Financial Analysis: TPG RE Finance Trust (NYSE:TRTX) and Franklin BSP Realty Trust (NYSE:FBRT)

Franklin BSP Realty Trust (NYSE:FBRT) and TPG RE Finance Trust (NYSE:TRTX) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Profitability

This table compares Franklin BSP Realty Trust and TPG RE Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin BSP Realty Trust	6.38%	4.30%	0.83%
TPG RE Finance Trust	13.13%	5.21%	1.17%

Volatility & Risk

Franklin BSP Realty Trust has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500. Comparatively, TPG RE Finance Trust has a beta of 1.47, suggesting that its share price is 47% more volatile than the S&P 500.

Insider & Institutional Ownership

59.9% of Franklin BSP Realty Trust shares are owned by institutional investors. Comparatively, 57.1% of TPG RE Finance Trust shares are owned by institutional investors. 1.3% of Franklin BSP Realty Trust shares are owned by insiders. Comparatively, 3.0% of TPG RE Finance Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Franklin BSP Realty Trust pays an annual dividend of $0.80 per share and has a dividend yield of 13.3%. TPG RE Finance Trust pays an annual dividend of $0.96 per share and has a dividend yield of 14.7%. Franklin BSP Realty Trust pays out -1,000.0% of its earnings in the form of a dividend. TPG RE Finance Trust pays out 246.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Franklin BSP Realty Trust and TPG RE Finance Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin BSP Realty Trust	2	1	3	0	2.17
TPG RE Finance Trust	1	2	4	0	2.43

Franklin BSP Realty Trust presently has a consensus target price of $11.00, suggesting a potential upside of 83.03%. TPG RE Finance Trust has a consensus target price of $9.33, suggesting a potential upside of 43.15%. Given Franklin BSP Realty Trust’s higher probable upside, equities analysts plainly believe Franklin BSP Realty Trust is more favorable than TPG RE Finance Trust.

Valuation and Earnings

This table compares Franklin BSP Realty Trust and TPG RE Finance Trust”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin BSP Realty Trust	$270.07 million	1.68	$82.27 million	($0.08)	-75.12
TPG RE Finance Trust	$332.58 million	1.49	$60.32 million	$0.39	16.72

Franklin BSP Realty Trust has higher earnings, but lower revenue than TPG RE Finance Trust. Franklin BSP Realty Trust is trading at a lower price-to-earnings ratio than TPG RE Finance Trust, indicating that it is currently the more affordable of the two stocks.

Summary

TPG RE Finance Trust beats Franklin BSP Realty Trust on 11 of the 16 factors compared between the two stocks.

About Franklin BSP Realty Trust

Benefit Street Partners operates as a self-managed real estate investment trust (REIT). BSP earns income from investing in a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the government-sponsored enterprises (GSEs)), or by an agency of the federal government, Government National Mortgage Association (Ginnie Mae). BSP’s investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of ARM Agency Securities. As of December 31, 2012, the Company’s securities consisted of Agency Securities classified as available-for-sale and Residential mortgage securities classified as held-to-maturity.

About TPG RE Finance Trust

TPG RE Finance Trust, Inc., a commercial real estate finance company, originates, acquires, and manages commercial mortgage loans and other commercial real estate-related debt instruments in the United States. It invests in commercial mortgage loans; subordinate mortgage interests, mezzanine loans, secured real estate securities, note financing, preferred equity, and miscellaneous debt instruments; and commercial real estate collateralized loan obligations and commercial mortgage-backed securities secured by properties primarily in the multifamily, life science, mixed-use, hospitality, self storage, industrial, and retail real estate sectors. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. TPG RE Finance Trust, Inc. was incorporated in 2014 and is based in New York, New York.