8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of Earliest Event Reported): November 2, 2022

BROADMARK REALTY CAPITAL INC.

(Exact name of registrant as specified in its charter)

Maryland	001-39134	84-2620891
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
1420 Fifth Avenue, Suite 2000 Seattle, Washington		98101
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (206) 971-0800

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	BRMK	New York Stock Exchange
Warrants, each exercisable for one fourth (1/4th) share of Common Stock at an exercise price of $2.875 per one fourth (1/4th) share	BRMK WS	NYSE American LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 

Emerging growth company ¨

If an 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. ¨

Item 2.02 Results of Operations and Financial Condition.

On November 7, 2022, Broadmark Realty Capital Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2022. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated in this Item 2.02 by reference.

The information in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The Company and Brian P. Ward, the Company’s Chief Executive Officer and a director, have mutually agreed to terminate Mr. Ward’s employment relationship with the Company effective at the close of business on November 7, 2022. Accordingly, Mr. Ward resigned as Chief Executive Officer and as a director effective at such time. The Company’s Board of Directors (the “Board”) appointed Jeffrey B. Pyatt, the Company’s Chairman of the Board and former Chief Executive Officer, as interim Chief Executive Officer, effective as of the close of business on November 7, 2022.

The Board also appointed Kevin M. Luebbers, a director of the Company, as Interim President, effective as of the close of business on November 7, 2022, and appointed Jonathan R. Hermes as the Company’s Chief Financial Officer, effective December 1, 2022.

Additional information regarding these executive officer actions is set forth below.

Separation Agreement with Chief Executive Officer

Mr. Ward and the Company entered into a Separation and Release Agreement, dated November 2, 2022 pursuant to which, among other things, Mr. Ward provided a release of claims against the Company, and the Company agreed to provide him with the benefits he would otherwise receive for a without cause termination by the Company or resignation by Mr. Ward for good reason under his employment agreement. The agreement also releases Mr. Ward from the restrictions on competition with the Company that were included in his employment agreement.

Appointment of Interim Chief Executive Officer

In connection with Mr. Pyatt’s appointment as Interim Chief Executive Officer, Mr. Pyatt entered into a letter agreement with the Company providing him with the following compensation: (1) a base salary of $325,000 per annum; and (2) service-based restricted stock units (“RSUs”) with a value of $325,000 as of the grant date. The RSUs will vest in one installment on November 9, 2023 subject to Mr. Pyatt’s continued employment or service on the Board through such date. The letter agreement also suspends the cash compensation and equity awards that Mr. Pyatt is otherwise entitled to receive for service as the Chairman of the Board pursuant to the letter agreement he entered into with the Company dated February 2, 2022.

Mr. Pyatt’s biography and compensation for 2021 and for service as Chairman of the Board is set forth in the Company’s definitive proxy statement for its 2022 annual meeting of stockholders, filed with the SEC on April 28, 2022, and is incorporated herein by reference. Mr. Pyatt does not have any family relationship with any member of the Board or executive officer of the Company, and does not have any related party transactions with the Company, as defined in Regulation S-K Item 404(a).

Appointment of Interim President

In connection with Mr. Luebbers’ appointment as Interim President, Mr. Luebbers entered into a letter agreement with the Company providing him with the following compensation: (1) a base salary of $325,000 per annum, and (2) service-based RSUs with a value of $325,000 as of the grant date. The RSUs will vest in one installment on November 9, 2023 subject to Mr. Luebbers’ continued employment or service on the Board through such date. Mr. Luebbers will not receive additional compensation for service as a director while he is being paid as Interim President.

As a director of the Company, Mr. Luebbers has received the standard compensation paid to the Company’s directors for service on the Board and its committees. A description of the compensation paid to members of the Board and its committees, along with Mr. Luebbers’ biography, are set forth in the Company’s definitive proxy statement for its 2022 annual meeting of stockholders, filed with the SEC on April 28, 2022, and are incorporated herein by reference. Mr. Luebbers does not have any family relationship with any member of the Board or executive officer of the Company, and does not have any related party transactions with the Company, as defined in Regulation S-K Item 404(a).

Appointment of Chief Financial Officer

Mr. Hermes, age 35, was appointed by the Board as the Company’s Chief Financial Officer, effective December 1, 2022. Mr. Hermes will succeed David Schneider, who, as disclosed in a Current Report on Form 8-K filed with the SEC on October 14, 2022, resigned from the Company in connection with accepting an opportunity at a private company. Mr. Schneider has agreed to remain with the Company until December 31, 2022 to help transition the chief financial officer duties to Mr. Hermes. Upon Mr. Hermes joining the Company on December 1, 2022, Mr. Schneider will cease to be the principal financial officer of the Company, and instead will become an advisor to Mr. Hermes until the termination of his employment.

From September 2010 to November 2022, Mr. Hermes was employed by PricewaterhouseCoopers LLP (“PwC”), working with public and private companies on capital raising transactions, mergers & acquisitions, financial statement audits, as well as assisting companies with technologies across a broad range of topics, including processes within the finance and accounting functions and SEC reporting processes. From 2020 to 2022, Mr. Hermes served as Director, in which capacity he advised companies through a variety of exit scenarios, including SPAC, IPO and private equity and public sales transactions. From 2015 to 2018, Mr. Hermes served in the Capital Markets group in PwC’s Amsterdam office as Manager, where he focused on cross-border transaction between U.S. and European entities, capital markets transactions and finance transformations. Prior to that, Mr. Hermes served in various roles leading public company audits on behalf of PwC in various sectors, including financial services. Mr. Hermes is a licensed certified public accountant, a member of the American Institute of Certified Public Accountants and Washington Society of CPAs. Mr. Hermes is a graduate of Kansas State University with a Bachelors in Financial Controllership and Accounting. Mr. Hermes does not have any family relationship with any member of the Board or executive officer of the Company, and does not have any related party transactions with the Company, as defined in Regulation S-K Item 404(a).

The terms and conditions of Mr. Hermes’ appointment will be governed by an employment agreement dated as of November 7, 2022 between Mr. Hermes and the Company (the “Employment Agreement”). Pursuant to the terms of the Employment Agreement, Mr. Hermes will receive an annual base salary of $375,000 and will be eligible to receive an annual cash bonus under the Company’s annual cash incentive compensation plan with a target bonus amount equal to his base salary, in each case, subject to annual review and increase by the Board or Compensation Committee. Mr. Hermes shall also be paid a cash signing bonus of $100,000, which Mr. Hermes will be obligated to repay on a pro-rated basis if he resigns his employment prior to one year of service other than for good reason or if the Company terminates his employment for cause. In addition, as of the effective date of Mr. Hermes employment, Mr. Hermes will receive a service-based RSU award with a value of $375,000 as of the grant date. The RSUs will vest in equal annual installments on each of the first three anniversary of the grant date, subject to Mr. Hermes’ continued employment through the applicable vesting date.

In the event that Mr. Hermes’ employment is terminated by the Company without “Cause,” or by him for “Good Reason” (as such terms are defined in the Employment Agreement), Mr. Hermes will be entitled to receive severance benefits of (i) 12 months of continued base salary, payable in regular installments in accordance with the Company’s general payroll practices, and (ii) payment of 12 months of premiums related to any continuation health coverage elected under the Company’s group health plans, in each case, provided that he has first entered into a release of claims in favor of the Company.

Item 8.01. Other Events.

On November 7, 2022, the Board approved a stock repurchase program authorizing the Company to repurchase up to $75.0 million of its common stock, par value $0.001 per share. Repurchases under the stock repurchase program may be made at management’s discretion from time to time on the open market, in privately negotiated transactions or otherwise, in each case subject to compliance with all Securities and Exchange Commission rules and other legal requirements, and may be made in part under one or more Rule 10b5-1 plans, which permit stock repurchases at times when the Company might otherwise be precluded from doing so. The timing and amount of any repurchase transactions will be determined by the Company’s management based on its evaluation of market conditions, share price, legal requirements and other factors. There is no guarantee as to the exact number of shares that will be repurchased under the stock repurchase program, or that any repurchases will occur. In addition, the stock repurchase program may be suspended, extended or terminated by the Company at any time without prior notice.

On November 4, 2022, the Company also entered into an amendment (the “Amendment”) to the Credit Agreement, dated February 19, 2021, by and among the Company, as the borrower, the lenders listed therein and JPMorgan Chase Bank, N.A., as administrative agent for the lenders (as amended, the “Credit Agreement”) to allow for repurchases of shares of the Company’s common stock, subject to certain limitations.  The foregoing description of the Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d)        Exhibits.

Exhibit No.	Description
10.1	Amendment No. 2 to Credit Agreement, dated November 4, 2022, by and between Broadmark Realty Capital Inc. and JP Morgan Chase Bank, N.A., as administrative agent.
99.1	Press Release of the Company, dated November 7, 2022.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

Signatures

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed by the undersigned hereunto duly authorized.

	BROADMARK REALTY CAPITAL INC.
Date: November 7, 2022	By:	/s/ David Schneider
	Name:	David Schneider
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)

EX-10.1

Exhibit 10.1

AMENDMENT NO. 2

THIS AMENDMENT NO. 2 (this “Amendment”), dated as of November 4, 2022, is entered into by and between BROADMARK REALTY CAPITAL INC., a Maryland corporation (the “Borrower”), certain Lenders party to the Credit Agreement (as defined below) as of the date hereof and JPMOrgan CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”).

RECITALS

WHEREAS, the Borrower, the lenders from time to time party thereto (the “Lenders”), and JPMorgan Chase Bank, N.A., as Administrative Agent, are party to the Credit Agreement, dated as of February 19, 2021 (as amended by Amendment No. 1 to the Credit Agreement, dated as of November 12, 2021 and as further amended, modified, extended, restated, replaced, or supplemented from time to time prior to the date hereof, the “Credit Agreement”); and

WHEREAS, the Borrower has requested certain amendments to the Credit Agreement as set forth herein; and

WHEREAS, as permitted by Sections 1.01 and 9.02 of the Credit Agreement, the Administrative Agent and the Required Lenders are willing to agree to this Amendment upon the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.            Defined Terms. Capitalized terms used herein but not otherwise defined herein shall have the meanings provided to such terms in the Credit Agreement, as amended by this Amendment.

2.            Amendment to Section 1.01 of the Credit Agreement. Effective as of the Amendment Effective Date (as defined below), the following definitions shall be added to Section 1.01 of the Credit Agreement in the appropriate alphabetical order:

“Payment” has the meaning assigned to it in Section 8.06(c).

“Payment Notice” has the meaning assigned to it in Section 8.06(c).

3.            Amendment to Section 6.07 of the Credit Agreement. Effective as of the Amendment Effective Date, Section 6.07 of the Credit Agreement is hereby amended by (i) deleting the word “and” at the end of clause (e) thereof and replacing it with “,”, (ii) deleting the period at the end of clause (f) thereof and replacing it with “and”, and (iii) inserting the following as a new clause (g) thereto:

“(g) the Borrower may make any payment (and incur any obligation (contingent or otherwise) to make any payment) on account of the purchase, redemption, retirement, acquisition, cancellation or termination of its common Equity Interests in an aggregate amount not to exceed $25,000,000, so long as (x) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (y) after giving pro forma effect to any such dividend or distribution, the Borrower shall be in compliance with Section 6.13.”

4.            Amendment to Section 8.06 of the Credit Agreement. Effective as of the Amendment Effective Date, Section 8.06 of the Credit Agreement is hereby amended by inserting the following provision at the end thereof, immediately following clause (b) thereof:

(c) (i) Each Lender hereby agrees that (x) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its commercially reasonable discretion that any funds received by such Lender from the Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, a “Payment”) were erroneously transmitted to such Lender (whether or not known to such Lender), and demands the return of such Payment (or a portion thereof), such Lender shall promptly, but in no event later than two (2) Business Days thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Lender shall not assert, and hereby waives, as to the Administrative Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Payments received, including without limitation any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Lender under this ‎Section 8.06(c) shall be conclusive, absent manifest error.

(ii)  Each Lender hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has been made with respect to such Payment.  Each Lender agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof) may have been sent in error, such Lender shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than two (2) Business Days thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.

(iii) The Borrower and each other Loan Party hereby agrees that (x) in the event an erroneous Payment (or portion thereof) are not recovered from any Lender that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender with respect to such amount and (y) an erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party.

(iv) Each party’s obligations under this ‎Section 8.06(c) shall survive the resignation or replacement of the Administrative Agent or any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations under any Loan Document.

5.            Payment of Expenses. The Borrower agrees to reimburse the Administrative Agent for all reasonable and documented out of pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable and documented fees, charges and disbursements of counsel for the Administrative Agent, in connection with the preparation and administration of this Amendment.

6.            Conditions Precedent. This effectiveness of this Amendment is subject to the satisfaction or waiver of each of the following conditions (the date on which such conditions shall have been so satisfied or waived, the “Amendment Effective Date”):

(a)            The Administrative Agent shall have received a counterpart of this Amendment, executed and delivered by a duly authorized officer of the Borrower, the Administrative Agent and the Lenders party hereto (which Lenders shall constitute Required Lenders).

(b)            At the time of and immediately after effectiveness of this Amendment, the representations and warranties set forth in Sections 7(c) and (d) shall be true and correct.

(c)            The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Amendment Effective Date, including, to the extent invoiced, reimbursement or payment of all reasonable and documented out of pocket expenses required to be reimbursed or paid by the Borrower hereunder and other the other Loan Documents.

7.            Representations and Warranties. The Borrower represents and warrants to the Administrative Agent that, as of the date hereof:

(a)            This Amendment has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law;

(b)            the execution delivery and performance by the Borrower of this Amendment will not (A) require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (B) violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (C) violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, where such violation, default or payment could reasonably be expected to have a Material Adverse Effect, and (D) result in the creation or imposition of, or the requirement to create, any Lien on any asset of the Borrower or any of its Subsidiaries other than the Liens created pursuant to the Collateral Documents and other than Liens permitted by Section 6.02 of the Credit Agreement.

(c)            The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects (or, in the case of any representation or warranty already qualified by materiality, material adverse effect or similar language, in all respects), in each case on and as of the Amendment Effective Date (or true and correct in all material respects as of a specified date, if earlier).

(d)            At the time of and immediately after effectiveness of this Amendment, no Default or Event of Default shall have occurred and be continuing.

8.            Reference to and Effect on the Loan Documents.

(a)            From and after the Amendment Effective Date, each reference in the Credit Agreement to “hereunder,” “hereof,” “this Agreement” or words of like import and each reference in the other Loan Documents to “Credit Agreement,” “thereunder,” “thereof” or words of like import shall, unless the context otherwise requires, mean and be a reference to the Credit Agreement as amended by this Amendment. This Amendment is a Loan Document.

(b)            The Loan Documents, and the obligations of the Borrower and the Guarantors under the Loan Documents, are hereby ratified and confirmed and shall remain in full force and effect according to their terms.

(c)            The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as an amendment of any provision of any of the Loan Documents and shall not be construed as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents, or be construed as a waiver or consent to any further or future action on the part of the Borrower that would require a waiver or consent of the Lenders or the Administrative Agent,.

(d)            Nothing in this Amendment is intended, or shall be construed, to constitute a novation or an accord and satisfaction of any of Borrower’s Obligations or to modify, affect or impair the perfection or continuity of the Administrative Agent’s security interests in, security titles to or other Liens, for the benefit of itself and the Lenders, on any Collateral for the Obligations.

9.            Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury Trial, Etc.

(a)            This Amendment shall be construed in accordance with and governed by the law of the State of New York, without regard to conflict of laws principles thereof to the extent such principles would cause the application of the law of another state.

(b)            EACH PARTY HERETO HEREBY AGREES AS SET FORTH IN SECTIONS 9.09 AND 9.10 OF THE CREDIT AGREEMENT AS IF SUCH SECTIONS WERE SET FORTH IN FULL HEREIN AND SHALL APPLY, MUTATIS MUTANDIS, TO THIS AMENDMENT.

10.            Amendments; Headings; Severability. This Amendment may not be amended nor may any provision hereof be waived except pursuant to a writing signed by the Borrower, the Administrative Agent and the Lenders required pursuant to Section 9.02 of the Credit Agreement. The Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment. Any provision of this Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

11.            Execution in Counterparts. This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart signature page of this Amendment that is an Electronic Signature transmitted by telecopy, emailed pdf or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Amendment. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Amendment, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower or any other Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic signature and (ii) upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by a manually executed counterpart.

12.            Notices. All notices hereunder shall be given in accordance with the provisions of Section 9.01 of the Credit Agreement.

[remainder of page intentionally left blank]

Each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.

BORROWER:	BROADMARK REALTY CAPITAL INC.,
	as Borrower
	By:	/s/ David Schneider
		Name: David Schneider
		Title: Chief Financial Officer

[Signature Page to Amendment No. 2 to Credit Agreement]

ADMINISTRATIVE AGENT:	JPMORGAN CHASE BANK, N.A.,
	as Administrative Agent and as a Lender
	By:	/s/ Matthew D. Griffith
		Name: Matthew D. Griffith
		Title: Managing Director

[Signature Page to Amendment No. 2 to Credit Agreement]

BARCLAYS BANK PLC
as Lender
By:	/s/ Craig J. Malloy
	Name: Craig J. Malloy
	Title: Director

[Signature Page to Amendment No. 2 to Credit Agreement]

VNB NEW YORK, LLC as Lender
By:	/s/ Alex Lurye
	Name: Alex Lurye
	Title: Senior Vice President

[Signature Page to Amendment No. 2 to Credit Agreement]

EX-99.1

Exhibit 99.1

BROADMARK REALTY CAPITAL ANNOUNCES THIRD QUARTER 2022 RESULTS

- Board of Directors Approves $75 Million Stock Repurchase Plan -

Seattle, WA – November 7, 2022 – Broadmark Realty Capital Inc. (NYSE: BRMK) (the “Company”), an internally managed secured real estate finance company, today announced operating results for the quarter ended September 30, 2022.

“The Board of Directors is taking decisive action to ensure a disciplined approach in this rapidly changing economic environment. We are focused on capital preservation and ensuring we are positioned to capture opportunities that emerge. While it will take time to accomplish our primary goal to unlock value and grow, we have always focused on mitigating risk through prudent and disciplined underwriting. Maintaining this approach will be key in our strategies to effectively navigate the headwinds of economic uncertainty,” stated Jeff Pyatt, Broadmark’s Interim Chief Executive Officer. “With an industry-leading fortress balance sheet and an enterprise leverage ratio of roughly 8%, we have the financial strength to address and remedy our non-performing loans, while positioning the business to take advantage of opportunities to rebuild long-term value.”

Third Quarter 2022 Financial and Loan Portfolio Highlights

§ Closed new originations and amendments of $137.9 million, with a weighted average yield of 12.9% and at a weighted average loan-to-value of 59.7%.

§ Received $197.8 million of loan payoffs during the third quarter of 2022.

§ Total revenue of $27.1 million for the quarter, comprised of interest income of $20.7 million and fee income of $6.4 million.

§ Net income attributable to common stockholders of $2.6 million, or $0.02 per diluted common share.

§ Distributable earnings prior to realized loss on investments, a non-GAAP financial measure, of $18.0 million, or $0.14 per diluted common share.

§ Principal outstanding on loans in contractual default placed on non-accrual status of $115.4 million as of September 30, 2022.

Balance Sheet Activity and Liquidity

At September 30, 2022, the Company had cash and cash equivalents of $61.1 million and a fully undrawn $135.0 million revolving credit facility, or $196.1 million in total liquidity, with $530.4 million of unfunded loan commitments on balance sheet. During the quarter, the Company drew $25.0 million on the credit facility and repaid the balance in full upon receipt of loan payoffs.

Stock Repurchase Program

On November 7, 2022, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $75.0 million of its common stock. Repurchases under the stock repurchase program may be made at management’s discretion from time to time on the open market, in privately negotiated transactions or otherwise, in each case subject to compliance with all Securities and Exchange Commission rules and other legal requirements, and may be made in part under one or more Rule 10b5-1 plans, which permit stock repurchases at times when the Company might otherwise be precluded from doing so.

Additional Information

The Company has posted supplemental financial information to provide additional disclosure on its website at www.broadmark.com. These materials can be found on the Investors section of the website under the “Financials” tab.

Conference Call and Webcast Information

The Company will host a live conference call and webcast today at 5:00 p.m. Eastern time. To listen to the live webcast, go to the Investors section of the Company’s website at www.broadmark.com at least 15 minutes prior to the scheduled start time in order to register and install any necessary audio software.

To Participate in the Telephone Conference Call:

Dial in at least 15 minutes prior to start time.

Domestic: 1-877-407-9039

International: 1-201-689-8470

Conference Call Playback:

Domestic: 1-844-512-2921

International: 1-412-317-6671

Passcode: 13729481

The playback can be accessed through November 21, 2022.

Forward Looking Statements

This press release contains certain “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Forward-looking statements reflect the Company’s current views with respect to, among other things, capital resources, portfolio performance and projected results of operations. In some cases, you can identify these forward-looking statements by the use of terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words or phrases. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their respective dates.

These forward-looking statements are based largely on the Company’s current beliefs, assumptions and expectations concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that it has anticipated. Factors that may cause actual results to vary from the Company’s forward-looking statements include, but are not limited to:

· mitigation of loan default rates and ability to timely resolve loans in contractual default status with positive economic outcomes;

· the adequacy of collateral securing the Company's loans and declines in the value of real estate property securing the Company's loans;

· the current and future health and stability of the economy and residential housing market;

· availability of origination and acquisition opportunities acceptable to the Company;

· increased competition from entities engaged in construction lending activities;

· potential mismatches in the timing of asset repayments and the maturity of the associated financing agreements;

· disruptions in the Company's business operations, including construction lending activity, relating to the COVID-19 pandemic;

· general economic uncertainty and the effect of general economic conditions on the real estate and real estate capital markets in particular;

· general and local commercial and residential real estate property conditions;

· changes in U.S. federal government policies;

· changes in U.S. federal, state and local governmental laws and regulations that impact the Company's business, assets or classification as a real estate investment trust;

· the Company's ability to pay, maintain or grow the dividend in the future;

· changes in interest rates;

· the availability of, and costs associated with, sources of liquidity;

· compliance with covenants contained in the Company's debt documents;

· the adequacy of the Company's policies, procedures and systems for managing risk effectively;

· the ability to manage future growth;

· changes in personnel and availability of qualified personnel; and

· other factors set forth in the Company's periodic filings with the Securities and Exchange Commission.

Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

The Company uses its website and social media channels as channels of distribution of Company information. The information that the Company posts through these channels may be deemed material. Accordingly, the Company encourages investors and others interested in the Company to routinely monitor these channels, in addition to following the Company’s press releases, Securities and Exchange Commission filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the “Email Alerts” section of the Company’s website at http://ir.broadmark.com/resources/email-alerts. The contents of the Company’s website and social media channels are not, however, incorporated by reference into this press release.

About Broadmark Realty Capital

Broadmark is a specialty real estate finance company, providing financing solutions generally in the $2 to $75 million range per transaction. The company provides smart, reliable, rapid solutions across the entire debt capital stack, including senior, subordinate, and participation investments with fixed and floating rate structures available. Broadmark invests in a variety of new construction and existing properties across all asset classes throughout the United States, including hotel, industrial, medical, mixed-use, office, retail, self-storage, warehouse, multifamily, senior living, student housing, condos, larger scaled single-family, townhome, and multiplex. It has the competitive advantage of being an internally managed balance sheet lender, and the company’s proactive approach delivers dedicated in-house underwriting, asset management, loan servicing, and draw administration. More information can be found at Broadmark Realty Capital Specialty Real Estate Investments.

Contact:

Investor Relations

InvestorRelations@broadmark.com

206-623-7782

Media Relations

media@broadmark.com

BROADMARK REALTY CAPITAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data, unaudited)

	September 30, 2022			December 31, 2021
Assets
Cash and cash equivalents	$	61,141		$	132,889
Mortgage notes receivable, net		911,664			901,350
Interest and fees receivable, net		17,184			17,526
Investment in real property, net		93,506			68,067
Right-of-use assets		5,714			6,016
Goodwill		136,965			136,965
Other assets		6,301			8,342
Total assets	$	1,232,475		$	1,271,155
Liabilities and stockholders' equity
Senior unsecured notes, net	$	97,646		$	97,223
Dividends payable		9,305			9,291
Accounts payable and accrued liabilities		13,671			8,180
Lease liabilities		7,643			7,993
Total liabilities	$	128,265		$	122,687
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 100,000,000 shares authorized, no shares issued and outstanding at September 30, 2022 and December 31, 2021		—			—
Common stock, $0.001 par value, 500,000,000 shares authorized, 132,914,051 and 132,716,338 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		132			132
Additional paid in capital		1,219,754			1,216,957
Accumulated deficit		(115,676	)		(68,621	)
Total stockholders' equity		1,104,210			1,148,468
Total liabilities and stockholders' equity	$	1,232,475		$	1,271,155

BROADMARK REALTY CAPITAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share data, unaudited)

	Three Months Ended					Nine Months Ended
	September 30, 2022			September 30, 2021		September 30, 2022			September 30, 2021
Revenues:
Interest income	$	20,685		$	22,846	$	66,927		$	66,481
Fee income		6,443			7,748		18,590			22,764
Total revenues	$	27,128		$	30,594	$	85,517		$	89,245
Expenses:
Compensation and employee benefits		3,972			3,920		12,970			10,916
General and administrative		3,429			2,905		9,832			8,321
Real property management expenses, net		1,542			—		2,625			108
Interest expense		2,242			721		6,477			1,719
Total expenses		11,185			7,546		31,904			21,064
Impairment:
Provision for credit losses, net		12,288			2,607		16,729			5,373
Other (expense) income:
Change in fair value of warrant liabilities		415			1,244		593			(2,490	)
Gain on sale of real property		25			—		984			—
Impairment on real property		(1,485	)		—		(1,831	)		—
Total other (expense) income		(1,045	)		1,244		(254	)		(2,490	)
Income before provision for income taxes		2,610			21,685		36,630			60,318
Income tax provision		—			—		—			—
Net income	$	2,610		$	21,685	$	36,630		$	60,318
Earnings per common share:
Basic	$	0.02		$	0.16	$	0.28		$	0.45
Diluted	$	0.02		$	0.16	$	0.28		$	0.45
Weighted-average shares of common stock outstanding, basic and diluted:
Basic		132,884,407			132,658,661		132,867,288			132,575,852
Diluted		132,906,780			132,752,471		132,936,411			132,663,437

BROADMARK REALTY CAPITAL INC.

RECONCILIATION OF NET INCOME TO DISTRIBUTABLE EARNINGS

(in thousands, except for per share amounts, unaudited)

Definition of Distributable Earnings

The Company has elected to present “distributable earnings” and “distributable earnings prior to realized loss on investments”, supplemental non-GAAP financial measures used by management to evaluate the Company’s operating performance. The Company defines distributable earnings as net income attributable to common stockholders adjusted for: (i) impairment recorded on the Company’s investments; (ii) unrealized gains or losses on the Company’s investments (including provision for credit losses) and warrant liabilities; (iii) new public company transition expenses; (iv) non-capitalized transaction-related and other one-time expenses; (v) non-cash stock-based compensation; (vi) depreciation and amortization including amortization of the Company’s intangible assets; and (vii) deferred taxes, which are subject to variability and generally not indicative of future economic performance or representative of current operations.

During the nine months ended September 30, 2022 and 2021, provision for credit losses, net was $16.7 and $5.4 million, respectively, which has been excluded from distributable earnings consistent with other unrealized gains (losses) pursuant to the Company’s policy for reporting distributable earnings. The Company expects to recognize such potential credit losses in distributable earnings if and when such amounts are deemed nonrecoverable upon a realization event. This is generally upon charge-off of principal at the time of loan repayment or upon sale of real property owned by the Company and the amount of proceeds is less than the principal outstanding at the time of foreclosure.

Management believes that the adjustments to compute “distributable earnings” specified above allow investors and analysts to readily identify and track the operating performance of the Company’s assets, assist in comparing the operating results between periods, and enable investors to evaluate the Company’s current performance using the same measure that management uses to operate the business. Distributable earnings excludes certain recurring items, such as unrealized gains and losses (including provision for credit losses) and non-capitalized transaction-related expenses, because they are not considered by management to be part of the Company’s primary operations for the reasons described herein. However, management has elected to also present distributable earnings prior to realized loss on investments because it believes the Company’s investors use such measure to evaluate and compare the performance of the Company and its peers. As such, distributable earnings and distributable earnings prior to realized loss on investments are not intended to reflect all of the Company’s activity and should be considered as only one of the factors used by management in assessing the Company’s performance, along with GAAP net income which is inclusive of all of the Company’s activities.

As a REIT, the Company is required to distribute at least 90% of its annual REIT taxable income and to pay tax at regular corporate rates to the extent that it annually distributes less than 100% of such taxable income. Given these requirements and its belief that dividends are generally one of the principal reasons stockholders invest in its common stock, the Company generally intends to attempt to pay dividends to its stockholders in an amount equal to its net taxable income, if and to the extent authorized by the Company’s board of directors. Distributable earnings and distributable earnings prior to realized loss on investments are one of many factors considered by the Company’s board of directors in declaring dividends and, while not direct measures of taxable income, over time, the measures can be considered useful indicators of the Company’s dividends.

Distributable earnings and distributable earnings prior to realized loss on investments do not represent, and should not be considered as a substitute for, or superior to, net income or as a substitute for, or superior to, cash flows from operating activities, each as determined in accordance with GAAP, and the Company’s calculation of these measures may not be comparable to similarly entitled measures reported by other companies.

The table below is a reconciliation of distributable earnings to the most directly comparable GAAP financial measure:

	Three Months Ended						Nine Months Ended
(dollars in thousands, except share and per share data)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net income attributable to common stockholders	$	2,610		$	21,685		$	36,630		$	60,318
Adjustments for non-distributable earnings:
Stock-based compensation expense		1,259			891			3,263			2,552
New public company expenses(1)		—			—			—			953
Non-capitalized transaction and other one-time expenses(2)		462			489			2,066			489
Change in fair value of warrant liabilities		(415	)		(1,244	)		(593	)		2,490
Depreciation and amortization		265			146			752			577
Impairment on real property		1,485			—			1,831			—
Provision for credit losses, net		12,288			2,607			16,729			5,373
Distributable earnings prior to realized loss on investments:	$	17,954		$	24,574		$	60,678		$	72,752
Realized credit losses(3)		(1,796	)		(695	)		(4,207	)		(2,096	)
Distributable earnings:	$	16,158		$	23,879		$	56,471		$	70,656
Distributable earnings per diluted share of common stock prior to realized loss on investments	$	0.14		$	0.19		$	0.46		$	0.55
Distributable earnings per diluted share of common stock	$	0.12		$	0.18		$	0.42		$	0.53
Weighted-average number of shares of common stock outstanding, basic and diluted
Basic		132,884,407			132,658,661			132,867,288			132,575,852
Diluted		132,906,780			132,752,471			132,936,411			132,663,437

(1) Expenses directly related to professional fees in connection with our new public company reporting procedures, the design and implementation of internal controls under Section 404 of the Sarbanes-Oxley Act and the implementation of the CECL standard.

(2) Includes other one-time expenses primarily related to the various costs associated with the search for and hiring of our new CEO as well as non-capitalized expenses incurred on held-for-sale real properties no longer under construction.

(3) Represents credit losses recorded in the provision for credit losses and recognized in distributable earnings upon charge-off of principal at the time of loan repayment or upon sale of real property where proceeds received are less than the principal outstanding.

XML

Cover	Nov. 02, 2022
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 02, 2022
Entity File Number	001-39134
Entity Registrant Name	BROADMARK REALTY CAPITAL INC.
Entity Central Index Key	0001784797
Entity Tax Identification Number	84-2620891
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	1420 Fifth Avenue
Entity Address, Address Line Two	Suite 2000
Entity Address, City or Town	Seattle
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98101
City Area Code	206
Local Phone Number	971-0800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	BRMK
Security Exchange Name	NYSE
Warrant [Member]
Document Information [Line Items]
Title of 12(b) Security	Warrants, each exercisable for one fourth (1/4th) share of Common Stock at an exercise price of $2.875 per one fourth (1/4th) share
Trading Symbol	BRMK WS
Security Exchange Name	NYSEAMER