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| 8-K - LIVE FILING - RAIT Financial Trust | htm_52659.htm |
RAIT Financial Trust Announces Third Quarter 2015 Financial Results
PHILADELPHIA, PA — November 5, 2015 — RAIT Financial Trust (“RAIT”) (NYSE: RAS) today announced third quarter 2015 financial results.
Highlights:
| - | Cash Available for Distribution (“CAD”) per share of $0.27 for the quarter ended September 30, 2015 compared to $0.00 for the quarter ended September 30, 2014. |
|
| - | RAIT paid a third quarter dividend of $0.18 per common share on October 30, 2015. |
|
| - | Investments in mortgages and loans, at cost, increased 14.4% to $1.59 billion at September 30, 2015 from $1.39 billion at December 31, 2014. |
|
| - | RAIT originated $237.7 million of loans during the quarter ended September 30, 2015 and $675.1 million of loans during the nine-month period ended September 30, 2015. |
|
| - | RAIT Apartment Portfolio (excludes IRT): |
| • | Average effective rent per unit per month in RAIT’s multifamily portfolio increased 4.5% to $841 for the quarter ended September 30, 2015 from $805 for the quarter ended September 30, 2014. |
| • | Average occupancy in RAIT’s multifamily portfolio increased to 93.8% for the quarter ended September 30, 2015 from 93.1% for the quarter ended September 30, 2014. |
| • | RAIT Q3 2015 Property Sales: |
| • | RAIT sold a 148 unit apartment community in Miami, Florida for $17.5 million resulting in a CAD gain of $5.9 million. |
| • | RAIT sold two land parcels in Daytona Beach, Florida for $3.0 million resulting in a CAD gain of $0.4 million. |
Commercial Real Estate (“CRE”) Lending Business
| • | RAIT originated $237.7 million of loans during the quarter ended September 30, 2015 consisting of $65.2 million of fixed-rate conduit loans and $172.5 million of floating-rate bridge loans. RAIT originated $675.1 million of loans during the nine-month period ended September 30, 2015 consisting of $312.2 million of fixed-rate conduit loans, $357.9 million of floating-rate bridge loans and a $5.0 million mezzanine loan. |
| • | RAIT sold $116.3 million of conduit loans during the quarter ended September 30, 2015 which generated fee income of $0.4 million. RAIT sold $339.5 million of conduit loans during the nine-month period ended September 30, 2015 which generated fee income of $6.1 million. |
| • | CRE loan repayments were $39.1 million for the quarter ended September 30, 2015 and $169.6 million during the nine-month period ended September 30, 2015. |
CRE Property Portfolio & Property Sales
| • | As of September 30, 2015, RAIT’s investments in real estate were $2.3 billion which includes $1.4 billion of multi-family properties owned by Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT). IRT is externally advised by RAIT and is a consolidated RAIT entity. IRT is a REIT focused on owning multifamily properties. At September 30, 2015, RAIT owned 15.5% of IRT’s outstanding common stock. |
| • | On September 17, 2015, IRT completed the acquisition of Trade Street Residential, Inc. adding nineteen high-quality properties or 4,989 units to its portfolio. RAIT expects the acquisition to benefit RAIT through RAIT’s ownership of IRT common stock and increased fees paid to RAIT by IRT. RAIT generated $6.1 million in asset and property management fees and incentive fees through its external management of IRT during the nine-month period ended September 30, 2015. |
| • | RAIT sold one property and two parcels of land for $20.5 million and recognized a CAD gain of approximately $6.3 million after costs and full repayment of the underlying debt. |
| • | RAIT reported a $7.3 million asset impairment for the quarter ended September 30, 2015 on an office building located in Garden City, New York. |
Asset & Property Management
| • | Total assets under management increased 28.9% to $5.8 billion at September 30, 2015 from $4.5 billion at December 31, 2014. |
| • | RAIT’s property management companies managed 20,744 apartment units and 22.9 million square feet of office and retail space at September 30, 2015. |
Dividends
| • | On September 17, 2015, RAIT’s Board of Trustees (the “Board”) declared a third quarter 2015 cash dividend on RAIT’s common shares of $0.18 per common share. The dividend was paid on October 30, 2015 to holders of record on October 9, 2015. |
| • | On July 28, 2015, the Board declared a third quarter 2015 cash dividend of $0.484375 per share on RAIT’s 7.75% Series A Cumulative Redeemable Preferred Shares, $0.5234375 per share on RAIT’s 8.375% Series B Cumulative Redeemable Preferred Shares and $0.5546875 per share on RAIT’s 8.875% Series C Cumulative Redeemable Preferred Shares. The dividends were paid on September 30, 2015 to holders of record on September 1, 2015. |
Scott Schaeffer, RAIT’s Chairman and CEO, said, “RAIT originated $172.5 million of floating-rate bridge loans and received repayments of $39.1 million, for net loan growth of $133.4 million. Additionally, RAIT originated $65.2 million of fixed-rate conduit loans and sold $116.3 million CMBS loans during the quarter. Our CMBS loan sale business remained profitable despite the dramatic widening of bond spreads. We also sold RAIT properties which generated $6.3 million of CAD gains. These activities plus the recurring income from our loan portfolio and various asset management activities delivered $0.27 of CAD and a $0.18 dividend to common shareholders in the third quarter. We continue to see solid lending opportunities and will continue the strategy seeking opportunistic sales of RAIT owned properties in order to reinvest proceeds into higher yielding asset classes.”
Financial Results
RAIT reported CAD, a non-GAAP financial measure, for the three-month period ended September 30, 2015 of $23.7 million, or $0.27 per share based on 87.1 million weighted-average shares outstanding, as compared to CAD for the three-month period ended September 30, 2014 of $(0.4) million, or $0.00 per share based on 82.0 million weighted-average shares outstanding. RAIT reported a net loss allocable to common shares for the three-month period ended September 30, 2015 of $6.5 million, or $0.07 total loss per share — diluted based on 87.1 million weighted-average shares outstanding – diluted, as compared to net loss allocable to common shares for the three-month period ended September 30, 2014 of $23.3 million, or $0.28 total loss per share – diluted based on 82.0 million weighted-average shares outstanding – diluted.
RAIT reported CAD for the nine-month period ended September 30, 2015 of $69.3 million, or $0.83 per share based on 83.8 million weighted-average shares outstanding, as compared to CAD for the nine-month period ended September 30, 2014 of $36.6 million, or $0.45 per share based on 81.1 million weighted-average shares outstanding. RAIT reported a net income allocable to common shares for the nine-month period ended September 30, 2015 of $5.3 million, or $0.06 total earnings per share based on 85.6 million weighted-average shares outstanding – diluted, as compared to net loss allocable to common shares for the nine-month period ended September 30, 2014 of $63.5 million, or $0.78 total loss per share based on 81.1 million weighted-average shares outstanding – diluted.
A reconciliation of RAIT’s reported net income (loss) allocable to common shares to its CAD is included as Schedule I to this release. A reconciliation of RAIT’s total shareholders’ equity to its adjusted book value, a non-GAAP financial measure, is included as Schedule II to this release. A reconciliation of RAIT’s net income (loss) allocable to common shares to its funds from operations, a non-GAAP financial measure, is included as Schedule III to this release.
These Schedules also include management’s respective rationales for the usefulness of each of these non-GAAP financial measures.
Key Statistics
(Unaudited and dollars in thousands, except per share information)
As of or For the Three-Month Periods Ended
| September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||||||||||||||||
Financial Statistics: |
||||||||||||||||||||||||||||||||
Total revenue |
$ | 74,962 | $ | 79,413 | $ | 75,897 | $ | 73,857 | $ | 75,293 | ||||||||||||||||||||||
Net interest margin |
$ | 16,447 | $ | 16,525 | $ | 16,334 | $ | 22,569 | $ | 25,637 | ||||||||||||||||||||||
Fee and other income |
$ | 3,056 | $ | 7,415 | $ | 5,594 | $ | 5,167 | $ | 7,842 | ||||||||||||||||||||||
Earnings (loss) per share – diluted |
$ | (0.07 | ) | $ | 0.21 | $ | (0.09 | ) | $ | (3.11 | ) | $ | (0.28 | ) | ||||||||||||||||||
Funds from Operations (“FFO”) per share |
$ | (0.05 | ) | $ | 0.15 | $ | 0.05 | $ | (2.97 | ) | $ | (0.17 | ) | |||||||||||||||||||
CAD per share |
$ | 0.27 | $ | 0.37 | $ | 0.19 | $ | 0.26 | $ | 0.00(5) | ||||||||||||||||||||||
Common dividend declared per share |
$ | 0.18 | $ | 0.18 | $ | 0.18 | $ | 0.18 | $ | 0.18 | ||||||||||||||||||||||
| Assets under management | $ | 5,820,702 | $4,764,259 | $4,607,413 | $ | 4,485,525 | $ | 5,417,579 | ||||||||||||||||||||||||
| Total Gross Assets | $ | 4,475,217 | $3,754,148 | $3,741,103 | $ | 3,681,955 | $ | 3,912,032 | ||||||||||||||||||||||||
Commercial Real Estate (“CRE”) Loan
Portfolio: |
||||||||||||||||||||||||||||||||
| CRE loans— unpaid principal | $ | 1,588,097 | $1,524,159 | $1,518,969 | $ | 1,409,254 | $ | 1,369,138 | ||||||||||||||||||||||||
CRE loans— weighted average coupon |
6.2 | % | 6.1 | % | 6.6 | % | 6.5 | % | 6.6 | % | ||||||||||||||||||||||
| Gross loan production | $ | 237,674 | $218,613 | $ | 218,770 | $ | 255,000 | $ | 256,000 | |||||||||||||||||||||||
Non-accrual loans — unpaid principal |
$ | 40,496 | $ | 24,851 | $ | 24,851 | $ | 25,281 | $ | 40,741 | ||||||||||||||||||||||
Non-accrual loans as a % of reported loans |
2.5 | % | 1.6 | % | 1.6 | % | 1.8 | % | 3.0 | % | ||||||||||||||||||||||
Reserve for losses |
$ | 14,646 | $ | 12,796 | $ | 10,797 | $ | 9,218 | $ | 15,662 | ||||||||||||||||||||||
Reserves as a % of non-accrual loans |
36.2 | % | 51.5 | % | 43.4 | % | 36.5 | % | 38.4 | % | ||||||||||||||||||||||
Provision for losses |
$ | 1,850 | $ | 2,000 | $ | 2,000 | $ | 2,000 | $ | 1,500 | ||||||||||||||||||||||
CRE Property Portfolio: |
||||||||||||||||||||||||||||||||
| Reported investments in real estate | $2,259,750(1) | $1,605,316 | $1,658,659 | $ | 1,671,971 | $ | 1,400,715 | |||||||||||||||||||||||||
| Net operating income | $29,541(1) | $ | 29,116 | $ | 27,990 | $ | 23,148 | $ | 20,932 | |||||||||||||||||||||||
Number of properties owned |
105(1) | 87 | 89 | 89 | 80 | |||||||||||||||||||||||||||
Multifamily units owned – RAIT |
5,763 | 5,911 | 7,043 | 7,043 | 7,043 | |||||||||||||||||||||||||||
| Multifamily units owned – IRT | 14,044(1) | 9,055 | 8,819 | 8,819 | 6,473 | |||||||||||||||||||||||||||
| Office square feet owned | 2,498,803 | 2,498,803 | 2,498,803 | 2,498,803 | 2,286,284 | |||||||||||||||||||||||||||
| Retail square feet owned | 1,378,839 | 1,378,171 | 1,378,171 | 1,356,487 | 1,356,487 | |||||||||||||||||||||||||||
Redevelopment square feet owned |
436,719 | 436,719 | 435,307 | 434,482 | 434,482 | |||||||||||||||||||||||||||
Land (acres owned) |
20.82 | 21.92 | 21.92 | 21.92 | 21.92 | |||||||||||||||||||||||||||
Average occupancy data: |
||||||||||||||||||||||||||||||||
Multifamily – RAIT |
93.8 | % | 94.0 | % | 93.0 | % | 92.4 | % | 93.1 | % | ||||||||||||||||||||||
| Multifamily – IRT | 94.0%(1) | 93.6 | % | 93.5 | % | 91.9 | % | 93.1 | % | |||||||||||||||||||||||
Office |
77.9 | % | 76.8 | % | 75.2 | % | 75.4 | % | 74.3 | % | ||||||||||||||||||||||
Retail (6) |
69.0 | % | 69.6 | % | 70.6 | % | 70.8 | % | 71.5 | % | ||||||||||||||||||||||
Average Effective Rent per Unit/Square
Foot (2): |
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Multifamily — RAIT (3) |
$ | 841 | $ | 826 | $ | 812 | $ | 806 | $ | 805 | ||||||||||||||||||||||
Multifamily — IRT (3) |
$ | 950(1) | $ | 840 | $ | 827 | $ | 792 | $ | 791 | ||||||||||||||||||||||
Office (4) |
$ | 21.31 | $ | 21.16 | $ | 21.01 | $ | 20.48 | $ | 18.96 | ||||||||||||||||||||||
Retail (4) (6) |
$ | 14.71 | $ | 15.98 | $ | 14.03 | $ | 14.34 | $ | 14.72 | ||||||||||||||||||||||
| (1) | Includes 50 apartment properties owned by IRT with 14,044 units and a book value of $1.4 billion and a net operating income of $13.5 million at September 30, 2015. |
| (2) | Based on properties owned as of September 30, 2015. |
| (3) | Average effective rent is rent per unit per month. |
| (4) | Average effective rent is rent per square foot per year. |
| (5) | Includes a $0.26 per share charge taken due to an agreement in principle between the SEC and Taberna Capital Management, LLC (“TCM”), a RAIT subsidiary, to settle an SEC investigation of TCM, as disclosed in RAIT’s public filings. Excluding this one-time item, CAD per share in this period would have been $0.26 per common share. |
| (6) | Excludes Murrels Retail, a retail property in re-development with an occupancy of 53.6% and average effective rent per square foot of $9.67 for the quarter ended September 30, 2015. |
Conference Call
All interested parties can listen to the live conference call webcast at 9:00 AM ET on Thursday, November 5, 2015 from the home page of the RAIT Financial Trust website at www.rait.com or by dialing 877.787.4169, access code 58570092. For those who are not available to listen to the live call, the replay will be available shortly following the live call on RAIT’s website and telephonically until Thursday, November 12, 2015, by dialing 855.859.2056, access code 58570092.
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.rait.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,” “trend”, “will,” “continue,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “seek,” “opportunities” or other similar words or terms. 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, (i) changes in financial markets and interest rates, or to the business or financial condition of RAIT or its business, (ii) whether RAIT will determine that the lending opportunities in its pipeline are advisable to make and will be able to make such loans, (iii) the availability of financing and capital, (iv) whether RAIT will be able to complete sales of RAIT owned properties or be able to reinvest any proceeds in higher yielding asset classes, and (v) those disclosed in RAIT’s 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@rait.com
RAIT Financial Trust
Consolidated Statements of Operations
(Dollars in thousands, except share and per share information)
(unaudited)
| For the Three-Month | For the Nine-Month | |||||||||||||||||||
| Periods Ended | Periods Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| Revenues: | 2015 | 2014(1) | 2015 2014(1) | |||||||||||||||||
Net interest margin: |
||||||||||||||||||||
Investment Interest income |
$ | 24,468 | $ | 33,273 | $ | 71,823 | $ | 102,882 | ||||||||||||
Investment Interest expense |
(8,021 | ) | (7,636 | ) | (22,517 | ) | (22,342 | ) | ||||||||||||
Net interest margin |
16,447 | 25,637 | 49,306 | 80,540 | ||||||||||||||||
Rental income |
55,459 | 41,806 | 164,321 | 116,204 | ||||||||||||||||
Fee and other income |
3,056 | 7,842 | 16,065 | 19,113 | ||||||||||||||||
Total revenue |
74,962 | 75,285 | 229,692 | 215,857 | ||||||||||||||||
Expenses: |
||||||||||||||||||||
Interest expense |
19,574 | 13,910 | 58,930 | 38,756 | ||||||||||||||||
Real estate operating expense |
25,918 | 20,874 | 77,674 | 58,655 | ||||||||||||||||
Compensation expense |
7,137 | 7,187 | 19,813 | 23,118 | ||||||||||||||||
General and administrative expense |
4,489 | 4,756 | 14,954 | 13,239 | ||||||||||||||||
Acquisition expense |
12,901 | 816 | 14,843 | 1,408 | ||||||||||||||||
Provision for losses |
1,850 | 1,500 | 5,850 | 3,500 | ||||||||||||||||
Depreciation and amortization expense |
15,168 | 13,236 | 51,190 | 38,719 | ||||||||||||||||
Total expenses |
87,037 | 62,279 | 243,254 | 177,395 | ||||||||||||||||
Operating (loss) income |
(12,075 | ) | 13,006 | (13,562 | ) | 38,462 | ||||||||||||||
Interest and other income (expense), net |
(380 | ) | (21,464 | ) | (1,016 | ) | (21,449 | ) | ||||||||||||
Gains (losses) on assets |
7,430 | 25 | 24,711 | (5,350 | ) | |||||||||||||||
Gain on IRT merger with TSRE |
64,012 | — | 64,012 | — | ||||||||||||||||
Gains (losses) on extinguishments of debt |
— | — | — | 2,421 | ||||||||||||||||
Asset impairment |
(7,250 | ) | — | (7,250 | ) | — | ||||||||||||||
TSRE financing extinguishment and employee
separation expenses |
(27,508 | ) | — | (27,508 | ) | — | ||||||||||||||
Change in fair value of financial instruments |
620 | (10,223 | ) | 13,466 | (59,433 | ) | ||||||||||||||
Income (loss) before taxes and discontinued operations |
24,849 | (18,656 | ) | 52,853 | (45,349 | ) | ||||||||||||||
Income tax benefit (provision) |
(23 | ) | 2,194 | (1,320 | ) | 2,454 | ||||||||||||||
Net income (loss) |
24,826 | (16,462 | ) | 51,533 | (42,895 | ) | ||||||||||||||
(Income) loss allocated to preferred shares |
(8,303 | ) | (7,407 | ) | (24,383 | ) | (20,628 | ) | ||||||||||||
(Income) loss allocated to noncontrolling interests |
(23,055 | ) | 603 | (21,823 | ) | 20 | ||||||||||||||
Net income (loss) allocable to common shares |
$ | (6,532 | ) | $ | (23,266 | ) | $ | 5,327 | $ | (63,503 | ) | |||||||||
Earnings (loss) per share—Basic: |
||||||||||||||||||||
Total earnings (loss) per share—Basic |
$ | (0.07 | ) | $ | (0.28 | ) | $ | 0.06 | $ | (0.78 | ) | |||||||||
| Weighted-average shares outstanding—Basic | 87,110,958 | 81,967,806 | 83,799,244 | 81,111,796 | ||||||||||||||||
Earnings (loss) per share—Diluted: |
||||||||||||||||||||
Total earnings (loss) per share—Diluted |
$ | (0.07 | ) | $ | (0.28 | ) | $ | 0.06 | $ | (0.78 | ) | |||||||||
| Weighted-average shares outstanding—Diluted | 87,110,958 | 81,967,806 | 85,645,609 | 81,111,796 | ||||||||||||||||
| (1) | Net interest margin for the three and nine month periods ended September 30, 2014 includes $4.8 million and $15.3 million from the Taberna business we exited in December 2014; operating income for the three and nine month periods ended September 30, 2014 includes $6 million and $15.3 million from such Taberna business; net income (loss) available to common shares for the three and nine month periods ended September 30, 2014 includes ($17.3) million and ($67.7) million from such Taberna business; earnings (loss) per share – diluted for the three and nine month periods ended September 30, 2014 includes ($0.21) and ($0.83) per share from such Taberna business. |
RAIT Financial Trust
Consolidated Balance Sheets
(Dollars in thousands, except share and per share information)
(unaudited)
| As of | As of | |||||||
| September 30, | December 31, | |||||||
| 2015 | 2014 | |||||||
Assets |
||||||||
Investments in mortgages and loans, at amortized cost: |
||||||||
Commercial mortgages, mezzanine loans, other loans and preferred |
$ | 1,588,097 | $ | 1,392,436 | ||||
equity interests |
||||||||
Allowance for losses |
(14,646 | ) | (9,218 | ) | ||||
Total investments in mortgages and loans |
1,573,451 | 1,383,218 | ||||||
Investments in real estate, net of accumulated depreciation of $188,581 |
2,259,750 | 1,671,971 | ||||||
and $168,480, respectively |
||||||||
Investments in securities and security-related receivables, at fair value |
— | 31,412 | ||||||
Cash and cash equivalents |
92,652 | 121,726 | ||||||
Restricted cash |
159,200 | 124,220 | ||||||
Accrued interest receivable |
56,249 | 51,640 | ||||||
Other assets |
76,222 | 72,023 | ||||||
Deferred financing costs, net of accumulated amortization of $33,804 |
29,806 | 27,802 | ||||||
and $26,056, respectively |
||||||||
Intangible assets, net of accumulated amortization of $22,316 and $13,911, |
39,306 | 29,463 | ||||||
respectively |
||||||||
Total assets |
$ | 4,286,636 | $ | 3,513,475 | ||||
Liabilities and Equity |
||||||||
Indebtedness: |
||||||||
Recourse indebtedness |
$ | 586,952 | $ | 509,701 | ||||
Non-recourse indebtedness |
2,613,029 | 2,105,965 | ||||||
Total indebtedness |
3,199,981 | 2,615,666 | ||||||
Accrued interest payable |
13,748 | 10,269 | ||||||
Accounts payable and accrued expenses |
42,219 | 54,962 | ||||||
Derivative liabilities |
8,960 | 20,695 | ||||||
Deferred taxes, borrowers’ escrows and other liabilities |
188,797 | 144,733 | ||||||
Total liabilities |
3,453,705 | 2,846,325 | ||||||
Series D Preferred Shares, 4,000,000 shares authorized, 4,000,000 and |
83,787 | 79,308 | ||||||
2,600,000 shares issued and outstanding |
||||||||
Equity: |
||||||||
Preferred shares, $0.01 par value per share, 25,000,000 shares authorized: |
||||||||
7.75% Series A cumulative redeemable preferred shares, liquidation |
53 | 48 | ||||||
preference $25.00 per share, 8,069,288 shares authorized, 5,306,084
shares issued and outstanding |
||||||||
8.375% Series B cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 4,300,000 shares authorized, 2,340,969
shares issued and outstanding |
23 | 23 | ||||||
8.875% Series C cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 3,600,000 shares authorized, 1,640,425
shares issued and outstanding |
17 | 17 | ||||||
Series E cumulative redeemable preferred shares, liquidation preference
$25.00 per share, 4,000,000 shares authorized |
— | — | ||||||
Common shares, $0.03 par value per share, 200,000,000 shares authorized,
90,898,034 and 82,506,606 issued and outstanding, including 742,764 and
541,575 unvested restricted common share awards |
2,727 | 2,473 | ||||||
Additional paid in capital |
2,082,695 | 2,025,683 | ||||||
Accumulated other comprehensive income (loss) |
(8,022 | ) | (20,788 | ) | ||||
Retained earnings (deficit) |
(1,674,412 | ) | (1,633,911 | ) | ||||
Total shareholders’ equity |
403,081 | 373,545 | ||||||
Noncontrolling interests |
346,063 | 214,297 | ||||||
Total equity |
749,144 | 587,842 | ||||||
Total liabilities and equity |
$ | 4,286,636 | $ | 3,513,475 | ||||
Schedule I
RAIT Financial Trust
Reconciliation of Net income (loss) Allocable to Common Shares and
Cash Available for Distribution (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)
| For the Three-Month Period | For the Nine-Month Period | |||||||||||||||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||
| Amount | Amount | Amount | Amount | |||||||||||||||||||||||||
Cash Available for Distribution: |
||||||||||||||||||||||||||||
| Net income (loss) allocable to common shares | $ | (6,532 | ) | $ | (23,266 | ) | $ | 5,327 | $(63,503) | |||||||||||||||||||
Adjustments: |
||||||||||||||||||||||||||||
| Depreciation and amortization expense | 15,168 | 13,236 | 51,190 | 38,719 | ||||||||||||||||||||||||
| Change in fair value of financial instruments | (620 | ) | 10,223 | (13,466) | 59,433 | |||||||||||||||||||||||
| (Gains) losses on assets | (1,030 | ) | (25 | ) | (4,401) | 5,350 | ||||||||||||||||||||||
TSRE financing extinguishment and employee separation
expenses |
27,508 | — | 27,508 | — | ||||||||||||||||||||||||
| (Gains) losses on IRT merger with TSRE | (64,012 | ) | - | (64,012) | - | |||||||||||||||||||||||
| (Gains) losses on debt extinguishment | - | - | - | (2,421) | ||||||||||||||||||||||||
| Taberna VIII and Taberna IX securitizations, net effect | - | (6,975 | ) | - | (21,063) | |||||||||||||||||||||||
Straight-line rental adjustments |
(78 | ) | (238 | ) | (53 | ) | (329 | ) | ||||||||||||||||||||
Share-based compensation |
1,158 | 1,148 | 3,552 | 3,777 | ||||||||||||||||||||||||
Acquisition expenses |
12,901 | — | 14,843 | — | ||||||||||||||||||||||||
| Origination fees and other deferred items | 10,198 | 5,718 | 24,892 | 15,450 | ||||||||||||||||||||||||
Provision for losses |
1,850 | 1,500 | 5,850 | 3,500 | ||||||||||||||||||||||||
Asset impairment |
7,250 | — | 7,250 | — | ||||||||||||||||||||||||
| Noncontrolling interest effect from certain adjustments | 19,939 | (1,716 | ) | 10,805 | (2,351) | |||||||||||||||||||||||
| Cash Available for Distribution | $ | 23,700 | $ | (395 | ) | $69,285 | $36,562 | |||||||||||||||||||||
Cash Available for Distribution per share(2)(3) |
$ | 0.27 | $ | 0.00 | $ | 0.83 | $ | 0.45 | ||||||||||||||||||||
| (1) | Cash available for distribution, or CAD, is a non-GAAP financial measure. We believe that CAD provides investors and management with a meaningful indicator of operating performance. Management also uses CAD, among other measures, to evaluate profitability and our board of trustees considers CAD in determining our quarterly cash dividends. We also believe that CAD is useful because it adjusts for a variety of noncash items (such as depreciation and amortization, equity-based compensation, realized gain (loss) on assets, provision for loan losses and non-cash interest income and expense items). Furthermore, CAD removes the effect of our previous consolidation of the legacy Taberna securitizations which we deconsolidated as part of our exit of the Taberna business in December 2014. |
We calculate CAD by subtracting from or adding to net income (loss) attributable to common shareholders the following items: depreciation and amortization items including, depreciation and amortization, straight-line rental income or expense, amortization of in place leases, amortization of deferred financing costs, amortization of discount on financings and equity-based compensation; changes in the fair value of our financial instruments, including such changes reflected in our such Taberna securitizations; net interest income from such Taberna securitizations; realized noncash gain (loss) on assets and other; provision for loan losses; impairment on depreciable property; acquisition gains or losses and transaction costs; certain fee income eliminated in consolidation that is attributable to third parties and one-time events pursuant to changes in U.S. GAAP and certain other non-recurring items.
CAD should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, our methodology for calculating CAD may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with these companies. In these Schedules, references to “we”, “us”, and “our” refer to RAIT Financial Trust and its subsidiaries.
| (2) | Based on 87,110,958 and 83,799,244 weighted-average shares outstanding for the three-month period and nine-month period ended September 30, 2015. |
| (3) | Based on 81,967,806 and 81,111,796 weighted-average shares outstanding for the three-month period and nine-month period ended September 30, 2014. |
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 September 30, 2015 | ||||||||
| Amount | Per Share(2) | |||||||
Total shareholders’ equity |
$ | 403,081 | $ | 4.43 | ||||
Liquidation value of preferred shares characterized as equity(3) |
(232,187 | ) | (2.55 | ) | ||||
Book value |
170,894 | 1.88 | ||||||
Adjustments: |
||||||||
Add: CRE CDO derivative liabilities |
8,960 | 0.10 | ||||||
Add: Fair value for warrants and investor SARs |
22,590 | 0.25 | ||||||
Add: Accumulated depreciation and amortization |
283,690 | 3.12 | ||||||
Add: Valuation of recurring collateral, property management fees and other items(4) |
98,193 | 1.08 | ||||||
Total adjustments |
$ | 413,433 | $ | 4.55 | ||||
Adjusted book value |
$ | 584,327 | $ | 6.43 | ||||
| (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 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 90,898,034 common shares outstanding as of September 30, 2015. |
| (3) | Based on 5,306,084 Series A preferred shares, 2,340,969 Series B preferred shares, and 1,640,425 Series C preferred shares outstanding as of September 30, 2015, all of which have a liquidation preference of $25.00 per share. |
| (4) | Includes the estimated value of the (1) property management fees to be received by RAIT as of September 30, 2015 from RAIT Residential and Urban Retail, the RAIT I and RAIT II securitizations, value ascribed to fixed-rate CMBS loan sale business and (2) advisory fees to be received by RAIT from IRT as of September 30, 2015. The other item included is the incremental market value of RAIT’s ownership of 7.3 million shares of IRT common stock over RAIT’s book value for these shares at September 30, 2015. We did not tax effect the valuation of these items as we have loss carryforwards that could absorb the potential gain. |
Schedule III
RAIT Financial Trust
Reconciliation of Net income (loss) Allocable to Common Shares and
Funds From Operations (“FFO”) (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)
| For the Nine-Month | ||||||||||||||||||||
| For the Three-Month Period | Period Ended September | |||||||||||||||||||
| Ended September 30, | 30, | |||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| Amount | Amount | Amount | Amount | |||||||||||||||||
Funds From Operations: |
||||||||||||||||||||
Net income (loss) allocable to common shares |
$ | (6,532 | ) | $ | (23,266 | ) | $ | 5,327 | $ | (63,503 | ) | |||||||||
Adjustments: |
||||||||||||||||||||
Real estate depreciation and amortization |
9,535 | 9,116 | 30,979 | 27,250 | ||||||||||||||||
(Gains) losses on the sale of real estate |
(7,430 | ) | (2 | ) | (24,711 | ) | 319 | |||||||||||||
Funds From Operations |
$ | (4,427 | ) | $ | (14,152 | ) | $ | 11,595 | $ | (35,934 | ) | |||||||||
FFO per share(2)(3) |
$ | (0.05 | ) | $ | (0.17 | ) | $ | 0.14 | $ | (0.44 | ) | |||||||||
| (1) | We believe that funds from operations, or FFO, which is a non-GAAP measure, is an additional appropriate measure of the operating performance of a REIT. 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. Our management utilizes FFO as a measure of our operating performance. FFO is not an equivalent to net income or cash generated from operating activities determined in accordance with U.S. GAAP. Furthermore, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. FFO should not 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. |
| (2) | Based on 87,110,958 and 83,799,244 weighted-average shares outstanding for the three-month period and nine-month period ended September 30, 2015. |
| (3) | Based on 81,967,806 and 81,111,796 weighted-average shares outstanding for the three-month period and nine-month period ended September 30, 2014. |