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8-K - FORM 8-K - BLACKSTONE MORTGAGE TRUST, INC. | d305594d8k.htm |
EX-99.2 - TRANSCRIPT FROM FISCAL QUARTER AND FISCAL YEAR ENDED DECEMBER 31, 2011 - BLACKSTONE MORTGAGE TRUST, INC. | d305594dex992.htm |
Exhibit 99.1
Contact: Douglas Armer
(212) 655-0220
Capital Trust Reports Year End and Fourth Quarter 2011 Results
NEW YORK, NY February 14, 2012 Capital Trust, Inc. (NYSE: CT) today reported results for the fourth quarter and year ended December 31, 2011.
| Operating Results: |
| Consolidated net income of $258.1 million, or $11.39 per share ($10.78 per share on a diluted basis), for the year ended December 31, 2011 and a consolidated net loss of $8.3 million, or ($0.37) per share (($0.37) per share on a diluted basis) for the three months ended December 31, 2011. |
| Consolidated assets were $1.37 billion as of December 31, 2011 and consolidated liabilities were $1.50 billion, resulting in a shareholders deficit of $110.4 million. |
| On an adjusted basis, the Company recorded net income for the fourth quarter of $8.5 million, or $0.37 per share, driven primarily by special servicing fees earned during the quarter. The Companys cash-basis adjusted net income was $7.3 million for the quarter. |
| Adjusted assets were $113.6 million as of December 31, 2011, and adjusted liabilities were $15.9 million, resulting in adjusted shareholders equity of $97.7 million. Based on 24.8 million shares outstanding (fully diluted basis) at quarter end, adjusted book value per share was $3.94. |
| The Companys investment management platform generated $10.6 million of revenues during the quarter, and $22.2 million year-to-date ($2.6 million and $7.0 million of fees were eliminated in consolidation under GAAP, respectively). |
Capital Trust, Inc.
| As of December 31, 2011, the Companys adjusted assets were comprised of: |
| The Companys investment management and special servicing platform, operated through its subsidiary, CT Investment Management Co., LLC (CTIMCO), has assets under management of $4.5 billion with mandates including: (i) management of its public company parent, Capital Trust, Inc.; (ii) management of CT Legacy REIT; (iii) management of various private equity funds and separate accounts; (iv) collateral management of five commercial real estate CDOs; and (v) special servicing of securitized loan investments for both CTIMCO-managed vehicles and third parties. |
| Unrestricted cash of $34.8 million. |
| $10.0 million funded under its co-investment commitment to CT Opportunity Partners I, LP ($25.0 million commitment, of which $15.0 million remains unfunded). |
| Equity interest in the CT Legacy REIT portfolio (52%) with an adjusted book value of $61.6 million. Net of its obligations under the secured notes and management incentive awards, the Companys equity interest in the CT Legacy REIT portfolio is $41.6 million on an adjusted basis. |
| The Company has no recourse liabilities. |
CT Investment Management Co., LLC
All of the Companys investment management activities are conducted through its wholly-owned, investment management subsidiary, CTIMCO. CTIMCO is headquartered in New York, employs all 29 of the Companys employees, and is operated as a taxable subsidiary. Since its inception, CTIMCO has originated approximately $12.0 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 approximately $4.5 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 $2.5 billion of loans.
| The investment management platform earned $10.6 million of revenues during the quarter, and $22.2 million year-to-date ($2.6 million and $7.0 million of fees were eliminated in consolidation under GAAP, respectively). |
| CTIMCO is currently investing CT Opportunity Partners I, a fund with $539.9 million of total equity commitments of which $324.6 million remains undrawn. |
| The CT High Grade Mezzanine platform was re-opened for CTIMCO to invest on a non-discretionary basis. |
| CTIMCO manages two other funds with total original equity commitments of $992 million and total investments of $726 million. |
| During the year, CTIMCO originated $219.4 million of new investments in 11 transactions for its investment management vehicles. |
| CTIMCOs special servicer rating was upgraded by Fitch Ratings to CSS3+ from CSS3. |
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, and either transferred or extinguished all of its recourse liabilities.
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CT Legacy REIT is owned 52% by the Company, 24% by an affiliate of its former mezzanine loan lender, and 24% by the Companys former lenders under its extinguished 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.
| Adjusted Operating Results: |
| CT Legacy REITs adjusted net income of $1.2 million for the quarter was primarily driven by (i) $5.4 million of recovery of loan losses, and (ii) $1.3 million of net interest income. This was offset by (i) intercompany dividends of $1.9 million, (ii) a $1.2 million valuation allowance on loans held-for-sale, and (iii) a $1.1 million other-than-temporary impairment of securities. CT Legacy REITs cash-basis adjusted net income was $1.7 million for the quarter ended December 31, 2011. |
| Assets: |
| Restricted cash of $13.0 million as of December 31, 2011. |
| Asset repayments of $269.6 million since the Companys March 31st restructuring, representing 54.0% of the initial net book value of the CT Legacy REIT portfolio. |
| 17 loans with a principal balance of $372.1 million, adjusted book balance of $237.4 million, and fair value of $212.5 million. |
| $8.0 million reversal during the quarter of a previously recorded provision for loan losses (total impairments in the portfolio of $132.3 million against five loans). |
| 14 securities with a principal balance of $143.4 million, adjusted book balance of $7.4 million, and fair value (excluding CT CDO III) of $1.6 million. |
| $483,000 of new credit impairments recorded during the quarter related to CT CDO III (total credit impairments in the securities portfolio of $135.7 million against 12 securities). |
| Liabilities: |
| Repayment of $266.3 million, or 69%, of CT Legacy REITs debt obligations since the Companys March 31st restructuring. |
| At year end, both the Morgan Stanley and Citigroup repurchase facilities had been repaid in full, and the only remaining liabilities were a $58.5 million JP Morgan repurchase facility and the $65.3 million mezzanine loan. |
| Subsequent to year-end, in February 2012, the Company refinanced the JP Morgan repurchase facility and the mezzanine loan with a single, new $124.0 million repurchase facility with JP Morgan. The facility matures in December 2014, carries a rate of LIBOR+5.50%, and has paydown hurdles and associated potential rate increases going forward. |
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Adjusted Balance Sheet and Operating Results
The consolidated financial statements of the Company include nine 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 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 December 31, 2011
(in thousands, except per share data) | Adjusted Balance Sheet | |||||||||||||||
Consolidated GAAP Capital Trust, Inc. |
Adjustments (1)(2)(3) | CT Legacy REIT |
Capital Trust, Inc. |
|||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | 34,818 | $ | | $ | | $ | 34,818 | ||||||||
Loans receivable, net |
19,282 | (19,282 | ) | | | |||||||||||
Equity investments in unconsolidated subsidiaries |
10,399 | | | 10,399 | ||||||||||||
Investment in CT Legacy REIT |
| 61,623 | | 61,623 | ||||||||||||
Deferred income taxes |
1,268 | | | 1,268 | ||||||||||||
Prepaid expenses and other assets |
4,533 | 947 | | 5,480 | ||||||||||||
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|
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|
|
|
|
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Subtotal |
70,300 | 43,288 | | 113,588 | ||||||||||||
Assets of Consolidated VIEs |
||||||||||||||||
CT Legacy REIT, Excluding Securitization Vehicles |
||||||||||||||||
Restricted cash |
12,985 | | 12,985 | | ||||||||||||
Securities held-to-maturity |
2,602 | 4,837 | 7,439 | | ||||||||||||
Loans receivable, net |
206,514 | | 206,514 | | ||||||||||||
Loans held-for-sale, net |
30,875 | | 30,875 | | ||||||||||||
Accrued interest receivable and other assets |
2,119 | | 2,119 | | ||||||||||||
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|
|
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Subtotal |
255,095 | 4,837 | 259,932 | | ||||||||||||
Assets of consolidated securitization vehicles |
1,040,921 | (1,040,921 | ) | | | |||||||||||
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|
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Total/adjusted assets |
$ | 1,366,316 | $ | (992,796 | ) | $ | 259,932 | $ | 113,588 | |||||||
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Liabilities & Shareholders Equity |
||||||||||||||||
Accounts payable and accrued expenses |
$ | 8,075 | $ | | $ | | $ | 8,075 | ||||||||
Secured notes |
7,847 | | | 7,847 | ||||||||||||
Participations sold |
19,282 | (19,282 | ) | | | |||||||||||
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|
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Subtotal |
35,204 | (19,282 | ) | | 15,922 | |||||||||||
Non-Recourse Liabilities of Consolidated VIEs |
||||||||||||||||
CT Legacy REIT, Excluding Securitization Vehicles |
||||||||||||||||
Accounts payable and accrued expenses |
743 | 650 | 1,393 | | ||||||||||||
Repurchase obligations |
58,464 | | 58,464 | | ||||||||||||
Mezzanine loan, net of unamortized discount |
55,111 | | 55,111 | | ||||||||||||
Participations sold |
97,465 | (97,465 | ) | | | |||||||||||
Interest rate hedge liabilities |
8,817 | | 8,817 | | ||||||||||||
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|
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Subtotal |
220,600 | (96,815 | ) | 123,785 | | |||||||||||
Liabilities of consolidated securitization vehicles |
1,239,451 | (1,239,451 | ) | | | |||||||||||
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Total/adjusted liabilities |
1,495,255 | (1,355,548 | ) | 123,785 | 15,922 | |||||||||||
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Total/adjusted equity |
(110,424 | ) | 344,237 | 136,147 | 97,666 | |||||||||||
Noncontrolling interests |
(18,515 | ) | 18,515 | | | |||||||||||
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Total/adjusted liabilities and shareholders equity |
$ | 1,366,316 | $ | (992,796 | ) | $ | 259,932 | $ | 113,588 | |||||||
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Capital Trust, Inc. book value/adjusted book value per share: |
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Basic |
$ | (4.85 | ) | $ | 4.29 | |||||||||||
Diluted |
$ | (4.85 | ) | $ | 3.94 |
(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 Form 10-K, filed on February 14, 2012, 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 Form 10-K, filed on February 14, 2012, 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 Form 10-K, filed on February 14, 2012, for discussion of interest rate swaps not designated as hedging instruments. |
5
Adjusted Income Statement for the Year Ended December 31, 2011
(in thousands, except per share data)
Adjusted Income Statement | ||||||||||||||||
Consolidated GAAP Capital Trust, Inc. |
Adjustments (1)(2)(3) | CT Legacy REIT |
Capital Trust, Inc. |
|||||||||||||
Income from loans and other investments: |
||||||||||||||||
Interest and related income |
$ | 117,162 | $ | (89,929 | ) | $ | 18,479 | $ | 8,754 | |||||||
Less: Interest and related expenses |
96,974 | (73,154 | ) | 19,554 | 4,266 | |||||||||||
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Income from loans and other investments, net |
20,188 | (16,775 | ) | (1,075 | ) | 4,488 | ||||||||||
Other revenues: |
||||||||||||||||
Management fees from affiliates |
6,618 | | | 6,618 | ||||||||||||
Servicing fees |
8,497 | 1,392 | | 9,889 | ||||||||||||
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Total other revenues |
15,115 | 1,392 | | 16,507 | ||||||||||||
Other expenses: |
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General and administrative |
23,867 | (758 | ) | 2,585 | 20,524 | |||||||||||
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Total other expenses |
23,867 | (758 | ) | 2,585 | 20,524 | |||||||||||
Total other-than-temporary impairments on securities |
(49,309 | ) | 24,698 | (24,598 | ) | (13 | ) | |||||||||
Portion of other-than-temporary impairments on securities recognized in other comprehensive income |
1,243 | (2,883 | ) | | (1,640 | ) | ||||||||||
Impairments on real estate held-for-sale |
(1,055 | ) | 1,055 | | | |||||||||||
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Net impairments recognized in earnings |
(49,121 | ) | 22,870 | (24,598 | ) | (1,653 | ) | |||||||||
Recovery of provision for loan losses |
19,326 | (1,011 | ) | 10,401 | 7,914 | |||||||||||
Valuation allowance on loans held-for-sale |
(1,456 | ) | | (1,456 | ) | | ||||||||||
Gain on extinguishment of debt |
271,031 | (96,185 | ) | | 174,846 | |||||||||||
Income from equity investments |
3,649 | | | 3,649 | ||||||||||||
Loss from CT Legacy REIT |
| | | (10,646 | ) | |||||||||||
Intercompany dividends |
| | (5,646 | ) | 5,646 | |||||||||||
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Income (loss)/adjusted income (loss) before income taxes |
254,865 | (88,951 | ) | (24,959 | ) | 180,227 | ||||||||||
Income tax provision |
2,546 | | 750 | 1,796 | ||||||||||||
Net income (loss)/adjusted net income (loss) before noncontrolling interests |
252,319 | (88,951 | ) | (25,709 | ) | 178,431 | ||||||||||
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Add: Net loss attributable to noncontrolling interests |
5,823 | (5,823 | ) | | | |||||||||||
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Net income (loss)/adjusted net income (loss) |
$ | 258,142 | $ | (94,774 | ) | $ | (25,709 | ) | $ | 178,431 | ||||||
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Earnings/adjusted earnings per share: |
||||||||||||||||
Basic |
$ | 11.39 | $ | 7.87 | ||||||||||||
Diluted |
$ | 10.78 | $ | 7.45 |
(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 Form 10-K, filed on February 14, 2012, 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 Form 10-K, filed on February 14, 2012, 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 Form 10-K, filed on February 14, 2012, for discussion of interest rate swaps not designated as hedging instruments. |
6
Adjusted Income Statement for the Three Months Ended December 31, 2011
(in thousands, except per share data)
Adjusted Income Statement | ||||||||||||||||
Consolidated GAAP Capital Trust, Inc. |
Adjustments (1)(2)(3) | CT Legacy REIT |
Capital Trust, Inc. |
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Income from loans and other investments: |
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Interest and related income |
$ | 21,975 | $ | (16,916 | ) | $ | 5,059 | $ | | |||||||
Less: Interest and related expenses |
16,593 | (12,662 | ) | 3,770 | 161 | |||||||||||
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Income from loans and other investments, net |
5,382 | (4,254 | ) | 1,289 | (161 | ) | ||||||||||
Other revenues: |
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Management fees from affiliates |
1,691 | | | 1,691 | ||||||||||||
Servicing fees |
6,289 | 760 | | 7,049 | ||||||||||||
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Total other revenues |
7,980 | 760 | | 8,740 | ||||||||||||
Other expenses: |
||||||||||||||||
General and administrative |
3,999 | (112 | ) | 452 | 3,435 | |||||||||||
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Total other expenses |
3,999 | (112 | ) | 452 | 3,435 | |||||||||||
Total other-than-temporary impairments on securities |
(13,689 | ) | 12,567 | (1,122 | ) | | ||||||||||
Portion of other-than-temporary impairments on securities recognized in other comprehensive income |
4,341 | (4,341 | ) | | | |||||||||||
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Net impairments recognized in earnings |
(9,348 | ) | 8,226 | (1,122 | ) | | ||||||||||
(Provision for) recovery of loan losses |
(15,075 | ) | 20,428 | 5,353 | | |||||||||||
Valuation allowance on loans held-for-sale |
(1,232 | ) | | (1,232 | ) | | ||||||||||
Income from equity investments |
1,544 | | | 1,544 | ||||||||||||
Income from CT Legacy REIT |
| | | 524 | ||||||||||||
Intercompany dividends |
| | (1,875 | ) | 1,875 | |||||||||||
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(Loss) income/adjusted income before income taxes |
(14,748 | ) | 25,272 | 1,961 | 9,087 | |||||||||||
Income tax provision |
1,332 | | 750 | 582 | ||||||||||||
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Net (loss) income/adjusted net income before noncontrolling interests |
(16,080 | ) | 25,272 | 1,211 | 8,505 | |||||||||||
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Add: Net loss attributable to noncontrolling interests |
7,758 | (7,758 | ) | | | |||||||||||
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Net (loss) income/adjusted net income (4) |
$ | (8,322 | ) | $ | 17,514 | $ | 1,211 | $ | 8,505 | |||||||
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Earnings/adjusted earnings per share: |
||||||||||||||||
Basic |
$ | (0.37 | ) | $ | 0.37 | |||||||||||
Diluted |
$ | (0.37 | ) | $ | 0.36 |
(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 Form 10-K, filed on February 14, 2012, 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 Form 10-K, filed on February 14, 2012, 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 Form 10-K, filed on February 14, 2012, for discussion of interest rate swaps not designated as hedging instruments. |
(4) | Capital Trust Inc.s cash-basis adjusted net income was $7.3 million. Cash-basis adjusted net income excludes from adjusted net income: (i) $1.6 million of non-cash income recognized from the Companys investments in equity method investees, including CT Legacy REIT, (ii) $482,000 of non-cash income tax expense recognized on the Companys deferred tax assets, and (iii) $86,000 of other items. CT Legacy REITs cash-basis adjusted net income was $1.7 million. Cash-basis adjusted net income excludes from adjusted net income: (i) $5.4 million of non-cash recovery of loan losses, (i) $2.4 million of non-cash securities impairments and valuation allowances on loans held-for-sale, and (iii) $91,000 of other items. |
7
******
The Company will conduct a management conference call at 10:00 a.m. Eastern Time on Wednesday, February 15, 2012 to discuss fourth quarter 2011 and year end 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 February 15, 2012 through midnight on Wednesday, February 29, 2012. The replay call number is 800-283-8183 or 402-220-0867 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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