Notes, 1.300% plus one-month LIBOR for the Class A-S Notes, 1.600% plus one-month LIBOR for the Class B Notes, 2.100% plus one-month LIBOR for the Class C Notes, 2.750% plus one-month LIBOR for the Class D Notes and 3.050% plus one-month LIBOR for the Class E Notes. Interest payments on the Notes are payable monthly, beginning on October 15, 2018, until and including September 15, 2035, which is the stated maturity date of each of the Notes. The Advancing Agent may be required to advance interest payments due on the Notes subject to the conditions set forth in the Indenture.

Each Class of Notes will mature at par on stated maturity date, unless redeemed or repaid prior thereto. Principal payments on each Class of Notes will be paid at the stated maturity in accordance with the priority of payments set forth in the Indenture. It is anticipated, however, that the Notes will be paid in advance of the stated maturity date in accordance with the priority of payments set forth in the Indenture. The weighted average life of each class of Offered Notes is currently expected to be 3.15 years for the Class A Notes, 4.30 years for the Class A-S Notes, 4.47 years for the Class B Notes, 4.66 years for the Class C Notes, 4.75 years for the Class D Notes and 4.85 years for the Class E. The calculation of the weighted average lives of the Offered Notes assumes certain collateral characteristics, including that there are no prepayments, defaults or delinquencies. There can be no assurance that such assumptions will be met.

The Notes are also subject to a mandatory redemption, subject to certain exceptions, on any interest payment date on which certain tests set forth in the Indenture are not satisfied. If certain events occur that would make the Issuer subject to paying U.S. income taxes or would make certain payments to or from the Issuer subject to withholding tax, then the Company may require that the Issuer redeem all of the Notes.

In addition to standard events of default, the Indenture also contains the following events of default: (1) the requirement of the Issuer, Co-Issuer or pool of assets securing the Notes to register as an investment company under the Investment Company Act of 1940, as amended, and (2) the loss of the Issuer’s status as a qualified REIT subsidiary or other disregarded entity of the Company, subject to certain exceptions.

The description of the Indenture above is a summary and is qualified in its entirety by the terms of the Indenture.

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Repurchase Agreements, Commercial Mortgage Loans

As of September 30, 2018, we have repurchase facilities with JPMorgan Chase Bank, National Association (the "JPM Repo Facility"), Goldman Sachs Bank USA (the "GS Repo Facility"), U.S. Bank National Association (the "USB Repo Facility"), Barclays Bank PLC (the "Barclays Facility") and Credit Suisse AG (the "CS Repo Facility" and together with JPM Repo Facility, GS Repo Facility, USB Repo Facility, Barclays Facility, the "Repo Facilities").

The JPM Repo Facility has a maturity date of January 30, 2020 plus a one-year extension at the Company's option and provides up to $520.0 million in advances. The GS Repo Facility has a maturity date of December 27, 2018, with a one-year extension at the Company’s option, which may be exercised upon the satisfaction of certain conditions, and provides up to $250.0 million in advances. The USB Repo Facility matures on June 15, 2020, with two one-year extensions at the option of the Company, which may be exercised upon the satisfaction of certain conditions, and provides up to $100.0 million in advances. The CS Repo Facility matures on June 19, 2019 and provides up to $300 million in advances. Prior to the end of each calendar quarter, the Company may request an extension of the termination date for an additional 364 days from the end of such calendar quarter subject to the satisfaction of certain conditions and approvals.

We expect to use advances from these Repo Facilities to finance the acquisition or origination of eligible loans, including first mortgage loans, subordinated mortgage loans, mezzanine loans and participation interests therein.

As of September 30, 2018 and December 31, 2017, there was $241.3 million and $42.0 million outstanding under the JPM Repo Facility, respectively. As of September 30, 2018 and December 31, 2017, we had $0.0 million and $13.5 million outstanding under the GS Repo Facility, respectively. As of September 30, 2018 and December 31, 2017, we had $309.4 million and $10.1 million outstanding under the CS Repo Facility, respectively. As of September 30, 2018, there was $14.7 million outstanding under the USB Repo Facility and no advances as of December 31, 2017.

The Company entered into the Barclays Facility on September 19, 2017. The Barclays Facility provides for a senior secured $100.0 million revolving line of credit and bears interest at per annum rates equal to one of two base rates plus an applicable margin. The Barclays Facility has a maturity of September 19, 2019, subject to an extension term of one year, and provides for quarterly interest-only payments, with all principal and interest outstanding being due on the maturity date. The Barclays Facility may be prepaid from time to time and at any time, in whole or in part, without premium or penalty. The Company expects to use advances on the Barclays Facility to finance the origination of eligible loans, including first lien mortgage loans, junior mortgage loans, mezzanine loans, and participation interests therein. We had no advances under the Barclays Facility as of September 30, 2018 and December 31, 2017.

Other financing - Commercial Mortgage Loans

We entered into a financing arrangement with Pacific Western Bank for term financing (“PWB Financing”) on May 17, 2017. The PWB Financing provided the Company with $36.2 million and was collateralized by a portfolio asset of $54.2 million. The PWB Financing had a maturity date of June 9, 2019. We paid off the outstanding balance in June 2018. As of December 31, 2017, we had $26.2 million outstanding under the PWB Financing.

Repurchase Agreements - Real Estate Securities

We entered into various Master Repurchase Agreements ("MRAs") that allow us to sell real estate securities while providing a fixed repurchase price for the same real estate securities in the future. The repurchase contracts on each security under an MRA generally mature in 30 to 90 days and terms are adjusted for current market rates as necessary.

Below is a summary of the Company's MRAs as of September 30, 2018 and December 31, 2017 (dollars in thousands):



	Amount						Weighted Average
Counterparty	Outstanding		Accrued Interest		Collateral Pledged		Interest Rate		Days to Maturity
As of September 30, 2018
J.P. Morgan Securities LLC	$	22,272	$	5	$	26,750	2.91	%	26
Total/Weighted Average	$	22,272	$	5	$	26,750	2.91	%	26

As of December 31, 2017
J.P. Morgan Securities LLC ⁽¹⁾	$	39,035	$	11	$	56,044	3.32	%	26
Total/Weighted Average	$	39,035	$	11	$	56,044	3.32	%	26

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⁽¹⁾Collateral includes $56.0 million Tranche C of Company issued CLO held by the Company, which eliminates within the Real estate securities, at fair value line of the consolidated balance sheets as of December 31, 2017, respectively.

Private Placements



As of September 30, 2018	Total
Closing Date	Shares Issued	Purchase Price
June 25, 2018	834,537	$	13,723
July 13, 2018	1,669,074	27,446
August 20, 2018	3,370,362	55,421
September 10, 2018	14,962	250
Total	5,888,935	$	96,840

The following table summarizes the sales of Series A preferred stock in these offerings (dollars in thousands, except share amounts; includes accrued dividends):



As of September 30, 2018	Total
Closing Date	Shares Issued	Purchase Price
June 25, 2018	2,256	$	11,278
July 13, 2018	4,498	22,554
August 20, 2018	9,083	45,619
August 28, 2018	3,378	17,000
Total	19,215	$	96,451

As of September 30, 2018, the Company had binding purchase commitments for $20 million of common stock at $16.71 per share and $15.1 million of Series A preferred stock at $5,000 per share plus accrued dividends. As of October 31, 2018, the Company had binding purchase commitments for $22.0 million of common stock at $16.71 per share and $50.3 million of Series A preferred stock at $5,000 per share plus accrued dividends. Pursuant to the applicable subscription agreements, the Company can determine the timing of the closing of these commitments in its sole discretion.

Distributions

In March 2016, our board of directors authorized and declared ongoing monthly distributions at a rate equivalent to $2.0625 per annum, per share. In August 2017, our board of directors authorized and declared ongoing monthly distributions at a rate equivalent to $1.44 per annum, per share.

The Company's distributions are payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The Company's board of directors may reduce the amount of distributions paid or suspend distribution payments at any time, and therefore, distributions payments are not assured.

The below table shows the distributions paid on shares of common stock outstanding during the nine months ended September 30, 2018 and 2017 (dollars in thousands):

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Nine Months Ended September 30, 2018
Payment Date	Amount Paid in Cash		Amount Issued under DRIP
January 3, 2018	$	2,649	$	1,242
February 1, 2018	2,665		1,233
March 1, 2018	2,386		1,098
April 1, 2018	2,664		1,200
May 1, 2018	2,593		1,152
June 1, 2018	2,718		1,184
July 2, 2018	2,637		1,143
August 1, 2018	2,939		1,179
September 2, 2018	3,156		1,166
Total	$	24,407	$	10,597



Nine Months Ended September 30, 2017
Payment Date	Amount Paid in Cash		Amount Issued under DRIP
January 3, 2017	$	3,575	$	2,007
February 1, 2017	3,560		1,957
March 1, 2017	3,231		1,770
April 1, 2017	3,621		1,926
May 1, 2017	3,536		1,846
June 1, 2017	3,692		1,887
July 3, 2017	3,607		1,809
August 1, 2017	3,755		1,854
September 1, 2017	2,751		1,293
Total	$	31,328	$	16,349

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The following table shows the sources for the payment of distributions to common stockholders for the periods presented (dollars in thousands):



	Three Months Ended September 30,								Nine Months Ended September 30,
	2018				2017				2018				2017
Distributions:
Cash distributions paid	$	8,732			$	10,113			$	24,407			$	31,328
Distributions reinvested	3,487				4,956				10,597				16,349
Total distributions	$	12,219			$	15,069			$	35,004			$	47,677
Source of distribution coverage:
Net Income (Loss) (GAAP)	$	8,732	71.5	%	$	4,324	28.7	%	$	24,407	70.0	%	$	20,394	42.8	%
Available cash on hand	—		—	%	5,789		38.4	%	—		—	%	10,934		22.9	%
Common stock issued under DRIP	3,487		28.5	%	4,956		32.9	%	10,478		30.0	%	16,349		34.3	%
Total sources of distributions	$	12,219	100.0	%	$	15,069	100.0	%	$	34,885	100.0	%	$	47,677	100.0	%
Net income applicable to common stock (GAAP)	$	17,294			$	6,975			$	35,141			$	19,305

The following table compares cumulative distributions paid to cumulative net income (in accordance with GAAP) for the period from November 15, 2012 (date of inception) through September 30, 2018 (dollars in thousands):



	For the Period from November 15, 2012 (date of inception) to September 30, 2018
Distributions paid:
Common stockholders in cash	$	138,313
Common stockholders pursuant to DRIP / offering proceeds	81,072
Total distributions paid	$	219,385
Reconciliation of net income:
Net interest income	$	230,873
Realized gain (loss) on sale of real estate securities	(1,841		)
Realized gain (loss) on sale of commercial mortgage loan	184
Acquisition fees and expenses	(17,594		)
Other operating expenses	(95,786		)
Net income	115,836

Cash Flows

Cash Flows for the Nine Months Ended September 30, 2018

Net cash used in operating activities for the nine months ended September 30, 2018 was $37.1 million. Cash outflows were primarily driven by cash outflows of $444.5 million from origination of commercial mortgage loans, held for sale, partially offset by $377.3 million of proceeds from the sale of commercial mortgage loans, held for sale.

Net cash used in investing activities for the nine months ended September 30, 2018 was $747.9 million. Cash outflows of $1,279.0 million was due to new originations and purchases of commercial mortgage loans, held for investment. This was partially offset by $556.5 million of proceeds from principal repayments received on commercial mortgage loans, held for investment.

Net cash provided by financing activities for the nine months ended September 30, 2018 was $759.3 million. Cash inflows were primarily driven by $499.7 million from net borrowings on the Repo Facilities repurchase agreements and net proceeds of $156.3 million on collateralized loan obligations and partially offset by cash outflow of $16.8 million on net payment for repurchase agreements - real estate securities.

Cash Flows for the Nine Months Ended September 30, 2017

Net cash provided by operating activities for the nine months ended September 30, 2017 was $47.8 million. Cash inflows were primarily driven by net income of $19.3 million and proceeds of $88.4 million from the sale of commercial mortgage loans, held for sale partially offset by cash outflows of $61.0 million related to origination of commercial mortgage loans, held for sale.

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Net cash used in investing activities for the nine months ended September 30, 2017 was $339.5 million. Cash outflows of $565.1 million were due to new originations and additional funding activities. This was partially offset by cash inflows of proceeds from the sale of real estate securities of $34.9 million, proceeds from the sale of commercial mortgage loans of and principal repayments of $176.1 million.

Net cash provided by financing activities for the nine months ended September 30, 2017 was $248.6 million. Cash inflows were primarily driven by proceeds of $339.5 million from the issuance of our CLO, BSPRT 2017-FL1. This was partially offset by cash outflows of $61.7 million net borrowings on the Repo Facilities, $27.6 million from net payment on our CMBS MRAs, the payment of $31.3 million in cash distributions paid to stockholders, $20.5 million of stock repurchase and repayments on collateralized loan obligations of $97.5 million.

REIT Election

We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code ("the Code") commencing with the taxable year ended December 31, 2013. As a REIT, if we meet certain organizational and operational requirements and distribute at least 90% of our "REIT taxable income" (determined before the deduction of dividends paid and excluding net capital gains) to our stockholders in a year, we will not be subject to U.S. federal income tax to the extent of the income that we distribute. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property, and U.S. federal income and excise taxes on our undistributed income.

Contractual Obligations and Commitments

Our contractual obligations, excluding expected interest payments, as of September 30, 2018 are summarized as follows (dollars in thousands):



	Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years		Total
Unfunded loan commitments ⁽¹⁾	$	6,277	$	218,540	$	104,635	$	—	$	329,452
JPM Repo Facility	—		241,282		—		—		241,282
CS Repo Facility	—		309,396		—		—		309,396
USB Repo Facility	—		14,651		—		—		14,651
Barclays Facility	—		—		—		—		—
CLOs ⁽²⁾	—		—		—		999,157		999,157
Total	$	6,277	$	783,869	$	104,635	$	999,157	$	1,893,938

________________________

⁽¹⁾ The allocation of our unfunded loan commitments is based on the earlier of the commitment expiration date or the loan maturity date.

⁽²⁾ Excludes $16.0 million of Tranche E notes and $14.9 million of Tranche F notes issued by 2017-FL2 Issuer; $36.6 million of Tranche E notes and $21.4 million of Tranche F notes issued by BSPRT 2018-FL3 Issuer, held by the Company, which are eliminated within the collateralized loan obligation line of the consolidated balance sheets as of September 30, 2018.

Excludes $16.0 million of Tranche E notes and $14.9 million of Tranche F notes issued by 2017-FL2 Issuer; held by the Company, which are eliminated within the collateralized loan obligation line of the consolidated balance sheets as of December 31, 2017.

In addition, we have contractual obligations under our agreements with the Advisor as described below.

Related Party Arrangements

Benefit Street Partners L.L.C.

Amended Advisory Agreement

On January 19, 2018, we entered into an amendment to the Advisory Agreement. The amended Advisory Agreement amends and restates the Advisory Agreement, dated as of September 29, 2016, by and among the Company, the Operating Partnership and the Advisor.

The Nominating and Corporate Governance Committee (the “Committee”) of our Board, which consists solely of the Company’s independent directors, negotiated, approved and recommended that the Board approve, the amended Advisory Agreement. The Committee engaged independent legal counsel to assist the Committee in negotiating the amended Advisory Agreement.

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The Advisor will continue to provide the daily management for the Company and the Operating Partnership, including an investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board. The Advisor shall continue to be entitled to an asset management fee equal to one and one-half percent (1.5%) of Equity (as defined in the amended Advisory Agreement). The Advisor shall continue to be entitled to an annual subordinated performance fee equal to fifteen percent (15%) of the Total Return (as defined in the amended Advisory Agreement) over a six percent (6%) per annum hurdle, subject to certain limitations. However, pursuant to an agreement with a Preferred Investor, the Advisor has agreed to defer payment of 50% of any annual subordinated performance fee generally until a “liquidity event” such as the listing of the Company’s common stock on a national securities exchange. The Advisor shall not be entitled to acquisition or disposition fees. The Company or the Operating Partnership shall continue to pay directly or reimburse the Advisor for all the expenses paid or actually incurred by the Advisor in connection with the services it provides to the Company and the Operating Partnership pursuant to the amended Advisory Agreement, subject to certain limitations.

The initial term of the amended Advisory Agreement is three-years and shall be automatically renewed for additional one-year periods, unless either party elects not to renew. The Company may terminate the amended Advisory Agreement for a Cause Event (as defined in the amended Advisory Agreement) without payment of a termination fee. Following the expiration of a term, and upon 180 days’ prior written notice, the Company may, without cause, elect not to renew the amended Advisory Agreement upon the determination by two-thirds of the Company’s independent directors that (i) there has been unsatisfactory performance by the Advisor or (ii) that the asset management fee and annual subordinated performance fee payable to the Advisor are not fair, subject to certain conditions. In such case, the Company shall be obligated to pay a termination fee.

Pursuant to the amended Advisory Agreement, the Advisor and/or its affiliates are required to acquire equity securities of the Company equal to a purchase price of not less than $10 million, subject to certain conditions, for which, the Advisor and its affiliates on February 14, 2018, have committed to purchase $32.1 million of common stock. During the term of the amended Advisory Agreement, the Advisor shall not, directly or indirectly, manage or advise another REIT that is engaged in the business of the Company in any geographical region in which the Company has a significant investment, or provide any services related to fixed-rate conduit lending to any other person, subject to certain conditions.

Investment in Stock

Refer to “Note 7 - Stock Transactions” in our consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of the Company’s private placements. Officers of the Company and other employees of the Advisor and its affiliates (“Manager Investors”) have acquired common stock and Series A preferred stock in these private placements on substantially the same terms applying to purchases by third party institutional investors unaffiliated with the Company or the Advisor. As of September 30, 2018, the Manager Investors have acquired in these private placements 1,893,569 shares of common stock for an aggregate purchase price of $31.6 million and 105 shares of Series A preferred stock for an aggregate purchase price (which included accrued dividends) of $0.5 million.

The Manager Investors have agreed with the Advisor not to sell or otherwise transfer the shares of common stock or Series A preferred stock, without the consent of the Advisor, prior to 180 days after a listing of the Company’s common stock on a national securities exchange. In addition, the Manager Investors will not be eligible to participate in the Company’s amended and restated share repurchase program for at least three years.

The board of directors and the Nominating and Corporate Governance Committee of the board of directors each unanimously approved the Company’s entry into these subscription agreements and the terms therein including the offering price.

Advisory Agreement Fees and Reimbursements

Pursuant to the Advisory Agreement, we are or were required to make the following payments and reimbursements to the Advisor:


•	We reimburse our Advisor’s costs of providing services pursuant to the Advisory Agreement, except the salaries and benefits paid by the Advisor to our executive officers.


•	We pay our Advisor, or its affiliates, a monthly asset management fee equal to one-twelfth of 1.5% of stockholder’s equity as calculated pursuant to the Advisory Agreement.

•

We will pay our Advisor an annual subordinated performance fee calculated on the basis of total return to stockholders, payable monthly in arrears, such that for any year in which total return on stockholders’ capital exceeds 6.0% per annum, our Advisor will be entitled to 15.0% of the excess total return; provided that in no event will the annual subordinated performance fee payable to our Advisor exceed 10.0% of the aggregate total return for such year, although the Advisor has agreed to defer payment of 50% of any annual subordinated performance fee generally until a “liquidity event” such as the listing of the Company’s common stock on a national securities exchange.

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•	Until September 2017, we paid our Advisor an acquisition fee of 1.0% of the principal amount funded by us to originate or acquire commercial mortgage loans and 1.0% of the anticipated net equity funded by us to acquire real estate securities.


•	We reimburse our Advisor for insourced expenses incurred by our Advisor on our behalf related to selecting, evaluating, originating and acquiring investments in an amount up to 0.5% of the principal amount funded by us to originate or acquire commercial mortgage loans and up to 0.5% of the anticipated net equity funded by us to acquire real estate securities investments.

Until September 29, 2016, the Former Advisor served as the Company's advisor and the Company paid the Former Advisor certain fees and expense reimbursements pursuant to its advisory agreement with the Former Advisor. The types of fees and reimbursements paid to the Former Advisor were similar to those paid to the Advisor prior to September 2017. In addition, prior to January 2016 we paid dealer-manager fees and selling commissions to an affiliate of the Former Advisor, prior to February 2016 we paid transfer agent fees to an affiliate of the Former Advisor, and prior to November 2015 we paid various financial services fees to an affiliate of the Former Advisor.

Loan Acquisition

In December 2017, we purchased a commercial mortgage loan from an entity that is an affiliate of our Advisor, for an aggregate purchase price of $17.1 million and is included in Commercial mortgage loans, held-for-investment in the consolidated balance sheet. The purchase of the commercial mortgage loan and the $17.1 million purchase price were approved by our board of directors and the Nominating and Corporate Governance Committee, which consists solely of independent directors.

On February 22, 2018, we purchased commercial mortgage loans from an entity that is an affiliate of our Advisor, for an aggregate purchase price of $27.8 million. The purchase of the commercial mortgage loans and the $27.8 million purchase price were approved by our board of directors, including all of our independent directors. On April 18, 2018, we sold $23.3 million of these commercial mortgage loans into a CMBS securitization. The remaining $4.5 million of these commercial mortgage loans are recorded in commercial mortgage loans, held-for-sale, measured at fair value on the consolidated balance sheet as of September 30, 2018.

The table below shows the costs incurred due to arrangements with our Advisor and its affiliates during the three and nine months ended September 30, 2018 and 2017 and the associated payable as of September 30, 2018 and December 31, 2017 (dollars in thousands).

See Note 9 - Related Party Transactions and Arrangements for further detail.



	Three Months Ended September 30,				Nine Months Ended September 30,				Payable as of
	2018		2017		2018		2017		September 30, 2018		December 31, 2017
Total compensation and reimbursement for services provided by the Former Advisor, its affiliates, entities under common control with the Former Advisor and the Former Dealer Manager	—		—		$	—	$	—	$	480	$	480
Acquisition fees and expenses⁽¹⁾	173		1,685		289		4,175		—		—
Administrative services expenses	3,501		1,480		9,822		3,285		1,299		3,480
Asset management and subordinated performance fee	2,720		2,299		7,227		6,952		1,220		2,315
Other related party expenses	315		87		785		183		316		146
Total	$	6,709	$	5,551	$	18,123	$	14,595	$	3,315	$	6,421

________________________

⁽¹⁾ Total acquisition fees and expenses paid during the three and nine months ended ended September 30, 2018 were $2.4 million and $6.6 million, respectively, of which $2.2 million and $6.3 million were capitalized within the commercial mortgage loans, held for investment line of the Company's consolidated balance sheet. For the three and nine months ended September 30, 2017 total acquisition fees and expenses paid during were $3.0 million and $9.0 million, respectively, of which $1.3 million and $4.8 million were capitalized within the commercial mortgage loans, held for investment line of the Company's consolidated balance sheet.

The payables as of September 30, 2018 and December 31, 2017 in the table above are included in Due to affiliates on our consolidated balance sheets.

Off Balance Sheet Arrangements

We have no off balance sheet arrangements as of September 30, 2018 and through the date of the filing of this Form 10-Q.

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Non-GAAP Financial Measures

Funds from Operations and Modified Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts ("NAREIT") and the Investment Program Association ("IPA") industry trade groups, have each promulgated measures respectively known as funds from operations ("FFO") and modified funds from operations ("MFFO"), which we believe to be appropriate supplemental measures to reflect the operating performance of a REIT. FFO and MFFO are not equivalents to our net income or loss as determined under generally accepted accounting principles ("GAAP").

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004 (the "White Paper"). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of depreciable property, property and asset impairment write-downs, depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our business plan is to operate as a mortgage REIT with our portfolio consisting of commercial mortgage loan investments and investments in real estate securities. We will typically have no FFO adjustments to our net income or loss computed in accordance with GAAP as a result of operating as a mortgage REIT. Although we have the ability to acquire real property, we have not acquired any at this time and as such have not had any FFO adjustments to our net income or loss computed in accordance with GAAP.

We define MFFO, a non-GAAP measure, consistent with the IPA's Guideline 2010 - 01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the "Practice Guideline") issued by the IPA in November 2010. We define MFFO as FFO further adjusted for the following items, as applicable: acquisition fees and expenses; accretion of discounts and amortization of premiums and other loan expenses on debt investments; fair value adjustments on real estate related investments such as commercial real estate securities or derivative investments included in net income; impairments of real estate related investments, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses from fair value adjustments on real estate securities, including commercial mortgage backed securities and other securities, interest rate swaps and other derivatives not deemed to be hedges and foreign exchanges holdings; unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums and other loan expenses on debt investments, gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized. While we will be responsible for managing interest rate, hedge and foreign exchange risk, we expect to retain an outside consultant to review all our hedging agreements. Inasmuch as interest rate hedges are not a fundamental part of our operations, we believe it is appropriate to exclude such gains and losses in calculating MFFO, as such gains and losses are not reflective of our core operations.

Our MFFO calculation excludes impairments of real estate related investments, including loans. We assess the credit quality of our investments and adequacy of loan loss reserves on a quarterly basis, or more frequently as necessary. For loans classified as held-for-investment, we establish and maintain a general allowance for loan losses inherent in our portfolio at the reporting date and, where appropriate, a specific allowance for loan losses for loans we have determined to be impaired at the reporting date. An individual loan is considered impaired when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the loan. Real estate related securities are evaluated for other-than-temporary impairment when the fair value of a security falls below its net amortized cost. Significant judgment is required in this analysis. We consider the estimated net recoverable value of the loan or security as well as other factors, including but not limited to the fair value of any collateral, the amount and the status of any senior debt, the prospects for the borrower and the competitive situation of the region where the borrower does business. Fair value is typically estimated based upon discounting the expected future cash flows of the underlying collateral taking into consideration the discount rate, capitalization rate, occupancy, creditworthiness of major tenants and many other factors. This requires significant judgment and because it is based upon projections of future economic events, which are inherently subjective, the amounts ultimately realized may differ materially from the carrying value as of the balance sheet date. If upon completion of the assessment, the estimated fair value of the underlying collateral is less than the net carrying value of the loan, a specific allowance for loan losses is recorded. In the case of real estate securities, all or a portion of a deemed impairment may be recorded.

MFFO is a metric used by management to evaluate our performance against other non-listed REITs and is not intended to be used as a liquidity measure. Although management uses the MFFO metric to evaluate future operating performance, this metric excludes certain key operating items and other adjustments that may affect our overall operating performance. MFFO is not equivalent to net income or loss as determined under GAAP. We believe that our use of MFFO and the adjustments used to

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calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to non-listed REITs.

We believe that FFO provides useful context for understanding MFFO, and we believe that MFFO is a useful non-GAAP measure for non-listed REITs. It is helpful to management and stockholders in assessing our future operating performance once our organization and offering and acquisition and development stages are complete, because it eliminates from net income non-cash fair value adjustments on our real estate securities and acquisition fees and acquisition expenses that are incurred as part of our investment activities. However, MFFO may not be a useful measure of our operating performance or as a comparable measure to other typical non-listed REITs if we do not continue to operate in a similar manner to other non-listed REITs.

However, MFFO does have certain limitations. For instance, the effect of any amortization or accretion on investments originated or acquired at a premium or discount, respectively, is not reported in MFFO. In addition, realized gains or losses from acquisitions and dispositions and other adjustments listed above are not reported in MFFO, even though such realized gains or losses and other adjustments could affect our operating performance and cash available for distribution. Stockholders should note that any cash gains generated from the sale of investments would generally be used to fund new investments. Any mark-to-market or fair value adjustments may be based on many factors, including current operational or individual property issues or general market or overall industry conditions.

Neither FFO nor MFFO is equivalent to net income or loss or cash flow provided by operating activities determined in accordance with GAAP and should not be construed to be more relevant or accurate than the GAAP methodology in evaluating our operating performance. Neither FFO nor MFFO is necessarily indicative of cash flow available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Furthermore, neither FFO nor MFFO should be considered as an alternative to net income or loss as an indicator of our operating performance.

Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO.

The table below reflects the items deducted or added to net income or loss in our calculation of FFO and MFFO for the nine months ended September 30, 2018 and 2017 (dollars in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Funds From Operations:
Net income (GAAP)	$	19,000		$	6,975		$	36,398		$	19,305
Funds from operations	$	19,000		$	6,975		$	36,398		$	19,305
Modified Funds From Operations:
Funds from operations	$	19,000		$	6,975		$	36,398		$	19,305
Accretion of premiums, discounts and fees on investments, net	(1,540		)	(458		)	(3,456		)	(1,617		)
Acquisition fees and expenses	173			1,685			289			4,175
Unrealized (gain) loss on financial instruments	(1,041		)	(556		)	(1,636		)	(803		)
Loan loss provision/(recovery)	1,066			(641		)	3,502			(222		)
Income Tax Benefit	—			(291		)	—			(291		)
Modified funds from operations⁽¹⁾	$	17,658		$	6,714		$	35,097		$	20,547

__________________________

⁽¹⁾ Modified funds from operations for the nine months ended September 30, 2018 of $17.7 million and $35.1 million includes a non-cash charge of $6.4 million related to the call of RFT 2015-FL1 CLO on February 15, 2018. For the three and nine months ended September 30, 2018, excluding this non-cash charge, modified funds from operations would have been $24.1 million and $41.5 million.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Credit Risk

Our investments are subject to a high degree of credit risk. Credit risk is the exposure to loss from loan defaults. Default rates are subject to a wide variety of factors, including, but not limited to, borrower financial condition, property performance, property management, supply/demand factors, construction trends, consumer behavior, regional economics, interest rates, the strength of the U.S. economy, and other factors beyond our control. All loans are subject to a certain probability of default. We manage credit risk through the underwriting process, acquiring our investments at the appropriate discount to face value, if any, and establishing loss assumptions. We also carefully monitor the performance of the loans, as well as external factors that may affect their value.

Interest Rate Risk

Our market risk arises primarily from interest rate risk relating to interest rate fluctuations. Many factors including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control contribute to interest rate risk. To meet our short and long-term liquidity requirements, we may borrow funds at fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates. During the periods covered by this report, we did not engage in interest rate hedging activities. We do not hold or issue derivative contracts for trading or speculative purposes. We do not have any foreign denominated investments, and thus, we are not exposed to foreign currency fluctuations.

As of September 30, 2018 and December 31, 2017, our portfolio included 94 and 64 variable rate investments, respectively, based on LIBOR for various terms. Borrowings under our repurchase agreements are also based on LIBOR. The following table quantifies the potential changes in interest income net of interest expense should interest rates increase by 50 or 100 basis points or decrease by 25 basis points, assuming that our current balance sheet was to remain constant and no actions were taken to alter our existing interest rate sensitivity:



	Estimated Percentage Change in Interest Income Net of Interest Expense
Change in Interest Rates	September 30, 2018		December 31, 2017
(-) 25 Basis Points	(1.55	)%	(1.61	)%
Base Interest Rate	—	%	—	%
(+) 50 Basis Points	3.09	%	3.23	%
(+) 100 Basis Points	6.19	%	6.45	%

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered in this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, as of the end of such period, that our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in our reports that we file or submit under the Exchange Act.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2018, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

Item 1. Legal Proceedings.

The Company has no knowledge of material pending legal proceedings, other than ordinary routine litigation incidental to the business, or material pending or threatened regulatory proceedings, against the Company at this time.

Item 1A. Risk Factors.

Our potential risks and uncertainties are presented in the section entitled "Risk Factors" contained in the Annual Report on Form 10-K for the year ended December 31, 2017. There have been no material changes from these risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

Refer to "Note 7 - Stock Transactions" to our consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of the common stock purchase agreements and preferred stock purchase agreements we entered into with certain accredited investors, certain officers of the Company, and certain owners, employees and associates of the Advisor and its affiliates pursuant to which such persons committed to buy shares of our common stock and Preferred Stock. As of September 30, 2018, the Company has sold 5,888,934 shares of common stock for proceeds of $96.8 million, and 19,215 shares of Preferred Stock for proceeds of $96.5 million. The Company sold an additional $1.5 million of common stock to accredited investors subsequent to September 30, 2018. As of November 1, 2018 there are $22.0 million of outstanding commitments to purchase common stock pursuant to the common stock purchase agreement and $50.3 million of outstanding commitments to purchase preferred stock pursuant to the preferred purchase agreement.

The offer and sale of the common stock and Preferred Stock pursuant to the Common Stock Purchase Agreements and Preferred Stock Purchase Agreements were conducted in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

Issuer Purchases of Equity Securities

Share repurchase activity under the SRP during the three months ended September 30, 2018 was as follows:



	Number of Shares Repurchased	Average Price per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
July 1 - July 31, 2018	387,214	$	18.74	387,214	(1)
August 1 - August 31, 2018	—	N/A		—	(1)
September 1 - September 30, 2018	—	N/A		—	(1)
Total	387,214				(1)

(1) The Company's board of directors unanimously approved an amended and restated share repurchase program (the “SRP”), which became effective on February 28, 2016. Repurchases pursuant to the SRP, when requested, generally will be made semiannually (each six-month period ending June 30 or December 31, a “fiscal semester”). Repurchases for any fiscal semester will be limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year, with a maximum for any fiscal year of 5.0% of the weighted average number of shares of common stock outstanding during the previous fiscal year. Funding for repurchases pursuant to the SRP for any given fiscal semester will be limited to proceeds received during that same fiscal semester through the issuance of common stock pursuant to any DRIP in effect from time to time, provided that the Company's board of directors has the power, in its sole discretion, to determine the amount of shares repurchased during any fiscal semester as well as the amount of funds to be used for that purpose. See "Note 7 - Stock Transactions" to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion of our SRP.

Item 3. Defaults upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

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Not applicable.

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Item 6. Exhibits.

EXHIBITS INDEX

The following exhibits are included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 (and are numbered in accordance with Item 601 of Regulation S-K).



Exhibit No.		Description
3.1*		Amended and Restated Bylaws of Benefit Street Partners Realty Trust, Inc.
10.1*		Indenture, dated as of October 12, 2018, by and among BSPRT 2018-FL4 Issuer, Ltd., BSPRT 2018-FL4 Co-Issuer, LLC, Benefit Street Partners Realty Operating Partnership, L.P., as advancing agent, and U.S. Bank National Association, as trustee, note administrator and custodian.
31.1*		Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a - 14(a) or 15(d) - 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a - 14(a) or 15(d) - 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*		Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		Quarterly Report on Form 10-Q for the nine months ended September 30, 2018, formatted in XBRL: (i) the consolidated Balance Sheets, (ii) the consolidated Statements of Operations, (iii) the consolidated Statements of Comprehensive Income, (iv) the consolidated Statement of Changes in Stockholders' Equity, (v) the consolidated Statements of Cash Flows and (vi) the Notes to the consolidated Financial Statements

____________________________________________

* Filed herewith.

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BENEFIT STREET PARTNERS REALTY TRUST, INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	BENEFIT STREET PARTNERS REALTY TRUST, INC.

Dated: November 9, 2018	By: /s/ Richard J. Byrne Name: Richard J. Byrne Title: Chief Executive Officer and President (Principal Executive Officer)

Dated: November 9, 2018	By: /s/ Jerome S. Baglien Name: Jerome S. Baglien Title: Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)