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8-K - FORM 8-K - BLACKSTONE MORTGAGE TRUST, INC. | c21200e8vk.htm |
EX-99.2 - EXHIBIT 99.2 - BLACKSTONE MORTGAGE TRUST, INC. | c21200exv99w2.htm |
Exhibit 99.1
Contact: | Douglas Armer (212) 655-0220 |
Capital Trust Reports Second Quarter 2011 Results
NEW YORK, NY August 3, 2011 Capital Trust, Inc. (NYSE: CT) today reported results for the
quarter ended June 30, 2011.
| Operating Results: |
| Reported consolidated net loss of $1.8 million, or $(0.08) per share
for the second quarter. |
||
| Consolidated assets were $2.4 billion as of June 30, 2011, offset by
consolidated liabilities of $2.5 billion, resulting in a shareholders deficit of
$110.9 million. |
||
| Consistent with last quarter, the Company reported adjusted earnings
and adjusted balance sheets for Capital Trust, Inc. and its subsidiary, CT Legacy
REIT. These adjusted presentations generally exclude consolidated securitization
vehicles and loan participations sold from the Companys operating results and
financial position, as well as certain non-cash expenses related to hedging
activities. |
||
| The Companys adjusted loss for the second quarter was $6.3 million,
or $(0.28) per share. |
| The Companys adjusted results were primarily attributable to the loss
it recognized from its investment in CT Legacy REIT. CT Legacy REIT lost
$14.7 million for the quarter on an adjusted basis, of which the Company
recognized $6.0 million. Absent this loss, the Companys adjusted net loss
was $297,000, driven by a $1.1 million income tax provision. The Companys
cash-basis net income was $1.5 million for the quarter. |
| Adjusted assets were $108.1 million as of June 30, 2011, offset by
adjusted liabilities of $16.1 million, resulting in adjusted shareholders
equity of $91.9 million. Based on 24.7 million shares outstanding (fully
diluted basis) at quarter end, adjusted book value per share was $3.73. |
Capital Trust, Inc.
The Company, which has $28.4 million of unencumbered cash and no recourse debt obligations, has
unencumbered ownership of 100% of: (i) its investment management platform, CT Investment Management
Co., LLC, (ii) its co-investment in CT Opportunity
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Partners I, LP, (iii) its residual ownership interests in CT CDOs I, II, and IV, and (iv) its net
operating loss carryforwards. Furthermore, the Company has a 52% equity interest in the common
stock of CT Legacy REIT. The Companys economic interest in CT Legacy REIT, however, is subject to
its obligations under (i) the secured notes, (ii) the management incentive awards plan that provide
for the participation in the recovery of CT Legacy REIT, and (iii) the subordinate class B common
stock of CT Legacy REIT.
In addition to the Companys interest in the common stock of CT Legacy REIT, it also owns 100% of
CT Legacy REITs class A preferred stock. The class A preferred stock initially entitles the
Company to cumulative preferred dividends of $7.5 million per annum, which dividends will be
reduced in 2013 as the CT Legacy REIT portfolio assets repay or are sold.
| Assets: |
| Cash of $28.4 million as of June 30, 2011. |
||
| $10.5 million co-investment in CT Opportunity Partners I, LP ($25.0
million commitment, of which $14.5 million remains unfunded). |
||
| Equity interest in the CT Legacy REIT portfolio of $65.6 million on
an adjusted basis. During the quarter the Company purchased
additional class B shares of CT Legacy REIT from its former lenders, resulting in a $708,000 increase
to adjusted book value. Net of its obligations under the secured notes and
management incentive awards plan described above, the Companys equity interest in
the CT Legacy REIT portfolio is $45.1 million on an adjusted basis. |
| Liabilities: |
| No recourse liabilities. |
||
| $7.5 million face amount of notes (payoff amount of $11.1 million)
secured solely by the Companys initial equity interests in the common stock of CT
Legacy REIT. The secured notes mature on March 31, 2016 and bear interest at a
rate of 8.2%, which may be deferred until maturity. |
CT Legacy REIT
In connection with its March 2011 restructuring, the Company transferred substantially all of its
directly held interest earning assets to CT Legacy REIT. The transferred assets included: (i) all
of the loans and securities which serve as collateral for the legacy repurchase obligations, except
for subordinate interests in certain CT CDOs, (ii) the Companys subordinate interests in CT CDO
III, and (iii) 100% of the Companys previously unencumbered loans and securities.
CT Legacy REIT, which is expected to be taxed as a REIT commencing in 2011, is owned 52% by the
Company, 24% by an affiliate of the mezzanine loan lender, and 24% by the Companys former lenders
under its senior credit facility. In addition, CT Legacy REIT issued a subordinate class of common
stock to the Companys former junior subordinated noteholders. The Company manages CT Legacy REIT
as a liquidating portfolio.
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| Adjusted Operating Results: |
| CT Legacy REITs adjusted net loss of $14.7 million for the quarter
was primarily driven by (i) $9.4 million of provisions for loan losses, (ii) a
$4.4 million non-cash charge to interest expense related to discount recognition
on the partial repayment of its mezzanine loan, and (iii) $1.9 million of
preferred dividends. CT Legacy REITs cash-basis net income was $1.2 million for
the quarter. |
| Assets: |
| Cash of $10.2 million as of June 30, 2011. |
||
| 20 loans with a principal balance of $434.1 million, adjusted book
balance of $279.3 million, and fair value of $248.3 million |
| Collected $206.6 million on 11 loans representing a 99% recovery of par
in the aggregate (41.5% of the net book value of the portfolio as of March
31, 2011) |
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| $9.4 million of new impairments recorded during the quarter (total
impairments in the portfolio of $154.8 million against seven loans) |
| 14 securities with a principal balance of $144.4 million, adjusted
book balance of $30.7 million, and fair value (excluding CDO residual interests)
of $3.8 million. |
| No new credit impairments recorded during the quarter (total credit
impairments in the portfolio of $110.9 million against nine securities) |
| Liabilities: |
| Repayment of $185.4 million of repurchase obligations (60.8% of their
post-restructuring balance), including the full repayment and termination of the
Morgan Stanley and Citigroup facilities and a release of their remaining
collateral. The only remaining repurchase obligation is a $119.3 million facility
with JP Morgan. |
| Interest rate LIBOR+2.50% |
||
| Matures December 15, 2014 |
||
| Subject to predetermined pay down hurdles and rate increases |
| $20.0 million paydown of the mezzanine loan, a 24% reduction from the
original balance at March 31, 2011 for a remaining balance of $63.0 million. |
| 15.0% interest rate (8.0% paid current, 7.0% deferred) |
||
| Matures on March 31, 2016 |
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Investment Management
All of the Companys investment management activities are conducted through its wholly-owned,
investment management subsidiary, CT Investment Management Co., LLC (CTIMCO). CTIMCO is
headquartered in New York, employs all 29 of the Companys employees, and is operated as a taxable
subsidiary of the Company. Since its inception, CTIMCO has originated over $11.8 billion of
commercial real estate debt and related investments and has raised over $3.5 billion of private
equity capital, as well as over $10 billion of public and private debt capital. CTIMCO currently
manages in excess of $5 billion of assets including its public company parent, CT Legacy REIT, five
commercial real estate CDOs, three private equity funds and one separate account. In addition,
CTIMCO is an approved special servicer by all three rating agencies and is the named special
servicer on $2.6 billion of loans.
| CTIMCO is currently investing CT Opportunity Partners I, a fund with $540 million of total
equity commitments of which $313 million remains undrawn. |
| CTIMCO manages three other funds with total original equity commitments of $1.4 billion and
total investments of $1.0 billion. |
| During the quarter, CTIMCO originated four new investments, $180.7 million in the
aggregate, for its investment management vehicles. |
Adjusted Balance Sheet and Operating Results
The consolidated financial statements of the Company include 10 consolidated securitization
vehicles which are all non-recourse, as well as assets and liabilities related to loan
participations sold which did not qualify as sales under accounting principles generally accepted
in the United States (GAAP). This has resulted in a presentation of gross assets and liabilities,
provisions/impairments, and operations being recorded in excess of the Companys economic interests
in such entities.
The Companys adjusted balance sheet and operating results (i) eliminate loan participations sold,
and (ii) deconsolidate securitization vehicles which are presented gross in accordance with GAAP,
and show instead the Companys cash investment in these non-recourse entities, adjusted for losses
expected or incurred, and the cash income earned thereon. Due to the non-recourse nature of these
entities, the Companys investment amount as well as its income from these entities cannot be less
than zero on a cash basis. In addition, non-cash interest expense recognized due to interest rate
swaps no longer designated as cash flow hedges is eliminated.
Also, the adjusted balance sheet and operating results separately show the Companys financial
position and operations from those of CT Legacy REIT.
The Companys adjusted balance sheet is not an alternative or substitute for its consolidated
balance sheet prepared in accordance with GAAP as a measure of its financial position, and the
Companys adjusted operating results are not an alternative or substitute for net income reported
in accordance with GAAP as a measure of the Companys performance. Rather, the Company believes
that its adjusted balance sheet and operating results provide meaningful
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information to consider, in addition to its consolidated balance sheet and statement of operations
prepared in accordance with GAAP, because these measures help the Company evaluate its financial
position and performance without the effects of certain transactions and GAAP adjustments that are
not necessarily indicative of the Companys current investment portfolio, capitalization, or
shareholders equity.
The Companys adjusted balance sheet should not be viewed as an alternative measure of
shareholders equity. Similarly, adjusted earnings should not be viewed as an alternative measure
of either the Companys operating liquidity or funds available for its cash needs. In addition, the
Company may not prepare its adjusted balance sheet or adjusted earnings in the same manner as other
companies that use similarly titled measures.
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Adjusted Balance Sheet as of June 30, 2011
(in thousands, except per share data)
Adjusted Balance Sheet | |||||||||||||||||
Consolidated GAAP | Adjustments | CT Legacy | Capital | ||||||||||||||
Capital Trust, Inc. | (1)(2)(3) | REIT | Trust, Inc. | ||||||||||||||
Assets |
|||||||||||||||||
Cash and cash equivalents |
$ | 28,430 | $ | | $ | | $ | 28,430 | |||||||||
Loans receivable, net |
28,660 | (28,660 | ) | | | ||||||||||||
Equity investments in unconsolidated
subsidiaries |
9,851 | | | 9,851 | |||||||||||||
Investment in CT Legacy REIT |
| 65,579 | | 65,579 | |||||||||||||
Deferred income taxes |
1,597 | | | 1,597 | |||||||||||||
Prepaid expenses and other assets |
1,985 | 625 | | 2,610 | |||||||||||||
Subtotal |
70,523 | 37,544 | | 108,067 | |||||||||||||
Assets of Consolidated VIEs |
|||||||||||||||||
CT Legacy REIT, Excluding Securitization
Vehicles |
|||||||||||||||||
Restricted cash |
10,225 | | 10,225 | | |||||||||||||
Securities held-to-maturity |
3,664 | 26,999 | 30,663 | | |||||||||||||
Loans receivable, net |
247,190 | | 247,190 | | |||||||||||||
Loans held-for-sale, net |
32,107 | | 32,107 | | |||||||||||||
Accrued interest receivable and other assets |
5,995 | | 5,995 | | |||||||||||||
Subtotal |
299,181 | 26,999 | 326,180 | | |||||||||||||
Assets of consolidated securitization vehicles |
1,995,696 | (1,995,696 | ) | | | ||||||||||||
Total/adjusted assets |
$ | 2,365,400 | ($1,931,153 | ) | $ | 326,180 | $ | 108,067 | |||||||||
Liabilities & Shareholders Equity |
|||||||||||||||||
Accounts payable and accrued expenses |
$ | 8,618 | $ | | $ | | $ | 8,618 | |||||||||
Secured notes |
7,529 | | | 7,529 | |||||||||||||
Participations sold |
28,660 | (28,660 | ) | | | ||||||||||||
Subtotal |
44,807 | (28,660 | ) | | 16,147 | ||||||||||||
Non-Recourse Liabilities of Consolidated VIEs |
|||||||||||||||||
CT Legacy REIT, Excluding Securitization
Vehicles |
|||||||||||||||||
Accounts payable and accrued expenses |
760 | 625 | 1,385 | | |||||||||||||
Repurchase obligations |
119,343 | | 119,343 | | |||||||||||||
Mezzanine loan, net of unamortized discount |
51,631 | | 51,631 | | |||||||||||||
Participations sold |
97,465 | (97,465 | ) | | | ||||||||||||
Interest rate hedge liabilities |
8,288 | | 8,288 | | |||||||||||||
Subtotal |
277,487 | (96,840 | ) | 180,647 | | ||||||||||||
Liabilities of consolidated securitization vehicles |
2,159,276 | (2,159,276 | ) | | | ||||||||||||
Total/adjusted liabilities |
2,481,570 | (2,284,776 | ) | 180,647 | 16,147 | ||||||||||||
Total/adjusted equity |
(110,947 | ) | 348,400 | 145,533 | 91,920 | ||||||||||||
Noncontrolling interests |
(5,223 | ) | 5,223 | | | ||||||||||||
Total/adjusted liabilities and shareholders equity |
$ | 2,365,400 | ($1,931,153 | ) | $ | 326,180 | $ | 108,067 | |||||||||
Capital Trust, Inc. book value/adjusted book value per share:
Basic |
($4.88) | $ 4.04 | |||||
Diluted |
($4.88) | $ 3.73 |
(1) | All securitization vehicles have been deconsolidated and reported at their cash investment
amount, adjusted for current losses relative to the Companys equity investment in each
vehicle. Due to the non-recourse nature of these entities, the Companys investment cannot
be less than zero on a cash basis. See note 11 to the Companys consolidated financial
statements for discussion of consolidated securitization vehicles. |
|
(2) | Loan participations which have been sold to third-parties, and did not qualify for sale
accounting, have been eliminated. See Note 8 to the Companys consolidated financial
statements for discussion of loan participations sold. |
|
(3) | Non-cash interest expense recognized due to interest rate swaps no longer designated as
cash flow hedges has been eliminated. See Note 10 to the Companys consolidated financial
statements for discussion of interest rate swaps not designated as hedging
instruments. |
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Adjusted Income Statement for the Six Months Ended June 30, 2011
(in thousands, except per share data)
(in thousands, except per share data)
Adjusted Income Sheet | |||||||||||||||||
Consolidated GAAP | Adjustments | CT Legacy | Capital | ||||||||||||||
Capital Trust, Inc. | (1)(2)(3) | REIT | Trust, Inc. | ||||||||||||||
Income from loans and other investments: |
|||||||||||||||||
Interest and related income |
$ | 69,545 | ($53,250 | ) | $ | 7,541 | $ | 8,754 | |||||||||
Less: Interest and related expenses |
58,543 | (44,275 | ) | 10,261 | 4,007 | ||||||||||||
Income from loans and other investments, net |
11,002 | (8,975 | ) | (2,720 | ) | 4,747 | |||||||||||
Other revenues: |
|||||||||||||||||
Management fees from affiliates |
3,174 | | | 3,174 | |||||||||||||
Servicing fees |
748 | 434 | | 1,182 | |||||||||||||
Total other revenues |
3,922 | 434 | | 4,356 | |||||||||||||
Other expenses: |
|||||||||||||||||
General and administrative |
14,928 | (323 | ) | 1,828 | 12,777 | ||||||||||||
Total other expenses |
14,928 | (323 | ) | 1,828 | 12,777 | ||||||||||||
Total other-than-temporary impairments on securities |
(4,933 | ) | 4,920 | | (13 | ) | |||||||||||
Portion of other-than-temporary impairments on
securities recognized in other comprehensive
income |
(3,271 | ) | 1,631 | | (1,640 | ) | |||||||||||
Net impairments recognized in earnings |
(8,204 | ) | 6,551 | | (1,653 | ) | |||||||||||
Recovery of (provision for) loan losses |
17,249 | (18,769 | ) | (9,434 | ) | 7,914 | |||||||||||
Valuation allowance on loans held-for-sale |
(224 | ) | | (224 | ) | | |||||||||||
Gain on extinguishment of debt |
250,976 | (76,130 | ) | | 174,846 | ||||||||||||
Income from equity investments |
1,797 | | | 1,797 | |||||||||||||
Loss from CT Legacy REIT |
| | | (6,690 | ) | ||||||||||||
Intercompany dividends |
| | (1,896 | ) | 1,896 | ||||||||||||
Income (loss)/adjusted income (loss) before
income taxes |
261,590 | (96,566 | ) | (16,102 | ) | 174,436 | |||||||||||
Income tax provision |
1,450 | | | 1,450 | |||||||||||||
Net income (loss)/adjusted net income (loss)
before noncontrolling interests |
260,140 | (96,566 | ) | (16,102 | ) | 172,986 | |||||||||||
Less: Net income attributable to noncontrolling
interests |
(7,400 | ) | 7,400 | | | ||||||||||||
Net income (loss)/adjusted net income (loss) |
$ | 252,740 | ($89,166 | ) | ($16,102 | ) | $ | 172,986 | |||||||||
Earnings/adjusted earnings per share:
Basic |
$11.19 | $ 7.66 | |||||
Diluted |
$10.52 | $ 7.20 |
(1) | All securitization vehicles have been deconsolidated; adjusted balances include only cash
income received from such vehicles. Due to the non-recourse nature of these entities, the
Companys net income from such entities cannot be less than zero on a cash basis. See note
11 to the Companys consolidated financial statements for discussion of consolidated
securitization vehicles. |
|
(2) | Loan participations which have been sold to third-parties, which did not qualify for sale
accounting, have been eliminated. See Note 8 to the Companys consolidated financial
statements for discussion of loan participations sold. |
|
(3) | Non-cash interest expense recognized due to interest rate swaps no longer designated as
cash flow hedges has been eliminated. See Note 10 to the Companys consolidated financial
statements for discussion of interest rate swaps not designated as hedging instruments. |
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Adjusted Income Statement for the Three Months Ended June 30, 2011
(in thousands, except per share data)
Adjusted Income Sheet | |||||||||||||||||
Consolidated GAAP | Adjustments | CT Legacy | Capital | ||||||||||||||
Capital Trust, Inc. | (1)(2)(3) | REIT | Trust, Inc. | ||||||||||||||
Income from loans and other investments: |
|||||||||||||||||
Interest and related income |
$ | 32,554 | ($25,013 | ) | $ | 7,541 | $ | | |||||||||
Less: Interest and related expenses |
32,296 | (21,969 | ) | 10,187 | 140 | ||||||||||||
Income from loans and other investments, net |
258 | (3,044 | ) | (2,646 | ) | (140 | ) | ||||||||||
Other revenues: |
|||||||||||||||||
Management fees from affiliates |
1,595 | | | 1,595 | |||||||||||||
Servicing fees |
438 | 211 | | 649 | |||||||||||||
Total other revenues |
2,033 | 211 | | 2,244 | |||||||||||||
Other expenses: |
|||||||||||||||||
General and administrative |
4,649 | (53 | ) | 518 | 4,078 | ||||||||||||
Total other expenses |
4,649 | (53 | ) | 518 | 4,078 | ||||||||||||
Total other-than-temporary impairments on |
|||||||||||||||||
securities |
| | | | |||||||||||||
Portion of other-than-temporary impairments on
securities recognized in other comprehensive
income |
| | | | |||||||||||||
Net impairments recognized in earnings |
| | | | |||||||||||||
Recovery of (provision for) loan losses |
8,088 | (17,522 | ) | (9,434 | ) | | |||||||||||
Valuation allowance on loans held-for-sale |
(224 | ) | | (224 | ) | | |||||||||||
Gain on extinguishment of debt |
937 | (937 | ) | | | ||||||||||||
Income from equity investments |
842 | | | 842 | |||||||||||||
Loss from CT Legacy REIT |
| | | (5,975 | ) | ||||||||||||
Intercompany dividends |
| | (1,896 | ) | 1,896 | ||||||||||||
Income (loss)/adjusted income
(loss) before income taxes |
7,285 | (21,239 | ) | (14,718 | ) | (5,211 | ) | ||||||||||
Income tax provision |
1,061 | | | 1,061 | |||||||||||||
Net income (loss)/adjusted net income (loss)
before noncontrolling interests |
6,224 | (21,239 | ) | (14,718 | ) | (6,272 | ) | ||||||||||
Less: Net income attributable to noncontrolling
interests |
(8,069 | ) | 8,069 | | | ||||||||||||
Net income (loss)/adjusted net income (loss) |
($1,845 | ) | ($13,170 | ) | ($14,718 | ) | ($6,272 | ) | |||||||||
Earnings/adjusted earnings per share:
Basic |
($0.08) | ($ 0.28) | |||||
Diluted |
($0.08) | ($ 0.28) |
(1) | All securitization vehicles have been deconsolidated; adjusted balances include only cash
income received from such vehicles. Due to the non-recourse nature of these entities, the
Companys net income from such entities cannot be less than zero on a cash basis. See note
11 to the Companys consolidated financial statements for discussion of consolidated
securitization vehicles. |
|
(2) | Loan participations which have been sold to third-parties, which did not qualify for sale
accounting, have been eliminated. See Note 8 to the Companys consolidated financial
statements for discussion of loan participations sold. |
|
(3) | Non-cash interest expense recognized due to interest rate swaps no longer designated as
cash flow hedges has been eliminated. See Note 10 to the Companys consolidated financial
statements for discussion of interest rate swaps not designated as hedging instruments. |
Page 8 of 9
******
The Company will conduct a management conference call at 10:00 a.m. Eastern Time on Thursday,
August 4, 2011 to discuss second quarter 2011 results. Interested parties can access the call toll
free by dialing (800) 862-9098 or 785-424-1051 for international participants. The conference ID is
CAPITAL. A recorded replay will be available from noon on Thursday, August 4, 2011 through
midnight on Thursday, August 18, 2011. The replay call number is (800) 723-2156 or (402) 220-2660
for international callers.
Forward-Looking Statements
This news release contains certain forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended, including statements relating to future financial
results and business prospects. The forward-looking statements contained in this news release are
subject to certain risks and uncertainties including, but not limited to, the continued credit
performance and recovery from the Companys retained balance sheet and transferred legacy assets,
the success of the Companys efforts to raise additional capital and re-commence balance sheet
investment activity, its asset/liability mix, the effectiveness of the Companys hedging strategy
and the rate of repayment of the Companys portfolio assets and the impact of these events,
conditions and uncertainties on the Companys cash flow, as well as other risks indicated from time
to time in the Companys Form 10-K and Form 10-Q filings with the Securities and Exchange
Commission. The Company assumes no obligation to update or supplement forward-looking statements
that become untrue because of subsequent events or circumstances.
About Capital Trust
Capital Trust, Inc. is a fully integrated, self-managed real estate finance and investment
management company that specializes in credit sensitive structured financial products. To date, the
Companys investment programs have focused primarily on loans and securities backed by commercial
real estate assets, investing both for its balance sheet and for third party vehicles. Capital
Trust is a real estate investment trust traded on the New York Stock Exchange under the symbol
CT. The Company is headquartered in New York City.
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