RAIT Financial Trust Announces Third Quarter 2012 Financial Results

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RAIT Financial Trust Announces Third Quarter 2012 Financial Results

PHILADELPHIA--(BUSINESS WIRE)-- RAIT Financial Trust ("RAIT") (NYS: RAS) today announced third quarter 2012 financial results.

Highlights

  • Adjusted funds from operations ("AFFO") increased 67% to $14.9 million for the quarter ended September 30, 2012 from $8.9 million for the quarter ended September 30, 2011.
  • AFFO per share increased 30% to $0.30 for the quarter ended September 30, 2012 from $0.23 for the quarter ended September 30, 2011.
  • Operating income increased 129% to $9.4 million for the quarter ended September 30, 2012 from $4.1 million for the quarter ended September 30, 2011.
  • Total revenues grew 7% to $60.3 million for the quarter ended September 30, 2012 from $56.3 million for the quarter ended June 30, 2012.
  • RAIT sold $36.5 million of CMBS loans and generated $2.1 million of fee income for the quarter ended September 30, 2012.
  • As of September 30, 2012, RAIT has approximately $290.7 million of capital available for investment into eligible bridge, mezzanine and CMBS loans.
  • Rental income increased to $26.4 million during the quarter ended September 30, 2012 from $23.6 million during the quarter ended September 30, 2011.
  • RAIT declared a third quarter 2012 common dividend of $0.09 per share, representing a 12.5% increase from the prior quarter's dividend of $0.08 per common share and a 50% increase from the fourth quarter 2011 dividend of $0.06 per common share.
  • Adjusted book value increased to $6.65 at September 30, 2012 from $6.56 at June 30, 2012.
  • On October 1, 2012, ARS VI Investor I, LLC (the "Investor"), an affiliate of Almanac Realty Investors, LLC, committed to invest $100 million in securities issued by RAIT. The Investor made its first $20 million investment in RAIT pursuant to this commitment on October 17, 2012. RAIT expects to use proceeds received pursuant to this commitment to fund RAIT's expanding loan origination and investment activities, including CMBS and bridge lending.

Scott Schaeffer, RAIT's Chairman and CEO, said, "We continue growing our core commercial real estate lending businesses. We funded more than $285 million of loans during the first nine months of the year, including $50 million small balance CMBS loans. Year to date, we've securitized $41.9 million of CMBS loans. This success has led to a 50% increase in the common dividend from the fourth quarter of 2011 and has improved our access to capital. We remain focused on lending, accretively, against cash-flowing commercial real estate properties with the goal of delivering a consistent and steadily growing common dividend to our shareholders."

Third Quarter 2012 Results

RAIT reported AFFO, a non-GAAP financial measure, for the three-month period ended September 30, 2012 of $14.9 million, or $0.30 per share - diluted based on 49.9 million weighted-average shares outstanding - diluted, as compared to AFFO for the three-month period ended September 30, 2011 of $8.9 million, or $0.23 per share - diluted based on 38.8 million weighted-average shares outstanding - diluted. RAIT reported a net loss allocable to common shares for the three-month period ended September 30, 2012 of $18.4 million, or $0.37 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 September 30, 2011 of $21.2 million, or $0.55 total loss per share - diluted based on 38.8 million weighted-average shares outstanding - diluted. The third quarter 2012 net loss includes $24.2 million of unrealized losses relating to non-cash mark-to-market adjustments in RAIT's legacy Taberna portfolios and the associated hedges. Non-cash mark-to-market gains and losses are excluded from AFFO.

RAIT reported AFFO for the nine-month period ended September 30, 2012 of $36.6 million, or $0.76 per share - diluted based on 48.0 million weighted-average shares outstanding - diluted, as compared to AFFO for the nine-month period ended September 30, 2011 of $24.8 million, or $0.65 per share - diluted based on 37.8 million weighted-average shares outstanding - diluted. RAIT reported a net loss allocable to common shares for the nine-month period ended September 30, 2012 of $132.4 million, or $2.76 total loss per share - diluted based on 48.0 million weighted-average shares outstanding - diluted, as compared to net loss allocable to common shares for the nine-month period ended September 30, 2011 of $35.5 million, or $0.94 total loss per share - diluted based on 37.8 million weighted-average shares outstanding - diluted. The net loss for the nine-month period ended September 30, 2012 includes $144.3 million of unrealized losses relating to non-cash mark-to-market adjustments in RAIT's legacy Taberna portfolios and the associated hedges. Non-cash mark-to-market gains and losses are excluded from AFFO.

A reconciliation of RAIT's reported net income (loss) allocable to common shares to its AFFO 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. Schedule I and Schedule II also include management's respective rationales for the usefulness of each of these non-GAAP financial measures.

RAIT also reported the following:

  • Investments in Real Estate. As of September 30, 2012, RAIT had investments in real estate of $906.5 million as compared to $891.5 million at December 31, 2011. During the three-months ended September 30, 2012, RAIT did not convert any loans to owned real estate.
  • Average Occupancy. The average occupancy of RAIT's portfolio of investments in real estate increased to 84.6% at September 30, 2012 from 83.6% at December 31, 2011.
  • CRE CDO Coverage Tests. As of the most recent reporting date, RAIT CRE CDO I, Ltd's overcollateralization test was passing at 126.5% with a trigger of 116.2% and RAIT Preferred Funding II, Ltd's overcollateralization test was passing at 118.0% with a trigger of 111.7%.
  • Non-Accrual CRE Loans. The unpaid principal balance of RAIT's non-accrual commercial real estate loan portfolio decreased to $70.4 million at September 30, 2012 as compared to $89.0 million at September 30, 2011.
  • Provision for losses. Provision for losses on RAIT's commercial real estate loan portfolio was $0.5 million for the quarter ended September 30, 2012 as compared to $0.5 million for the quarter ended September 30, 2011.
  • Dividends. On September 18, 2012, RAIT declared a third quarter common dividend of $0.09 per common share to shareholders of record on October 11, 2012 and payable on October 31, 2012. On October 23, 2012, RAIT's Board of Trustees declared a fourth quarter 2012 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 preferred dividends will be paid on December 31, 2012 to holders of record on December 3, 2012.

Key Statistics
(Unaudited and dollars in thousands, except per share information)

   

As of or For the Three-Month Periods Ended

 

September

30, 2012

   

June 30,

2012

   

March 31,

2012

   

December

31, 2011

   

September

30, 2011

Financial Statistics:            
 
Assets under management$3,598,503$3,642,189$3,549,029$3,517,684$3,633,133
Total revenue$60,327$56,347$54,245$56,923$60,089
Earnings per share - diluted$(0.37)$(0.14)$(2.42)$(0.39)$(0.55)
Funds from Operations ("FFO") per share$(0.21)$0.01$(2.25)$(0.20)$(0.36)
AFFO per share$0.30$0.25$0.21$0.30$0.23
Common dividend declared$0.09$0.08$0.08$0.06$0.06

Commercial Real Estate ("CRE") Loan

Portfolio:

CRE loans-- unpaid principal$1,042,047$1,072,655$990,321$952,997$1,064,946
Non-accrual loans -- unpaid principal$70,419$73,592$56,113$54,334$89,023
Non-accrual loans as a % of reported loans6.8%6.9%5.7%5.7%8.4%
Reserve for losses$32,738$35,426$35,527$40,565$50,609
Reserves as a % of non-accrual loans46.5%48.1%63.3%74.7%56.8%
Provision for losses$500$500$500$500$500
 
CRE Property Portfolio:
Reported investments in real estate$906,487$911,128$887,130$891,502$849,232
Net operating income$12,158$12,053$11,034$10,503$9,072
Number of properties owned5858565648
Multifamily units owned8,0148,0148,0148,0148,014
Office square feet owned2,015,5242,015,5241,786,8601,786,8601,786,860
Retail square feet owned1,422,4811,422,2981,358,2571,358,2571,114,250
Land (acres owned)19.9019.9019.9019.907.25
 
Average occupancy data:
Multifamily90.2%91.2%90.4%88.5%89.8%
Office71.9%71.0%70.7%69.2%68.5%
Retail73.2%   70.0%   66.9%   68.0%   68.9%
Total84.6%85.2%85.0%83.6%84.5%
 
Average Effective Rent per Unit/Square Foot (1):
Multifamily (2)$699$695$691$681$671
Office (3)$19.08$19.07$21.53$20.85$20.50
Retail (3)$11.74$12.44$10.59$9.73$9.55
 

(1) Based on properties owned as of September 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, October 25, 2012 from the home page of the RAIT Financial Trust website at www.raitft.com or by dialing 866.831.6272, access code 71546798. 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 1, 2012, by dialing 888.286.8010, access code 33732273.

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," "goal" 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 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.

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RAIT Financial Trust

Consolidated Statements of Operations

(Dollars in thousands, except share and per share information)


(unaudited)

       

For the Three-Month
Periods Ended

September 30

For the Nine-Month
Periods Ended

September 30

 2012    2011  2012    2011
Revenue:      
Interest income$30,358$33,549$87,059$101,590
Rental income26,41223,63576,78367,063
Fee and other income   3,557    2,905  7,077    8,578
Total revenue60,32760,089170,919177,231
Expenses:
Interest expense18,36722,68956,95368,384
Real estate operating expense14,25414,56341,53840,971
Compensation expense6,0316,89817,01519,179
General and administrative expense3,7904,04211,39813,441
Provision for loan losses5005001,5003,400
Depreciation and amortization   7,939    7,300  23,233    21,668
Total expenses50,88155,992151,637167,043
Operating income9,4464,09719,28210,188
Interest and other income (expense)52145(1,386)295
Gains (losses) on sale of assets-1,4552,5293,434
Gains (losses) on extinguishment of debt-11,3711,57414,540
Change in fair value of financial instruments   (24,177)    (34,997)  (144,269)    (55,113)
Income (loss) before taxes and discontinued operations(14,679)(17,929)(122,270)(26,656)
Income tax benefit (provision)   (292)    158  65    468
Income (loss) from continuing operations(14,971)(17,771)(122,205)(26,188)
Income (loss) from discontinued operations   -    (50)  -    747
Net income (loss)(14,971)