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8-K - LIVE FILING - RAIT Financial Trust | htm_45627.htm |
RAIT Financial Trust Announces Second Quarter 2012 Financial Results
PHILADELPHIA, PA July 26, 2012 RAIT Financial Trust (RAIT) (NYSE: RAS) today announced second quarter 2012 financial results.
Highlights
| Adjusted funds from operations (AFFO) increased 45% to $12.4 million for the quarter ended June 30, 2012 from $8.5 million for the quarter ended June 30, 2011. |
| AFFO per share increased to $0.25 for the quarter ended June 30, 2012 from $0.22 for the quarter ended June 30, 2011. |
| Total revenues grew 4% to $56.3 million for the quarter ended June 30, 2012 from $54.2 million for the quarter ended March 31, 2012. |
| Operating income increased 48% to $6.5 million for the quarter ended June 30, 2012 from $4.4 million for the quarter ended June 30, 2011. |
| Adjusted book value of $6.56 at June 30, 2012. |
| RAIT funded $170.3 million in loans during the quarter ended June 30, 2012 and received $86.4 million from loan repayments during the quarter ended June 30, 2012. As of June 30, 2012, RAIT has approximately $275.4 million of capital available for investment into eligible bridge, mezzanine and CMBS loans. |
| RAIT sold $4.6 million of CMBS loans into a securitization and generated a gain of $0.4 million during the quarter. Subsequent to quarter end, RAIT sold $19.1 million of CMBS loans into a securitization, generating a gain of $0.4 million. |
| Rental income increased to $25.5 million during the quarter ended June 30, 2012 from $22.1 million during the quarter ended June 30, 2011. |
| Declared a second quarter 2012 common dividend of $0.08 per share. |
Scott Schaeffer, RAITs Chairman and CEO, said, Weve had strong loan originations in our core commercial real estate businesses. We funded more than $243 million of loans during the first half of the year, including $37 million small balance CMBS loans. Year to date, weve successfully securitized $24 million of CMBS loans. We look to build on this momentum during the second half of 2012.
Second Quarter 2012 Results
RAIT reported AFFO, a non-GAAP financial measure, for the three-month period ended June 30, 2012 of $12.4 million, or $0.25 per share diluted based on 49.9 million weighted-average shares outstanding diluted, as compared to AFFO for the three-month period ended June 30, 2011 of $8.5 million, or $0.22 per share diluted based on 38.1 million weighted-average shares outstanding diluted. RAIT reported a net loss allocable to common shares for the three-month period ended June 30, 2012 of $7.0 million, or $0.14 total loss per share diluted based on 49.9 million weighted-average shares outstanding diluted, as compared to net loss allocable to common shares for the three-month period ended June 30, 2011 of $20.1 million, or $0.53 total loss per share diluted based on 38.1 million weighted-average shares outstanding diluted. The second quarter 2012 net loss includes $22.9 million of unrealized losses relating to non-cash mark-to-market adjustments in RAITs legacy Taberna portfolios and the associated hedges. Non-cash mark-to-market gains and losses are excluded from AFFO.
RAIT reported AFFO for the six-month period ended June 30, 2012 of $21.7 million, or $0.46 per share diluted based on 47.0 million weighted-average shares outstanding diluted, as compared to AFFO for the six-month period ended June 30, 2011 of $15.5 million, or $0.41 per share diluted based on 37.3 million weighted-average shares outstanding diluted. RAIT reported a net loss allocable to common shares for the six-month period ended June 30, 2012 of $114.0 million, or $2.42 total loss per share diluted based on 47.0 million weighted-average shares outstanding diluted, as compared to net loss allocable to common shares for the six-month period ended June 30, 2011 of $14.3 million, or $0.38 total loss per share diluted based on 37.3 million weighted-average shares outstanding diluted.
A reconciliation of RAITs reported net income (loss) allocable to common shares to its AFFO is included as Schedule I to this release. A reconciliation of RAITs total shareholders equity to its adjusted book value is included as Schedule II to this release. Schedule I and Schedule II also include managements respective rationales for the usefulness of each of these non-GAAP financial measures.
RAIT also reported the following:
| Investments in Real Estate. As of June 30, 2012, RAIT had investments in real estate of $911.1 million as compared to $891.5 million at December 31, 2011. During the three-months ended June 30, 2012, RAIT converted two loans, with a carrying value of $25.1 million, to owned real estate. |
| Average Occupancy. The average occupancy of RAITs portfolio of investments in real estate increased to 85.2% at June 30, 2012 from 83.6% at December 31, 2011. |
| CRE CDO Coverage Tests. As of the most recent reporting date, RAIT CRE CDO I, Ltds overcollateralization test was passing at 126.4% with a trigger of 116.2% and RAIT Preferred Funding II, Ltds overcollateralization test was passing at 118.0% with a trigger of 111.7%. |
| Non-Accrual CRE Loans. The unpaid principal balance of RAITs non-accrual commercial real estate loan portfolio decreased to $73.6 million at June 30, 2012 as compared to $94.1 million at June 30, 2011. |
| Provision for losses. Provision for losses on RAITs commercial real estate loan portfolio decreased to $0.5 million for the quarter ended June 30, 2012 as compared to $1.0 million for the quarter ended June 30, 2011. |
| Dividends. On June 21, 2012, RAIT declared a second quarter common dividend of $0.08 per common share to shareholders of record on July 11, 2012 and payable on July 31, 2012. On May 1, 2012, RAITs Board of Trustees declared a second quarter 2012 cash dividend of $0.484375 per share on RAITs 7.75% Series A Cumulative Redeemable Preferred Shares, $0.5234375 per share on RAITs 8.375% Series B Cumulative Redeemable Preferred Shares and $0.5546875 per share on RAITs 8.875% Series C Cumulative Redeemable Preferred Shares. The preferred dividends were paid on July 2, 2012 to holders of record on June 1, 2012. |
Key Statistics
(Unaudited and dollars in thousands, except per share information)
As of or For the Three-Month Periods Ended
June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | June 30, 2011 | ||||||||||||||||
Financial Statistics: |
||||||||||||||||||||
Assets under management |
$ | 3,642,189 | $ | 3,549,029 | $ | 3,517,684 | $ | 3,633,133 | $ | 3,753,290 | ||||||||||
Total revenue |
$ | 56,347 | $ | 54,245 | $ | 56,923 | $ | 60,089 | $ | 58,863 | ||||||||||
Earnings per share diluted |
$ | (0.14 | ) | $ | (2.42 | ) | $ | (0.39 | ) | $ | (0.55 | ) | $ | (0.53 | ) | |||||
Funds from Operations (FFO) per share |
$ | 0.01 | $ | (2.25 | ) | $ | (0.20 | ) | $ | (0.36 | ) | $ | (0.34 | ) | ||||||
AFFO per share |
$ | 0.25 | $ | 0.21 | $ | 0.30 | $ | 0.23 | $ | 0.22 | ||||||||||
Common dividend declared |
$ | 0.08 | $ | 0.08 | $ | 0.06 | $ | 0.06 | $ | 0.06 | ||||||||||
Commercial Real Estate (CRE) Loan Portfolio: |
||||||||||||||||||||
CRE loans unpaid principal |
$ | 1,072,655 | $ | 990,321 | $ | 952,997 | $ | 1,064,946 | $ | 1,122,898 | ||||||||||
Non-accrual loans unpaid principal |
$ | 73,592 | $ | 56,113 | $ | 54,334 | $ | 89,023 | $ | 94,117 | ||||||||||
Non-accrual loans as a % of reported loans |
6.9 | % | 5.7 | % | 5.7 | % | 8.4 | % | 8.4 | % | ||||||||||
Reserve for losses |
$ | 35,426 | $ | 35,527 | $ | 40,565 | $ | 50,609 | $ | 49,906 | ||||||||||
Reserves as a % of non-accrual loans |
48.1 | % | 63.3 | % | 74.7 | % | 56.8 | % | 53.0 | % | ||||||||||
Provision for losses |
$ | 500 | $ | 500 | $ | 500 | $ | 500 | $ | 950 | ||||||||||
CRE Property Portfolio: |
||||||||||||||||||||
Reported investments in real estate |
$ | 911,128 | $ | 887,130 | $ | 891,502 | $ | 849,232 | $ | 851,916 | ||||||||||
Net operating income |
$ | 12,053 | $ | 11,034 | $ | 10,503 | $ | 9,072 | $ | 8,347 | ||||||||||
Number of properties owned |
58 | 56 | 56 | 48 | 48 | |||||||||||||||
Multifamily units owned |
8,014 | 8,014 | 8,014 | 8,014 | 8,014 | |||||||||||||||
Office square feet owned |
2,015,524 | 1,786,860 | 1,786,860 | 1,786,860 | 1,786,908 | |||||||||||||||
Retail square feet owned |
1,422,298 | 1,358,257 | 1,358,257 | 1,114,250 | 1,116,171 | |||||||||||||||
Land |
19.90 | 19.90 | 19.90 | 7.25 | 7.25 | |||||||||||||||
Average occupancy data: |
||||||||||||||||||||
Multifamily |
91.2 | % | 90.4 | % | 88.5 | % | 89.8 | % | 88.6 | % | ||||||||||
Office |
71.0 | % | 70.7 | % | 69.2 | % | 68.5 | % | 68.8 | % | ||||||||||
Retail |
70.0 | % | 66.9 | % | 68.0 | % | 68.9 | % | 62.0 | % | ||||||||||
Total |
85.2 | % | 85.0 | % | 83.6 | % | 84.5 | % | 83.1 | % | ||||||||||
Average Effective Rent per Unit/Square Foot (1): |
||||||||||||||||||||
Multifamily (2) |
$ | 695 | $ | 691 | $ | 681 | $ | 671 | $ | 673 | ||||||||||
Office (3) |
$ | 19.07 | $ | 21.53 | $ | 20.85 | $ | 20.50 | $ | 18.39 | ||||||||||
Retail (3) |
$ | 12.44 | $ | 10.59 | $ | 9.73 | $ | 9.55 | $ | 6.69 |
(1) | Based on properties owned as of June 30, 2012. |
(2) | Average effective rent is rent per unit per month. |
(3) | Average effective rent is rent per square foot per year. |
Conference Call
All interested parties can listen to the live conference call webcast at 9:00 AM EDT on Thursday, July 26, 2012 from the home page of the RAIT Financial Trust website at www.raitft.com or by dialing 866.356.3095, access code 47631703. For those who are not available to listen to the live call, the replay will be available shortly following the live call on RAITs website and telephonically until Thursday, August 2, 2012, by dialing 888.286.8010, access code 43131737.
About RAIT Financial Trust
RAIT Financial Trust is an internally-managed real estate investment trust that provides debt financing options to owners of commercial real estate and invests directly into commercial real estate properties located throughout the United States. In addition, RAIT is an asset and property manager of real estate-related assets. For more information, please visit www.raitft.com or call Investor Relations at 215.243.9000.
Forward-Looking Statements
This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as may, will, expect, intend, anticipate, estimate, believe, continue, or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, those disclosed in RAITs filings with the Securities and Exchange Commission. RAIT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.
RAIT Financial Trust Contact
Andres Viroslav
215-243-9000
aviroslav@raitft.com
RAIT Financial Trust
Consolidated Statements of Operations
(Dollars in thousands, except share and per share information)
(unaudited)
For the Three-Month | For the Six-Month | |||||||||||||||
Periods Ended | Periods Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenue: |
||||||||||||||||
Interest income |
$ | 28,745 | $ | 34,483 | $ | 56,701 | $ | 68,041 | ||||||||
Rental income |
25,540 | 22,138 | 50,371 | 43,428 | ||||||||||||
Fee and other income |
2,062 | 2,242 | 3,520 | 5,673 | ||||||||||||
Total revenue |
56,347 | 58,863 | 110,592 | 117,142 | ||||||||||||
Expenses: |
||||||||||||||||
Interest expense |
19,238 | 22,328 | 38,586 | 45,695 | ||||||||||||
Real estate operating expense |
13,487 | 13,791 | 27,284 | 26,408 | ||||||||||||
Compensation expense |
5,246 | 5,737 | 10,984 | 12,281 | ||||||||||||
General and administrative expense |
3,783 | 4,431 | 7,608 | 9,399 | ||||||||||||
Provision for loan losses |
500 | 950 | 1,000 | 2,900 | ||||||||||||
Depreciation and amortization |
7,631 | 7,249 | 15,294 | 14,368 | ||||||||||||
Total expenses |
49,885 | 54,486 | 100,756 | 111,051 | ||||||||||||
Operating income |
6,462 | 4,377 | 9,836 | 6,091 | ||||||||||||
Interest and other income (expense) |
(1,471 | ) | 67 | (1,438 | ) | 150 | ||||||||||
Gains (losses) on sale of assets |
2,518 | 564 | 2,529 | 1,979 | ||||||||||||
Gains (losses) on extinguishment of debt |
| 3,706 | 1,574 | 3,169 | ||||||||||||
Change in fair value of financial instruments |
(11,169 | ) | (25,727 | ) | (120,092 | ) | (20,116 | ) | ||||||||
Income (loss) before taxes and discontinued operations |
(3,660 | ) | (17,013 | ) | (107,591 | ) | (8,727 | ) | ||||||||
Income tax benefit (provision) |
90 | 256 | 357 | 310 | ||||||||||||
Income (loss) from continuing operations |
(3,570 | ) | (16,757 | ) | (107,234 | ) | (8,417 | ) | ||||||||
Income (loss) from discontinued operations |
| 6 | | 797 | ||||||||||||
Net income (loss) |
(3,570 | ) | (16,751 | ) | (107,234 | ) | (7,620 | ) | ||||||||
(Income) loss allocated to preferred shares |
(3,419 | ) | (3,414 | ) | (6,829 | ) | (6,828 | ) | ||||||||
(Income) loss allocated to noncontrolling interests |
38 | 67 | 93 | 117 | ||||||||||||
Net income (loss) allocable to common shares |
$ | (6,951 | ) | $ | (20,098 | ) | $ | (113,970 | ) | $ | (14,331 | ) | ||||
Earnings (loss) per shareBasic: |
||||||||||||||||
Continuing operations |
$ | (0.14 | ) | $ | (0.53 | ) | $ | (2.42 | ) | $ | (0.40 | ) | ||||
Discontinued operations |
| | | 0.02 | ||||||||||||
Total earnings (loss) per shareBasic |
$ | (0.14 | ) | $ | (0.53 | ) | $ | (2.42 | ) | $ | (0.38 | ) | ||||
Weighted-average shares outstandingBasic |
49,902,247 | 38,055,234 | 47,026,586 | 37,340,755 | ||||||||||||
Earnings (loss) per shareDiluted: |
||||||||||||||||
Continuing operations |
$ | (0.14 | ) | $ | (0.53 | ) | $ | (2.42 | ) | $ | (0.40 | ) | ||||
Discontinued operations |
| 0.00 | | 0.02 | ||||||||||||
Total earnings (loss) per shareDiluted |
$ | (0.14 | ) | $ | (0.53 | ) | $ | (2.42 | ) | $ | (0.38 | ) | ||||
Weighted-average shares outstandingDiluted |
49,902,247 | 38,055,234 | 47,026,586 | 37,340,755 | ||||||||||||
RAIT Financial Trust
Consolidated Balance Sheets
(Dollars in thousands, except share and per share information)
(unaudited)
As of | As of | |||||||
June 30, | December 31, | |||||||
2012 | 2011 | |||||||
Assets |
||||||||
Investments in mortgages and loans, at amortized cost: |
||||||||
Commercial mortgages, mezzanine loans, other loans and preferred |
$ | 1,090,481 | $ | 996,363 | ||||
equity interests |
||||||||
Allowance for losses |
(39,877 | ) | (46,082 | ) | ||||
Total investments in mortgages and loans |
1,050,604 | 950,281 | ||||||
Investments in real estate |
911,128 | 891,502 | ||||||
Investments in securities and security-related receivables, at fair value |
657,783 | 647,461 | ||||||
Cash and cash equivalents |
44,265 | 29,720 | ||||||
Restricted cash |
101,347 | 278,607 | ||||||
Accrued interest receivable |
43,143 | 39,455 | ||||||
Other assets |
44,881 | 39,771 | ||||||
Deferred financing costs, net of accumulated amortization of $13,706 and |
21,050 | 23,178 | ||||||
$11,613, respectively |
||||||||
Intangible assets, net of accumulated amortization of $2,590 and $2,337, |
2,376 | 2,629 | ||||||
respectively |
||||||||
Total assets |
$ | 2,876,577 | $ | 2,902,604 | ||||
Liabilities and Equity |
||||||||
Indebtedness: |
||||||||
Recourse indebtedness |
$ | 184,230 | $ | 169,107 | ||||
Non-recourse indebtedness |
1,601,128 | 1,579,167 | ||||||
Total indebtedness |
1,785,358 | 1,748,274 | ||||||
Accrued interest payable |
24,619 | 22,541 | ||||||
Accounts payable and accrued expenses |
23,956 | 20,825 | ||||||
Derivative liabilities |
167,155 | 181,499 | ||||||
Deferred taxes, borrowers escrows and other liabilities |
27,799 | 9,481 | ||||||
Distributions payable |
7,384 | 5,890 | ||||||
Total liabilities |
2,031,271 | 1,988,510 | ||||||
Equity: |
||||||||
Shareholders equity: |
||||||||
Preferred shares, $0.01 par value per share, 25,000,000 shares authorized;
7.75% Series A cumulative redeemable preferred shares, liquidation |
28 | 28 | ||||||
preference $25.00 per share, 2,787,931 and 2,760,000 shares issued
and outstanding |
||||||||
8.375% Series B cumulative redeemable preferred shares, liquidation |
23 | 23 | ||||||
preference $25.00 per share, 2,271,620 and 2,258,300 shares issued
and outstanding |
||||||||
8.875% Series C cumulative redeemable preferred shares, liquidation |
16 | 16 | ||||||
preference $25.00 per share, 1,621,430 and 1,600,000 shares issued
and outstanding |
||||||||
Common shares, $0.03 par value per share, 200,000,000 shares authorized, |
1,490 | 1,236 | ||||||
49,905,866 and 41,289,566 issued and outstanding |
||||||||
Additional paid in capital |
1,779,514 | 1,735,969 | ||||||
Accumulated other comprehensive income (loss) |
(108,721 | ) | (118,294 | ) | ||||
Retained earnings (deficit) |
(830,738 | ) | (708,671 | ) | ||||
Total shareholders equity |
841,612 | 910,307 | ||||||
Noncontrolling interests |
3,694 | 3,787 | ||||||
Total equity |
845,306 | 914,094 | ||||||
Total liabilities and equity |
$ | 2,876,577 | $ | 2,902,604 | ||||
Schedule I
RAIT Financial Trust
Reconciliation of Net income (loss) Allocable to Common Shares and
Funds From Operations (FFO) and
Adjusted Funds From Operations (AFFO) (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)
For the Three- Month Periods | For the Six-Month Periods | |||||||||||||||||||
Ended June 30 | Ended June 30 | |||||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||
Funds From Operations (FFO): |
||||||||||||||||||||
Net income (loss) allocable to common shares |
$ | (6,951 | ) | $ | (20,098 | ) | $ | (113,970 | ) | $ | (14,331 | ) | ||||||||
Adjustments: |
||||||||||||||||||||
Depreciation expense |
7,449 | 6,961 | 14,908 | 13,531 | ||||||||||||||||
(Gains) Losses on sale of real estate |
| 168 | | 46 | ||||||||||||||||
Funds from operations |
$ | 498 | $ | (12,969 | ) | $ | (99,062 | ) | $ | (754 | ) | |||||||||
Funds from Operations per share |
$ | 0.01 | $ | (0.34 | ) | $ | (2.11 | ) | $ | (0.02 | ) | |||||||||
Weighted-average shares diluted |
49,902,247 | 38,055,234 | 47,026,586 | 37,340,755 | ||||||||||||||||
Adjusted Funds From Operations (AFFO): |
||||||||||||||||||||
Funds from Operations |
$ | 498 | $ | (12,969 | ) | $ | (99,062 | ) | $ | (754 | ) | |||||||||
Adjustments: |
||||||||||||||||||||
Change in fair value of financial instruments |
11,169 | 25,727 | 120,092 | 20,116 | ||||||||||||||||
(Gains) Losses on debt extinguishment |
| (3,706 | ) | (1,574 | ) | (3,169 | ) | |||||||||||||
Capital expenditures, net of direct financing |
(535 | ) | (413 | ) | (783 | ) | (775 | ) | ||||||||||||
Straight-line rental adjustments |
(785 | ) | (922 | ) | (1,091 | ) | (1,687 | ) | ||||||||||||
Amortization of deferred items and intangible assets |
1,516 | 763 | 3,042 | 1,436 | ||||||||||||||||
Share-based compensation |
549 | 58 | 1,106 | 317 | ||||||||||||||||
Adjusted Funds from Operations |
$ | 12,412 | $ | 8,538 | $ | 21,730 | $ | 15,484 | ||||||||||||
Adjusted Funds from Operations per share |
$ | 0.25 | $ | 0.22 | $ | 0.46 | $ | 0.41 | ||||||||||||
Weighted-average shares diluted |
49,902,247 | 38,055,234 | 47,026,586 | 37,340,755 | ||||||||||||||||
(1) | We believe that funds from operations, or FFO, and adjusted funds from operations, or AFFO, each of which are non-GAAP measures, are additional appropriate measures of the operating performance of a REIT and us in particular. |
We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss allocated to common shares (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles.
AFFO is a computation made by analysts and investors to measure a real estate companys cash flow generated by operations. We calculate AFFO by adding to or subtracting from FFO: change in fair value of financial instruments; gains or losses on debt extinguishment; capital expenditures, net of any direct financing associated with those capital expenditures; straight-line rental effects; amortization of various deferred items and intangible assets; and share-based compensation.
Our calculation of AFFO differs from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. Our management utilizes FFO and AFFO as measures of our operating performance, and believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash items, such as real estate depreciation, share-based compensation and various other items required by GAAP that may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and AFFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs.
Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with U.S. GAAP. Furthermore, FFO and AFFO do not represent amounts available for managements discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity. References to we, us, and our refer to RAIT Financial Trust and its subsidiaries.
Schedule II
RAIT Financial Trust
Reconciliation of Shareholders Equity to Adjusted Book Value (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)
As of June 30, 2012 | ||||||||||||||||||||
Amount | Per Share (2) | |||||||||||||||||||
Total Shareholders equity, as reported |
$841,612 | $ | 16.87 | |||||||||||||||||
Subtract: Liquidation value of preferred shares (3) |
(167,025) | (3.35 | ) | |||||||||||||||||
RAIT Book Value |
674,587 | 13.52 | ||||||||||||||||||
Adjustments: |
||||||||||||||||||||
Subtract: Taberna securitizations net effect |
(547,257) (10.97 | ) | ||||||||||||||||||
Add: CRE CDO derivative liabilities |
79,816 1.60 | |||||||||||||||||||
Add: Accumulated depreciation and amortization |
99,333 1.99 | |||||||||||||||||||
Add: Valuation of recurring collateral and property management fees 20,970 0.42 |
||||||||||||||||||||
Total adjustments |
(347,138) | (6.96 | ) | |||||||||||||||||
Adjusted Book Value |
$327,449 | $ | 6.56 | |||||||||||||||||
(1) | Management views adjusted book value as a useful and appropriate supplement to shareholders equity and book value per share. The measure serves as an additional measure of our value because it facilitates evaluation of us without the effects of various items that we are required to record in accordance with GAAP but which have limited economic impact on our business. Those adjustments primarily reflect the effect of consolidated securitizations where we do not currently receive cash flows on our retained interests, accumulated depreciation and amortization, the valuation of long-term derivative instruments and a valuation of our recurring collateral and property management fees. Adjusted book value is a non-GAAP financial measurement, and does not purport to be an alternative to reported shareholders equity, determined in accordance with GAAP, as a measure of book value. Adjusted book value should be reviewed in connection with shareholders equity as set forth in our consolidated balance sheets, to help analyze our value to investors. Adjusted book value may be defined in various ways throughout the REIT industry. Investors should consider these differences when comparing our adjusted book value to that of other REITs. |
(2) | Based on 49,905,866 common shares outstanding as of June 30, 2012. |
(3) | Based on 2,787,931 Series A preferred shares, 2,271,620 Series B preferred shares, and 1,621,430 Series C preferred shares outstanding as of June 30, 2012, all of which have a liquidation preference of $25.00 per share. |