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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2026

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number - 000-56705

FRANKLIN BSP REAL ESTATE DEBT, INC.

(Exact name of registrant as specified in its charter)


Maryland						99-3480205
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


One Madison Avenue, Suite 1600
New York, New York						10010
(Address of principal executive offices)						(Zip Code)

(Registrant’s telephone number, including area code) 212-588-6770

Securities registered pursuant to Section 12(b) of the Act: None

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 ☒ No ☐

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 ☒ No ☐

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.


Large accelerated filer ☐			Accelerated filer ☐
Non-accelerated filer ☒			Smaller reporting company ☒
			Emerging growth company ☒

If 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. ☐

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

As of May 11, 2026, there were 9,667,254 shares of our common stock, $0.001 par value, outstanding consisting of 5,046,223 shares of Class G common stock, 2,266,192 shares of Class G-D common stock, 2,339,784 shares of Class G-S common stock, 9,471 shares of Class E common stock and 5,584 shares of Class I common stock.

FRANKLIN BSP REAL ESTATE DEBT, INC.

FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31,2026

TABLE OF CONTENTS


			Page
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements and Notes (Unaudited)			2
Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (Unaudited)			2
Consolidated Statement of Operations for the Three Months Ended March 31, 202 6 and 2025 (Unaudited)			3
Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 202 6 and 2025 (Unaudited)			4
Consolidated Statement of Cash Flows for the Three Months Ended March 31, 202 6 and 2025 (Unaudited)			5
Notes to Consolidated Financial Statements (Unaudited)			6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			37
Item 4. Controls and Procedures			37
PART II - OTHER INFORMATION
Item 1. Legal Proceedings			38
Item 1A. Risk Factors			38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			38
Item 3. Defaults Upon Senior Securities			39
Item 4. Mine Safety Disclosures			39
Item 5. Other Information			39
Item 6. Exhibits			40
Signatures			41

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

FRANKLIN BSP REAL ESTATE DEBT, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share)


	March 31, 2026		December 31, 2025
Assets
Loans receivable, at fair value (includes pledged loans of $567,565 and $273,489 at March 31, 2026 and December 31, 2025, respectively)	$	619,721	$	372,276
Real estate securities, at fair value (includes pledged securities of $86,275 and $103,370 at March 31, 2026 and December 31, 2025, respectively)	102,051		103,668
Cash	18,444		12,315
Restricted cash	9,819		7,589
Interest receivable	2,482		1,016
Due from affiliates	615		615
Prepaid expenses and other assets	567		330
Total assets	$	753,699	$	497,809

Liabilities and Equity
Repurchase agreements, at fair value	$	512,402	$	292,032
Subscriptions received in advance	9,819		7,589
Due to affiliates	10,905		9,512
Distributions payable	1,543		1,164
Redemption payable	47		—
Interest payable	1,214		623
Accrued expenses and other liabilities	988		1,128
Total liabilities	536,918		312,048

Commitments and contingencies (See Note 12)

Equity
Common stock, $0.001 par value per share, 100,000 shares authorized, zero and zero shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively	—		—
Common stock, Class G shares, $0.001 par value per share, 4,599,068 and 3,918,589 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively	5		4
Common stock, Class G-D shares, $0.001 par value per share, 1,959,278 and 1,768,731 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively	2		2
Common stock, Class G-S shares, $0.001 par value per share, 1,751,134 and 1,484,584 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively	2		1
Common stock, Class E shares, $0.001 par value per share, 8,440 and 7,773 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively	—		—
Common stock, Class I shares, $0.001 par value per share, 5,542 and zero shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively	—		—
Additional paid-in capital	203,207		175,234
Accumulated deficit	(6,272)		(4,328)
Total stockholders' equity	196,944		170,913
Non-controlling interests	19,837		14,848
Total equity	216,781		185,761
Total liabilities and equity	$	753,699	$	497,809

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

FRANKLIN BSP REAL ESTATE DEBT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except share and per share data)


	For the three months ended March 31, 2026		For the three months ended March 31, 2025
Income
Interest income	$	10,478	$	—
Less: interest expense	(5,391)		—
Net interest income	5,087		—
Fee and other income	600		—
Total income	5,687		—

Expenses
Administrative fees	649		—
General and administrative expenses	463		—
Financing fees	445		—
Management & performance fees - related party	866		—
Accounting fees	202		—
Total expenses	2,625		—

Other loss
Unrealized loss on real estate securities, at fair value	(529)		—
Total other loss	(529)		—
Net income	2,533		—
Net income attributable to non-controlling interest	(236)		—
Net income attributable to Franklin BSP Real Estate Debt, Inc.	2,297		—
Net income per common share, basic and diluted	0.29		—
Weighted average common shares outstanding, basic and diluted	7,923,955		40

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

FRANKLIN BSP REAL ESTATE DEBT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(in thousands)

For the three months ended March 31, 2026:


	Common Shares		Common Shares Class G		Common Shares Class G-D		Common Shares Class G-S		Common Shares Class E		Common Shares Class I		Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity		Non-controlling Interests		Total Equity
Balance at December 31, 2025	$	—	$	4	$	2	$	1	$	—	$	—	$	175,234	$	(4,328)	$	170,913	$	14,848	$	185,761
Net income	—		—		—		—		—		—		—		2,297		2,297		—		2,297
Net income attributable to non-controlling interests	—		—		—		—		—		—		—		—		—		236		236
Proceeds from issuance of common shares	—		1		—		1		—		—		28,597		—		28,599		—		28,599
Offering costs	—		—		—		—		—		—		(577)		—		(577)		—		(577)
Common shares redeemed													(47)				(47)				(47)
Distribution declared on common shares (See note 9)	—		—		—		—		—		—		—		(4,241)		(4,241)		—		(4,241)
Contributions from non-controlling interests	—		—		—		—		—		—		—		—		—		4,753		4,753
Balance at March 31, 2026	$	—	$	5	$	2	$	2	$	—	$	—	$	203,207	$	(6,272)	$	196,944	$	19,837	$	216,781

For the three months ended March 31, 2025:


	Common Shares		Common Shares Class G		Common Shares Class G-D		Common Shares Class G-S		Common Shares Class E		Common Shares Class I		Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity		Non-controlling Interests		Total Equity
Balance at December 31, 2024	$	—	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	1	$	—	$	1
Common shares issued	—		—		—		—		—		—		—		—		—		—		—
Balance at March 31, 2025	$	—	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	1	$	—	$	1

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

FRANKLIN BSP REAL ESTATE DEBT, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(in thousands, except share and per share data)


	For the three months ended March 31, 2026		For the three months ended March 31, 2025
Cash flows from operating activities:
Net income	$	2,533	$	—
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized loss on real estate securities, at fair value	529		—
Financing fees	445		—
Accretion of purchase discount on real estate securities, net	(7)		—
Change in assets and liabilities
Increase in interest receivable	(1,466)		—
Increase in prepaid expenses and other assets	(237)		—
Increase in interest payable	591		—
Increase in due to affiliates	921		—
Decrease in accrued expenses and other liabilities	(140)		—
Net cash provided by operating activities	$	3,169	$	—

Cash flows from investing activities:
Deposits received in relation to origination of loans	$	—	$	46
Loan origination and funding activities	(248,677)		—
Principal repayments received on loans	1,232		—
Proceeds from sale or paydown of real estate securities	1,095		—
Net cash used in investing activities	$	(246,350)	$	46

Cash flows from financing activities:
Borrowings on repurchase agreements	$	232,360	$	—
Repayment on repurchase agreements	(924)		—
Net borrowings (paydowns) on repurchase agreements - less than 90 days maturity	(11,066)		—
Financing fees paid	(445)		—
Proceeds from issuance of common stock, net offering costs paid	28,597		—
Contributions from non-controlling interests	4,753		—
Stockholder servicing fees - paid	(104)		—
Distributions paid	(3,861)		—
Subscriptions received in advance	2,230		34,417
Net cash provided by financing activities	$	251,540	$	34,417

Net increase in cash and restricted cash	$	8,359	$	34,463
Cash and restricted cash, beginning of the period	19,904		26
Cash and restricted cash, end of the period	$	28,263	$	34,489

Reconciliation of cash and restricted cash:
Cash	$	18,444	$	72
Restricted cash	9,819		34,417
Cash and restricted cash, end of the period	$	28,263	$	34,489

Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,800	$	—

Non-cash financing activities:
Accrued stockholder servicing fees due to affiliates	$	377	$	—
Accrued offering costs due to affiliates	199		—
Distributions payable	380		—
Redemption payable	47		—

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

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the period ended March 31, 2026

Note 1 - Organization

Franklin BSP Real Estate Debt, Inc. (the “Company”) was formed on May 22, 2024 as a Maryland corporation and intends to elect to qualify to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes. The Company was organized to originate high-quality commercial real estate loans.

The Company is externally managed by Benefit Street Partners L.L.C. (the “Adviser”). The Adviser is a limited liability company that is registered as an investment adviser with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Adviser oversees the management of the Company’s activities and is responsible for making investment decisions with respect to the loans the Company originates.

The Company intends to use its proceeds from its private offering of common shares (the “Offering”) to finance the Company’s investment objectives. The Company’s investment strategy is to originate, acquire, finance and manage a portfolio of primarily commercial real estate (“CRE”) investments, focused on senior secured CRE loans across a wide range of geography. To a lesser extent, the Company may invest in, or originate, other real-estate related debt and equity investments, which may include subordinated debt, commercial mortgage-backed securities (“CMBS”) and collateralized loan obligations (“CLOs”).

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The following is a summary of significant accounting policies consistently followed by the Company in the preparation of its consolidated financial statements. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and consolidate the financial statements of the Company and its controlled subsidiaries. All intercompany balances and transactions have been eliminated upon 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 accompanying unaudited consolidated interim financial statements have been prepared pursuant to the requirements for reporting on Form 10-Q and Article 8 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management, the accompanying unaudited consolidated interim financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of financial statements for the interim periods presented.

The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 12, 2026.

The Company was formed on May 22, 2024 and operations commenced on April 1, 2025.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these consolidated financial statements. Actual results could differ from those estimates. In the opinion of management, the interim data includes all adjustments necessary for a fair statement of the results for the period.

Cash and Cash Equivalents

Cash and cash equivalents include cash held in banks and short-term, liquid investments in a money market deposit account that have original or remaining maturity dates of three months or less when purchased. Cash and cash equivalents are carried at cost which approximates fair value. The Company did not hold cash equivalents as of March 31, 2026. The Company may have cash balances in excess of federally insured amounts. The Company mitigates its risk of loss by maintaining cash deposits with high-quality institutions and by actively monitoring the credit risk of our counterparties.

Restricted Cash

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

Restricted cash consists of cash received for subscriptions prior to the date on which the subscriptions are effective. The Company’s restricted cash pertaining to subscriptions received in advance is held primarily in a bank account controlled by the Company’s transfer agent.

Fair Value Option

The Company has elected the fair value option for certain eligible financial assets and liabilities including CRE loans, real estate securities and liabilities associated with borrowing facilities. These financial assets and liabilities for which the Company has elected the fair value option are recorded in Loans receivable, at fair value, Real estate securities, at fair value, and Repurchase agreements, at fair value on the Consolidated Balance Sheets. The fair value elections were made to create a more direct alignment between the Company’s financial reporting and the calculation of Net Asset Value (“NAV”) per share used to determine the prices at which investors can purchase and redeem shares of the Company’s common shares, par value $0.001 per share.

The decision to elect the fair value option is determined on an instrument-by-instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately on the Company’s Consolidated Balance Sheets from those instruments using another accounting method.

The Company’s fair value option elections will be made in accordance with the guidance in Accounting Standards Codification (“ASC”) 825, Financial Instruments, that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attributed for certain eligible financial assets and liabilities. In the case of loans and securities investments for which fair value option is elected, loan origination fees and costs related to the origination or acquisition of the instrument should be immediately recognized within Fee and Other Income on the Consolidated Statements of Operations. In the case of debt facilities for which the fair value option is elected, financing fees related to the debt should be immediately recognized as an expense within Financing Fees on the Consolidated Statements of Operations. Unrealized gains and losses on assets and liabilities for which the fair value option has been elected are also reported in earnings without deferral. This is because under the fair value option, a lender reports the instrument at its exit price (i.e., the price that would be received to sell the instrument in an orderly transaction), which reflects the market’s assessment of the instrument’s cash flows and risks and does not include any equity-specific costs or fees.

Revenue Recognition

Interest income on performing loans and financial instruments is accrued based on the outstanding principal amount and contractual terms on the instrument. Origination fees and direct loan costs are recorded in income on the Consolidated Statements of Operations within Fee and other income and not deferred.

As of March 31, 2026 and December 31, 2025, the Company has elected the fair value option for each of its outstanding loans.

Organization and Offering Costs

Organization costs consist of costs incurred to establish the Company and enable it legally to do business. Organization costs are expensed as incurred and recorded on the Company’s Consolidated Statements of Operations. Offering costs consist of costs incurred in connection with the offering. Offering costs are recorded as a reduction to paid-in capital when the offering is completed.

The Company will bear the organization and offering expenses incurred in connection with the formation of the Company and the offering, including certain out of pocket expenses of the Adviser and its agents and affiliates under the Company’s advisory agreement (the “Advisory Agreement”). In addition, the Adviser may request reimbursement from the Company for the organization and offering costs it incurs on the Company’s behalf.

Under the Advisory Agreement, the Adviser will pay for organization and offering costs incurred prior to the first anniversary of April 1, 2025. The Company will reimburse the Adviser all organization and offering costs paid for by the Adviser in 60 equal monthly installments commencing with the first anniversary of April 1, 2025 or over an alternative time period agreed to by the Company’s Board of Directors (the “Board”) and the Adviser. After the first anniversary of April 1, 2025, the Company will reimburse the Adviser for any organization and offering costs paid on the Company’s behalf as they are incurred.

As of March 31, 2026, the Adviser and its affiliates have incurred organization and offering expenses on the Company’s behalf of approximately $3.6 million recorded in Due to affiliates on the Consolidated Balance Sheets.

Operating Expenses

Pursuant to the terms of the Advisory Agreement, the Adviser may pay for certain of the Company’s operating expenses prior to the first anniversary of April 1, 2025. All operating expenses paid by the Adviser will be reimbursed by the Company to the

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

Adviser in 60 equal monthly installments commencing on the first anniversary of April 1, 2025 or over an alternative time period agreed to by the Board and the Adviser. If the Adviser pays any operating expenses after the first anniversary of April 1, 2025, the Company will reimburse the Adviser at the end of each fiscal quarter for total operating expenses paid by the Adviser during such quarter. However, the Company may not reimburse the Adviser at the end of any fiscal quarter for total operating expenses (as defined in the Advisory Agreement) that, in the four consecutive fiscal quarters then ended, exceed the greater of 2% of average invested assets or 25% of net income for such four fiscal quarters determined without reduction for any non-cash reserves and excluding any gain from the sale of our assets for that period (the “2%/25% Guidelines”). The Company may reimburse the Adviser for expenses in excess of the 2%/25% Guidelines if a majority of the Company’s independent directors determines that such excess expenses are justified based on unusual and non-recurring factors. If the Company’s independent directors do not approve such excess amount as being so justified, the Adviser will reimburse the Company the amount by which the operating expenses exceeded the 2%/25% Guidelines.

On February 26, 2026, the Company entered into an amended and restated advisory agreement (the “Amended Advisory Agreement”) with the Adviser to amend the terms regarding the reimbursement to the Adviser of operating expenses it pays on behalf of the Company. Pursuant to the Amended Advisory Agreement, commencing January 1, 2026 through December 31, 2026, the Company will reimburse the Adviser for operating expenses it pays on the Company’s behalf in an amount up to 0.60% of Average Net Asset Value (as defined in the Amended Advisory Agreement) and expenses above such amount will be paid in 12 equal, quarterly installments, with approval of the independent directors of the Company required for the Company to reimburse the Adviser if such amounts are in excess of the greater of 2% of Average Invested Assets and 25% of Net Income (as defined in the Amended Advisory Agreement). Operating expenses paid by the Adviser prior to January 1, 2026 will be reimbursed in 60 monthly installments and beginning January 1, 2027, operating expenses will be reimbursed by the Company subject to the caps as provided for in the initial agreement.

As of March 31, 2026, the Adviser and its affiliates have incurred operating expenses on the Company’s behalf of approximately $2.1 million recorded in Due to affiliates in the Consolidated Balance Sheets. For the three months ended March 31, 2026, $1.1 million of operating expenses were deferred under the Amended Advisory Agreement.

Repurchase Agreements

Real estate loans and securities sold under repurchase agreements have been treated as a secured borrowing and accounted for as repo to maturity transaction under ASC 860, Transfers and Servicing, because the Company maintains effective control over the transferred securities as this aligns with the adoption of the accounting policy. Commercial mortgage loans and real estate securities financed through repurchase agreements remain in the Consolidated Balance Sheets as an asset and cash received from the purchaser is recorded as a liability. Interest paid in accordance with repurchase agreements is recorded in Interest expense in the Consolidated Statements of Operations.

Stockholder Servicing Fees

The Company accrues the full amount of stockholder servicing fees payable over an estimated investor holding period as an offering cost at the time each applicable share is sold during our continuous offering and records the amount as an offset (reduction) to additional paid-in capital in the Consolidated Balance Sheets. As of March 31, 2026 $2.9 million of stockholder servicing fees have been recorded as an offset to additional paid-in capital in the Consolidated Balance Sheets.

Income Taxes

The Company intends to elect to qualify to be taxed as a REIT under the Code beginning with the taxable year ended December 31, 2025. In general, 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 year, the Company will not be subject to U.S. federal income tax to the extent of the income that it distributes. The Company believes it currently qualifies, and it intends to continue to qualify as a REIT under the Code. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income.

The Company evaluates tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether it is “more-likely-than-not” (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. Tax positions that do not meet the more-likely-than-not threshold are disclosed as uncertain tax positions in the current year. The Company’s accounting policy is to classify interest and penalties related to uncertain tax positions as a provision for income taxes. The Company did not record any tax provision in the current period. However, management’s conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, examination by tax authorities on-going analysis of and changes to tax laws, regulations and interpretations thereof.

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash investments, single asset CMBS, loan investments and interest receivable. The Company may place cash investments in excess of insured amounts with high quality financial institutions. The Company performs ongoing analysis of credit risk concentrations in its investment portfolio by evaluating exposure to various markets, underlying property types, term, tenant mix and other credit metrics. While our investment objectives include avoiding excess borrower concentration, we expect to experience some level of borrower concentration prior to the time that we have raised substantial offering proceeds and acquired a broad loan portfolio. As of March 31, 2026, there are no borrowers whose aggregate loan balance exceeds our established threshold of 10% of our total assets balance. As of March 31, 2026, one stockholder held 12.7% of our total outstanding common shares.

Segment Reporting

In accordance with FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures the Company operates through a single operating and reporting segment with an investment objective to provide high current income while maintaining downside protection on its investments. The chief operating decision maker (“CODM”) is comprised of the Company’s Chief Executive Officer/President and the Chief Financial Officer/Chief Operating Officer, and assesses the performance and makes operating decisions of the Company on a consolidated basis primarily based on the Company’s net income under GAAP. The CODM uses net income as a key metric in determining the amount of dividends to be distributed to the Company’s stockholders. As the Company’s operations comprise of a single reporting segment, the segment assets are reflected in total assets on the accompanying Consolidated Balance Sheets and the significant segment expenses are listed on the accompanying Consolidated Statements of Operations.

Recently Issued Accounting Guidance

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” or ASU 2023-09. ASU 2023-09 requires additional disaggregated disclosures on the entity’s effective tax rate reconciliation and additional details on income taxes paid. ASU 2023-09 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2025 and early adoption is permitted. We do not expect the adoption of ASU 2023-09 to have a material impact on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03 “Income statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,” or ASU 2024-03. ASU 2024-03 requires additional disclosures about specific expenses categories in the notes to the financial statements. ASU 2024-03 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026 and early adoption is permitted. We do not expect the adoption of ASU 2024-03 to have a material impact on our consolidated financial statements.

Note 3 - Related Party Transactions

Advisory Agreement

On April 1, 2025, the Company entered into the Advisory Agreement with the Adviser in which the Adviser, subject to the overall supervision of the Board, manages the day-to-day operations of, and provides investment advisory services to the Company. Under the Advisory Agreement, the Adviser is responsible for sourcing, evaluating and monitoring the Company’s investment opportunities and making decisions related to the acquisition, origination, management, financing and disposition of the Company’s assets, in accordance with the Company’s investment objectives, guidelines, policies and limitations, subject to oversight by the Board.

Pursuant to the Advisory Agreement, the Company pays the Adviser a fee for investment advisory and management services consisting of two components- a base management fee and performance fee (“Performance Fee”). In addition, the Adviser is also entitled to a portion of certain commitment fees charged to and paid by the borrower on loans originated by the Company.

Management and Performance Fees

As compensation for the services provided pursuant to the Advisory Agreement, the Adviser will be paid a management fee equal to 1.25% per annum of the NAV allocable to each class of common shares, except for Class F, F-S, F-D, G, G-S, G-D and E common shares (the “Management Fee”). The Management Fee for Class F, F-S and F-D common shares is equal to 0.60% per annum of the NAV allocable to each such class of common shares. The Management Fee for Class G, G-S and G-D common shares is equal to 0.55% per annum of the NAV allocable to each such class of common shares. There is no management fee with respect to Class E shares. The Management Fee is payable monthly in arrears. In calculating the

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

Management Fee, the Company will use the NAV before giving effect to accruals for the Management Fee, Stockholder Serving Fee, the Performance Fee or any distributions.

The Adviser may be entitled to receive a performance fee for each class of common share, other than Class E common shares, which is accrued monthly and payable quarterly in arrears. The Performance Fee will be an amount, not less than zero, equal to (i) 12.5% of Core Earnings (as defined below) for the immediately preceding four calendar quarters (each such period, a "4-Quarter Performance Measurement Period"), subject to a hurdle rate, expressed as an annual rate of return on average Adjusted Capital (as defined in the Advisory Agreement), equal to 5.0% (the "Annual Hurdle Rate"), minus (ii) the sum of any Performance Fees paid to the Adviser with respect to the first three calendar quarters in the applicable 4-Quarter Performance Measurement Period. The Adviser does not earn a Performance Fee for any calendar quarter until Core Earnings for the applicable 4-Quarter Performance Measurement Period exceed the Annual Hurdle Rate.

As defined in the Advisory Agreement, Core Earnings shall mean for the applicable performance measurement period, the net income (loss), computed in accordance with GAAP, attributable to holders of classes of Common Shares to which the Performance Fee applies, including realized gains (losses) not otherwise included in GAAP net income (loss), amortizing over the life of the loan any warehouse debt issuance costs that is expensed at inception under GAAP, and excluding (i) non-cash equity compensation expense, (ii) the Performance Fee, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, (v) one-time events pursuant to changes in GAAP, and (vi) certain non-cash adjustments and certain material non-cash income or expense items, in each case after discussions between the Adviser and the Independent Directors and approved by a majority of the Independent Directors.

For each of the three full calendar quarters preceding the fourth quarter of the initial 4-Quarter Performance Measurement Period, the Performance Fee will be an amount, not less than zero, equal to (i) 12.5% of our Core Earnings for all of the full calendar quarter periods completed since the initial closing of our private offering (each such period, a “Partial-Year Performance Measurement Period”), subject to the Applicable Hurdle Rate (as defined below), which is calculated by multiplying the Annual Hurdle Rate by a fraction consisting of (x) a numerator equal to the number of full calendar quarter periods included in the Partial-Year Performance Measurement Period, and (y) a denominator equal to 4, minus (ii) the sum of any Performance Fees paid to the Adviser with respect to the prior Partial-Year Performance Measurement Periods.

Once the Company’s Core Earnings exceed the Applicable Hurdle Rate, the Adviser is entitled to a “catch-up” fee payable quarterly equal to the amount of Core Earnings in excess of the Applicable Hurdle Rate (as defined in the Advisory Agreement), until the Company’s Core Earnings for the applicable performance measurement period exceed a percentage of average adjusted capital equal to the specified Applicable Hurdle Rate divided by the difference of 1 minus 0.125 for the applicable performance measurement period. Thereafter, the Adviser is entitled to receive 12.5% of the Company’s Core Earnings.

The Management Fee and Performance Fee may be paid, at the Adviser's election, in any combination of cash or common shares with a cash equivalent value (based on NAV per share allocable to such class). If the Adviser elects to receive any portion of its Management Fee or Performance Fee in common shares, the Adviser or any subsequent transferee thereof may elect to have the Company repurchase such common shares from the Adviser or such transferee at a later date at a repurchase price per common share equal to the then NAV per share allocable to such class. Common shares obtained by the Adviser or any subsequent transferee will not be subject to the Company's share repurchase plan, including the repurchase limits or any reduction or penalty for an early repurchase.

Accrued Organization and Offering Costs and Accrued Operating Expenses

Refer to Note 2.

Stockholder Servicing Fees

The Company entered into a dealer manager agreement (the “Dealer Manager Agreement”) with Franklin Distributors, L.L.C. (the “Dealer Manager”), an affiliate of the Adviser, on January 23, 2025 effective as of September 1, 2024. The Dealer Manager is entitled to receive stockholder servicing fees with respect to certain classes of our common shares, including 0.85% per annum of the aggregate NAV for each of the Class F-S shares and Class G-S shares and 0.25% per annum of the aggregate NAV for each of the Class F-D shares and Class G-D shares.

The Dealer Manager anticipates that substantially all of the stockholder servicing fees will be retained by, or re-allowed (paid) to, participating broker-dealers. For the three months ended March 31, 2026, the Dealer Manager did not retain any stockholder servicing fees.

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

The Company accrues the estimated amount of the future stockholder servicing fees payable to the Dealer Manager. Accrued stockholder servicing fees were $2.7 million at March 31, 2026. There were $2.4 million accrued stockholder servicing fees at December 31, 2025.

The table below shows the costs incurred due to arrangements with the Adviser and its affiliates during the three months ended:


(in thousands)	March 31, 2026		March 31, 2025
Administrative Expenses	$	649	$	—
Performance Fees	594		—
Management Fees	272		—
Stockholder Servicing Fees(1)	377		—
Offering Costs(2)	199		—
	2,091		—

(1) The Company accrues the full amount of stockholder servicing fees payable over an estimated investor holding period as an offering cost at the time each applicable share is sold during the Company’s continuous offering and records the amount as an offset (reduction) to additional paid-in capital in the Consolidated Balance Sheets.

(2) Offering costs consist of costs incurred in connection with the Company’s continuous offering. Offering costs are recorded as a reduction to paid-in capital.

Due from Affiliates

The following table details the components of Due from affiliates:


(in thousands)	March 31, 2026		December 31, 2025
Other	615		615
Total due from affiliates	$	615	$	615

Due to Affiliates

The following table details the components of Due to affiliates:


(in thousands)	March 31, 2026		December 31, 2025
Accrued organization costs	$	1,053	$	1,053
Accrued offering costs	2,563		2,364
Accrued management fees	272		220
Accrued performance fees	594		325
Accrued administration fees	1,636		1,626
Accrued stockholder services fees	2,691		2,418
Due to advisor	2,096		1,506
Total due to affiliates	$	10,905	$	9,512

Loan Acquisition Transactions

For the three months ended March 31, 2026, the Company purchased interests in twelve commercial real estate loans from an entity managed by and affiliated with the Adviser. The below table details the commercial real estate loan interests and associated debt acquired during the three months ended March 31, 2026:


(in thousands)	Principal Balance Acquired		Debt Acquired		Net Cash Paid (1)
Related Party Acquisitions	$	136,525	$	(93,197)	$	43,846

(1) Net cash paid includes accrued interest income of $0.5 million.

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

Note 4 - Investments in Loans Receivable

At March 31, 2026, the Company’s held for investment loan portfolio is as follows:


($ in thousands)
Loan Type	Loan Amount (1)		Principal Balance Outstanding		Fair Value		Weighted Average Interest Rate (2)		Weighted Average Life (3)
Senior	$	696,314	$	613,812	$	613,812	6.98	%	3.94
Mezzanine	20,243		5,909		5,909		12.78	%	3.79
Total	$	716,557	$	619,721	$	619,721	7.03	%	3.94

(1)Loan amount consists of outstanding principal balance plus unfunded loan commitments.

(2)Represents the weighted average interest rate for each loan at March 31, 2026. Loans earn interest at the one-month term Secured Overnight Financing Rate (“SOFR”) plus a spread, aside from one Senior loan with a fixed-rate of 6.45%. At March 31, 2026, the one-month SOFR was 3.66%.

(3)Assumes all extension options are exercised by the borrower, however, loans may be prepaid prior to such date. Extension options are subject to satisfaction of certain predefined conditions as defined in the respective loan agreements.

At December 31, 2025, the Company’s held for investment loan portfolio is as follows:


($ in thousands)
Loan Type	Loan Amount (1)		Principal Balance Outstanding		Fair Value		Weighted Average Interest Rate (2)		Weighted Average Life (3)
Senior	$	452,540	$	367,996	$	367,996	7.06	%	4.18
Mezzanine	19,131		4,280		4,280		12.72	%	3.82
Total	$	471,671	$	372,276	$	372,276	7.13	%	4.17

(1)Loan amount consists of outstanding principal balance plus unfunded loan commitments.

(2)Represents the weighted average interest rate for each loan at December 31, 2025. Loans earn interest at the one-month term Secured Overnight Financing Rate (“SOFR”) plus a spread. At December 31, 2025, the one-month SOFR was 3.69%.

The below tables detail the property type and geographic location of the properties securing our commercial real estate loans as of March 31, 2026 and December 31, 2025:


($ in thousands)
	March 31, 2026				December 31, 2025
Property Type	Fair Value		Percentage		Fair Value		Percentage
Multifamily	$	500,391	80.75	%	$	272,297	73.14	%
Industrial	96,830		15.62	%	67,816		18.22	%
Hospitality	22,500		3.63	%	22,500		6.04	%
Mixed Use	—		—	%	9,663		2.60	%
Total	$	619,721	100	%	$	372,276	100	%

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026


($ in thousands)
	March 31, 2026				December 31, 2025
Region	Fair Value		Percentage		Fair Value		Percentage
Southeast	$	184,191	29.72	%	$	120,168	32.28	%
Southwest	116,823		18.85	%	74,389		19.98	%
Far West	93,869		15.15	%	66,349		17.82	%
Mideast	76,892		12.41	%	26,020		6.99	%
Various(1)	71,227		11.49	%	39,715		10.67	%
Rocky Mountain	44,593		7.20	%	29,525		7.93	%
Great Lakes	23,610		3.81	%	16,110		4.33	%
New England	8,516		1.37	%	—		—	%
	$	619,721	100	%	$	372,276	100	%

(1) Various includes industrial and multifamily portfolios with multiple locations throughout the United States.

Note 5 - Investments in Real Estate Securities

The following is a summary of the Company’s investments in real estate securities, at fair value at March 31, 2026 and December 31, 2025:


	CMBS Bonds
($ in thousands)	Number of Bonds	Benchmark Interest Rate	Weighted Average Interest Rate	Weighted Average Contractual Maturity (years)	Par Value		Fair Value
March 31, 2026	17	1 month SOFR	6.80%	4.00	$	102,275	$	102,051
December 31, 2025	17	1 month SOFR	6.83%	4.25	$	103,370	$	103,668

The Company reports CMBS bonds at fair value on the Consolidated Balance Sheets with changes in fair value recorded in Unrealized gain (loss) on real estate securities, at fair value in the Consolidated Statements of Operations.

The following table shows the amortized cost, unrealized gain (loss) and fair value of the Company’s CMBS bonds at March 31, 2026 and December 31, 2025:


(in thousands)	Amortized Costs		Unrealized Gain		Unrealized Loss		Fair Value
March 31, 2026	$	102,181	$	60	$	(190)	$	102,051
December 31, 2025	$	103,269	$	400	$	—	$	103,668

Note 6 - Repurchase Agreements

The following table presents the value of repurchase agreements, at fair value at March 31, 2026:

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026


(in thousands, except interest rates)
Description	Weighted Average Interest Rate (1)		Maximum Facility Size		Available Capacity		Debt Amount Outstanding		Fair Value of Debt		Fair Value of Collateral		Current Maturity Date	Maximum Maturity Date (2)
FBRED REIT BWH Seller, LLC	5.26	%	$	250,000	$	135,659	$	114,341	$	114,341	$	144,955	5/8/2028	5/8/2030
FBRED REIT JWH Seller, LLC	5.53	%	250,000		76,108		173,892		173,892		229,536		3/18/2027	3/18/2030
FBRED REIT WWH Seller, LLC	5.16	%	150,000		2,726		147,274		147,274		185,793		7/30/2027	7/30/2030
FBRED REIT AWH Seller, LLC	6.41	%	100,000		94,903		5,097		5,097		7,281		12/16/2026	12/16/2027
FBRED REIT High Yield Securities, LLC - JPM (3)	4.60	%	n/a		N/A		54,309		54,309		64,775		30 days	30 days
FBRED REIT High Yield Securities - Lucid (3)	4.70	%	n/a		N/A		17,489		17,489		21,500		30 days	30 days
Total	5.25	%					$	512,402	$	512,402	$	653,840

(1)Represents the weighted average interest rate at March 31, 2026.

(2)Borrowing facilities may have extension options, subject to lender approval and compliance with certain financial and administrative covenants.

(3)Borrowings are tied to real estate securities with a 30-day repurchase maturity term, which automatically renew, subject to administrative covenants.

The following table presents the value of repurchase agreements, at fair value at December 31, 2025:


(in thousands, except interest rates)
Description	Weighted Average Interest Rate (1)		Maximum Facility Size		Available Capacity		Debt Amount Outstanding		Fair Value of Debt		Fair Value of Collateral		Current Maturity Date	Maximum Maturity Date (2)
FBRED REIT BWH Seller, LLC	5.32	%	$	250,000	$	177,162	$	72,837	$	72,837	$	91,999	5/8/2028	5/8/2030
FBRED REIT JWH Seller, LLC	6.01	%	250,000		184,474		65,526		65,526		90,772		3/18/2027	3/18/2030
FBRED REIT WWH Seller, LLC	5.17	%	150,000		84,292		65,708		65,708		83,437		7/30/2027	7/30/2030
FBRED REIT AWH Seller, LLC	6.44	%	100,000		94,903		5,097		5,097		7,281		12/16/2026	12/16/2027
FBRED REIT High Yield Securities, LLC - JPM (3)	4.63	%	N/A		N/A		54,558		54,558		65,870		30 days	30 days
FBRED REIT High Yield Securities - Lucid (3)	4.76	%	N/A		N/A		28,306		28,306		37,500		30 days	30 days
Total	5.28	%					$	292,032	$	292,032	$	376,859

(1)Represents the weighted average interest rate at December 31, 2025.

(2)Borrowing facilities may have extension options, subject to lender approval and compliance with certain financial and administrative covenants.

(3)Borrowings are tied to real estate securities with a 30-day repurchase maturity term, which automatically renew, subject to administrative covenants.

Borrowings under the Company’s repurchase agreements bear interest at one-month term SOFR plus a spread. At March 31, 2026, the one-month SOFR was 3.66%. Our repurchase agreements are subject to certain non-financial and financial covenants, including liquidity, tangible net worth and leverage covenants. We were in compliance with these covenants as of March 31, 2026.

Repurchase Agreement Facilities

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

On March 17, 2025, the Company, through its indirect wholly-owned subsidiary FBRED REIT High Yield Securities, LLC, entered into a Master Repurchase Agreement (the “J.P. Morgan MRA”) with J.P. Morgan Securities LLC. Under the J.P. Morgan MRA, there is no maximum aggregate commitment. There is no initial maturity date of the J.P. Morgan MRA, however the borrowings are tied to real estate securities with 30-day repurchase maturity terms.

On March 18, 2025, the Company, through its indirect wholly-owned subsidiary FBRED REIT JWH Seller, LLC (“JWH”), entered into an Uncommitted Master Repurchase Agreement (the “Uncommitted MRA”) with J.P. Morgan Chase Bank, National Association. The Uncommitted MRA provides up to $250 million of advances. At the Company’s option, the Uncommitted MRA may be upsized to provide up to $500 million in advances. The initial maturity date of the Uncommitted MRA is March 18, 2027.

On May 8, 2025, the Company, through its indirect wholly-owned subsidiary FBRED REIT BWH Seller, LLC, entered into an Master Repurchase Agreement (the “Barclays MRA”) with Barclays Bank PLC. The Barclays MRA provides up to $250 million of advances. The initial maturity date of the Barclays MRA is May 8, 2028.

On July 30, 2025, the Company, through its indirect wholly-owned subsidiary FBRED REIT WWH Seller, LLC, entered into a Master Repurchase Agreement (the “Wells Fargo MRA”) with Wells Fargo Bank, National Association. The Wells Fargo MRA provides up to $150 million of advances. The initial maturity date of the Wells Fargo MRA is July 30, 2027, which may be extended for up to three years.

On September 19, 2025, the Company, through its indirect wholly-owned subsidiary FBRED REIT High Yield Securities, LLC, entered into a Master Repurchase Agreement (the “Lucid MRA”) with Lucid Prime Fund LLC. Under the Lucid MRA, there is no maximum aggregate commitment. There is no initial maturity date on the Lucid MRA, however the borrowings are tied to real estate securities 30-day repurchase maturity term.

On December 17, 2025, the Company, through its indirect wholly-owned subsidiaries FBRED REIT AWH Seller, LLC and FBRED REIT AWH Mezzanine Loan Seller, LLC, entered into a Master Repurchase Agreement (the “Atlas MRA”) with Atlas Securitized Products, L.P. The Atlas MRA provides up to $100 million of advances. The initial maturity of the Atlas MRA is December 16, 2026, which may be extended for one year.

The following table represents the future principal payments under the Company’s outstanding repurchase agreements, assuming maximum maturity dates under available extension options, at March 31, 2026:


(in thousands)
Year	Amount
2026	$	71,798
2027	5,097
2028	—
2029	—
2030	435,507
Thereafter	—
Total	$	512,402

Note 7 - Fair Value Measurements

In accordance with ASC 820, Fair Value Measurement (“ASC 820”), fair value is defined as the price that the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

Each financial asset and liability is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below:

•Level 1 – Quoted prices in active markets for identical assets or liabilities.

•Level 2 – Other significant observable inputs (including quoted prices for similar assets or liabilities, interest rates, prepayment speeds, credit risk, etc.).

•Level 3 – Significant unobservable inputs (including the Company’s own assumptions in determining the fair value of assets and liabilities at the reporting date).

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

Valuation of Financial Assets and Liabilities Measured at Fair Value

The Company measures the fair value of its loans receivable and repurchase agreements using a discounted cash flow analysis unless observable market data is available. A discounted cash flow analysis requires management to make estimates regarding future interest rates and credit spreads. The most significant of these inputs relates to credit spreads and is unobservable. Thus, the Company has determined that the fair values of loans receivable and repurchase agreements valued using a discount cash flow analysis should be classified as Level 3 of the fair value hierarchy, while mortgage loans valued using securitized pricing should be classified as Level 2 of the fair value hierarchy. Mortgage loans classified as Level 3 are transferred to Level 2 if securitization pricing becomes available. The Company obtains third party pricing for determining the fair value of real estate securities, resulting in a Level 2 classification.

The following table presents the Company’s financial assets and liabilities carried at fair value on a recurring basis in the Consolidated Balance Sheets at March 31, 2026 by their level in the fair value hierarchy:


	Fair Value Measurements
(in thousands)	Level 1		Level 2		Level 3		Total
Financial Assets:
Loans receivable, at fair value	$	—	$	—	$	619,721	$	619,721
Real estate securities, at fair value	—		102,051		—		102,051
Total	$	—	$	102,051	$	619,721	$	721,772

Financial Liabilities:
Repurchase agreements, at fair value	$	—	$	—	$	512,402	$	512,402
Total	$	—	$	—	$	512,402	$	512,402

The following table presents the Company’s financial assets and liabilities carried at fair value on a recurring basis in the Consolidated Balance Sheets at December 31, 2025 by their level in the fair value hierarchy:


	Fair Value Measurements
(in thousands)	Level 1		Level 2		Level 3		Total
Financial Assets:
Loans receivable, at fair value	$	—	$	—	$	372,276	$	372,276
Real estate securities, at fair value	—		103,668		—		103,668
Total	$	—	$	103,668	$	372,276	$	475,944

Financial Liabilities:
Repurchase agreements, at fair value	$	—	$	—	$	292,032	$	292,032
Total	$	—	$	—	$	292,032	$	292,032

Valuation of Loans Receivable, at Fair Value

The following table shows a reconciliation of the beginning and ending fair value measurements of the Company’s loans receivable at March 31, 2026:


(in thousands)	March 31, 2026
Beginning balance at January 1, 2026	$	372,276
Loan originations and fundings	248,677
Principal paydowns	(1,232)
Unrealized gain (loss) on loans receivable	—
Balance at March 31, 2026	$	619,721

The following table summarizes the significant unobservable inputs used in the fair value measurement of the Company’s loans receivable at March 31, 2026:

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

(in thousands)

Fair Value

Valuation Technique

Unobservable Inputs

Weighted Average Rate

Range

Loans receivable, at fair value - Senior

581,707

Discounted Cash Flow

Discount Rate (interest spread)

3.35%

2.00% - 6.45%

Loans receivable, at fair value - Senior

32,105

Recent Transaction (1)

N/A

Loans receivable, at fair value - Mezzanine

5,909

Discounted Cash Flow

Discount Rate (interest spread)

9.15%

4.52% - 15.43%

Loans receivable, at fair value - Mezzanine

—

Recent Transaction (1)

N/A

619,721

(1) Any loans receivable originated during the calendar month are valued utilizing the transaction price as a market approach under ASC 820.

The following table summarizes the significant unobservable inputs used in the fair value measurement of the Company’s loans receivable at December 31, 2025:

(in thousands)

Fair Value

Valuation Technique

Unobservable Inputs

Weighted Average Rate

Range

Loans receivable, at fair value - Senior

266,241

Discounted Cash Flow

Discount Rate (interest spread)

3.39%

2.30% - 6.49%

Loans receivable, at fair value - Senior

101,755

Recent Transaction (1)

N/A

Loans receivable, at fair value - Mezzanine

1,640

Discounted Cash Flow

Discount Rate (interest spread)

11.68%

7.02% - 15.43%

Loans receivable, at fair value - Mezzanine

2,640

Recent Transaction (1)

N/A

372,276

(1) Any loans receivable originated during the calendar month are valued utilizing the transaction price as a market approach under ASC 820.

Valuation of Repurchase Agreements, at Fair Value

The following table shows a reconciliation of the beginning and ending fair value measurements of the Company’s repurchase agreements at March 31, 2026:


(in thousands)	March 31, 2026
Beginning balance at January 1, 2026	$	292,032
Borrowings under repurchase agreements	415,571
Repayment under repurchase agreements	(195,201)
Balance at March 31, 2026	$	512,402

The Company did not have repurchase agreements measured at fair value during the three months ended March 31, 2025.

The following table summarizes the significant unobservable inputs used in the fair value measurement of the Company’s repurchase agreements at March 31, 2026:

(in thousands)

Fair Value

Valuation Technique

Unobservable Inputs

Weighted Average Rate

Range

Repurchase agreements, at fair value

482,334

Discounted Cash Flow

Discount Rate (interest spread)

1.58%

0.60% - 3.70%

Repurchase agreements, at fair value

30,068

Recent Transaction (1)

N/A

512,402

(1) Any borrowings under repurchase agreements executed during the calendar month are valued utilizing the transaction price as a market approach under ASC 820.

The following table summarizes the significant unobservable inputs used in the fair value measurement of the Company’s repurchase agreements at December 31, 2025

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

(in thousands)

Fair Value

Valuation Technique

Unobservable Inputs

Weighted Average Rate

Range

Repurchase agreements, at fair value

230,975

Discounted Cash Flow

Discount Rate (interest spread)

1.52%

0.65% - 3.60%

Repurchase agreements, at fair value

61,057

Recent Transaction (1)

N/A

292,032

(1) Any borrowings under repurchase agreements executed during the calendar month are valued utilizing the transaction price as a market approach under ASC 820.

Note 8 - Prepaid Expenses and Other Assets and Accrued Expenses and Other Liabilities

The following table summarizes the components of Prepaid expenses and other assets:


(in thousands)	March 31, 2026		December 31, 2025
Exit fee receivables	$	525	$	233
Prepaid expenses	42		97
Total prepaid expenses and other assets	$	567	$	330

The following table summarizes the component of Accrued expenses and other liabilities:


(in thousands)	March 31, 2026		December 31, 2025
Accrued expenses	$	922	$	1,074
Directors compensation payable	66		54
Accrued expenses and other liabilities	$	988	$	1,128

Note 9 - Stockholders’ Equity

Authorized Capital

As of May 22, 2024, the Company was authorized to issue 100,000 shares of common stock, par value $0.001 per share. On March 27, 2025, the Company amended it Articles of Incorporation, pursuant to which the Company is authorized to issue 3.2 billion shares, consisting of 3.1 billion shares of common stock, par value of $0.001 per share, of which 500 million shares are classified as Class I common stock, and 100.0 million shares of preferred stock, par value of $0.001 per share.

Effective April 1, 2025, the Company supplemented its Articles of Incorporation to classify 100 million of its common shares as Class F common stock, 400 million of its common shares as Class F-D common stock, 400 million of its common shares as Class F-S common stock, 100 million of its common shares as Class G common stock, 400 million of its common shares as Class G-D common stock, 400 million of its common shares as Class G-S common stock and 200 million of its common shares as Class E common stock.

The Company has commenced a continuous private offering, pursuant to which it offers and sells to a limited number of investors various classes of its common shares. The classes of common shares may have different upfront selling commissions, dealer manager fees and ongoing stockholder servicing fees, as well as different management fees and performance participation allocations. The initial per share purchase price for shares of the Company’s common shares in the offering was equal to the most recently determined NAV per share for the applicable class (which was deemed to be $25.00 until the last calendar day of the month during which the Company makes its first investment, which was April 1, 2025) plus applicable upfront selling commissions and dealer manager fees. Thereafter, the purchase price per share for each class of the Company’s common shares varies and will generally equal the prior month’s NAV per share for each applicable class, as calculated monthly, plus applicable upfront selling commissions and dealer manager fees.

Common Shares

On April 1, 2025 the Company completed its first closing of its private offering of common shares.

The table below summarizes changes in the Company’s outstanding common shares and proceeds from the issuance of

common shares for the three months ended March 31, 2026:

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026


	Common Shares		Common Shares Class G		Common Shares Class G-D		Common Shares Class G-S		Common Shares Class E		Common Shares Class I		Total
Shares outstanding at December 31, 2025	—		3,918,589		1,768,731		1,484,584		7,773		—		7,179,677
Common shares issued	—		642,264		159,538		250,799		602		5,500		1,058,703
DRIP shares issued	—		40,187		31,009		15,751		65		42		87,054
Repayment of affiliate's initial investment	—		(1,972)		—		—		—		—		(1,972)
Shares outstanding at March 31, 2026	—		4,599,068		1,959,278		1,751,134		8,440		5,542		8,323,462
Proceeds from issuance of common shares (in thousands)	$	—	$	17,082	$	4,736	$	6,625	$	17	$	139	$	28,599

The table below summarizes changes in the Company’s outstanding common shares and proceeds from the issuance of

common shares for the three months ended March 31, 2025:


	Common Shares		Common Shares Class G		Common Shares Class G-D		Common Shares Class G-S		Common Shares Class E		Common Shares Class I		Total
Shares outstanding at December 31, 2024	40		—		—		—		—		—		40
Common shares issued	—		—		—		—		—		—		—
Shares outstanding at March 31, 2025	40		—		—		—		—		—		40
Proceeds from issuance of common shares (in thousands)	$	1	$	—	$	—	$	—	$	—	$	—	$	1

Share Repurchase Plan

The Company has adopted a share repurchase plan whereby stockholders may request on a quarterly basis that the Company repurchase all or any portion of their shares. However, the share repurchase plan is discretionary and the Company is not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased in any particular calendar quarter. In addition, the Company’s ability to fulfill repurchase requests is subject to a number of limitations, including whether there is sufficient cash available to meet such requests. As a result, share repurchases may not be available each calendar quarter. Repurchases will be made at the transaction price in effect on the repurchase date, except that shares that have not been outstanding for at least one year will be repurchased at 95% of the transaction price (an “Early Repurchase Deduction”). The one-year holding period is measured as of the first calendar day immediately following the prospective repurchase date. The Early Repurchase Deduction will not apply to shares acquired through the Company’s distribution reinvestment plan (“DRIP”). In February 2026, the Board unanimously approved a limited waiver of the Early Repurchase Deduction with respect to requests for repurchase of shares submitted through discretionary model portfolio management programs or with respect to automatic non-discretionary rebalancing programs.

The aggregate NAV of total repurchases of common stock (excluding any Early Repurchase Deduction) is limited to no more than 5% of the aggregate NAV per calendar quarter (measured using the aggregate NAV as of the end of the immediately preceding month). Shares issued to the Adviser pursuant to the Advisory Agreement are not subject to these repurchase limitations.

In the event that the Company determines to repurchase some but not all of the shares submitted for repurchase during any calendar quarter under the share repurchase plan, shares repurchased at the end of the calendar quarter will be repurchased on a pro rata basis. All unsatisfied repurchase requests must be resubmitted after the start of the next calendar quarter, or upon the recommencement of the share repurchase plan, as applicable.

Under the share repurchase plan, the Board may make exceptions to, amend, suspend (including indefinitely) or terminate the share repurchase plan at any time if it deems such action to be in the Company’s best interest and the best interests of the stockholders.

The Company may fund repurchase requests from sources other than cash flow from operations, including, without limitation, the sale of assets, borrowings, return of capital or offering proceeds, and there are no limits on the amounts the Company may

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

pay from such sources. Should repurchase requests, in the Company’s judgment, place an undue burden on its liquidity, adversely affect the Company’s operations or risk having an adverse impact on the Company as a whole, or should the Company otherwise determine that investing its liquid assets in real estate or other investments rather than repurchasing its shares is in the best interests of the Company as a whole, then the Company may choose to repurchase fewer shares than have been requested to be repurchased, or none at all.

For the three months ended March 31, 2026, the Company processed one redemption request and recorded $46,767 to Redemptions payable in the Consolidated Balance Sheets.

Distribution Reinvestment Plan

The Company has adopted a distribution reinvestment plan whereby stockholders will have their cash distributions automatically reinvested in additional shares of common stock unless they elect to receive their distributions in cash. The per share purchase price for shares purchased under the distribution reinvestment plan is equal to the transaction price at the time the distribution is payable.

Distributions

The following table details the aggregate distributions declared for the Company’s common shares for the three months ended March 31, 2026:


	Common Shares Class G		Common Shares Class G-D		Common Shares Class G-S		Common Shares Class E		Common Shares Class I
Aggregate gross distribution declared per common share	$	0.5467	$	0.5467	$	0.5467	$	0.5467	$	0.3800
Stockholder servicing fee per common share	—		(0.0145)		(0.0493)		—		—
Net distributions declared per common share	$	0.5467	$	0.5322	$	0.4974	$	0.5467	$	0.3800

There were no distributions declared for the Company’s common shares for the three months ended March 31, 2025.

Note 10 - Earnings Per Common Share

Earnings per common share for the three months ended March 31, 2026 and December 31, 2025, is computed as presented in the table below:


(in thousands, except share and per share amounts)	Three months ended March 31, 2026		Three months ended March 31, 2025
Basic and Diluted
Net income available to common stockholders	$	2,297	$	—
Weighted average common shares outstanding	7,923,955		40
Basic and diluted earnings per common share	$	0.29	$	—

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

Note 11 - Variable Interest Entity

In November 2025, the Company and an affiliate of the Company entered into a joint venture agreement, forming FBRED Lux HYJV, LLC (the “JV”). The JV is the sole owner of FBRED REIT High Yield Securities, LLC (the “HY SPE”). The Company has a 40% interest in the JV and is the Manager, as defined by the joint venture agreement, while the affiliate fund has a 60% interest. The affiliated fund contributed a net $14.6 million for their 60% interest in the JV. There was no gain or loss on the transaction.

Pursuant to the joint venture agreement, the Company, as Manager, holds the power and control over the management of the JV, including but not limited to, entering transactions, modifying joint venture agreement, materially changing the business of the JV or replacing the Manager for the JV. The Company has determined the JV is a VIE of which the Company is the primary beneficiary, as such, the activity of the JV is consolidated in the Company’s Consolidated Financial Statements.

Our involvement with this VIE primarily affects our financial performance and cash flows through amounts recorded in interest income, interest expense and through activity associated with our investments in real estate securities and repurchase agreements.

Through this entity, the Company invests in real estate securities and those are financed through repurchase agreements. The Company believes it is the primary beneficiary of the VIE because (i) the Company has the power to direct the activities that most significantly affect the VIE’s 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 VIE is non-recourse to the Company.

The assets and liabilities related to the consolidated joint venture are as follows:


(in thousands)	March 31, 2026		December 31, 2025
Assets
Investments in real estate securities, at fair value	$	102,051	$	103,668
Cash	3,353		3,731
Interest receivable	326		334
Total assets	$	105,730	$	107,733

Liabilities
Repurchase agreements, at fair value	$	71,798	$	82,864
Due to affiliates	679		—
Interest payable	192		122
Total liabilities	$	72,669	$	82,986

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

Note 12 - Commitments and Contingencies

Commitments

As of March 31, 2026, the Company had unfunded commitments on delayed draw term loans of $96.8 million. As of March 31, 2026, the Company’s unfunded commitments consisted of the following:


(in thousands)
Investment Type	Total Commitment		Remaining Commitment
Senior Mortgage	$	284,537	$	82,502
Mezzanine	18,444		14,334
	$	302,981	$	96,836

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.

Indemnifications

In the ordinary course of its business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote. Accordingly, the Company has not entered into any contracts and not accrued any liability in conjunction with such indemnifications.

Note 13 - Dependency

The Company is dependent on the Adviser and its affiliates for certain services that are essential to it, including the sale of the Company’s common shares, origination, acquisition and disposition decisions, and certain other responsibilities. In the event that the Adviser and its affiliates are unable to provide such services, the Company would be required to find alternative service providers.

Note 14 - Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q. The following activity took place subsequent to March 31, 2026.

Common Shares

Subsequent to March 31, 2026, and in connection with the Company’s continuous private offering, the Company issued shares of its Class G common stock, Class G-D common stock, Class G-S common stock, Class E common stock and Class I common stock.

These offers and sales of the Class G common stock, Class G-D common stock, Class G-S common stock, Class E common stock and Class I common stock were exempt from the registration provisions of the Securities Act, by virtue of Section 4(a)(2) and Regulation D thereunder.

FRANKLIN BSP REAL ESTATE DEBT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the period ended March 31, 2026

The following table details the shares issued between April 1, 2026 and May 11, 2026:


(in thousands, except share amounts)	Common Shares, excluding DRIP			DRIP
Title of Securities	Number of Shares Sold	Aggregate Consideration		Number of Shares Sold	Aggregate Consideration
Class G Common Stock	430,587	$	10,749	16,567	$	414
Class G-D Common Stock	294,977	7,308		11,938	296
Class G-S Common Stock	582,345	14,476		6,306	156
Class E Common Stock	1,003	25		28	1
Class I Common Stock	—	—		42	1
Total	1,308,912	$	32,558	34,881	$	868

Distributions Declared

The following table summarizes subsequent payments related to distributions on common stock declared by the Board as of the record dates noted. Net distributions paid (after any servicing fees) from April 1, 2026 through May 11, 2026 were $1.5 million, and were paid in cash or reinvested in the applicable class of common stock for stockholders participating in the Company’s distribution reinvestment plan.

Record Date

Declaration Date

Payment Date

Distributions Per Share

Share Class

March 31, 2026

March 9, 2026

April 14, 2026

0.1900

G, G-D, G-S, E, I

April 30, 2026

March 9, 2026

May 15, 2026

0.1900

G, G-D, G-S, E, I

May 31, 2026

May 10, 2026

June 15, 2026

0.1900

G, G-D, G-S, E, I

June 29, 2026

May 10, 2026

July 15, 2026

0.1900

G, G-D, G-S, E, I

July 31, 2026

May 10, 2026

August 17, 2026

0.1900

G, G-D, G-S, E, I

Amendment #1 to the Wells Fargo Master Repurchase Agreement

On May 1, 2026, the Company, through its indirect wholly-owned subsidiary FBRED REIT WWH Seller, LLC (“Seller”), entered into Amendment #1 (the “Amendment”) to the Wells Fargo MRA. The Amendment, among other things, increased the maximum amount of advances from $150 million to $250 million.

First Amendment to the Advisory Agreement

On May 11, 2026, the Advisory Agreement was amended to reflect an update to the definition of Core Earnings. Refer to Note 3 for the amended definition of Core Earnings.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.

References herein to “Franklin BSP Real Estate Debt Inc.” “Company,” “we,” “us,” or “our” refer to Franklin BSP Real Estate Debt, Inc. and its subsidiaries unless the context specifically requires otherwise.

Forward-Looking Statements

Certain information contained in this Quarterly Report on Form 10-Q constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, including those set forth under Item 1A “Risk Factors”, actual events or results or the actual performance of the company may differ materially from those reflected or contemplated in such forward-looking statements. As a result, prospective investors should not rely on such forward-looking statements in making their investment decisions. In addition, certain statements reflect estimates, predictions or opinions of the company, benefit street partners or their affiliates, which cannot be independently verified and may change. There is no guarantee that these estimates, predictions or opinions will be ultimately realized.

You should carefully review the section entitled “Risk Factors” for a discussion of the risks and uncertainties that we believe are material to our business, operating results, prospects and financial condition, as such factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission (the “SEC”), which are accessible on the SEC’s website at http://www.sec.gov. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, including (but not limited to), as a result of new information and future events.

Overview

We are a Maryland corporation that was formed on May 22, 2024. We intend to elect to qualify to be taxed as a REIT for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2025. We are externally managed by Benefit Street Partners, L.L.C. (“Adviser”) pursuant to the advisory agreement with the Adviser (the “Advisory Agreement”). Our Adviser manages our affairs on a day-to-day basis. The Adviser receives fees for services related to the investment and management of our assets and operations.

The Adviser, an SEC-registered investment adviser, is a credit-focused alternative asset management firm. The Adviser 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 Adviser’s robust platform. The Adviser is a wholly-owned subsidiary of Franklin Resources, Inc., which together with its various subsidiaries operates as “Franklin Templeton.”

We plan to use our proceeds from our private offering of common stock, along with borrowings, to finance our investment objectives. We seek to achieve attractive risk-adjusted returns while preserving capital by primarily originating senior floating-rate mortgage loans, but also by investing in other real estate-related assets, including subordinated mortgage loans, mezzanine loans, and participations in such loans, commercial real estate securities, including commercial mortgage-backed securities (“CMBS”), equity or equity-linked securities in real estate operating companies, and net leased properties.

We are not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting real estate generally, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from our business, other than those referred to in this Quarterly Report on Form 10-Q.

Q1 2026 Highlights

Capital Activity and Distributions

•During the three months ended March 31, 2026, we raised approximately $26.4 million of net proceeds from the sale of our common shares through our continuous offering. In addition, during the three months ended March 31, 2026, we issued 87,054 shares pursuant to our distribution reinvestment plan (the “DRIP”) for an aggregate net value of approximately $2.2 million.

•During the three months ended March 31, 2026, we declared aggregate net distributions totaling approximately $4.2 million.

Investments

•As of March 31, 2026, our commercial real estate loan portfolio included 63 loans with a total commitment amount of $716.6 million, and total outstanding principal amount of $619.7 million. During the quarter, the Company executed on 21 loans for a total commitment of $246.1 million.

•As of March 31, 2026, our floating rate CMBS bond portfolio included 17 securities with a total principal balance of $102.3 million and a total fair value of $102.1 million.

Financing Activity

•During the three months ended March 31, 2026, we did not enter into any new repurchase agreement facilities. We received net borrowings of $220.4 million from our repurchase agreements.

Financial Condition

Investment Activities

Investments in Loans Receivable

We commenced investing in commercial real estate loans in April 2025. As of March 31, 2026, we have originated 63 loans totaling $716.6 million in total commitments. We elected fair value option for our commercial real estate loan investments and accordingly, we recognize any origination costs or fees associated with the loans in the period of origination. During the quarter ended March 31, 2026, we earned $8.7 million of interest income on the loans we originated.

The following table details overall statistics of our investment loan portfolio as of March 31, 2026:


($ in thousands)
Loan Type	Number of Investments	Principal Balance Outstanding		Fair Value		Unfunded Commitments		Weighted Average Interest Rate (1)		Weighted Average Life (2)
Senior	57	$	613,812	$	613,812	$	82,502	6.98	%	3.94
Mezzanine	6	5,909		5,909		14,334		12.78	%	3.79
	63	$	619,721	$	619,721	$	96,836	7.03	%	3.94

(1) Represents the weighted average interest rate for each loan at March 31, 2026. Loans earn interest at the one-month term Secured Overnight Financing Rate (“SOFR”) plus a spread, aside from one Senior loan with a fixed-rate of 6.45%. At March 31, 2026, the one-month SOFR was 3.66%.

(2) Assumes all extension options are exercised by the borrower, however, loans may be prepaid prior to such date. Extension options are subject to satisfaction of certain predefined conditions as defined in the respective loan agreements.

The following table details the diversification and composition of our investment loan portfolio based on fair value as of March 31, 2026:


($ in thousands)
	March 31, 2026
Property Type	Fair Value		Percentage
Multifamily	$	500,391	80.75	%
Industrial	96,830		15.62	%
Hospitality	22,500		3.63	%
	$	619,721	100	%


($ in thousands)
	March 31, 2026
Region	Fair Value		Percentage
Southeast	$	184,191	29.72	%
Southwest	116,823		18.85	%
Far West	93,869		15.15	%
Mideast	76,892		12.41	%
Various(1)	71,227		11.49	%
Rocky Mountain	44,593		7.20	%
Great Lakes	23,610		3.81	%
New England	8,516		1.37	%
	$	619,721	100	%

(1) Various includes industrial and multifamily portfolios with multiple locations throughout the United States.

As of March 31, 2026, our commercial real estate loan portfolio consists of 63 loans. The following table details the statistics of our investment loan portfolio as of March 31, 2026:


(in thousands, except interest rates)
Description	Location	Origination Date	Interest Rate (1)		Loan Commitment (2)		Principal Balance Outstanding		Fair Value		Payment Terms	Maximum Maturity Date (3)
Multifamily	Texas	3/26/2025	9.66	%	$	23,806	$	5,670	$	5,670	I/O	10/9/2029
Industrial	Various	4/7/2025	7.52	%	13,680		13,680		13,680		I/O	4/9/2030
Multifamily	Texas	4/11/2025	6.66	%	7,500		7,500		7,500		I/O	4/9/2030
Hospitality	South Carolina	4/16/2025	7.91	%	7,500		7,500		7,500		I/O	5/9/2028
Multifamily	California	5/8/2025	10.16	%	20,594		17,153		17,153		I/O	5/9/2029
Hospitality	Florida	5/14/2025	8.16	%	7,500		7,500		7,500		I/O	5/9/2030
Multifamily	California	5/22/2025	6.31	%	11,279		11,279		11,279		I/O	6/9/2030
Multifamily	California	5/30/2025	9.91	%	7,500		7,500		7,500		I/O	6/9/2029
Multifamily	North Carolina	5/30/2025	6.91	%	7,500		6,279		6,279		I/O	6/9/2030
Multifamily	North Carolina	6/13/2025	6.61	%	10,000		10,000		10,000		I/O	6/9/2028
Multifamily	Texas	6/30/2025	6.66	%	10,000		10,000		10,000		I/O	7/9/2030
Multifamily	Florida	7/3/2025	6.16	%	7,500		7,500		7,500		I/O	7/9/2028
Multifamily	Various	8/15/2025	8.71	%	10,000		—		—		I/O	2/9/2028
Multifamily	Tennessee	8/18/2025	9.91	%	27,763		1,613		1,613		I/O	9/9/2030
Multifamily	North Carolina	8/19/2025	6.91	%	10,000		9,814		9,814		I/O	9/9/2029
Multifamily	Texas	8/21/2025	6.41	%	7,500		6,901		6,901		I/O	9/9/2030
Industrial	Various	9/10/2025	6.66	%	7,500		6,184		6,184		I/O	9/9/2030
Multifamily	Nevada	9/29/2025	6.31	%	28,522		28,522		28,522		I/O	10/9/2030
Multifamily	New Jersey	9/30/2025	9.71	%	31,315		29,859		29,859		I/O	10/9/2029
Industrial	West Virginia	10/15/2025	6.96	%	24,855		20,233		20,233		I/O	10/9/2030
Multifamily	Ohio	10/22/2025	6.18	%	17,500		17,500		17,500		I/O	11/9/2028
Multifamily	Ohio	10/22/2025	6.16	%	6,110		6,110		6,110		I/O	11/9/2028
Multifamily	Various	10/28/2025	5.96	%	17,500		17,500		17,500		I/O	11/9/2030
Multifamily	Georgia	10/29/2025	6.16	%	17,500		17,500		17,500		I/O	11/9/2030
Industrial	Georgia	10/29/2025	7.66	%	10,000		7,627		7,627		I/O	11/9/2030
Multifamily	Texas	10/31/2025	6.21	%	7,388		7,388		7,388		I/O	11/9/2030
Multifamily	Texas	11/12/2025	6.39	%	15,000		15,000		15,000		I/O	11/9/2030
Multifamily	Utah	11/14/2025	6.26	%	12,025		12,025		12,025		I/O	11/9/2029
Multifamily	Texas	11/14/2025	6.13	%	15,000		15,000		15,000		I/O	12/9/2030
Multifamily	New York	11/14/2025	6.38	%	16,193		16,193		16,193		I/O	11/9/2030
Multifamily	Florida	11/20/2025	6.16	%	7,500		7,500		7,500		I/O	12/9/2030
Multifamily	Texas	11/21/2025	7.41	%	7,500		7,500		7,500		I/O	12/9/2028
Multifamily	Colorado	11/25/2025	5.96	%	10,000		10,000		10,000		I/O	12/9/2030
Multifamily	New York	12/1/2025	5.66	%	10,000		9,946		9,946		I/O	12/9/2030
Multifamily	Texas	12/12/2025	9.42	%	10,000		9,119		9,119		I/O	1/9/2028
Industrial	Oregon	12/12/2025	7.21	%	7,500		6,253		6,253		I/O	1/9/2030
Multifamily	Nevada	12/16/2025	6.56	%	10,000		10,000		10,000		I/O	1/9/2031
Industrial	Texas	12/16/2025	7.16	%	7,500		5,328		5,328		I/O	1/9/2031
Hospitality	Florida	12/19/2025	7.51	%	7,500		7,500		7,500		I/O	1/9/2031
Industrial	California	12/19/2025	7.21	%	7,500		6,057		6,057		I/O	1/9/2030
Multifamily	Utah	12/23/2025	6.11	%	7,500		7,500		7,500		I/O	1/9/2028
Industrial	Various	12/23/2025	6.59	%	10,000		10,000		10,000		I/O	1/9/2031
Industrial	Florida	12/29/2025	6.81	%	7,500		5,987		5,987		I/O	1/9/2031
Multifamily	North Carolina	12/29/2025	6.91	%	13,704		12,000		12,000		I/O	1/9/2031
Multifamily	North Carolina	12/30/2025	7.66	%	7,500		7,002		7,002		I/O	1/9/2031
Multifamily	North Carolina	12/30/2025	7.11	%	7,500		6,424		6,424		I/O	1/9/2031
Multifamily	New Jersey	1/2/2025	6.51	%	17,750		17,750		17,750		I/O	1/6/2027
Multifamily (6)	Various	9/16/2025	6.56	%	23,863		23,863		23,863		I/O	10/9/2029
Multifamily (6)	Colorado	9/25/2025	6.06	%	15,068		15,068		15,068		I/O	10/9/2030
Multifamily	Florida	2/9/2026	7.16	%	27,400		27,400		27,400		I/O	2/9/2031
Industrial	Virginia	2/12/2026	6.51	%	7,500		6,964		6,964		I/O	2/9/2031
Multifamily	Texas	2/27/2026	6.36	%	7,500		7,500		7,500		I/O	3/9/2031


Industrial	Massachusetts	2/26/2026	6.71	%	10,000	8,516	8,516	I/O	3/9/2031
Multifamily	California	3/4/2026	6.41	%	7,500	7,105	7,105	I/O	3/9/2029
Multifamily	North Carolina	3/11/2026	6.46	%	7,500	7,500	7,500	I/O	3/9/2030
Multifamily (5)	Texas	3/26/2026	6.45	%	7,500	7,500	7,500	I/O	10/9/2027
Multifamily	Texas	3/27/2026	6.26	%	10,000	10,000	10,000	I/O	4/9/2031
Multifamily	Texas	3/26/2025	18.91	%	4,596	1,095	1,095	I/O	10/9/2029
Multifamily (4)	California	5/8/2025	14.00	%	5,098	—	—	I/O	5/9/2029
Multifamily	Tennessee	8/18/2025	16.99	%	5,949	349	349	I/O	9/9/2030
Multifamily	New York	11/14/2025	10.68	%	1,799	1,799	1,799	I/O	11/9/2030
Multifamily	New York	12/1/2025	8.18	%	1,351	1,344	1,344	I/O	12/9/2030
Multifamily	Texas	12/12/2025	14.12	%	1,449	1,322	1,322	I/O	1/9/2028
					716,557	619,721	619,721

(1)Represents the interest rate for each loan at March 31, 2026. Loans earn interest at the one-month term Secured Overnight Financing Rate (“SOFR”) plus spread. At March 31, 2026, the one-month SOFR was 3.66%.

(2)Loan amounts consist of outstanding principal balance plus funded loan commitments for each loan.

(3)Maximum maturity date assumes all extension options are exercised by the borrower, however, loans may be prepaid prior to such date. Extension options are subject to satisfaction of certain predefined conditions as defined in the respective loan agreements.

(4)Loan has a fixed rate of 14%.

(5)Loan has a fixed rate of 6.45%.

(6)These loans were acquired as part of internal acquisitions in Q1 2026 so the origination date herein is the original funding date. For more details please refer to Note 3 - Related Party Transactions - Loan Acquisition Transactions to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Investments in Real Estate Securities

The following table details the statistics of our real estate securities portfolio as of March 31, 2026:


	CMBS Bonds
($ in thousands)	Number of Bonds	Benchmark Interest Rate	Weighted Average Interest Rate	Weighted Average Contractual Maturity (years)	Par Value		Fair Value
March 31, 2026	17	1 month SOFR	6.80%	4.00	$	102,275	$	102,051

Financing Activities

We finance the majority of our loan portfolio through repurchase agreements. As of March 31, 2026, we had six repurchase agreement facilities that bear interest at one-month term SOFR plus a spread. At March 31, 2026, the one-month SOFR was 3.66%. These facilities had a weighted average borrowing rate of 5.25% at March 31, 2026.

The table below summarizes our repurchase agreement borrowings at March 31, 2026:


(in thousands, except interest rates)
Description	Weighted Average Interest Rate (1)		Maximum Facility Size		Available Capacity		Debt Amount Outstanding		Fair Value of Debt		Fair Value of Collateral		Current Maturity Date	Maximum Maturity Date (2)
FBRED REIT BWH Seller, LLC	5.26	%	$	250,000	$	135,659	$	114,341	$	114,341	$	144,955	5/8/2028	5/8/2030
FBRED REIT JWH Seller, LLC	5.53	%	250,000		76,108		173,892		173,892		229,536		3/18/2027	3/18/2030
FBRED REIT WWH Seller, LLC	5.16	%	150,000		2,726		147,274		147,274		185,793		7/30/2027	7/30/2030
FBRED REIT AWH Seller, LLC	6.41	%	100,000		94,903		5,097		5,097		7,281		12/16/2026	12/16/2027
FBRED REIT High Yield Securities, LLC - JPM (3)	4.60	%	n/a		N/A		54,309		54,309		64,775		30 days	30 days
FBRED REIT High Yield Securities - Lucid (3)	4.70	%	n/a		N/A		17,489		17,489		21,500		30 days	30 days
Total	5.25	%					$	512,402	$	512,402	$	653,840

(1)Represents the weighted average interest rate at March 31, 2026.

(2)Borrowing facilities may have extension options, subject to lender approval and compliance with certain financial and administrative covenants.

(3)Borrowings are tied to real estate securities with a 30-day repurchase maturity term, which automatically renew, subject to administrative covenants.

Each of our repurchase agreements contains customary terms and conditions, including but not limited to, negative covenants relating to restrictions on our operations with respect to our status as a REIT, and financial covenants, such as a minimum interest coverage ratio covenant, minimum tangible net worth covenant, cash liquidity covenant and maximum Leverage Ratio covenant.

As of March 31, 2026, we were in compliance with the covenants of our financing facilities.

Results of Operations

There were no operations for the three months ended March 31, 2025. Operations commenced April 1, 2025.

For the three months ended March 31, 2026 our results of operations consisted of:


	For the three months ended March 31, 2026
Income
Interest income	$	10,478
Less: interest expense	(5,391)
Net interest income	5,087
Fee and other income	600
Total income	5,687

Expenses
Administrative fees	649
General and administrative expenses	463
Financing fees	445
Management & performance fees - related party	866
Accounting fees	202
Total expenses	2,625

Other loss
Unrealized loss on real estate securities, at fair value	(529)
Total other loss	(529)
Net income	2,533
Net income attributable to non-controlling interest	(236)
Net income attributable to Franklin BSP Real Estate Debt, Inc.	2,297
Net income per common share, basic and diluted	$	0.29
Weighted average common shares outstanding, basic and diluted	7,923,955

We commenced investing in commercial real estate loans in April 2025. There were no operations prior to April 2025 and therefore, no net income reported for the three months ended March 31, 2025. Net Income attributable to common stockholders for the three months ended March 31, 2026 was $2.3 million or $0.29 per weighted average common share (basic).

•Total income for the three months ended March 31, 2026 was $5.7 million which consisted of interest income of $10.5 million, interest expense of $5.4 million and fee and other income of $0.6 million (predominantly origination fees).

•Administrative fees for the three months ended March 31, 2026, were $0.6 million. These fees were predominately personnel and other Adviser costs of providing services pursuant to the Advisory Agreement.

•General and administrative expenses for the three months ended March 31, 2026 were $0.5 million. These fees related to services such as third party administrative fees, transfer agent fees, legal, filing fees, board of director compensation and valuation services.

•Financing fees for the three months ended March 31, 2026 were $0.4 million. These fees are related to the various debt obligations we entered into to fund loan originations.

•Management and performance fees - related party for the three months ended March 31, 2026 were $0.9 million. These fees represent fees incurred under the Advisory Agreement.

•Accounting fees for the three months ended March 31, 2026 were $0.2 million. These fees are related to audit and tax services for the Company.

•Total other loss for the three months ended March 31, 2026 was $(0.5) million, which related to the remeasurement of the real estate securities at fair value.

•For the three months ended March 31, 2026, Offering costs of $0.2 million were incurred. Under generally accepted accounting principles in the United States of America (“GAAP”), these costs are charged directly against stockholders’

equity. These costs have been advanced by the Adviser and paid on our behalf. In addition, for the three months ended March 31, 2026 stockholder servicing fees were $0.4 million and were charged directly against stockholders’ equity.

Liquidity And Capital Resources

Liquidity is a measure of our ability to meet our cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make new investments where appropriate, pay distributions to our stockholders and other general business needs. We believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for the next twelve months and beyond.

Our initial closing of our private offering occurred on April 1, 2025, at which time we commenced our principal operations.

Since the initial closing of our private offering of our common stock occurred on April 1, 2025, we have issued common stock for a total of $242.0 million through May 11, 2026, including $6.1 million issued pursuant to the DRIP. We expect to continue to have subsequent closings of common stock through our private offering on a monthly basis. We intend to promptly invest the net proceeds from each closing in our target assets consistent with our investment objectives. In addition, we have obtained, and expect to obtain additional, debt financing on our assets consistent with our financing strategy, and intend to use the proceeds to make additional investments in our target assets.

We generate cash primarily from (i) the net proceeds of our continuous private offering, (ii) cash flows from our operations, (iii) our financing arrangements, and (iv) any future offerings of our equity or debt securities. Our primary sources of capital are net proceeds from monthly closings on our continuous private offering, debt financing and interest payments on our investments. We expect longer term capital sources to include these same sources and repayments of principal on our target investments.

Our primary use of cash are for (i) origination or acquisition of commercial mortgage loans and other commercial debt investments, CMBS and other commercial real estate-related debt investments, (ii) the cost of operations (including the Management Fee and Performance Fee), (iii) debt service of any borrowings, (iv) periodic repurchases, including under our share repurchase plan, and (v) cash distributions (if any) to the holders of our shares to the extent declared by our Board.

We intend to qualify to be taxed and to operate in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Code commencing with our taxable year ended December 31, 2025. Under the Code, to qualify as a REIT, we must distribute at least 90% of our taxable income subject to certain adjustments and excluding capital gain, and we must distribute 100% of our taxable income to avoid federal income tax payment obligations. These requirements will restrict our ability to retain cash flow to fund future liquidity needs.

Our Adviser has agreed to several support measures that have and will enhance our liquidity. Our Adviser has and will advance all organization and offering expenses (other than upfront selling commissions, dealer manager fees and stockholder servicing fees) on our behalf through the first anniversary of the initial closing of our private offering. We will reimburse the Adviser for all such advanced costs and expenses ratably over the 60 months following the first anniversary of the initial closing of our private offering. Our Adviser has also advanced certain operating expenses prior to January 1, 2026, which we will reimburse over the 60 months following January 1, 2026 and is expected to advance certain of our operating expenses after January 1, 2026.

On February 26, 2026, the Company entered into the Amended Advisory Agreement with the Adviser to amend the terms regarding the reimbursement to the Adviser of operating expenses it pays on behalf of the Company. Pursuant to the Amended Advisory Agreement, commencing January 1, 2026 through December 31, 2026, the Company will reimburse the Adviser for operating expenses it pays on the Company’s behalf in an amount up to 0.60% of Average Net Asset Value (as defined in the Amended Advisory Agreement) and expenses above such amount will be paid in 12 equal, quarterly installments, with approval of the independent directors of the Company required for the Company to reimburse the Adviser if such amounts are in excess of the greater of 2% of Average Invested Assets and 25% of Net Income (as defined in the Amended Advisory Agreement). Operating expenses paid by the Adviser prior to January 1, 2026 will be reimbursed in 60 monthly installments, as noted above, and beginning January 1, 2027, operating expenses will be reimbursed by the Company subject to the caps as provided for in the initial agreement.

Our primary sources of liquidity include cash and available borrowings under our repurchase agreements. The following table summarizes amounts available under these sources at March 31, 2026:


(in thousands)	March 31, 2026
Cash	$	18,444
Available borrowings on undrawn repurchase agreements	309,396
Total available liquidity and capital resources	$	327,840

Contractual Obligations and Commitments

The following table shows our payment obligations for repayment of debt at March 31, 2026:


(in thousands)	Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 years		Total
Repurchase agreements	$	71,798	$	5,097	$	435,507	$	—	$	512,402
Total	$	71,798	$	5,097	$	435,507	$	—	$	512,402

In the ordinary course of business, we may enter into future funding commitments. At March 31, 2026, we had unfunded commitments on delayed draw term loans of $96.8 million. At March 31, 2026 the Company’s unfunded commitments consisted of the following:


Investment Type	Total Commitment		Remaining Commitment
Senior Mortgage	$	284,537	$	82,502
Mezzanine	18,444		14,334
	$	302,981	$	96,836

Cash Flows

The following table summarizes the changes in cash and restricted cash for the three months ended March 31, 2026:


(in thousands)	March 31, 2026
Net cash provided by operating activities	$	3,169
Net cash used in investing activities	(246,350)
Net cash provided by financing activities	251,540
Net increase in cash and restricted cash	$	8,359

Cash flows provided by operating activities were $3.2 million and were primarily due to interest income and origination fees earned on the loans receivable and real estate securities during the three months ended March 31, 2026.

Cash flows used in investing activities were $246.4 million and were primarily related to the origination of loans and real estate securities during the three months ended March 31, 2026.

Cash flows provided by financing activities were $251.5 million and were primarily related to net proceeds received from repurchase agreements and issuance of common stock during the three months ended March 31, 2026.

Distributions

We generally intend to distribute substantially all of our taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to our stockholders each year to comply with the REIT provisions of the Code. Distributions are at the discretion of the Board and include a review of earnings, cash flow, liquidity and capital resources.

The net distribution varies for each class based on the applicable stockholder servicing fee, which is deducted from the monthly distribution per share and paid directly to the applicable distributor.

The initial closing of our private offering occurred on April 1, 2025, at which time we commenced our principal operations.

The following table summarizes our distributions declared during the three months ended March 31, 2026:


	March 31, 2026
(in thousands)	Amount		Percentage
Distributions
Payable in cash	$	1,862	44	%
Reinvested in shares	2,379		56	%
Total distribution	$	4,241	100	%
Sources of Distributions
Cash flows from operating activities	$	3,169	75	%
Offering proceeds	1,072		25	%
Total sources of distribution	$	4,241	100	%

Net cash provided by operating activities	$	3,169

The table below details the net distribution per share declared for each of our common share classes for the three months ended March 31, 2026:


Record Date	Common Shares Class G		Common Shares Class G-D		Common Shares Class G-S		Common Shares Class E		Common Shares Class I
January 30, 2026	$	0.1667	$	0.1618	$	0.1504	$	0.1667	$	—
February 27, 2026	0.1900		0.1852		0.1736		0.1900		0.1900
March 31, 2026	0.1900		0.1852		0.1734		0.1900		0.1900
Totals	$	0.5467	$	0.5322	$	0.4974	$	0.5467	$	0.3800

Related Party Transactions

We have entered into the Advisory Agreement with Benefit Street Partners. See Note 3 - Related Party Transactions to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

The Adviser may be entitled to receive a Performance Fee for each class of common share except Class E common shares, which is accrued monthly and payable quarterly in arrears. Refer to Note 3 - Related Party Transactions - Management and Performance Fees to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a summary of how our performance fee is computed.

For other related party transactions, see Note 3 - Related Party Transactions to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Critical Accounting Estimates

There have been no significant changes to our critical accounting policies and estimates that are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Non-GAAP Financial Measures

Net Asset Value (“NAV”) and NAV Per Share Calculation

We calculate our NAV each month in accordance with valuation guidelines approved by the Board. We calculate our NAV for each class of shares based on the net asset values of our investments (including but not limited to commercial real estate loans and debt securities), the addition of any other assets (such as cash, restricted cash, receivables, and other assets obtained in the ordinary course of business), and the deduction of any liabilities (including but not limited to financing facilities, payables, and other liabilities incurred in the ordinary course of business). NAV is not a measure used under GAAP and the valuations of and certain adjustments made to our assets and liabilities used in the determination of NAV differs from GAAP. NAV is not equivalent to stockholders’ equity or any other GAAP measure.

The following table details the major components of our NAV as of March 31, 2026:


(in thousands, except share data)
Components of NAV	March 31, 2026
Loans receivable, at fair value	$	619,721
Real estate securities, at fair value	102,051
Cash	18,444
Restricted cash	9,819
Interest receivable	2,482
Prepaid expenses and other assets (1)	1,756
Due from affiliate	615
Repurchase agreements, at fair value	(512,402)
Interest payable	(1,214)
Subscription received in advance	(9,819)
Due to affiliates (2)	(2,088)
Accrued stockholder serving fees (3)	(38)
Distribution payable	(1,543)
Redemption payable	(47)
Other accrued liabilities	(988)
Non-controlling interest	(19,837)
NAV	$	206,912
Number of outstanding shares (all classes)	8,323,462

(1)Other assets represents exit fee receivable and unamortized debt facility costs. In accordance with the fair value option under GAAP, direct costs incurred in the establishment of debt facilities are expensed at the time the facilities are established. For purposes of NAV, these costs are capitalized and amortized over the life of the debt facility, therefore included in the above amount.

(2)Due to affiliates excludes $5 million advanced by the Adviser for organizational, offering and operating expenses and $1.1 million of operating expenses deferred by the Advisor under the Advisory Agreement.

(3)Accrued stockholder servicing fee represents the accrual for the full cost of the stockholder servicing fee for Class G-D and Class G-S shares. Under GAAP, we accrued an estimate of the full cost of the stockholder servicing fees over the life of each share as an offering cost at the time we sold each of the Class G-D and Class G-S shares. For purposes of NAV, we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis.

The following table provides a breakdown of our total NAV and NAV per share by class as of March 31, 2026:


(in thousands, except share amounts and per share data)	Common Shares Class G		Common Shares Class G-D		Common Shares Class G-S		Common Shares Class E		Common Shares Class I		Total
Net Asset Value	$	114,680	$	48,525	$	43,359	$	210	$	138	$	206,912
Number of outstanding shares	4,599,068		1,959,278		1,751,134		8,440		5,542		8,323,462
NAV per share	$	24.94	$	24.77	$	24.76	$	24.92	$	24.90	$	24.86

Reconciliation of Stockholders’ Equity to NAV

Despite being a well-recognized term across many industries as a practical expedient for measuring the fair value of certain investments, NAV is not a measure used under GAAP. As described above, our monthly NAV is determined in accordance with valuation guidelines that we believe are consistent with industry practice and have been approved by the Board, but the treatment of certain assets and liabilities used for the determination of NAV under these guidelines differs from GAAP. Thus, our NAV is not equivalent to Stockholders’ equity or any other GAAP measure.

The following table reconciles GAAP stockholders’ equity per our Consolidated Balance Sheets to our NAV at March 31, 2026:


(in thousands)	March 31, 2026
Stockholders' equity	$	196,944
Adjustments:
Advanced organization, offering and operating costs	5,014
Accrued stockholder servicing fees not currently payable (1)	2,652
Deferred operating expenses (2)	1,113
Unamortized debt issuance costs	1,189
NAV	$	206,912

(1)We have accrued stockholder servicing fees totaling $2.7 million of which approximately $38,356 is currently payable to the Dealer Manager as of March 31, 2026.

(2) Includes operating expenses which were deferred by the Adviser through March 31, 2026, pursuant to the Advisory Agreement.

Given their timing and substantial size, reflecting organizational, offering and operating expense in NAV when incurred can be overly punitive to the NAV per share of early investors and reduce cash available for new investments that will inure to the benefit of later investors. To help mitigate the impact of this timing difference, the Adviser incurred the bulk of these costs on our behalf and agreed to allow organizational and offering expenses to be repaid ratably over 60 months starting after the first anniversary of the initial closing of our private offering or January 1, 2026, with respect to operating expenses. Under the terms of our Advisory Agreement, the Adviser advanced all of our organizational, offering and operating expenses (other than upfront selling commissions and ongoing stockholder servicing fees). We will decrease our NAV by the amount of each monthly repayment made to the Adviser during the reimbursement period. These costs were expensed as incurred in our GAAP financial statements.

Under the terms of our agreement, the Dealer Manager is entitled to receive upfront selling commissions for certain classes of common stock, including Class F-S, Class F-D, Class G-S and Class G-D shares and stockholder servicing fees for certain classes of our common stock, including Class F-S, Class F-D, Class G-S and Class G-D shares sold in the continuous offering. Under GAAP, we accrue the full amount of stockholder servicing fees payable over an estimated investor holding period as an offering cost at the time each applicable share is sold during the continuous offering and treat the amount as an offset (reduction) to Additional paid-in capital. As the actual monthly amounts are remitted to the Dealer Manager, the NAV is reduced by a corresponding amount.

We have elected the fair value option for our financing facilities and expense debt issuance costs in accordance with GAAP. However, when calculating our NAV, we capitalize debt issuance and other financing costs as incurred and expense the costs over the life of the financing facility so that the costs to maintain the facility are borne by all investors who benefit from its use, rather than just those who were invested during the period in which the facility was implemented.

Distributable Earnings and Distributable Earnings to Common Stockholders

Distributable Earnings is a non-GAAP measure, which the Company defines as GAAP net income (loss), adjusted for (i) unrealized gain/loss on loan investments and real estate securities, at fair value (ii) advanced organization and operating expenses (iii) deferred operating expenses and (iv) unamortized debt issuance costs. Further, Distributable Earnings to Common Stockholders, a non-GAAP measure, presents Distributable Earnings net of non-controlling interests in joint ventures.

The Company believes that Distributable Earnings and Distributable Earnings to Common Stockholders provide meaningful information to consider in addition to the disclosed GAAP results. The Company believes Distributable Earnings and Distributable Earnings to Common Stockholders are useful financial metrics for existing and potential future holders of its common stock, as Distributable Earnings to Common Stockholders is an indicator of common dividends per share. The Company intends to elect to qualify to be taxed as a REIT, and therefore, the Company generally must distribute annually at least 90% of its taxable income, subject to certain adjustments, and therefore believes dividends are one of the principal reasons stockholders may invest in its common stock. Further, Distributable Earnings to Common Stockholders help investors evaluate performance excluding the effects of certain transactions and GAAP adjustments that the Company does not believe are necessarily indicative of current loan portfolio performance and the Company's operations and is one of the performance metrics the Company's Board considers when dividends are declared.

Distributable Earnings and Distributable Earnings to Common Stockholders do not represent net income (loss) and should not be considered as an alternative to GAAP net income (loss). The methodology for calculating Distributable Earnings and Distributable Earnings to Common Stockholders may differ from the methodologies employed by other companies and thus may not be comparable to the Distributable Earnings reported by other companies.

The following table provides a reconciliation of GAAP net income to Distributable Earnings and Distributable Earnings to Common Stockholders for the three months ended March 31, 2026:


(in thousands, except share and per share amounts)	March 31, 2026
GAAP Net Income	$	2,533
Adjustments:
Unrealized gain on real estate securities, at fair value	212
Advanced organization and operating costs(1)	—
Deferred operating expenses(3)	1,113
Unamortized debt issuance costs(2)	224
Distributable Earnings	$	4,082
Net Income attributable to Non-Controlling Interest	(236)
Distributable Earnings to Common Stockholders	$	3,846
Weighted average common shares outstanding, basic and diluted	7,923,955
Distributable Earnings per common share, basic and diluted	$	0.49

(1) Includes organizational and other operating expenses which were advanced by the Adviser for the three months ended March 31, 2026, pursuant to the Advisory Agreement.

(2) We have elected the fair value option for our financing facilities and expense debt issuance costs in accordance with GAAP. However, when calculating Distributable Earnings, we adjust the effect of debt issuance and other financing costs to reflect the cost over the life of the financing facility so that the costs to maintain the facility are borne by all investors who benefit from its use, rather than just those who were invested during the period in which the facility was implemented.

(3) Includes operating expenses which were deferred by the Adviser through March 31, 2026, pursuant to the Advisory Agreement.

Item 3. Quantitative And Qualitative Disclosure About Market Risk

Not required for a smaller reporting company.

Item 4. Controls And Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q was made under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based upon this evaluation, such officers have concluded that as of the end of the period covered by this report our disclosure controls and procedures (a) were effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by SEC rules and forms and (b) included, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including such officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, 2026, 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.

PART II. OTHER INFORMATION

ITEM 3. LEGAL PROCEEDINGS

From time to time, we may be involved in various claims and legal actions in the ordinary course of business. As of March 31, 2026, we were not subject to any material legal proceedings.

ITEM 1A. RISK FACTORS

Our potential risks and uncertainties are presented in the section entitled “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 12, 2026. There have been no material changes from these risk factors.

ITEM 2. UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

We are engaged in a continuous private offering of our common stock to “accredited investors” (as defined in Regulation D under the Securities Act) made pursuant to the exemptions provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder and applicable state securities laws.

The following table details the common shares sold pursuant to our ongoing private offering, including the DRIP, during the three months ended March 31, 2026:


(in thousands, except share amounts)	Number of Common Shares Sold
Date Shares Sold	Common Shares Class G	Common Shares Class G-D	Common Shares Class G-S	Common Shares Class E	Common Shares Class I	Aggregate Consideration (1)
January 2, 2026	183,146	24,096	96,384	—	—	$	7,607
January 14, 2026 (DRIP)	11,868	9,684	4,744	17	—	$	657
February 2, 2026	287,467	64,185	86,715	602	5,500	$	11,111
February 13, 2026 (DRIP)	12,951	9,727	5,005	20	—	$	691
March 1, 2026	171,651	71,256	67,700	—	—	$	7,755
March 13, 2026 (DRIP)	15,368	11,597	6,002	28	42	$	823
Total	682,451	190,545	266,550	667	5,542	$	28,644

(1) Includes upfront selling commissions and placement fees of $45,975 on the Class G-S common shares.

The following table details the common shares repurchased during the three months ended March 31, 2026:


Period	Total Number of Shares Repurchased(1)	Average Price Paid per Share(2)		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs(3)	Maximum Number of Shares Pending Repurchase Pursuant to Publicly Announced Plans or Programs(4)
January 1 - January 31	—	$	—	—	—
February 1 - February 28	—	—		—	—
March 1 - March 31	1,972	23.72		1,972	—
Total	1,972	$	23.72	1,972	—

(1) The Board adopted a share repurchase plan on March 17, 2025. Refer to “Item 5—Market for Registrant’s Common Equity, Related Stockholder Matters, And Issuer Purchases Of Equity Securities—Share Repurchase Plan” in our Annual Report on Form 10-K filed with the SEC on March 12, 2026, for information regarding the terms of our share repurchase plan.

(2) Shares repurchased within one year of the date of issuance generally will be repurchased at 95% of the current transaction price, subject to certain limited exceptions.

(3) Number of shares repurchased as part of publicly announced plans or programs consist of share repurchases under the Share Repurchase Plan.

(4) All repurchase requests under the Share Repurchase Plan were satisfied.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

During the quarterly period ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act) adopted, modified or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

Amendment to the Advisory Agreement

On May 11, 2026, the Company and the Adviser, entered into an amendment (the “Amendment”) to the Amended Advisory Agreement to amend the definition of Core Earnings which is used to calculate the performance fee due to the Adviser. Pursuant to the Amendment, Core Earnings is calculated as the net income (loss) of the Company in accordance with GAAP, amortizing over the life of the loan any warehouse debt issuance cost that is expensed at inception under GAAP, and subject to certain exclusions previously provided for in the Amended Advisory Agreement. This foregoing description of the Amendment is a summary and is qualified in its entirety by reference to the Amendment, which is filed as Exhibit 10.2 to this Form 10-Q.

ITEM 6. EXHIBITS

(a) List of documents filed:

(1) The Financial Statements of the Company. (See Item 1 above.)

(2) Exhibits


Exhibit Number						Exhibit Description
10.1						Amended and Restated Advisory Agreement between the Company and Benefit Street Partners L.L.C., dated February 26, 2026 (incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 12, 2026).
10.2*						First Amendment to Amended and Restated Advisory Agreement, between the Company and Benefit Street Partners L.L.C, dated May 11 , 2026
10.3*						Amendment #1 to the Master Repurchase Agreement, dated May 1, 2026, by and between FBRED REIT WWH Seller, LLC and Wells Fargo Bank, National Association
31.1*						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the XBRL document (filed herewith)
101.SCH						Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL						Inline XBRL Taxonomy Calculation Linkbase Document (filed herewith)
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LAB						Inline XBRL Taxonomy Label Linkbase Document (filed herewith)
101.PRE						Inline XBRL Taxonomy Presentation Linkbase Document (filed herewith)
104						Cover Page Interactive Data File (embedded within the Inline XBRL document) (filed herewith)

* Filed herewith.

SIGNATURES

Pursuant to the requirements 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.

Franklin BSP Real Estate Debt, Inc.

Date

Signature

Title

May 11, 2026

By: /s/ Michael Comparato

Michael Comparato

Chief Executive Officer, President and Director

(Principal Executive Officer)

May 11, 2026

By: /s/ Jerome Baglien

Jerome Baglien