RAIT Financial Trust Announces Fourth Quarter and Fiscal 2012 Financial Results

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RAIT Financial Trust Announces Fourth Quarter and Fiscal 2012 Financial Results

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

Highlights

  • Adjusted funds from operations ("AFFO") increased 39% to $16.9 million for the quarter ended December 31, 2012 from $12.1 million for the quarter ended December 31, 2011.
  • AFFO per share increased 11% to $0.33 for the quarter ended December 31, 2012 from $0.30 for the quarter ended December 31, 2011.
  • Operating income increased 164% to $11.3 million for the quarter ended December 31, 2012 from $4.3 million for the quarter ended December 31, 2011.
  • Total revenues grew 16% to $54.9 million for the quarter ended December 31, 2012 from $47.5 million for the quarter ended December 31, 2011.
  • RAIT originated $375.5 million of loans in 2012 consisting of $119.3 million CMBS loans, $240.8 million bridge loans and $15.4 million mezzanine loans.
  • RAIT sold $97.9 million of CMBS loans during the year ended December 31, 2012 which generated $6.2 million of fee income. RAIT sold $56.8 million of CMBS loans during the quarter ended December 31, 2012 which generated $3.8 million of fee income.
  • Rental income increased 9% to $27.1 million during the quarter ended December 31, 2012 from $24.8 million during the quarter ended December 31, 2011.
  • Average effective rent per unit in RAIT's multifamily portfolio increased 5% to $718 for the quarter ended December 31, 2012 from $681 for the quarter ended December 31, 2011.
  • As of December 31, 2012, RAIT has approximately $500.0 million of capital available for investment into eligible bridge, mezzanine and CMBS loans.
  • On December 21, 2012, RAIT raised net proceeds of approximately $49.1 million in an underwritten public offering of RAIT's common shares. RAIT raised additional net proceeds of $7.4 million on January 16, 2013 when the overallotment option for this offering was exercised in full.
  • On December 14, 2012, RAIT entered into a new $150 million facility with Column Financial, Inc., a subsidiary of Credit Suisse AG, to finance RAIT's bridge lending business.
  • RAIT declared a fourth quarter 2012 common dividend of $0.10 per share, representing a 11% increase from the prior quarter's dividend of $0.09 per common share and a 67% increase from the fourth quarter 2011 dividend of $0.06 per common share.

Scott Schaeffer, RAIT's Chairman and CEO, said, "We continue executing on our multi-strategy approach of growing our core commercial real estate lending businesses and managing our property portfolio. During 2012, we funded more than $376 million of loans and sold $98 million CMBS loans. Net operating income, in our equity portfolio, increased 16% in the fourth quarter of 2012 compared to the fourth quarter of 2011. This success has led to a 67% increase in the common dividend from the fourth quarter of 2011 and has improved our access to capital. We remain focused on lending against cash-flowing commercial real estate properties with the goal of delivering a consistent and steadily growing common dividend to our shareholders."

Fourth Quarter and Fiscal 2012 Results

RAIT reported AFFO, a non-GAAP financial measure, for the three-month period ended December 31, 2012 of $16.9 million, or $0.33 per share - diluted based on 51.0 million weighted-average shares outstanding - diluted, as compared to AFFO for the three-month period ended December 31, 2011 of $12.1 million, or $0.30 per share - diluted based on 40.5 million weighted-average shares outstanding - diluted. RAIT reported a net loss allocable to common shares for the three-month period ended December 31, 2012 of $50.4 million, or $0.99 total loss per share - diluted based on 51.0 million weighted-average shares outstanding - diluted, as compared to net loss allocable to common shares for the three-month period ended December 31, 2011 of $15.6 million, or $0.39 total loss per share - diluted based on 40.5 million weighted-average shares outstanding - diluted. The fourth quarter 2012 net loss includes $57.5 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 year ended December 31, 2012 of $53.5 million, or $1.10 per share - diluted based on 48.7 million weighted-average shares outstanding - diluted, as compared to AFFO for the year ended December 31, 2011 of $36.8 million, or $0.96 per share - diluted based on 38.5 million weighted-average shares outstanding - diluted. RAIT reported a net loss allocable to common shares for the year ended December 31, 2012 of $182.8 million, or $3.75 total loss per share - diluted based on 48.7 million weighted-average shares outstanding - diluted, as compared to net loss allocable to common shares for the year ended December 31, 2011 of $51.1 million, or $1.33 total loss per share - diluted based on 38.5 million weighted-average shares outstanding - diluted. The net loss for the year ended December 31, 2012 includes $201.8 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 December 31, 2012, RAIT had investments in real estate of $918.2 million as compared to $891.5 million at December 31, 2011. During the three-months ended December 31, 2012, a RAIT subsidiary, Independence Realty Trust, Inc., acquired a 192-unit multi-family property in Indianapolis, Indiana.
  • Average Occupancy. The average occupancy of RAIT's portfolio of investments in real estate increased to 85.1% at December 31, 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 126.6% 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%.
  • Provision for losses. Provision for losses on RAIT's commercial real estate loan portfolio was $0.5 million for the quarter ended December 31, 2012 unchanged from the quarter ended December 31, 2011.
  • Dividends. On December 12, 2012, RAIT declared a fourth quarter common dividend of $0.10 per common share to shareholders of record on January 16, 2012. The dividend was paid on January 31, 2013 and totaled $6.0 million. On January 29, 2013, RAIT's Board of Trustees declared a first quarter 2013 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 April 1, 2013 to holders of record on March 1, 2013.

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

       

As of or For the Three-Month Periods Ended

         

December
31, 2012

 

September
30, 2012

 

June 30,
2012

 

March 31,
2012

 

December
31, 2011

Financial Statistics:
 
Assets under management$3,630,959$3,598,503$3,642,189$3,549,029$3,517,684
Total revenue$54,922$52,193$47,873$45,796$47,479
Earnings per share - diluted$(0.99)$(0.37)$(0.14)$(2.42)$(0.39)
Funds from Operations ("FFO") per share

$

(0.83)$(0.21)$0.01$(2.25)$(0.20)
AFFO per share$0.33$0.30$0.25$0.21$0.30
Common dividend declared$0.10$0.09$0.08$0.08$0.06
 

Commercial Real Estate ("CRE") Loan Portfolio:

CRE loans-- unpaid principal$1,068,984$1,042,047$1,072,655$990,321$952,997
Non-accrual loans -- unpaid principal$69,080$70,419$73,592$56,113$54,334
Non-accrual loans as a % of reported loans6.5%6.8%6.9%5.7%5.7%
Reserve for losses$30,400$32,738$35,426$35,527$40,565
Reserves as a % of non-accrual loans44.0%46.5%48.1%63.3%74.7%
Provision for losses$500$500$500$500$500
 
CRE Property Portfolio:
Reported investments in real estate$918,189$906,487$911,128$887,130$891,502
Net operating income$12,184$12,158$12,053$11,034$10,503
Number of properties owned5958585656
Multifamily units owned8,2068,0148,0148,0148,014
Office square feet owned2,015,5242,015,5242,015,5241,786,8601,786,860
Retail square feet owned1,422,5721,422,4811,422,2981,358,2571,358,257
Land (acres owned)21.9221.9221.9221.9221.92
 
Average occupancy data:
Multifamily90.0%90.2%91.2%90.4%88.5%
Office72.8%71.9%71.0%70.7%69.2%
Retail 73.2%  73.2%  70.0%  66.9%  68.0%
Total85.1%84.6%85.2%85.0%83.6%
 
Average Effective Rent per Unit/Square Foot (1):
Multifamily (2)$718$699$695$691$681
Office (3)$18.82$19.08$19.07$21.53$20.85
Retail (3)$12.53$11.74$12.44$10.59$9.73
 
    (1) Based on properties owned as of December 31, 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 EST on Wednesday, February 13, 2013 from the home page of the RAIT Financial Trust website at www.raitft.com or by dialing 800.299.9086, access code 29186116. 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 Wednesday, February 20, 2013, by dialing 888.286.8010, access code 87397344.

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.

    
RAIT Financial Trust
Consolidated Statements of Operations
(Dollars in thousands, except share and per share information)
(unaudited)
 
For the Three-Month
Periods Ended

December 31

For the Year Ended
December 31

 2012   2011  2012   2011 
Revenue:  
Investment Interest income$29,995$30,761$117,054$132,351
Investment Interest expense (7,852)  (9,444) (32,909)  (38,356)
Net interest margin22,14321,31784,14593,995
Rental income27,08924,817103,87291,880
Fee and other income 5,690   1,345  12,767   9,923 
Total revenue54,92247,479200,784195,798
Expenses:
Interest expense10,51211,82142,40851,293
Real estate operating expense14,90514,31456,44355,285
Compensation expense6,1674,81423,18223,993
General and administrative expense3,4683,93914,86617,380
Provision for loan losses5005002,0003,900
Depreciation and amortization 8,104   7,822  31,337   29,490 
Total expenses43,65643,210170,236181,341
Operating income11,2664,26930,54814,457
Interest and other income (expense)(403)53(1,789) Read Full Story

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