Shares of Franklin BSP Realty Trust Inc (FBRT) plummeted 5.02% in intraday trading on Thursday following the release of its third-quarter earnings report, which highlighted ongoing challenges for the real estate investment trust.

The company reported distributable earnings of $0.22 per share, which included a $1.7 million loss from a REO sale. Excluding this loss, distributable earnings were $0.23 per share. However, the company's book value decreased due to dividend under coverage and the impact of its recent NewPoint acquisition. The core portfolio also declined slightly to $4.4 billion, falling short of the company's $5 billion target.

Despite some positive developments, including progress on the NewPoint integration, a successful CRE CLO issuance, and the resumption of share repurchases, investors seemed to focus on the persistent challenges. The company's watch list increased slightly during the quarter, with one position marked down by $2.3 million due to expectations of a short sale in the fourth quarter. Management described the third quarter as a "transitional period" and a "construction zone" for the company, suggesting that improvements may take time to materialize.

While Franklin BSP Realty Trust's management expressed optimism about future prospects, including potential earnings growth from the NewPoint acquisition and improved financing structures, the market's reaction indicates that investors may require more concrete evidence of a turnaround before regaining confidence in the stock.