Benefit Street Partners (BSP) is now Realty Finance Trust’s (RFT) new external advisor, replacing an affiliate of AR Global and beating out three other competitors for the position.
The transaction closed Thursday and resulted in BSP’s president, Rich Byrne, taking over as RFT’s chairman and chief executive officer, according to a statement. In addition, Jerry Baglien, BSP’s chief financial officer of commercial real estate, took over as RFT’s CFO.
A special committee assembled by RFT’s board of directors had conducted the search for a new external advisor.
The advisory agreement the two firms reached included terms that were more “investor friendly” and is more line with publicly traded real estate investment trusts rather than those of privately held REITs, a source familiar with the situation told Private Debt Investor.
Provisions of the agreement include calculating BSP’s management fee based on stockholders’ equity rather than assets and revising the annual performance fee to be more shareholder friendly, the statement said. Disposition fees will also be eliminated, as will acquisition fees after $600 million of new investment. Houlihan Lokey and Ropes & Gray were financial and legal advisors, respectively, to BSP.
Byrne said in the statement: “We believe that BSP will be able to enhance RFT’s already strong platform through increased scale and institutional relationships, driving its loan origination process and balance sheet management to deliver meaningful value to stockholders.”
The transaction comes as BSP is looking to close another deal with AR Global. An affiliated entity of AR Global advises Business Development Company of America (BDCA), which BSP is scheduled to acquire pending a 28 October shareholder vote.
The BDCA deal, which was disclosed to the SEC in regulatory documents filed 25 July, requires a shareholder vote. The needed vote will cause it to close after the RFT transaction even though the BDCA deal was announced first. Peter Budko, currently CEO of BDCA, was also the former CEO of RFT.
BSP is also set to hit the fundraising trail this fall when it launches its fourth debt fund, which has a $1.75 billion target. The firm’s third debt fund raised the same amount, which was the fund’s hard-cap. The third fund had a $1 billion target.