PHILADELPHIA, PA — February 10, 2011 — RAIT Financial Trust (“RAIT”) (NYSE: RAS) today announced results for the fourth quarter and year ended December 31, 2010. RAIT reported net income allocable to common shares for the three-month period ended December 31, 2010 of $29.5 million, or $0.29 total earnings per share — diluted based on 103.0 million weighted-average shares outstanding – diluted, as compared to net income allocable to common shares for the three-month period ended December 31, 2009 of $15.6 million, or $0.24 total earnings per share – diluted based on 66.3 million weighted-average shares outstanding – diluted. RAIT reported net income allocable to common shares for the year ended December 31, 2010 of $98.2 million, or $1.11 total earnings per share – diluted based on 88.3 million weighted-average shares outstanding – diluted, as compared to net loss allocable to common shares for the year ended December 31, 2009 of $441.2 million, or $6.77 total loss per share – diluted based on 65.2 million weighted-average shares outstanding – diluted.
RAIT also reported the following:
-
REIT Taxable Income. RAIT announced estimated REIT taxable income, a non-GAAP financial measure, of $11.3 million for the year ended December 31, 2010, as compared to a tax loss of $35.5 million for the year ended December 31, 2009. A reconciliation of RAIT’s reported net income (loss) to its estimated REIT taxable income, including management’s rationale for the usefulness of this non-GAAP financial measure, is included as Schedule I to this release.
-
Operating Income. Income before other income, taxes and discontinued operations increased to $1.9 million during the quarter ended December 31, 2010 as compared to a loss of $18.6 million during the quarter ended December 31, 2009.
-
Rental Income.Rental income increased 49.6% to $20.2 million during the quarter ended December 31, 2010 from $13.5 million during the quarter ended December 31, 2009.
-
Average Occupancy. The average occupancy of RAIT’s portfolio of directly held investments in real estate increased to 79.2% at December 31, 2010 from 69.8% at December 31, 2009.
-
Non-Accrual CRE Loans. The unpaid principal balance of RAIT’s non-accrual commercial real estate loan portfolio decreased to $122.3 million at December 31, 2010 as compared to $171.4 million at December 31, 2009. Provision for losses on RAIT’s commercial real estate loan portfolio decreased to $2.5 million for the quarter ended December 31, 2010 as compared to $22.5 million for the quarter ended December 31, 2009.
-
CRE CDO Coverage Tests. As of December 31, 2010, RAIT CRE CDO I, Ltd’s. overcollateralization test was passing at 123.7% with a trigger of 116.2% and RAIT Preferred Funding II, Ltd’s. overcollateralization test was passing at 113.5% with a trigger of 111.7%.
-
Gains on Debt Repurchases. RAIT generated $20.3 million in gains on debt repurchases during the quarter ended December 31, 2010 through repurchases of $28.5 million of RAIT’s CDO notes payable.
-
Debt Reduction. RAIT’s debt to equity ratio improved to 2.3 times at December 31, 2010 as compared to 3.0 times at December 31, 2009. RAIT’s recourse debt decreased from $398.5 million at December 31, 2009 to $293.6 million at December 31, 2010.
-
Investments in Real Estate. As of December 31, 2010, RAIT had investments in real estate of $841.5 million as compared to $738.2 million at December 31, 2009. During the three-months ended December 31, 2010, RAIT converted two loans, secured by multi-family properties, with a carrying value of $30.4 million, to owned real estate properties. As of December 31, 2010, RAIT has categorized an owned property with a carrying value of $48.9 million as an asset held for sale. The revenue and expense associated with this property has been reclassified to income from discontinued operations.
-
Acquired Non-Traded Public REIT. On January 20, 2011, RAIT acquired a development stage, non-traded public REIT and subsequently changed its name to Independence Realty Trust, Inc. (“Independence”). RAIT paid approximately $2.3 million for Independence and certain of its affiliated entities including the entity that serves as Independence’s external advisor. RAIT will be the sponsor of Independence’s offering and expects Independence to raise capital for investing in commercial real estate assets.
-
Preferred Dividends. On October 28, 2010, RAIT’s Board of Trustees declared fourth quarter 2010 cash dividends of $0.484375 per share on RAIT’s 7.75% Series A Cumulative Redeemable Preferred Shares, $0.5234375 per share on RAIT’s 8.375% Series B Cumulative Redeemable Preferred Shares and $0.5546875 per share on RAIT’s 8.875% Series C Cumulative Redeemable Preferred Shares that were paid on December 31, 2010 to holders of record on December 1, 2010. On January 25, 2011, RAIT’s Board of Trustees declared a first quarter 2011 cash dividend of $0.484375 per share on RAIT’s 7.75% Series A Cumulative Redeemable Preferred Shares, $0.5234375 per share on RAIT’s 8.375% Series B Cumulative Redeemable Preferred Shares and $0.5546875 per share on RAIT’s 8.875% Series C Cumulative Redeemable Preferred Shares. The dividends will be paid on March 31, 2011 to holders of record on March 1, 2011.
-
Annual Common Dividend. On January 10, 2011, RAIT announced that RAIT’s Board of Trustees declared a 2010 annual cash dividend on RAIT’s common shares of $0.03 per common share. The dividend was paid on January 31, 2011 to holders of record on January 21, 2011. The Board decided to continue its approach of considering whether to declare a dividend on RAIT’s common shares related to RAIT’s 2011 annual REIT distribution requirements once a full year of RAIT’s 2011 REIT taxable income is available.
Liquidity
As of December 31, 2010, RAIT had $27.2 million of cash and cash equivalents and $16.0 million of unused capacity in RAIT’s two CRE securitizations to invest in commercial real estate assets. At December 31, 2010, RAIT had carrying amounts of $293.6 million of recourse indebtedness (comprised of $143.5 million of outstanding 6.875% Convertible Senior Notes and $150.1 million of other recourse indebtedness) and $1.5 billion of non-recourse indebtedness as compared to $398.5 million of recourse indebtedness (comprised of $245.9 million of outstanding 6.875% Convertible Senior Notes and $152.6 million of other recourse indebtedness) and $1.7 billion of non-recourse indebtedness at December 31, 2009.
Key Statistics (Unaudited and dollars in thousands, except per share information)
As of or For the Three-Month Periods Ended
December 31, 2010
September 30, 2010
June 30, 2010
March 31, 2010
December 31, 2009
Financial Statistics:
Assets under management
$
3,837,526
$
3,901,342
$
4,014,556
$
9,911,824
$
10,126,853
Debt to equity ratio
2.3x
2.6x
2.7x
2.8x
3.0x
Total revenue
$
37,118
$
36,484
$
37,137
$
42,689
$
38,475
Recourse debt maturing in one year
$
41,489
$
7,919
$
9,919
$
10,905
$
24,390
Earnings per share — diluted
$
0.29
$
0.16
$
0.27
$
0.41
$
0.24
Commercial Real Estate (“CRE”) Loan Portfolio:
CRE loans— unpaid principal
$
1,173,141
$
1,216,875
$
1,288,466
$
1,305,816
$
1,360,811
Non-accrual loans — unpaid principal
$
122,306
$
143,212
$
131,377
$
132,978
$
171,372
Non-accrual loans as a % of reported loans
10.4
%
11.8
%
10.2
%
10.2
%
12.6
%
Reserve for losses
$
61,931
$
73,029
$
70,699
$
68,850
$
78,636
Reserves as a % of non-accrual loans
50.6
%
51.0
%
53.8
%
51.8
%
45.9
%
Provision for losses
$
2,500
$
10,813
$
7,644
$
17,350
$
22,500
CRE Property Portfolio:
Reported investments in real estate
$
841,488
$
823,881
$
803,548
$
795,952
$
738,235
Number of properties owned
47
47
47
46
39
Multifamily units owned
8,311
8,231
7,893
7,893
6,967
Office square feet owned
1,632,978
1,634,997
1,732,626
1,550,401
1,350,177
Retail square feet owned
1,116,112
1,069,588
1,069,588
1,069,652
1,069,643
Average occupancy data:
Multifamily
85.5
%
84.6
%
83.5
%
78.0
%
77.7
%
Office
67.8
%
52.5
%
55.5
%
54.2
%
48.2
%
Retail
58.8
%
57.7
%
58.7
%
60.1
%
58.0
%
Total
79.2
%
74.8
%
74.4
%
70.8
%
69.8
%
Conference Call
All interested parties can listen to the live conference call webcast at 10:00 AM EST on Thursday, February 10, 2011 from the home page of the RAIT Financial Trust website at www.raitft.com or by dialing 866.383.8009, access code 54750416. For those who are not available to listen to the live call, the replay will be available shortly following the live call on RAIT’s website and telephonically until Thursday, February 17, 2011, by dialing 888.286.8010, access code 87219017.
About RAIT Financial Trust
RAIT Financial Trust manages a portfolio of real estate related assets, provides a comprehensive set of debt financing options to the real estate industry and invests in real estate-related assets. RAIT’s management uses its experience, knowledge and relationship network to seek to generate and manage real estate related investment opportunities for RAIT and for outside investors. For more information, please visit www.raitft.com or call Investor Relations at 215.243.9000.
Forward-Looking Statements and Disclosures
This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to: uncertainties relating to financing availability and capital proceeds; and uncertainties relating to the public offering of Independence’s common stock. This is neither an offer nor a solicitation to purchase securities.
RAIT Financial Trust Contact Andres Viroslav 215-243-9000 aviroslav@raitft.com
1
RAIT Financial Trust Consolidated Statements of Operations (Dollars in thousands, except share and per share information) (unaudited)
For the Three-Month
For the Years
Periods Ended
Ended
December 31
December 31
2010
2009
2010
2009
Revenue:
Investment interest income
$
36,200
$
44,128
$
153,955
$
381,979
Investment interest expense
(21,939
)
(25,398
)
(91,142
)
(255,604
)
Net interest margin
14,261
18,730
62,813
126,375
Rental income
20,170
13,487
72,373
44,637
Fee and other income
2,687
6,258
18,242
26,498
Total revenue
37,118
38,475
153,428
197,510
Expenses:
Real estate operating expense
13,985
13,087
56,824
41,399
Compensation expense
7,028
8,109
28,732
27,578
General and administrative expense
3,644
6,876
18,232
21,770
Provision for losses
2,500
22,500
38,307
226,567
Asset impairments
—
—
—
46,015
Depreciation Expense
7,929
6,103
27,832
19,715
Amortization of intangible assets
149
369
822
1,407
Total expenses
35,235
57,044
170,749
384,451
Income (loss) before other income (expense), taxes and discontinued operations
1,883
(18,569
)
(17,321
)
(186,941
)
Interest and other income (expense)
75
2,485
422
5,643
Gains (losses) on sale of assets
10
(1,147
)
11,626
(376,751
)
Gains on extinguishment of debt
20,285
20,455
71,575
115,869
Change in fair value of financial instruments
10,720
13,819
45,840
1,563
Unrealized gains (losses) on interest rate hedges
(4
)
1
46
(470
)
Equity in income (loss) of equity method investments
—
(1
)
4
(12
)
Income (loss) before taxes and discontinued operations
32,969
17,043
112,192
(441,099
)
Income tax benefit (provision)
(2,086
)
1,399
(1,602
)
958
Income (loss) from continuing operations
30,883
18,442
110,590
(440,141
)
Income (loss) from discontinued operations
1,953
41
323
(840
)
Net income (loss)
32,836
18,483
110,913
(440,981
)
(Income) loss allocated to preferred shares
(3,414
)
(3,414
)
(13,641
)
(13,641
)
(Income) loss allocated to noncontrolling interests
77
519
880
13,419
Net income (loss) allocable to common shares
$
29,499
$
15,588
$
98,152
$
(441,203
)
Earnings (loss) per share—Basic:
Continuing operations
$
0.27
$
0.24
$
1.13
$
(6.76
)
Discontinued operations
0.02
—
—
(0.01
)
Total earnings (loss) per share—Basic
$
0.29
$
0.24
$
1.13
$
(6.77
)
Weighted-average shares outstanding—Basic
100,803,777
65,841,545
86,854,265
65,205,233
Earnings (loss) per share—Diluted:
Continuing operations
$
0.27
$
0.24
$
1.11
$
(6.76
)
Discontinued operations
0.02
—
—
(0.01
)
Total earnings (loss) per share—Diluted
$
0.29
$
0.24
$
1.11
$
(6.77
)
Weighted-average shares outstanding—Diluted
103,009,649
66,266,358
88,252,012
65,205,233
2
RAIT Financial Trust Consolidated Balance Sheets (Dollars in thousands, except share and per share information) (unaudited)
As of
December 31,
As of
2010
December 31, 2009
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred equity interests
$
1,219,110
$
1,467,566
Allowance for losses
(69,691
)
(86,609
)
Total investments in mortgages and loans
1,149,419
1,380,957
Investments in real estate
841,488
738,235
Investments in securities and security-related receivables, at fair value
705,451
694,897
Cash and cash equivalents
27,230
25,034
Restricted cash
176,723
156,167
Accrued interest receivable
37,138
37,625
Other assets
32,840
28,105
Deferred financing costs, net of accumulated amortization of $9,943 and $7,290, respectively
19,954
23,778
Intangible assets, net of accumulated amortization of $1,777 and $82,929, respectively
3,189
10,178
Total assets
$
2,993,432
$
3,094,976
Liabilities and Equity
Indebtedness:
Recourse indebtedness
$
293,581
$
398,483
Non-recourse indebtedness
1,544,596
1,678,640
Total indebtedness
1,838,177
2,077,123
Accrued interest payable
19,925
17,432
Accounts payable and accrued expenses
25,089
21,889
Derivative liabilities
184,878
186,986
Deferred taxes, borrowers’ escrows and other liabilities
6,833
21,625
Total liabilities
2,074,902
2,325,055
Equity:
Shareholders’ equity:
Preferred shares, $0.01 par value per share, 25,000,000 shares authorized; 7.75% Series A cumulative redeemable preferred shares, liquidation preference $25.00 per share, 2,760,000 shares issued and outstanding
28
28
8.375% Series B cumulative redeemable preferred shares, liquidation preference $25.00 per share, 2,258,300 shares issued and outstanding
23
23
8.875% Series C cumulative redeemable preferred shares, liquidation preference $25.00 per share, 1,600,000 shares issued and outstanding
16
16
Common shares, $0.01 par value per share, 200,000,000 shares authorized, 105,900,570 and 74,420,598 issued and outstanding, including 14,159 unvested restricted share awards at December 31, 2009
1,060
744
Additional paid in capital
1,691,681
1,630,428
Accumulated other comprehensive income (loss)
(127,602
)
(118,973
)
Retained earnings (deficit)
(647,110
)
(745,262
)
Total shareholders’ equity
918,096
767,004
Noncontrolling interests
434
2,917
Total equity
918,530
769,921
Total liabilities and equity
$
2,993,432
$
3,094,976
3
Schedule I RAIT Financial Trust Reconciliation of Net Income (Loss) and Total Taxable Income (Loss) and Estimated REIT Taxable Income (Loss) (1) (Dollars in thousands, except share and per share amounts) (unaudited)
For the Three- Month Periods
For the Years
Ended December 31
Ended December 31
2010
2009
2010
2009
Net income (loss), as reported
$
32,836
$
18,483
$
110,913
$
(440,981
)
Add (deduct):
Provision for losses
2,500
22,500
38,307
226,567
Charge-offs on allowance for losses
(6,359
)
(30,001
)
(47,787
)
(152,014
)
Domestic TRS book-to-total taxable income differences:
Income tax provision (benefit)
2,086
(1,399
)
1,602
(958
)
Fees received and deferred in consolidation
198
—
—
—
Stock compensation, forfeitures and other temporary tax differences
(5
)
656
93
829
Capital loss carry-forward offsetting capital gains
—
—
(7,938
)
—
Asset Impairments
—
—
—
46,015
Capital losses not offsetting capital gains and other temporary tax differences
(508
)
1,447
108
377,096
Change in fair value of financial instruments, net of noncontrolling interests (2)
(10,720
)
(13,819
)
(45,840
)
(23,822
)
Amortization of intangible assets
149
369
822
1,407
CDO investments aggregate book-to-taxable income differences (3)
(12,731
)
(19,557
)
(50,768
)
(69,314
)
Accretion of (premiums) discounts
—
1,443
—
1,232
Other book to tax differences
328
(2,662
)
5,347
(2,520
)
Total taxable income (loss)
7,774
(22,540
)
4,859
(36,463
)
Less: Taxable income attributable to domestic TRS entities
690
3,062
6,113
(4,051
)
Plus: Dividends paid by domestic TRS entities
—
—
14,000
5,013
Less: Deductible preferred share dividends
(3,414
)
—
(13,641
)
—
Estimated REIT taxable income (loss)(4)
$
5,050
$
(19,478
)
$
11,331
$
(35,501
)
(1)
Total taxable income (loss) and REIT taxable income (loss) are non-GAAP financial measurements, and do not purport to be an alternative to reported net income determined in accordance with GAAP as a measure of operating performance or to cash flows from operating activities determined in accordance with GAAP as a measure of liquidity. RAIT’s total taxable income (loss) represents the aggregate amount of taxable income (loss) generated by RAIT and by RAIT’s domestic and foreign Taxable REIT Subsidiaries (“TRSs”). REIT taxable income (loss) is calculated under U.S. federal tax laws in a manner that, in certain respects, differs from the calculation of net income pursuant to GAAP. REIT taxable income (loss) excludes the undistributed taxable income of RAIT’s domestic TRSs, which is not included in REIT taxable income (loss) until distributed to RAIT. Subject to TRS value limitations, there is no requirement that RAIT’s domestic TRSs distribute their earnings to RAIT. REIT taxable income (loss), however, generally includes the taxable income of RAIT’s foreign TRSs because RAIT will generally be required to recognize and report RAIT’s taxable income on a current basis. Since RAIT is structured as a REIT and the Internal Revenue Code requires that RAIT distribute substantially all of RAIT’s net taxable income in the form of distributions to RAIT’s shareholders, RAIT believes that presenting the information management uses to calculate RAIT’s REIT taxable income (loss) is useful to investors in understanding the amount of the minimum distributions that RAIT must make to its shareholders so as to comply with the rules set forth in the Internal Revenue Code. Because not all companies use identical calculations, this presentation of total taxable income (loss) and REIT taxable income (loss) may not be comparable to other similarly titled measures as determined and reported by other companies.
(2)
Change in fair value of financial instruments is reported net of allocation to noncontrolling interests of $(22,258) for the year ended December 31, 2009.
(3)
Amounts reflect the aggregate book-to-taxable income differences and are primarily comprised of (a) unrealized gains on interest rate hedges within CDO entities that Taberna consolidated, (b) amortization of original issue discounts and debt issuance costs and (c) differences in tax year-ends between Taberna and its CDO investments.
(4)
Before the deduction for the common dividend paid in January 2011 totaling $3.2 million and the use of $8.1 million of RAIT’s net operating loss carryforward from 2009. As of December 31, 2010, RAIT has an estimated tax net operating loss carry-forward of approximately $27.4 million that may be used to offset its future REIT taxable income.
4
We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.
