Real estate investment trust Franklin BSP Realty Trust Inc. is facing a proposed investor class action in New York federal court alleging it concealed the possibility that it would cut its quarterly dividend payouts, hurting investors when it announced a dividend "reset" and its share price subsequently fell.

In a Thursday complaint, FBRT investor Robert Moses claimed the company's shares were artificially inflated between Nov. 5, 2024, when the company's executives expressed confidence that they would maintain the company's quarterly dividend of 35.5 cents per share, and Feb. 11, when CEO Michael Comparato announced after the markets closed "a reset of the quarterly dividend" to 20 cents per share.

At the time, Comparato said it was taking longer than expected to sell certain real estate, which "has led to over-distributing capital to investors," the complaint says.

The following day, FBRT shares fell more than 14% to under $9, following news of the dividend reduction, Moses claims.

The complaint also notes that FBRT's stock price had fallen about 1% on Feb. 11 after the company announced Comparato was succeeding Richard J. Byrne as CEO effective immediately.

"FBRT's dividend was core to its operations because a steady dividend yield was material to its investors, and a growing or steady dividend is the primary reason for investors to invest in REIT," the suit says.

Moses accuses the company, Comparato, Byrne and Chief Financial Officer Jermone S. Baglien of recklessly overstating the company's ability to keep making those quarterly dividend payments.

He claims they were closely monitoring the company's financial performance and knew, or should have known, that the current dividend level might not prove sustainable.

The company's leadership had acknowledged strained economics underlying its dividend payments on earnings calls during the class period, the suit says.

For example, the executives said on calls in November 2024 and February 2025 that the company didn't reach "dividend coverage," or the ratio in which its earnings cover the quarterly dividends. Even so, the suit says, the company brass told shareholders it remained "confident" that its existing dividend levels were appropriate.

In July, the company said its distributable earnings for its most recent quarter were 27 cents per fully converted share, but said the board had "determined it was appropriate to maintain" the 35.5-cent dividend, the suit says.

The company again maintained its dividend for its third quarter, the suit says, even as an executive said on an earnings call that it was "highly focused on playing offense."

In February, the company said it was lowering its dividend to 20 cents to "match the earnings power of our company to distributions."

Representatives for the parties did not immediately respond to requests for comment Friday.

Robert Moses is represented by Phillip Kim and Laurence M. Rosen of the Rosen Law Firm PA.

Counsel information for the defendants wasn't immediately available Friday.

The case is Moses v. Franklin BSP Realty Trust Inc et al, case number 1:26-cv-01107, in the U.S. District Court for the Eastern District of New York.