Broadmark Realty Capital Stock Price, News & Analysis

Broadmark Realty Capital Inc. (NYSE: BRMK) was an internally managed commercial real estate finance company headquartered in Seattle, Washington. The company specialized in providing short-term bridge loans to real estate investors and developers across the United States, with transaction sizes generally ranging from $5 million to $75 million.

Business Model and Operations

Broadmark Realty Capital operated as a specialty finance company focused on underwriting, funding, servicing, and managing a portfolio of short-term trust deed loans. These loans primarily funded the construction, development, renovation, and investment in residential and commercial properties. The company functioned as a balance sheet lender, meaning it used its own capital to fund loans rather than acting as a broker or intermediary.

The company's lending activities spanned diverse property types including multifamily residential, single-family developments, condominiums, townhomes, senior living facilities, student housing, hotels, industrial properties, medical facilities, mixed-use developments, office buildings, retail centers, self-storage facilities, and warehouses. This diversification across asset classes and geographic regions throughout the United States helped spread risk across the loan portfolio.

Loan Structure and Risk Management

Broadmark Realty's loans were typically structured with partial funding at closing, with additional disbursements made as borrowers completed predetermined construction milestones. This staged funding approach allowed the company to monitor project progress and reduce risk exposure. The properties securing these loans were generally not income-producing during the loan term, as they were either under construction or undergoing renovation.

Each loan in Broadmark's portfolio was secured by a first mortgage lien on real estate, providing the company with a senior secured position. The company maintained conservative underwriting standards, limiting loans to a maximum loan-to-value ratio of 65% of the appraised "as-is" value. Additionally, loans were personally guaranteed on a recourse basis by the borrower's principals, adding another layer of protection for the lender.

Target Borrowers

Broadmark Realty's typical borrowers included real estate investors, developers, and commercial borrowers seeking capital for vertical construction, horizontal development, land acquisition, refinancing, and property renovation. The company did not provide loans to owner-occupants of residential real estate, instead focusing exclusively on commercial and investment-oriented transactions.

REIT Structure

Broadmark Realty Capital elected to be taxed as a Real Estate Investment Trust (REIT) for U.S. federal income tax purposes. Under this structure, the company was required to distribute at least 90% of its REIT taxable income to shareholders as dividends, in exchange for avoiding corporate-level income taxation on distributed earnings. This structure provided shareholders with regular dividend income derived from the company's interest income on its loan portfolio.

Competitive Position

As an internally managed company, Broadmark Realty maintained in-house teams for underwriting, asset management, loan servicing, and draw administration. This integrated approach allowed for direct oversight of the entire loan lifecycle, from origination through repayment or disposition. The company's focus on bridge lending filled a niche between traditional bank financing and longer-term permanent loans, serving borrowers who needed flexible, short-term capital for transitional real estate projects.

Merger with Ready Capital

Broadmark Realty Capital merged with Ready Capital Corporation (NYSE: RC), a multi-strategy real estate finance company. Following the completion of this transaction, BRMK shares were converted into Ready Capital common stock, and Broadmark Realty ceased to exist as a separate publicly traded entity. Former BRMK shareholders became shareholders of Ready Capital, which continues to operate as a diversified real estate finance platform providing various lending solutions across the commercial real estate sector.