RAIT Financial Trust - FORM 8-K - EX-99.1

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8-K - 8-K - RAIT Financial Trust	d775341d8k.htm

Investor Presentation

August 2014

Cira Centre, 2929 Arch Street, 17 Floor, Philadelphia, PA 19104 | 215.243.9000 | rait.com

Exhibit 99.1

Forward Looking Statements, Non-

GAAP Financial

Measures & Securities Offering Disclaimers

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, projected dividends, projected cash available for distribution (“CAD”),

projected net income 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: our ability to realize the projections related to our future CAD and net income and the underlying assumptions

and 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

RAIT’s

website

www.rait.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. (“IRT”) , a RAIT consolidated and managed multifamily equity REIT.

About RAIT

RAIT Financial Trust (“RAIT”) (NYSE: RAS), is a multi-strategy commercial real estate company with a vertically

integrated platform focused on lending, owning and managing commercial real estate related assets nationwide.

RAIT is organized as an internally-managed REIT with $5.3 billion of assets under management

RAIT’s

IPO

January

1998

Focus on delivering strong-risk adjusted returns

Scalable, “in-house”, commercial real estate platform with approximately 700 employees

(includes property management)

Offices -

Philadelphia, New York, Chicago, Charlotte

RAIT originated $470.8 million of loans during the six-months ended June 30, 2014 consisting of $288.4 million

bridge loans, $165.6 million conduit loans and $16.8 million mezzanine loans

No corporate, unsecured, recourse debt maturities until April 2016

Increased

quarterly

common

dividend

$0.18

for

the

second

quarter

2014

June

2014

38%

increase

over

the second quarter 2013

Seasoned executive team with strong real estate equity and debt experience

Multi-Strategy Business Approach

COMMERCIAL REAL ESTATE

OWNER & OPERATOR

COMMERCIAL REAL ESTATE

LENDER

ASSET & PROPERTY MANAGER

Commercial

Real Estate Platform

$5.3 Billion

Assets Under Management

As of June 30, 2014

Maximize value over time

Opportunistic acquisitions

Hedges against inflation

Adds stability to the asset mix

One-source financing option to middle

market: originate, underwrite, close &

service commercial real estate loans

Full service property manager

Asset Manager: S&P & Morningstar

rated primary and special loan

servicer

External advisor to Independence

Realty Trust, Inc. (NYSE MKT: IRT)

Commercial Real Estate Lender

The lending opportunity

Improved

lending

environment

economy,

liquid

market,

stronger

borrowers

Over $1.5 trillion of CRE debt is expected to mature through 2019

(1)

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 conduit loans of $5

million to $30 million on multi-family, office, retail and light industrial properties

RAIT’s competitive advantage: uniquely positioned to deliver a one-source

financing

option

our

borrowers

short

term,

floating

rate

financing

for

properties

in transition to long term, fixed rate financing for stabilized properties

Active credit and risk management

(1)

Trepp , LLC

Commercial Real Estate Lender

Loan Types

Bridge loans

balance sheet loans: transitional properties, 3 to 5 year, floating rate over LIBOR,

origination

exit

fee,

approximate

floor

rates

4.75%

7.0%

Conduit loans

for sale loans: stable properties, 5 to 10 year, fixed rate, approximate coupon range

4.50% -

5.50%

Mezzanine loans

balance sheet loans: stable properties, floating rate, origination fees, approximate

coupon: 10.00% -12.00%

Funding Sources

Warehouse providers

Bridge loans: Citibank, Column Financial (Credit Suisse AG affiliate), UBS Real Estate

Securities, Inc.

Conduit

loans:

Barclays,

Citibank

sell

loans

into

third-party

securitizations

RAIT’s balance sheet

Securitizations

RAIT

2013-FL1

$135

million

floating

rate

securitization;

RAIT

2014-FL2

$196 million floating rate securitization

Capital markets

Commercial Real Estate Lender

Growth in loan originations

Loan repayments and sales

Average quarterly commercial loan (bridge and mezzanine) repayments of $42.8 million

for the six-months ended June 30, 2014

Average quarterly conduit loan sales of $59.7 million for the six-months ended June 30,

2014

As of June 30, 2014

$471

$376

$603

$55

6/30/2014

FY 2013

FY 2012

FY 2011

$700

$600

$500

$400

$300

$200

$100

($ in millions)

Conduit Loans

Bridge Loans

Mezzanine Loans

CRE Loan Portfolio Statistics

Loan Portfolio Statistics

As of June 30, 2014 unless otherwise Indicated ($ in 000s)

(1) Based on book value at 6/30/2014.

Office

41%

Multi-family

18%

Retail

29%

Other

13%

Central

38%

Mid Atlantic

28%

Southeast

19%

West

10%

Northeast

Book Value

Average

Coupon

Range of Maturities

Number of

Loans

Key Statistics

2014

2013

Commercial Real Estate (CRE) Loans

CRE Non-accrual loans

$30,269

$37,073

Commercial mortgages

$1,003,051

6.0%

Aug.

2014

to Jul. 2044

% change

(18)%

Mezzanine loans

260,320

9.5

Sep. 2014

to Jan. 2029

Reserve for losses

15,336

22,955

Preferred equity interests

41,

721

7.7

May 2015

to Aug. 2025

% change

Total CRE Loans

$1,305,092

6.8

175

Provision for losses

1,000

1,500

Other loans

20,204

2.8

Oct. 2016

% change

Total investments in loans

$1,325,296

6.7

176

By Geographic Region

(1)

(33)%

Weighted -

By Property Type

(1)

Commercial Real Estate Owner

(1)

Includes

nineteen

apartment

buildings

totaling

$343.5

million

owned

IRT

June

30,

2014.

July

21,

2014,

RAIT

owned

28.2%

IRT’s

outstanding

common

stock.

Directly owned real estate portfolio

Strategy to maximize value over time through professional management, increasing

occupancy and higher rental rates

Opportunistic acquisitions

Provides stability to asset mix and hedges against inflation

$1.3 billion of CRE properties at June 30, 2014

Portfolio is internally managed

Acquire well located apartment buildings in secondary markets via Independence Realty

Trust, Inc. (“IRT”) (NYSE MKT: IRT)

IRT owned 19 properties totaling $343.5 million at June 30, 2014

Consolidated by RAIT and externally managed by RAIT subsidiary

RAIT owns approximately 7.3 million shares of IRT common stock (approximately

28.2% of the outstanding common stock)

IRT utilizes RAIT’s relationships, broker-network & relationships; off-market

transactions

Directly Owned Commercial Real Estate Portfolio

Statistics

Investments in Real Estate Property Types

(a)

Investments in Real Estate Geographic U.S. Regions

(a)

Based on book value of properties owned as of June 30, 2014.

Retail

Other

Office

21%

Multi-family

69%

Southeast

23%

Mid-Atlantic

West

26%

Central

46%

Directly Owned Commercial Real Estate Portfolio

Statistics

Net Real Estate Operating Income

(a)

(b)

(c)

(d)

Improved Occupancy and Net Operating Income

As of June 30, 2014 unless otherwise Indicated ($ in 000s)

Average

Effective

Rent

(b)

Investments

in Real

Estate

Quantity

Number of

Properties

Average Physical Occupancy

6/30/2014

6/30/2013

Multi-family real estate properties

(a)

$957,858

12,388 units

92.8%

92.6%

Office real estate properties

322,477

2,248,321 sq. ft.

74.3%

Retail real estate properties

84,088

1,420,909 sq. ft.

67.5%

68.7%

Parcels of land

50,097

21.9 acres

Total

$1,414,520

Property Type

Q2 2014

Q2 2013

% Increase

Multi-family

(c)

$799

$743

Office

(d)

20.10

18.77

Retail

(d)

12.5

11.78

Average effective rent is rent per square foot per year.

Average effective rent is rent per unit per month.

Average monthly effective rent represents the average monthly rent collected for all occupied units after giving effect to tenant concessions. We do not report average effective rent per unit in the month of acquisition

as it is not representative of a full month of operations. Based on properties owned as of June 30, 2014.

Includes nineteen apartment buildings owned by IRT with 5,342 units and a book value of $343.5 million as of June 30, 2014. At August 5, 2014, RAIT owned 28.2% of IRT’s outstanding common stock.

Q2 2014

Q2 2013

Rental income

$39,214

$27,858

Real estate operating expenses

19,690

14,911

Net Real Estate Operating Income

$19,524

$12,947

NOI growth

51%

Asset and Property Manager

Asset & Property Management

$5.3 billion of AUM

Management fees

Manage approximately $2.6 billion of commercial real estate assets, $1.5 billion of U.S.

real estate debt securities and property manage $1.2 billion of commercial real estate

for third parties

S&P & Morningstar rated primary and special CRE loan servicer

Multi-family focused

Office focused

Retail focused

54 properties -

12,683 units

17 states

3.0 million square feet

13 states

63 properties –

18.2 million square feet

25 states

Property

management

fees

RAIT,

IRT

and

party

opportunities

RAS Dividend History –

Since 2011

Stable and steady dividend

(a)

Compound Annual Growth Rate

2014 Projected Cash Available for Distribution

(1)

Reconciliation of RAIT Annualized Projected Cash Available for Distribution ("CAD")

(dollars in millions, except per share data)

2014 Annualized Projected CAD

(2)

Net Income (loss) allocable to common shares

(3)

22.1

28.1

Adjustments:

Depreciation, amortization expense and other items

78.6

Taberna VIII and Taberna IX securitizations, net effect

(28.2)

Loan origination fees

5.6

7.6

CAD

78.1

86.1

CAD per share

(4)

0.97

1.07

(1)

Please see slide 17 for CAD definition.

(2)

Constitutes forward-looking information. Actual full 2014 projected net income, cash available for distribution and each individual line item presented herein could vary significantly from the

projections presented. Net income, CAD and each such item may fluctuate based upon a variety of factors, including, but not limited to, the timing and amount of investments, repayments and

asset sales, capital raised, use of leverage, changes in the expected yield of investments and the overall conditions in commercial real estate and the economy generally. CAD per share does

not take into account any potential dilution from our outstanding convertible senior notes or warrants or equity compensation. The above projections assume for 2014: gross loan originations of

$900 million to $1.25 billion; Investment portfolios do not experience significant loan repayments; RAIT’s property portfolio performs at historical levels; and RAIT continues to receive its

securitization collateral management and property management fees.

(3)

Represents projected net income (loss) allocable to common shares for 2014 excluding the changes in fair value of financial instruments. For the six-months ended June 30, 2014, changes in

fair value of financial instruments was a loss of $63.5 million and net income allocable to common shares was a loss of $40.2 million.

(4)

Based on 80,636,895 weighted-average shares outstanding-diluted for the six-month period ended June 30, 2014.

RAIT Highlights & Goals

Growth & stability through a multi-strategy approach

Utilizing RAIT’s core, integrated, real estate platform and management expertise to

generate appropriate risk-adjusted returns by originating, underwriting and managing

commercial real estate loans

Growing revenue through accretive capital deployment

Focus on bridge and conduit loans

Creating value in RAIT’s portfolio of owned real estate through increasing rental and

occupancy rates while managing operating costs through RAIT’s property managers

Growing IRT’s portfolio of apartment properties

Expanding and maintaining our sources of liquidity

Maintaining a strong pipeline of investment opportunities

Delivering stable and growing dividends

Appendix

Cash Available for Distribution

(1)

Unsecured Recourse Debt Summary

No corporate, unsecured, recourse debt maturities until April 2016

As of June 30, 2014

(1)

Excludes $76.9 million of secured debt outstanding under RAIT’s CMBS and commercial mortgage facilities with contractual maturities in 2015 & 2016.

(2)

Assumes full exercise of holders’ 7.0% & 4.0% convertible senior notes redemption right in April 2016 and October 2018, respectively, and excludes $12.1 million outstanding under secured credit facilities with

contractual maturities in 2016 related to Independence Realty Trust, Inc.

(3)

Includes $70.0 million of senior unsecured notes issued in August 2014. Excludes $82.0 million of outstanding senior secured notes issued by us which are eliminated in consolidation with contractual maturities

ranging from 2017 to 2019.

(4)

Includes $60.0 million of senior unsecured notes issued in April 2014.

(All $ in 000s except per share numbers)

(a)

CRE Loan Portfolio includes commercial mortgages, mezzanine loans, and preferred equity interests only and does not include other loans.

(b)

Includes 19 apartment properties owned by IRT with 5,342 units and a book value of $343.5 million as of June 30, 2014.

(c)

Based on properties owned as of June 30, 2014.

(d)

Average effective rent is rent per unit per month.

(e)

Average effective rent is rent per square foot per year.

Key Statistics –

6.30.2014

RAIT Income Statement

RAIT Balance Sheet

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.

Based on 82,507,410 common shares outstanding as of June 30, 2014.

Based on 4,069,288 Series A preferred shares, 2,288,465 Series B preferred shares, and 1,640,100 Series C preferred shares outstanding as of June 30, 2014, all of which have a liquidation

preference of $25.00 per share.

Adjusted Book Value

(1)

(2)

(3)

(All $ in 000s except per share numbers)

As of June 30, 2014

Amount

Per Share (2)

Total shareholders’ equity ................................................

633,736

7.68

Liquidation value of preferred shares characterized as equity(2)

(199,946)

(2.42)

Book value ........................................................................

433,790

5.26

Adjustments:

Taberna VIII and Taberna IX securitizations, net effect

(187,864)

(2.29)

RAIT I and RAIT II derivative liabilities .....................

31,102

0.38

Change in fair value for warrants and investor SARs

18,820

0.23

Accumulated depreciation and amortization .........

183,932

2.23

Valuation of recurring collateral and property management fees

57,479

0.70

Total adjustments .............................................................

103,469

1.25

Adjusted book value .........................................................

537,259

6.51

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