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| 8-K - FORM 8-K - RAIT Financial Trust | d504843d8k.htm |
 1
R
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RAIT Financial Trust
Investor Presentation
Full Year 2012
Exhibit 99.1 |
 2
R
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Forward Looking Statements &
Non-GAAP Financial Measures
This document and the related presentation may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to, statements about
RAIT
Financial
Trust’s
(“RAIT”)
plans,
objectives,
expectations
and
intentions
with
respect
to
future
operations,
products, dividends, cash from investments and services and other statements that are not
historical facts. Forward- looking statements are sometimes identified by the words
“may”, “will”, “should”, “potential”, “predict”, “continue”,
“project”, “guide”, or other similar words or expressions. These
forward-looking statements are based upon the current beliefs and expectations of
RAIT's management and are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are difficult to predict and generally not within RAIT’s
control. In addition, these forward-looking statements are subject to assumptions with
respect to future business strategies and decisions that are subject to change. RAIT
does not guarantee that the assumptions underlying such forward looking statements are
free from errors. Actual results may differ materially from the anticipated results
discussed in these forward-looking statements.
The following factors, among others, could cause actual results to differ materially from the
anticipated results or other expectations expressed in the forward-looking
statements: the risk factors and other disclosure contained in filings by RAIT with the
Securities and Exchange Commission (“SEC”), including, without limitation, RAIT’s most recent
annual and quarterly reports filed with SEC. RAIT’s SEC filings are available on
RAIT’s website at www.raitft.com. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
presentation. All subsequent written and oral forward-looking statements attributable to RAIT or any person
acting on its behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this
document
and
the
related
presentation.
Except
to
the
extent
required
by
applicable
law
or
regulation,
RAIT
undertakes no obligation to update these forward-looking statements to reflect events or
circumstances after the date of this presentation or to reflect the occurrence of
unanticipated events. This document and the related presentation may contain
non-U.S. generally accepted accounting principles (“GAAP”) financial
measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP
financial measure is included in this document and/or RAIT’s most recent annual and
quarterly reports. This presentation is for informational purposes only and does
not constitute an offer to sell or a solicitation of an offer to buy any securities of
RAIT or Independence Realty Trust, Inc. |
 3
R
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About RAIT
RAIT Financial Trust (“RAIT”) (NYSE: RAS), is a multi-strategy commercial real
estate company organized as an internally-managed REIT
Scalable commercial real estate platform with over 350 employees
$3.6 billion of assets under management
Seasoned executive team with strong real estate experience
Increased quarterly common dividend to $0.10 for the fourth quarter 2012 –
a 67% increase from the fourth quarter 2011
No corporate, unsecured, recourse debt maturities until April 2016
As of December 31, 2012 |
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Multi-Strategy Business Approach
Commercial real estate lender
“One Source”
financing option to middle market
Comprehensive lending platform -
originate, underwrite, close & service CMBS
and transitional CRE loans
$1.0 billion loan portfolio
Commercial real estate owner
Maximize value of the portfolio over time through increased occupancy and
rental rates
$1.0 billion portfolio (59 properties): 61% multi-family, 26% office, 8% retail
and 5% other
Adds stability to the asset mix and hedge against inflation
Asset and property manager
S&P & Morningstar rated primary and special loan servicer
Full service property management capabilities
Asset Manager –
earning management fees
Non-traded REIT sponsor: Scalable non-traded REIT platform
As of December 31, 2012 |
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R
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Commercial Real Estate Lender
The lending opportunity
Over
$1.5
trillion
of
CRE
debt
is
expected
to
mature
through
2019
(1)
Limited competition for small balance CMBS loans and short term transitional loans
Increasing
CMBS
activity:
market
expects
to
end
2013
with
around
$65
billion
of
issuance,
approximately
a
35%
increase
over
the
$48
billion
issued
in
2012
(2)
Equity gap drives bridge and mezzanine lending opportunities
RAIT’s goal
Capitalize on lending opportunity utilizing existing, scalable platform and internal
expertise
to
originate
and
underwrite
bridge,
mezzanine
and
CMBS
loans
of
$5
million to $30 million on multi-family, office, retail and light industrial
properties Active credit and risk management
(1)
Morgan Stanley, Bloomberg LP, Foresight Analytics, Trepp and Intex
(2)
Commercial Mortgage Alert |
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Commercial Real Estate Lender: CMBS
CMBS loans
Funding
Funded $119.3 million and sold $98 million of CMBS loans in 2012
CMBS pipeline at approximately $740 million at March 13, 2013
CMBS loans: warehouse providers
Barclays $150 million
Citibank $100 million |
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Commercial Real Estate Lender: Bridge &
Mezzanine Lending
Bridge & mezzanine lending
Funded $240.1 million in bridge and $15.4 million in mezzanine loans in 2012
Bridge and mezzanine pipeline at approximately $283 million at March 13, 2013
General terms
–
transitional properties
Bridge
loans
–
floating
rate,
fees,
approximately
6.5%
-
7%
coupons
Mezzanine
loans
-
floating
rate,
fees,
approximately
12%+
coupons
Origination and exit fees
Funding
$150 million facility with a subsidiary of Credit Suisse AG
Senior participations: regional bank participation program |
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Commercial Real Estate Loan Examples |
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R
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Risk Management: Commercial Real Estate
Loan Performance
As of December 31, 2012 ($ in 000s) |
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R
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Commercial Real Estate Owner
Directly owned real estate portfolio
Strategy to maximize value over time through increasing occupancy and higher
rental rates
$1.0 billion of CRE properties at December 31, 2012
Portfolio is internally managed by seasoned property management professionals
5% average effective rent growth in multi-family portfolio from December 31,
2011 to December 31, 2012
Opportunistically acquire properties
RAIT subsidiary acquired Runaway Bay apartments in Indianapolis,
Indiana
$15.8 million acquisition at a 6.9% cap rate; $10.2 million first mortgage
at 3.59%; expected 15% internal rate of return
192 garden style apartments |
  11
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Directly Owned Commercial Real Estate
Portfolio Statistics
Net Real Estate Operating Income
Average Effective Rent
(a)
a)
Based
on
properties
owned
as
of
December
31,
2012.
b)
Average
effective
rent
is
rent
per
unit
per
month.
c)
Average
effective
rent
is
rent
per
square
foot
per
year.
Improved Occupancy and Net Operating Income
As of December 31, 2012 unless otherwise Indicated ($ in 000s)
Q4 2012
Q4 2011
Rental income
$27,089
$24,817
Real estate operating expenses
14,905
14,314
Net Real Estate Operating Income
$12,184
$10,503
Average Occupancy
85.1%
83.6%
Property Type
Q4 2012
Q4 2011
% Variance
Multi-family
(b)
$718
$681
5%
Office
(c)
18.82
20.85
-10%
Retail
(c)
12.53
9.73
29%
Investments
in Real
Estate
Quantity
Number of
Properties
Average Physical Occupancy
12/31/2012
12/31/2011
Multi-family real estate properties
$613,888
8,206
units
34
90.0%
88.5%
Office real estate properties
271,847
2,015,524
sq. ft.
11
72.8%
69.2%
Retail real estate properties
82,081
1,422,572
sq. ft.
4
73.2%
68.0%
Parcels of land
47,765
21.92
acres
10
–
–
Total
$1,015,581
59
85.1%
83.6% |
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Directly Owned Commercial Real Estate
Portfolio Statistics
(a)
Based on properties owned as of December 31, 2012.
.
Retail
8.3%
Other
5.2%
Investments in Real Estate
Property Types
(a)
Central
32.0%
Investments in Real Estate
Geographic U.S. Regions
(a)
Multi-family
60.7%
Office
25.8%
West
33.8%
Southeast
28.6%
Mid
-Atlantic
5.6% |
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Fee Income: Asset and Property Manager
Asset management
Management fees
Manage approximately $2 billion of commercial real estate loans and $1.6 billion
of U.S. real estate debt securities
S&P & Morningstar rated primary and special CRE loan servicer
Property management
Property management fees
Jupiter Communities -
Multi-family focused
49 properties –
10,649 units
CRP Commercial Services -
Office focused
2.7 million square feet
Scalable non-traded REIT platform
Independence
Realty
Trust,
Inc.
-
multi-family
equity
REIT
As of December 31, 2012 |
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2013 Opportunities for Growth & Stability
Focus on growth & stability through a multi-strategy approach:
Utilizing RAIT’s core real estate platform and management expertise to generate
appropriate risk-adjusted returns by originating, underwriting and managing
commercial real estate loans
Grow cash flow through accretive capital deployment
Focus on CMBS and transitional loans (bridge and mezzanine loans)
Continue to actively manage credit risk
Effectively manage RAIT’s portfolio of owned real estate to deliver increasing
rental and occupancy rates while managing operating costs
Leveraging RAIT’s capabilities through non-traded REIT platform to grow fee
income and assets under management |
 15
R
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2013 Projected Cash Received from
Investments
(1)
(1)
Constitutes forward-looking information. Actual full 2013 projected cash received
from investments and each individual line item presented herein, could vary significantly from the
projections presented. The above projections assume: RAIT does not raise any other
capital and fully deploys capital raised from Almanac affiliate before the end of 2013; Investment
portfolios do not experience significant loan repayments; RAIT continues to receive its
securitization collateral management fees and generates property management fees and loan
origination
fees
from
third
parties
at
historical
levels;
RAIT’s
sponsored
non-traded
REITs
experience
growth
in
their
investment
portfolios
by
the
end
of
the
period
covered
and
the
identified cash uses remain at historical levels.
($'s in millions, except per share amounts)
Projected In-flows
178
$
-
$196
Less: CRE and Property level interest costs
(52)
Less: Corporate interest and preferred dividends
(35)
Less: General and administrative costs
(34)
-
(35)
Net cash flow available to common shareholders
$57
$74
Per Share
0.95
$
1.23
$
2013 |
 16
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RAIT Highlights
Multi-strategy business approach for growth and stability
Improving cash flow and capital access
Stable and growing dividends
Integrated platform with synergistic business lines
Strong Pipeline of investment opportunities |
 17
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Appendix |
 18
R
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Adjusted Book Value
(1)
(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 58,913,142 common shares outstanding as of December 31,
2012.
(3)
Based
on
3,124,288
Series
A
preferred
shares,
2,288,465
Series
B
preferred
shares,
and
1,640,100
Series
C
preferred
shares
outstanding
as
of
December
31,
2012,
all
of
which
have
a
liquidation preference of $25.00 per share. |
 19
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Recourse Debt Summary
No unsecured, recourse debt maturities until April 2016
(1)
In
January
2013,
we
prepaid
the
$19.4
million
junior
subordinated
note.
(2)
Assumes full exercise of holders’
7.0% convertible senior notes redemption right in April 2016.
(3)
Includes
senior
secured
notes
issued
by
us
with
an
aggregate
principal
amount
equal
to
$94,000
with
a
weighted
average
coupon
of
7.0%,
which
are
eliminated
in
consolidation
As of December 31, 2012
$-
$-
$19,381
$123,090
$47,000
$23,500
$23,500
$-
$43,771
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
2013
2014
2015 (1)
2016 (2)
2017 (3)
2018 (3)
2019 (3)
2020
Thereafter
Recourse Debt Maturities and Redemption Dates
(in 000s) |
 20
R
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CRE Loan Portfolio Statistics
By Property Type
(1)
(1) Based on book value at 12/31/2012.
By Geographic Region
(1)
Improved credit performance of the loan portfolio
As of December 31, 2012 unless otherwise Indicated ($ in 000s)
Office
43%
Multi-family
25%
Retail
28%
Other
4%
Central
32%
Mid Atlantic
29%
Southeast
12%
West
17%
Northeast
10% |
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R
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Owned Commercial Real Estate Performance
As of December 31, 2012 ($ in 000s) |