EXHIBIT 99.2
Contact: Brian Beades
212-754-5596
ahr-info@blackrock.com
Anthracite Capital, Inc. Reports Fourth Quarter Earnings; Portfolio
Repositioning on Track; Commercial Real Estate Assets Increase
to 61%; Dividend Yield is 10.1%
New York, NY - February 4, 2004 - Anthracite Capital, Inc. (the "Company" or
"Anthracite") (NYSE: AHR) today reported net income for the fourth quarter of
2003 of $0.25 per share versus $0.11 per share for the same period last year.
Fourth quarter earnings from the Company's portfolio ("Operating Earnings")
were $0.25 per share versus $0.41 per share for the same three-month period
last year. For the full year ended December 31, 2003 the net loss was $0.34
per share versus net income of $1.18 per share for the year ended December 31,
2002. Operating Earnings for the full year ended December 31, 2003 were $1.25
per share versus $1.67 per share for the year ended December 31, 2002. Based
on the $0.28 per share dividend declared on December 11, 2003, and the
February 3, 2004 closing price of $11.06 per share, Anthracite's annualized
dividend yield is 10.1%.
The pace of reinvestment achieved during the fourth quarter of 2003 is
consistent with the portfolio repositioning plan previously disclosed by the
Company in September 2003. The Company sold Residential Mortgage Backed
Securities ("RMBS") to reduce interest rate volatility and replaced them with
predominantly investment grade commercial mortgage backed securities ("CMBS").
The Company expects Operating Earnings to rise when its capital is fully
redeployed into higher yielding non-investment grade commercial real estate
assets.
The Company considers its Operating Earnings to be net interest income after
operating expenses and preferred dividends but before realized and unrealized
gains and losses. The Company believes Operating Earnings better reflect the
recurring long-term earnings of the Company. Operating Earnings can and will
fluctuate over time based on changes in asset levels, funding rates, available
reinvestment rates and expected losses on credit sensitive positions. A table
is provided at the end of this news release which reconciles Operating
Earnings per share with net income (loss) per share. (All numbers are
thousands, except per share amounts.)
During the fourth quarter of 2003, the Company's commercial real estate assets
increased to $1,464,492 representing an 11% increase from the third quarter,
and its holdings of RMBS assets after the settlement of $99,551 of RMBS
securities sold not yet settled decreased by $220,736 representing a 25%
decrease from the third quarter. After the settlement of the sold RMBS, the
ratio of commercial real estate assets to the Company's total portfolio, and
RMBS to the Company's total portfolio is 68% and 30%, respectively. The
Company's considers its total portfolio to be total assets less other assets
and receivable for investments sold. The increase in commercial real estate
assets of $144,068 is comprised of 73% investment grade CMBS, 23%
non-investment grade CMBS, and 4% whole loans.
The Company considers CMBS securities where it maintains the right to control
the foreclosure/workout process on the underlying loans as controlling class
CMBS ("Controlling Class CMBS"). During the twelve months ended December 31,
2003, the Company acquired $140,139 of par of 2003 vintage Controlling Class
CMBS. The Company did not acquire new Controlling Class CMBS during the fourth
quarter of 2003.
Hugh Frater, President and Chief Executive Officer of the Company, stated, "We
have made significant progress in reducing the risk of the RMBS portfolio in
favor of commercial real estate securities and loans. Our credit performance
remains consistent with our expectations. We still have further work to do in
re-positioning the portfolio into high yield commercial real estate assets,
but the reduction in volatility accomplished during the fourth quarter is an
important first step."
Chris Milner, Chief Investment Officer of the Company, also stated, "Our
increased focus on commercial real estate opportunities resulted in a
significant increase in assets acquired. We have committed to invest over
$50,000 in CMBS which we expect to close within the next sixty days in
addition to a significant pipeline of other high yielding opportunities. We
continue to apply a disciplined approach to credit underwriting which we
expect to result in consistent performance over the long term."
The Company's Operating Earnings for the fourth quarter of 2003 represent an
annualized return on the quarter's average common stock equity ("Annualized
ROE") of 15.0% and a net interest margin of 2.8%. Annualized ROE based upon
Operating Earnings for the same period last year was 20.6% and the net
interest margin was 3.8%. The decrease in the net interest margin is
attributable to the Company's reduction in RMBS assets and a lower debt to
capital ratio compared to the twelve months ended December 31, 2002.
Aggregate leverage at December 31, 2003 is unchanged from September 30, 2003
at 4.4:1 debt to capital. The Company's exposure to changes in short-term
interest rates increased during the fourth quarter; as of December 31, 2003, a
50 basis point change in LIBOR would cause the Company's net income to change
by $0.01 per share annually.
Investment Activity
The Company's primary focus is to invest in a diverse portfolio of commercial
real estate loans and securities. The Company will generally control the
credit process of its portfolio. Our objective is to maximize the spread
between the loss adjusted income and the cost of financing. As of December 31,
2003, the Company has financed 51% of its commercial real estate loans and
securities with match-funded secured collateralized debt obligation ("CDO")
debt to minimize the effect on performance of changes in interest rates. The
Company plans to issue additional CDO debt in the first half of 2004.
The majority of the Company's commercial real estate investments are in the
form of commercial real estate securities. Income from these securities is
reported after assuming losses will occur over time. During the fourth quarter
of 2003 the Company's loan loss expectations for its commercial real estate
securities portfolio did not change. Total expected underlying loan losses
remain at 2.06% of original loan balances. None of the Company's underlying
loans incurred losses during the fourth quarter. Total losses recognized were
0.41% at the end of the third and fourth quarters. At December 31, 2003, loan
delinquencies represented 1.5% of the total unpaid principal balance on the
Company's Controlling Class CMBS as compared to 1.4% at the end of the third
quarter.
The average yield on the Company's commercial real estate securities
(primarily investment grade and below investment grade CMBS, investment grade
REIT debt, and CMBS IO's) for the fourth quarter of 2003 was 8.0%, while the
average loss adjusted yield on only the below investment grade CMBS was 9.7%.
The average cost of financing the commercial real estate securities portfolio
during the fourth quarter was 5.0% compared to 5.2% for the third quarter.
This reduction is due to the increase in investment grade CMBS. The Company
anticipates that its cost of borrowing will increase in the event of an
additional CDO offering. Included in net income for the fourth quarter are
expenses related to hedging the Company's assets which are not financed
through its two CDO's. This hedging expense was $5,539 or $0.11 per share for
the fourth quarter.
A breakdown of the commercial real estate securities portfolio net interest
income and realized gains for the quarter and year ended December 31, 2003 is
as follows:
For the quarter ended For the year ended
December 31, 2003
----------------------------------------------
Interest Income $26,384 $98,114
Interest Expense* (12,860) (48,567)
----------------------------------------------
Net Interest Income 13,524 49,547
----------------------------------------------
Realized Gains - 1,161
----------------------------------------------
Net Interest Income and Realized Gains from
Commercial Real Estate Securities $13,524 $50,708
==============================================
*Including hedges in the Company's CDOs
The average yield on the Company's commercial real estate loan portfolio for
the third and fourth quarters of 2003 was 10.4% and 10.7%, respectively. The
total cost of borrowing secured by loan assets is 2.9% and 3.0% respectively.
The Company has two committed warehouse lines that can be used to finance
these assets. The annualized yield on the Company's investment in Carbon
Capital, Inc. which constitutes 29% of the Company's commercial real estate
loan portfolio for the year ended December 31, 2003, was 15.1%.
A breakdown of the commercial real estate loan portfolio net interest income
for the quarter and year ended December 31, 2003 is as follows:
For the quarter ended For the year ended
December 31, 2003
-----------------------------------------------
Interest Income $ 2,828 $10,196
Interest Expense (163) (526)
-----------------------------------------------
Net Interest Income from Commercial Real
Estate Loans $ 2,665 $ 9,670
===============================================
Book Value
Net book value per share at the end of the fourth quarter was $6.64. The
securities of the Company are marked to market based upon market prices
provided by dealers. As the Company's portfolio matures, the net book value of
credit sensitive CMBS securities held by the Company is expected to increase
towards its original purchase cost, provided that the Company's estimates of
expected credit losses are accurate. The unrealized loss on all Controlling
Class CMBS at December 31, 2003 was $68,079. This amount reflects the amount
of recovery (net of expected underlying loan losses) if the portfolio is held
to maturity. Net book value per share increased approximately 1.7% from $6.53
at September 30, 2003 due to tighter credit spreads across the Company's
portfolio. Since the securities of the Company are marked to market, there can
be fluctuations in book value based solely on quarterly changes in credit
spreads and interest rates. To the extent that there is a sustained decline in
book value due to changes in credit experience or other permanent factors,
such declines would effectively reduce earnings.
GAAP Reconciliation
The table below reconciles net income (loss) per common share with Operating
Earnings per common share:
Three Months Ended Year Ended
--------------------------------------------------
12/31/03 12/31/02 12/31/03 12/31/02
--------------------------------------------------
Operating Earnings per share $0.25 $0.41 $1.25 $1.67
Realized gain (loss) (0.17) 0.18 (0.86) (0.57)
Unrealized gain (loss)* 0.16 (0.25) (0.07) 0.18
Foreign currency gain/(loss) & hedge ineffectiveness 0.01 (0.01) 0.01 (0.02)
Loss on impairment of asset - (0.22) (0.67) (0.22)
Cumulative transition adjustment - SFAS 142 - - - 0.14
--------------------------------------------------
Net Income (loss) per share $0.25 $0.11 $(0.34) $1.18
*Includes hedges
Dividend Reinvestment Plan
Anthracite has a dividend reinvestment plan that provides current owners of
its common stock with a simple, economical and convenient method of increasing
their investment. Even if you are not a current owner of Anthracite common
stock, the Company's transfer agent can issue registered stock directly to you
without commission or markup. This transaction can be done regardless of
whether or not shares are held in street name. To take advantage of this
program, stockholders must submit a signed Request for Waiver to the Company.
A printable version of the form is available on the Company's website or
investors can call or email the Company to obtain the Waiver and instructions
via fax.
To request a prospectus and receive enrollment materials or to ask questions
about the plan, interested investors and stockholders may contact the
Company's transfer agent, American Stock Transfer & Trust Company, at
1-877-248-6416, or Investor Relations, Anthracite Capital, Inc., at
212-409-3333. The Company's website address is www.anthracitecapital.com. The
Company is currently offering a 2% discount to the trailing 12-business day
average provided the stock price remains above threshold levels established by
the Company at the time.
About Anthracite
Anthracite Capital, Inc. is a specialty finance company focused on investments
in high yield real estate loans and related securities. Anthracite is
externally managed by BlackRock Financial Management, Inc., which is a
subsidiary of BlackRock, Inc. ("BlackRock") (NYSE:BLK), one of the largest
publicly traded investment management firms in the United States with
$309,400,000 in global assets under management as of December 31, 2003.
BlackRock is a member of The PNC Financial Services Group, Inc. ("PNC")
(NYSE:PNC), a diversified financial services organization. Through its
affiliates, PNC originates commercial, multifamily and residential real estate
loans, and services $83,300,000 in commercial mortgage loans for third parties
through its Midland Loan Services, Inc. subsidiary as of December 31, 2003.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act with respect to future financial
or business performance, strategies or expectations. Forward-looking
statements are typically identified by words or phrases such as "trend,"
"opportunity," "pipeline," "believe," "comfortable," "expect," "anticipate,"
"current," "intention," "estimate," "position," "assume," "potential,"
"outlook," "continue," "remain," "maintain," "sustain," "seek," "achieve," and
similar expressions, or future or conditional verbs such as "will," "would,"
"should," "could," "may" or similar expressions. Anthracite cautions that
forward-looking statements are subject to numerous assumptions, risks and
uncertainties, which change over time. Forward-looking statements speak only
as of the date they are made, and Anthracite assumes no duty to and does not
undertake to update forward-looking statements. Actual results could differ
materially from those anticipated in forward-looking statements and future
results could differ materially from historical performance.
In addition to factors previously disclosed in Anthracite's Securities and
Exchange Commission (the "SEC") reports and those identified elsewhere in this
press release, the following factors, among others, could cause actual results
to differ materially from forward-looking statements or historical
performance: (1) the introduction, withdrawal, success and timing of business
initiatives and strategies; (2) changes in political, economic or industry
conditions, the interest rate environment or financial and capital markets,
which could result in changes in the value of Anthracite's assets; (3) the
relative and absolute investment performance and operations of Anthracite's
manager; (4) the impact of increased competition; (5) the impact of capital
improvement projects; (6) the impact of future acquisitions; (7) the
unfavorable resolution of legal proceedings; (8) the extent and timing of any
share repurchases; (9) the impact, extent and timing of technological changes
and the adequacy of intellectual property protection; (10) the impact of
legislative and regulatory actions and reforms and regulatory, supervisory or
enforcement actions of government agencies relating to Anthracite, BlackRock
or PNC; (11) terrorist activities, which may adversely affect the general
economy, real estate, financial and capital markets, specific industries, and
Anthracite and BlackRock; and (12) the ability of Anthracite's manager to
attract and retain highly talented professionals.
Anthracite's Annual Report on Form 10-K for the year ended December 31, 2002
and Anthracite's subsequent reports filed with the SEC, accessible on the
SEC's website at www.sec.gov and on Anthracite's website
www.anthracitecapital.com, identify additional factors that can affect
forward-looking statements.
To learn more about Anthracite Capital, Inc., visit our website at:
www.anthracitecapital.com
Anthracite Capital, Inc. and Subsidiaries
Consolidated Statements of Financial Condition (Unaudited)
(in thousands, except per share data)
- --------------------------------------------------------------------------------------------------------------------------------
December 31, 2003 December 31, 2002
----------------- -----------------
ASSETS
Cash and cash equivalents $ 20,805 $ 24,698
Restricted cash equivalents 12,845 84,485
Residential mortgage backed securities 753,219 1,506,450
--------------- ---------------
Cash and RMBS 786,869 1,615,633
Commercial real estate securities 1,366,508 894,345
Commercial real estate loans 97,984 88,926
--------------- ---------------
Total Commercial real estate 1,464,492 983,271
Receivable for investments sold 99,056 -
Other assets 42,964 40,447
--------------- ---------------
Total Assets $2,393,381 $2,639,351
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Borrowings:
Secured by pledge of residential mortgage backed securities $670,874 $1,418,206
Secured by pledge of commercial real estate securities 444,987 42,861
Secured by pledge of commercial real estate loans 22,710 16,004
--------------- ---------------
Total short term borrowings 1,138,571 1,477,071
Long term Borrowings: Collateralized debt obligations 684,970 684,590
--------------- ---------------
Total borrowings $1,823,541 $2,161,661
Securities sold, not yet settled 99,551 -
Payable for investments purchased - 524
Distributions payable 14,749 16,589
Other liabilities 38,110 54,361
--------------- ---------------
Total Liabilities $1,975,951 $2,233,135
--------------- ---------------
Stockholders' Equity:
Common stock, par value $0.001 per share; 400,000 shares authorized;
49,464 shares issued and outstanding in 2003; and
47,398 shares issued and outstanding in 2002 49 47
10% Series B Preferred stock, liquidation preference $43,942
in 2003 and $47,817 in 2002 33,431 36,379
9.375% Series C Preferred stock, liquidation preference $57,500
in 2003 55,435 -
Additional paid - in capital 536,333 515,180
Distributions in excess of earnings (101,635) (24,161)
Accumulated other comprehensive loss (106,183) (121,229)
--------------- ---------------
Total Stockholders' Equity 417,430 406,216
--------------- ---------------
Total Liabilities and Stockholders' Equity $2,393,381 $2,639,351
=============== ===============
Anthracite Capital, Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
- ----------------------------------------------------------------------------------------------------------------------------------
For the Three Months Ended For the Year Ended
December 31, December 31,
---------------------------------------------------------------------------
2003 2002 2003 2002
---------------------------------------------------------------------------
Operating Portfolio
Income:
Commercial real estate securities $26,384 $21,782 $98,114 $72,205
Commercial real estate loans 2,828 3,481 10,196 16,243
Residential mortgage backed securities 8,878 17,070 54,504 72,524
Cash and cash equivalents 126 276 964 1,473
-------- -------- -------- --------
Total income 38,216 42,609 163,778 162,445
-------- -------- -------- --------
Expenses:
Interest expense:
Collateralized debt obligations 11,138 8,158 44,226 17,626
Commercial real estate securities 1,722 1,255 4,341 5,686
Commercial real estate loans 163 364 526 1,832
Residential mortgage backed securities 2,512 6,094 16,072 25,009
Hedging Expense 5,539 3,308 18,790 14,758
General and administrative 572 549 2,296 2,323
Incentive fee - - - 9,332
Management fee 2,070 2,460 9,411 3,195
-------- -------- -------- --------
Total expenses 23,716 22,188 95,662 79,761
-------- -------- -------- --------
Operating Earnings 14,500 20,421 68,116 82,684
-------- -------- -------- --------
Other gain (loss):
Realized loss (8,354) 8,455 (41,633) (26,265)
Unrealized gain (loss) 7,858 (12,083) (3,405) 8,401
Foreign currency (loss) - (432) - (812)
Hedge Ineffectiveness 881 110 706 236
Incentive fee attributable to other gains - - - (343)
Loss on impairment of asset - (10,273) (32,426) (10,273)
-------- -------- -------- --------
Total other gain (loss) 385 (14,223) (76,758) (29,056)
-------- -------- -------- --------
Income before cumulative transition adjustment 14,885 6,198 (8,642) 53,628
Cumulative transition adjustment - SFAS 142 - - - 6,327
Net Income (Loss) 14,885 6,198 (8,642) 59,955
-------- -------- -------- --------
Dividends on preferred stock 2,446 1,195 7,744 5,162
-------- -------- -------- --------
Net Income (Loss) available to Common Stockholders 12,439 5,003 (16,386) 54,793
======== ======== ======== ========
Operating Earnings available to Common Stockholders per share:
Basic $0.25 $0.41 $1.25 $1.67
Diluted $0.25 $0.41 $1.25 $1.67
Net Income (Loss) per share, basic
Income before cumulative transition adjustment $0.25 $0.11 $(0.34) $ 1.04
Cumulative transition adjustment - - - 0.14
-------- -------- -------- --------
Net Income $0.25 $0.11 $(0.34) $ 1.18
======== ======== ======== ========
Net Income (Loss) per share, diluted
Income before cumulative transition adjustment $0.25 $0.11 $(0.34) $ 1.04
Cumulative transition adjustment - - - 0.14
-------- -------- -------- --------
Net Income $0.25 $0.11 $(0.34) $ 1.18
======== ======== ======== ========
Weighted average number of shares outstanding:
Basic 49,107 47,256 48,246 46,411
Diluted 49,118 47,284 48,246 46,452