EXHIBTI 99.1
[GRAPHIC OMITTED] NEWCASTLE INVESTMENT CORP.
Contact: FOR IMMEDIATE RELEASE
Lilly H. Donohue
Director of Investor Relations
212-798-6118
Newcastle Announces First Quarter Results
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First Quarter Highlights
- FFO of $11.6 million, or $0.49 per share for the first quarter 2003 as
compared to $10.3 million or $0.45 per share for the fourth quarter
2002, representing an 8.9% increase on a per share basis for the first
quarter 2003.
- Income available for stockholders of $10.9 million, or $0.46
per share for the first quarter 2003.
- Quarterly dividend of $0.45 per share of common stock for the first
quarter 2003.
- Issued $62.5 million of 9.75% Series B Cumulative Preferred Stock.
- Issued $472 million of non-recourse debt through our third
collateralized bond obligation.
New York, NY. April 29, 2003 - Newcastle Investment Corp. (NYSE: NCT) reported
that for the quarter ended March 31, 2003, Funds from Operations ("FFO") totaled
$11.6 million or $0.49 per share, achieving a return on average invested equity
of 15.6%. For the three months ended March 31, 2003, income available for common
stockholders was $10.9 million or $0.46 per share. For the quarter ended March
31, 2003, Newcastle declared a dividend of $0.45 per share of common stock.
For a reconciliation and discussion of GAAP net income to FFO and GAAP book
equity to invested equity, please refer to the tables following the presentation
of GAAP results.
Our GAAP common equity book value was $287.4 million at March 31, 2003 and
increased from $284.2 million at December 31, 2002. Total assets of $2.1 billion
at March 31, 2003 increased from $1.6 billion at December 31, 2002 predominately
as a result of the purchase of our third real estate securities portfolio.
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Selected Financial Data (Unaudited)
(in thousands)
Operating data for the three months ended March 31, 2003:
Funds from operations $ 11,604
Income available for common stockholders $ 10,900
Balance Sheet data as of March 31, 2003:
Real estate securities $ 1,590,122
Total assets $ 2,149,065
CBO bond obligations $ 1,336,297
Stockholders' equity $ 349,866
Supplemental Real Estate Securities Data as of March 31, 2003 (Unaudited)
Weighted average asset yield 7.28%
Weighted average liability cost 5.16%
Weighted average net spread 2.12%
Average credit rating BBB-
Weighted average credit spread 3.10%
Percentage investment grade 76%
Number of securities 192
Capital Markets Activity
In the first quarter 2003, Newcastle successfully accessed the capital markets
through the issuance of preferred stock and non-recourse debt. Newcastle
issued $62.5 million of 9.75% Series B Cumulative Redeemable Preferred Stock
on March 18, 2003. We also issued $472 million of debt, which long-term
financed the purchase of our third real estate securities portfolio.
"We are pleased with our first quarter performance and our continued ability
to raise capital. Capital raised from our preferred equity issuance will be
invested in our next real estate securities portfolio," commented Wesley R.
Edens, Chairman and Chief Executive Officer.
Real Estate Securities Investment Activity
During the first quarter of 2003, Newcastle purchased $120.5 million of real
estate securities, representing 20 securities. For the three months ended
March 31, 2003, we sold $35.8 million face amount of real estate securities,
representing four securities, for a net gain of $1.8 million.
In connection with our third real estate securities portfolio, on-balance
sheet real estate securities increased by $414 million. The weighted average
credit quality for our third portfolio is BBB and 85% of the securities were
rated investment grade as of March 31, 2003.
As of March 31, 2003, our aggregate $1.6 billion real estate securities
portfolio was well diversified with 192 securities of which 90% were fixed rate
securities with a weighted average life of 7.5 years and the remaining 10%
represented floating rate securities with a weighted average life of 2.8 years.
The portfolio consisted of 62% commercial mortgage backed securities, 31% senior
unsecured REIT debt and 7% asset backed securities. As of March 31, 2003, the
average credit quality of our aggregate real estate securities portfolio was
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BBB- and 76% of the real estate securities were rated investment grade. Our
average investment size is $7.5 million and our largest investment in a single
security is $28 million. The weighted average credit spread was 3.10% as of
March 31, 2003 versus 3.37% as of December 31, 2002. The weighted average
credit spread represents the yield premium on our securities over the
comparable US Treasury rate or LIBOR.
Kenneth Riis, Newcastle's President, stated, "We actively manage our credit
exposure through portfolio diversification and ongoing asset surveillance and
selection. Based on our current view of the domestic real estate market, we
continued to migrate to higher rated securities and as a result increased the
percentage of investment grade securities in our portfolio to 76% at the end of
the first quarter 2003 from 68% at year-end 2002."
Real Estate Securities Business
Our core business strategy is to invest in a diverse portfolio of moderately
credit sensitive real estate debt securities. We generally target securities
rated "A" through "BB". Newcastle seeks to match fund these securities with
respect to interest rates and maturities in order to minimize the impact of
interest rate fluctuations on earnings, and to reduce the risk of refinancing
our liabilities prior to the maturity of our assets. Furthermore, these
financings are designed to give us the flexibility to manage our credit
exposure.
We make our money by locking in the difference between the yield on our assets
and the cost of our liabilities and optimizing this difference, which
difference we refer to as "net spread".
Our real estate securities portfolio is financed to maturity through long
term, match funded financings that are not callable as a result of changes in
value. Accordingly, unless there is a material impairment in value that would
result in a payment not being received on a security, changes in the book
value of our portfolio will not affect our recurring earnings and our ability
to pay a dividend, although they will result in changes to GAAP common equity
book value. As of March 31, 2003, none of our owned securities had defaulted,
and there have been no principal losses in Newcastle's real estate securities
portfolio to date.
Other Investments
We supplement our core business strategy with investments in other real
estate-related assets including operating real estate and mortgage loans.
In February 2003, Newcastle sold its entire position in conforming residential
loans (a portion of its mortgage loan portfolio) with an aggregate unpaid
principal balance of approximately $159.0 million for gross proceeds of
approximately $162.6 million, resulting in a gain of approximately $0.7
million. In addition, we bought approximately $207.4 million of non-conforming
adjustable rate residential mortgages.
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Conference Call and Annual Meeting
Management will conduct a conference call on April 30, 2003 to review the
Company's first quarter financial results for the period ended March 31, 2003.
The conference call is scheduled for 4:30 P.M. eastern time. All interested
parties are welcome to participate on the live call. You can access the
conference call by dialing (800) 288-8961 ten minutes prior to the scheduled
start of the call; please reference "Newcastle First Quarter 2003 Earnings
Call." International callers should dial (612) 332-0107.
For those who are not available to listen to the live call, a replay will be
available until 6:00 P.M. eastern time on Friday, May 9, 2003 by dialing (800)
475-6701; please reference access code "683004." International callers should
dial (320) 365-3844 to access the replay.
Newcastle will hold its annual meeting of stockholders at the Four Seasons
Hotel, located at 57 East 57th Street, New York, NY 10022 on Thursday, May 29,
2003 at 8:00A.M. local time. All stockholders are cordially invited to attend.
Newcastle Investment Corp. invests in real estate securities and other real
estate-related assets. Newcastle is organized and conducts its operations to
qualify as a real estate investment trust (REIT) for federal income tax
purposes.
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Newcastle Investment Corp.
Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31, 2003
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Revenue:
Interest and dividend income $25,032
Rental and escalation income 5,797
Gain on settlement of investments 2,491
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Total revenue 33,320
Expenses:
Interest expense 14,863
Property operating expense 2,665
Loan servicing expense 402
General and administrative expense 950
Management fees to affiliate 1,305
Preferred incentive return to affiliate 1,330
Depreciation and amortization 711
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Total expenses 22,226
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Income from continuing operations 11,094
Income from discontinued operations 9
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Net income 11,103
Preferred dividends (203)
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Income available for common stockholders $10,900
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Net income per share of common stock, basic and diluted $0.46
Income from continuing ops. per share of common stock,
after preferred dividends, basic and diluted $0.46
Income from discontinued operations per share of common stock, basic and diluted $0.00
Weighted average number shares of common stock outstanding, basic 23,488,517
Weighted average number shares of common stock outstanding, diluted 23,619,909
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Newcastle Investment Corp.
Consolidated Balance Sheet
(In thousands)
(Unaudited)
Assets
Real estate securities, available for sale $1,590,122
Operating real estate, net 118,931
Real estate held for sale 2,208
Real estate loans receivable, net 303,013
Other securities, available for sale 20,931
Cash and cash equivalents 75,765
Restricted cash 11,797
Deferred costs, net 7,300
Receivables and other assets 18,998
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Total assets $2,149,065
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Liabilities and Stockholders' Equity
Liabilities
CBO bonds payable $1,336,297
Other bonds payable 37,584
Notes payable 65,272
Repurchase agreements 289,446
Derivative liabilities 49,522
Due to affiliates 1,768
Dividends payable 10,773
Accrued expenses and other liabilities 8,537
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Total liabilities 1,799,199
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Stockholders' Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 2,500,000 shares, liquidation
preference $25.00 per share, issued and outstanding at March 31, 2003 62,500
Common stock, $0.01 par value, 500,000,000 shares authorized, 23,488,517 shares issued and
outstanding at March 31, 2003 235
Additional paid-in capital 288,499
Dividends in excess of earnings (13,636)
Accumulated other comprehensive income 12,268
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Total stockholders' equity 349,866
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Total stockholders' equity and liabilities $2,149,065
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Newcastle Investment Corp.
Reconciliation of GAAP Net Income to FFO
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2003
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Net income available for common stockholders $ 10,900
Operating real estate depreciation 704
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Funds from operations ("FFO") $ 11,604
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Weighted average number shares of common stock outstanding, basic 23,488,517
Weighted average number shares of common stock outstanding, diluted 23,619,909
Newcastle believes FFO is one appropriate measure of the performance of real
estate companies because it provides investors with an understanding of our
ability to incur and 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. FFO, for our purposes, represents net income
available for common stockholders (computed in accordance with accounting
principles generally accepted in the United States (GAAP)), excluding
extraordinary items, plus real estate depreciation and amortization, 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. The Company's 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 Equity
(In thousands)
(Unaudited)
March 31, 2003
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Book equity $ 349,866
Accumulated depreciation on operating real estate 10,686
Accumulated other comprehensive income (12,268)
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Invested equity $ 348,284
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Certain items in this press release may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
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, changes in economic
conditions generally and the real estate and bond markets specifically; changes
in interest rate, credit spreads, as well as the success of our hedging strategy
in relation to such changes; impairments in the value of the collateral
underlying our real estate securities; legislative/ regulatory changes;
completion of pending investments; continued ability to source new investments;
the availability and cost of capital for future investments; competition within
the finance and real estate industries; and
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other risks detailed from time to time in Newcastle's SEC reports. 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.
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