| NEWCASTLE INVESTMENT CORP. |
Contact: |
Lilly H. Donohue |
Director of Investor Relations |
212-798-6118
Nadean Finke
Investor Relations
212-479-5295
Newcastle Announces Second Quarter 2007 Results
Second Quarter Highlights
- | Net book value per share increased to $18.59 per share from $18.39 per share at March 31, 2007 |
- | Declared 2Q07 dividend of $0.72 per share, up 4.3% from our 1Q07 dividend of $0.69 per share |
- | Raised $125 million of equity capital through the issuance of 4.56 million common shares |
Subsequent Events
- | Board of Directors approved a potential buy back of up to $100 million of common shares |
- | Completed $2.5 billion of non-recourse term financings |
New York, NY, August 2, 2007 – Newcastle Investment Corp. (NYSE: NCT) reported that for the quarter ended June 30, 2007, Funds from Operations (“FFO”) excluding the effect of a non-cash impairment charge was $38.5 million, or $0.73 per diluted share, compared to $0.66 per diluted share for the second quarter 2006. The Company generated an FFO return on average invested equity of 15.5% excluding the effect of the impairment charge.
For the three months ended June 30, 2007, income available for common stockholders excluding the effect of a non-cash impairment charge was $38.2 million, or $0.73 per share, compared to $0.65 per diluted share for the second quarter 2006.
For the quarter ended June 30, 2007, we declared a dividend of $0.72 per common share. This represents a 4.3% increase from the prior quarter’s dividend of $0.69 per common share.
Our GAAP common equity book value increased by $0.20 per share to $18.59 per share or a total of $981 million at June 30, 2007 from $18.39 per share or $886 million at March 31, 2007.
1
For a reconciliation and discussion of GAAP net income to FFO and GAAP book equity to invested common equity, please refer to the tables following the presentation of GAAP results.
For the second quarter, we recognized a non-cash charge of $6 million on five of our subprime securities with an aggregate $18 million face amount representing an other than temporary impairment under U.S. GAAP. This resulted in a reduction of FFO and net income of $0.09 per diluted share.
Selected Financial Data (Unaudited) ($ in millions, except per share data)
Operating Data: |
| Three Months Ended |
| Three Months Ended |
| ||||||||
|
| (Amount) |
| (per diluted share) |
| (Amount) |
| (per diluted share) |
| ||||
| $ | 38.5 |
| $ | 0.73 |
|
| — |
|
| — |
| |
FFO |
| $ | 34.0 |
| $ | 0.64 |
| $ | 28.9 |
| $ | 0.66 |
|
Income available for common stockholders(1) |
| $ | 38.2 |
| $ | 0.73 |
|
| — |
|
| — |
|
Income available for common stockholders |
| $ | 33.7 |
| $ | 0.64 |
| $ | 28.7 |
| $ | 0.65 |
|
Balance Sheet Data: |
| As of |
| As of |
| ||
Total assets |
| $ | 10,024 |
| $ | 10,221 |
|
Total liabilities |
|
| 8,890 |
|
| 9,182 |
|
Common stockholders’ equity |
|
| 981 |
|
| 887 |
|
Preferred stock |
|
| 152 |
|
| 152 |
|
Total equity |
|
| 1,133 |
|
| 1,039 |
|
The following table summarizes our investment portfolio at June 30, 2007(2) and March 31, 2007 ($ in millions):
|
| As of June 30, 2007 |
| As of March 31, 2007 |
| ||||||
Core |
| Face Amount |
| % Total |
| Face Amount |
| % Total |
| ||
Real Estate Securities and Related Loans |
| $ | 6,535 |
| 71.7 | % | $ | 6,782 |
| 65.2 | % |
Subprime Loans, Held for Sale |
|
| — |
| 0.0 | % |
| 1,049 |
| 10.1 | % |
Residential Mortgage Loans |
|
| 706 |
| 7.7 | % |
| 759 |
| 7.3 | % |
Subprime Loans Subject to Call Options |
|
| 406 |
| 4.5 | % |
| 299 |
| 2.8 | % |
Investment in Real Estate Joint Venture |
|
| 39 |
| 0.4 | % |
| 38 |
| 0.4 | % |
Subtotal |
| $ | 7,686 |
| 84.3 | % | $ | 8,927 |
| 85.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
Non-Core |
|
|
|
|
|
|
|
|
|
|
|
Agency RMBS |
| $ | 1,317 |
| 14.4 | % | $ | 1,349 |
| 13.0 | % |
ICH Loans |
|
| 118 |
| 1.3 | % |
| 122 |
| 1.2 | % |
Total Portfolio |
| $ | 9,121 |
| 100.0 | % | $ | 10,398 |
| 100.0 | % |
2
The following tables compare certain supplemental data relating to our investment portfolio at June 30, 2007 versus March 31, 2007:
Supplemental Data:
|
| Total Portfolio |
| Core Portfolio |
| ||||
|
| June 30, 2007(2) |
| March 31, 2007 |
| June 30, 2007(2) |
| March 31, 2007 |
|
Weighted average asset yield |
| 7.46 | % | 7.45 | % | 7.85 | % | 7.80 | % |
Weighted average liability cost |
| 5.96 | % | 5.88 | % | 6.13 | % | 6.03 | % |
Weighted average net spread |
| 1.50 | % | 1.57 | % | 1.72 | % | 1.77 | % |
(1) | Excludes the effect of a non-cash impairment charge. |
(2) | Investments portfolio proforma for the securitization of the subprime loans held for sale that closed on July 12, 2007. |
Investment Portfolio
Newcastle’s $9.1 billion investment portfolio consists primarily of commercial, residential and corporate debt. The following describes our investment portfolio at June 30, 2007(1) ($ in millions):
|
| Face Amount |
| % of Total Portfolio |
| Number |
| Credit(2) |
| WA Life |
| |
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
CMBS |
| $ | 2,413 |
| 26.5 | % | 288 |
| BBB | - | 5.4 |
|
Mezzanine Loans |
|
| 1,124 |
| 12.3 | % | 27 |
| 68 | % | 2.4 |
|
B-Notes |
|
| 403 |
| 4.4 | % | 13 |
| 65 | % | 2.2 |
|
Real Estate Loans |
|
| 128 |
| 1.4 | % | 5 |
| 75 | % | 1.3 |
|
Other |
|
| 157 |
| 1.7 | % | 171 |
| NR |
| 3.7 |
|
Total Commercial |
|
| 4,225 |
| 46.3 | % | 504 |
|
|
| 4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
Subprime Securities |
|
| 644 |
| 7.0 | % | 122 |
| BBB | + | 2.1 |
|
ABS Manufactured Housing & Franchise |
|
| 128 |
| 1.4 | % | 29 |
| BBB | + | 5.5 |
|
Subprime Residual / Retained Securities |
|
| 159 |
| 1.7 | % | 8 |
| NR |
| 3.1 |
|
Agency RMBS |
|
| 1,317 |
| 14.4 | % | 43 |
| AAA |
| 4.4 |
|
Manufactured Home Loans |
|
| 589 |
| 6.5 | % | 16,878 |
| 692 |
| 6.1 |
|
Residential Mortgage Loans |
|
| 117 |
| 1.3 | % | 375 |
| 716 |
| 2.8 |
|
Other |
|
| 406 |
| 4.5 | % | 2 |
| NR |
| 2.1 |
|
Total Residential |
|
| 3,360 |
| 36.8 | % | 17,457 |
|
|
| 3.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
REIT Debt |
|
| 938 |
| 10.3 | % | 95 |
| BBB | - | 5.6 |
|
Corporate Bank Loans |
|
| 598 |
| 6.6 | % | 14 |
| 58 | % | 3.3 |
|
Total Corporate |
|
| 1,536 |
| 16.9 | % | 109 |
|
|
| 4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
| $ | 9,121 |
| 100 | % |
|
|
|
| 4.1 |
|
(1) | Investment portfolio proforma for the securitization of the subprime loans held for sale that closed on July 12, 2007. |
(2) | Credit represents weighted average rating for rated assets, LTV for non-rated commercial assets, FICO score for non-rated residential assets and implied AAA for Agency RMBS. |
3
Commercial Debt
We owned $4.2 billion face amount of commercial assets (CMBS, Mezzanine Loans, B-Notes and Real Estate Loans). During the quarter, we purchased $261.3 million, sold $30.5 million and had pay downs of $554.9 million for a net decrease of $324.1 million. Our $2.4 billion CMBS portfolio continues to perform well as only 0.39% of the underlying loans are delinquent. We have no delinquencies in our Mezzanine Loans, B-Notes and Real Estate Loans. We had 17 or $105.5 million CMBS securities upgraded with 1 or $9.0 million downgraded. Credit spreads widened on average by 24 basis points on our CMBS portfolio and were unchanged on our Mezzanine Loans, B-Notes and Real Estate Loans portfolio.
Residential Debt
We owned $3.4 billion face amount of residential assets (Subprime Securities, ABS Manufactured Housing, Subprime Residual / Retained Securities, Agency RMBS, Manufactured Home Loans and Residential Mortgage Loans). During the quarter, we purchased $254.0 million, sold $32.5 million and had paydowns of $278.6 million for a net decrease of $57.1 million. 60+ delinquencies on our Manufactured Housing loan portfolio decreased to 0.7% from 1.0% in March. The current average rating of our $640 million Subprime Securities portfolio was unchanged at BBB+. Our Subprime Securities portfolio had 2 or $12.7 million of securities downgraded with 1 or $6.5 million of securities upgraded. The following table illustrates the exposure by vintage in our subprime securities portfolio as of June 30, 2007.
($ in thousands) |
| |||||||||||||||||||
|
| Collateral Characteristics | Security Characteristics | |||||||||||||||||
Vintage |
| Deal |
| Collateral |
| Delinq |
| 3 month |
| Cum Loss |
| Average |
| Current |
| % |
| Principal |
| |
2003 Vintage |
| 46 |
| 0.16 |
| 10.6 | % | 22.1 | % | 2.0 | % | A |
| $ | 55,529 |
| 8.6 | % | 25.2 | % |
2004 Vintage |
| 36 |
| 0.22 |
| 11.0 | % | 30.9 | % | 0.9 | % | A | - |
| 218,889 |
| 34.0 | % | 21.5 | % |
2005 Vintage |
| 23 |
| 0.49 |
| 11.4 | % | 33.6 | % | 0.6 | % | BBB | + |
| 202,030 |
| 31.4 | % | 12.4 | % |
2006 Vintage |
| 11 |
| 0.80 |
| 9.4 | % | 20.3 | % | 0.1 | % | BB | + |
| 159,497 |
| 24.8 | % | 3.7 | % |
2007 Vintage |
| 3 |
| 0.97 |
| 0.1 | % | 14.4 | % | 0.0 | % | BBB | + |
| 7,750 |
| 1.2 | % | 9.6 | % |
Total |
| 26 |
| 0.45 |
| 10.6 | % | 28.1 | % | 0.7 | % | BBB | + | $ | 643,695 |
| 100.0 | % | 14.4 | % |
In addition to the principal credit support of 14.4%, the securities are further supported by approximately 200 basis points of excess spread. Our Subprime Securities portfolio had 2 or $12.7 million of securities downgraded with 1 or $6.5 million of securities upgraded.
Corporate Debt
We owned $1.5 billion face amount of corporate assets (Bank Loans and REIT Debt). During the quarter, we purchased $102.4 million, sold $32.5 million and had pay downs of $30.2 million for a net increase of
4
$39.7 million. Our Bank Loan portfolio had no rating changes and we had only 2 or $46.4 million downgrades in our REIT Debt portfolio. Credit spreads widened on average by 7 basis points on our REIT Debt portfolio and were unchanged on our Bank Loan portfolio.
Funded Investments in the Second Quarter ($ in millions):
Commercial | Face |
| Number |
| Credit |
| WA Credit Spread |
| ||
CMBS |
| $ | 62 |
| 8 |
| BB | + | 212 |
|
Mezz Loans |
|
| 99 |
| 3 |
| 55 | % | 221 |
|
Whole Loan |
|
| 25 |
| 1 |
| 68 | % | 175 |
|
B-Notes |
|
| 75 |
| 2 |
| 63 | % | 293 |
|
Total Commercial |
|
| 261 |
| 14 |
|
|
| 235 |
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
|
|
|
|
|
|
|
|
|
Subprime Securities |
| $ | 8 |
| 3 |
| BBB | + | 353 |
|
Agency RMBS |
|
| 31 |
| 1 |
| AAA |
| 71 |
|
Subprime Loans, held for sale |
|
| 215 |
| 988 |
| 652 |
| NR |
|
Total Residential |
|
| 254 |
| 992 |
|
|
| 127 |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
|
|
|
REIT |
| $ | 33 |
| 6 |
| BBB | + | 65 |
|
Bank Loans |
|
| 70 |
| 3 |
| 56 | % | 202 |
|
Total Corporate |
|
| 103 |
| 9 |
|
|
| 157 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
| $ | 618 |
| 1015 |
|
|
| 205 |
|
Capital Markets Activity
In April, we issued 4.56 million common shares, and raised net proceeds of approximately $125 million. The proceeds were used to pay down amounts drawn on our credit facility.
In April, we priced our tenth collateralized debt obligation (“CDO”). The proceeds from this issuance were used to term finance an $825 million portfolio of newly acquired mezzanine loans, bank loans, B-Notes, CMBS and other commercial real estate assets including whole loans. Net of this financing, we invested approximately $123 million of capital with a targeted return on equity of 16.5%.
Subsequent to quarter-end:
| - | As of today, we have $200 million available on our credit facility, $35 million of cash and $154 million of restricted cash to invest in our CBOs. In addition, we have three committed warehouse facilities aggregating $1.2 billion of which $900 million is available. |
| - | In July, we closed a $1.09 billion securitization of the subprime mortgage loan portfolio which we acquired in March and April 2007. Newcastle, through the securitization trust, issued $1.02 billion face amount of investment grade notes of which $979 million were sold to third parties. Newcastle invested approximately $50 million of equity in the transaction. This comprises approximately $46 million invested in 100% of the low investment grade notes and equity and approximately $4 million, net of financing, invested in $39 million face amount of notes rated Baa1 through Baa3 by Moody’s Investors Service and A to BBB by Standard & Poor’s. In connection with the transaction, we recorded in the second quarter a loss of $5.8 million related to changes in rates on the loans held for sale offset by a $5.8 million gain upon termination of the swap which was hedging our interest rate exposure. No write down for credit was recorded on these loans. |
5
| - | In July, we closed a $1.4 billion collateralized debt obligation where the proceeds from the offering were used to redeem securities issued in three of our prior securitizations. The portfolio initially consisted of approximately 56% CMBS, 26% REIT debt and 18% real estate related ABS. We were able to reduce our financing cost by 39 basis points on $1,288 million of debt and extend the average expected maturity on our debt from 5.6 to 10.0 years. In connection with this transaction, we recorded one-time costs of $7.3 million in the second quarter. |
Share Buy Back
Our board of directors has approved a potential repurchase of up to $100 million of shares of our common stock.
Conference Call
Newcastle’s management will conduct a live conference call today, August 2, 2007, at 1:00 P.M. eastern time to review the financial results for the quarter ended June 30, 2007. All interested parties are welcome to participate on the live call. You can access the conference call by dialing (800) 289-0743 (from within the U.S.) or (913) 981-5546 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “Newcastle Second Quarter Earnings Call.”
A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newcastleinv.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. An online replay of the webcast will be available until September 30, 2007.
A telephonic replay of the conference call will also be available until 11:59 P.M. eastern time on Thursday, August 9, 2007 by dialing (888) 203-1112 (from within the U.S.) or (719) 457-0820 (from outside of the U.S.); please reference access code “8941573.”
About Newcastle
Newcastle Investment Corp. owns and manages a $9.1 billion highly diversified real estate debt portfolio with moderate credit risk that is primarily financed with match funded debt. Our business strategy is to “lock in” and optimize the difference between the yield on our assets and the cost of our liabilities. Newcastle is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes. Newcastle is managed by an affiliate of Fortress Investment Group LLC, a global alternative asset management firm with approximately $36 billion in assets under management as of March 31, 2007. For more information regarding Newcastle Investment Corp. or to be added to our e-mail distribution list, please visit www.newcastleinv.com.
Safe Harbor
Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the stability of our business model and achievement of certain goals. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements; Newcastle can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Newcastle’s expectations include, but are not limited to, the risk that we can find additional suitably priced investments;
6
the risk that investments made or committed to be made cannot be financed on the basis and for the term at which we expect; the relationship between yields on assets which are paid off and yields on assets in which such monies can be reinvested; the relative spreads between the yield on the assets we invest in and the cost of financing. Such forward-looking statements speak only as of the date of this press release. Newcastle expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
7
Newcastle Investment Corp.
Consolidated Statements of Income
(dollars in thousands, except share data)
(Unaudited)
|
| For the Three Months Ended June 30, |
| For the Six Months Ended June 30, |
| ||||||||
|
| 2007 |
| 2006 |
| 2007 |
| 2006 |
| ||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
| $ | 191,869 |
| $ | 124,209 |
| $ | 354,090 |
| $ | 238,116 |
|
Rental and escalation income |
|
| 1,322 |
|
| 774 |
|
| 2,575 |
|
| 2,782 |
|
Gain on sale of investments, net |
|
| 6,977 |
|
| 5,493 |
|
| 9,189 |
|
| 7,421 |
|
Other income |
|
| 5,753 |
|
| (1,449 | ) |
| 6,496 |
|
| 4,256 |
|
|
|
| 205,921 |
|
| 129,027 |
|
| 372,350 |
|
| 252,575 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| 133,917 |
|
| 87,909 |
|
| 250,674 |
|
| 164,874 |
|
Loss on extinguishment of debt |
|
| 7,280 |
|
| — |
|
| 7,280 |
|
| — |
|
Property operating expense |
|
| 1,044 |
|
| 949 |
|
| 2,080 |
|
| 1,767 |
|
Loan and security servicing expense |
|
| 3,698 |
|
| 1,402 |
|
| 5,681 |
|
| 3,408 |
|
Provision for credit losses |
|
| 3,089 |
|
| 1,179 |
|
| 5,125 |
|
| 3,186 |
|
Provision for losses, loans held for sale |
|
| 5,754 |
|
| — |
|
| 5,754 |
|
| 4,127 |
|
General and administrative expense |
|
| 1,478 |
|
| 1,161 |
|
| 2,815 |
|
| 2,791 |
|
Management fee to affiliate |
|
| 4,545 |
|
| 3,474 |
|
| 8,451 |
|
| 6,945 |
|
Incentive compensation to affiliate |
|
| 2,521 |
|
| 2,834 |
|
| 6,209 |
|
| 5,686 |
|
Depreciation and amortization |
|
| 342 |
|
| 278 |
|
| 671 |
|
| 477 |
|
|
|
| 163,668 |
|
| 99,186 |
|
| 294,740 |
|
| 193,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before other gains (losses) |
|
| 42,253 |
|
| 29,841 |
|
| 77,610 |
|
| 59,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Gains (Losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other than temporary impairment |
|
| (5,953 | ) |
| — |
|
| (5,953 | ) |
| — |
|
Income before equity in earnings of unconsolidated subsidiaries |
|
| 36,300 |
|
| 29,841 |
|
| 71,657 |
|
| 59,314 |
|
Equity in earnings of unconsolidated subsidiaries |
|
| 819 |
|
| 1,215 |
|
| 1,666 |
|
| 2,410 |
|
Income from continuing operations |
|
| 37,119 |
|
| 31,056 |
|
| 73,323 |
|
| 61,724 |
|
Income from discontinued operations |
|
| (6 | ) |
| (26 | ) |
| (19 | ) |
| 225 |
|
Net Income |
|
| 37,113 |
|
| 31,030 |
|
| 73,304 |
|
| 61,949 |
|
Preferred dividends |
|
| (3,375 | ) |
| (2,329 | ) |
| (5,890 | ) |
| (4,657 | ) |
Income Available For Common Stockholders |
| $ | 33,738 |
| $ | 28,701 |
| $ | 67,414 |
| $ | 57,292 |
|
Net Income Per Share of Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 0.64 |
| $ | 0.65 |
| $ | 1.35 |
| $ | 1.30 |
|
Diluted |
| $ | 0.64 |
| $ | 0.65 |
| $ | 1.34 |
| $ | 1.30 |
|
Income from continuing operations per share of common stock, after preferred dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 0.64 |
| $ | 0.65 |
| $ | 1.35 |
| $ | 1.29 |
|
Diluted |
| $ | 0.64 |
| $ | 0.65 |
| $ | 1.34 |
| $ | 1.29 |
|
Income from discontinued operations per share of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | — |
| $ | — |
| $ | — |
| $ | 0.01 |
|
Diluted |
| $ | — |
| $ | — |
| $ | — |
| $ | 0.01 |
|
Weighted Average Number of Shares of Common Stock Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 52,273,988 |
|
| 43,990,635 |
|
| 49,936,428 |
|
| 43,967,854 |
|
Diluted |
|
| 52,467,019 |
|
| 44,071,310 |
|
| 50,158,085 |
|
| 44,067,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Declared per Share of Common Stock |
| $ | 0.720 |
| $ | 0.650 |
| $ | 1.410 |
| $ | 1.275 |
|
8
Newcastle Investment Corp.
Consolidated Balance Sheets
(dollars in thousands, except share data)
|
| June 30, 2007 (unaudited) |
| December 31, |
| ||
Assets |
|
|
|
|
|
|
|
Real estate securities, available for sale |
| $ | 5,338,347 |
| $ | 5,581,228 |
|
Real estate related loans, net |
|
| 2,060,789 |
|
| 1,568,916 |
|
Residential mortgage loans, net |
|
| 698,453 |
|
| 809,097 |
|
Subprime mortgage loans, held for sale |
|
| 1,095,821 |
|
| — |
|
Subprime mortgage loans subject to call option |
|
| 289,742 |
|
| 288,202 |
|
Investments in unconsolidated subsidiaries |
|
| 22,634 |
|
| 22,868 |
|
Operating real estate, net |
|
| 31,553 |
|
| 29,626 |
|
Cash and cash equivalents |
|
| 103,863 |
|
| 5,371 |
|
Restricted cash |
|
| 241,248 |
|
| 184,169 |
|
Derivative assets |
|
| 76,789 |
|
| 62,884 |
|
Receivables and other assets |
|
| 64,329 |
|
| 52,031 |
|
| $ | 10,023,568 |
| $ | 8,604,392 |
| |
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
CBO bonds payable |
| $ | 3,924,672 |
| $ | 4,313,824 |
|
Other bonds payable |
|
| 621,562 |
|
| 675,844 |
|
Notes payable |
|
| 93,793 |
|
| 128,866 |
|
Repurchase agreements |
|
| 2,450,517 |
|
| 760,346 |
|
Repurchase agreements subject to ABCP facility |
|
| 1,281,156 |
|
| 1,143,749 |
|
Financing of subprime mortgage loans subject to call option |
|
| 289,742 |
|
| 288,202 |
|
Credit facility |
|
| — |
|
| 93,800 |
|
Junior subordinated notes payable (security for trust preferred) |
|
| 100,100 |
|
| 100,100 |
|
Derivative liabilities |
|
| 8,000 |
|
| 17,715 |
|
Dividends payable |
|
| 40,786 |
|
| 33,095 |
|
Due to affiliates |
|
| 7,741 |
|
| 13,465 |
|
Accrued expenses and other liabilities |
|
| 72,113 |
|
| 33,406 |
|
|
| 8,890,182 |
|
| 7,602,412 |
| |
Stockholders’ Equity |
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 2,500,000 shares of 9.75% Series B Cumulative Redeemable Preferred Stock 1,600,000 shares of 8.05% Series C Cumulative Redeemable Preferred Stock, and 2,000,000 shares of 8.375% Series D Cumulative Redeemable Preferred Stock liquidation preference $25.00 per share, issued and outstanding (Series D issued in 2007) |
|
| 152,500 |
|
| 102,500 |
|
Common stock, $0.01 par value, 500,000,000 shares authorized, 52,779,179 and 45,713,817 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively |
|
| 528 |
|
| 457 |
|
Additional paid-in capital |
|
| 1,033,316 |
|
| 833,887 |
|
Dividends in excess of earnings |
|
| (14,699 | ) |
| (10,848 | ) |
Accumulated other comprehensive income (loss) |
|
| (38,259 | ) |
| 75,984 |
|
|
|
| 1,133,386 |
|
| 1,001,980 |
|
| $ | 10,023,568 |
| $ | 8,604,392 |
| |
9
Newcastle Investment Corp.
Reconciliation of GAAP Net Income to FFO
(dollars in thousands)
(Unaudited)
|
| Three Months Ended |
| Three Months Ended |
| ||
Net income available for common stockholders |
| $ | 33,738 |
| $ | 28,701 |
|
Operating real estate depreciation |
|
| 271 |
|
| 210 |
|
Funds from operations (“FFO”) |
| $ | 34,009 |
| $ | 28,911 |
|
We believe FFO is one appropriate measure of the operating performance of real estate companies because it provides investors with information regarding our ability to service debt and make capital expenditures. We also believe that FFO is an appropriate supplemental disclosure of operating performance for a REIT due to its widespread acceptance and use within the REIT and analyst communities. Furthermore, FFO is used to compute our incentive compensation to our manager. FFO, for our purposes, represents net income available for common stockholders (computed in accordance with GAAP), excluding extraordinary items, plus real estate depreciation, and after adjustments for unconsolidated subsidiaries, if any. We consider gains and losses on resolution of our investments to be a normal part of our recurring operations and therefore do not exclude such gains and losses when arriving at FFO. Adjustments for unconsolidated subsidiaries, if any, are calculated to reflect FFO on the same basis. FFO does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an indicator of our operating performance or as an alternative to cash flow as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs. Our calculation of FFO may be different from the calculation used by other companies and, therefore, comparability may be limited.
Newcastle Investment Corp.
Reconciliation of GAAP Book Equity to Invested Common Equity
(dollars in thousands)
(Unaudited)
|
| June 30, 2007 |
| |
Book equity |
| $ | 1,133,386 |
|
Preferred stock |
|
| (152,500 | ) |
Accumulated depreciation on operating real estate |
|
| 5,100 |
|
Accumulated other comprehensive income |
|
| 38,259 |
|
Invested common equity |
| $ | 1,024,245 |
|
10