RAIT Financial Trust Announces First Quarter 2013 Financial Results

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RAIT Financial Trust Announces First Quarter 2013 Financial Results

PHILADELPHIA--(BUSINESS WIRE)-- RAIT Financial Trust ("RAIT") (NYS: RAS) today announced first quarter 2013 financial results.

Highlights

  • Adjusted funds from operations ("AFFO") increased 100% to $18.6 million for the quarter ended March 31, 2013 from $9.3 million for the quarter ended March 31, 2012.
  • AFFO per share increased 48% to $0.31 for the quarter ended March 31, 2013 from $0.21 for the quarter ended March 31, 2012.
  • Operating income increased 326% to $14.4 million for the quarter ended March 31, 2013 from $3.4 million for the quarter ended March 31, 2012.
  • Total revenues grew 27% to $58.3 million for the quarter ended March 31, 2013 from $45.8 million for the quarter ended March 31, 2012.
  • RAIT funded $94.9 million of loans in the quarter ended March 31, 2013 consisting of $69.4 million conduit loans, $20.8 million bridge loans and a $4.7 million mezzanine loan.
  • RAIT sold $41.4 million of conduit loans during the quarter ended March 31, 2013 which generated $3.1 million of fee income.
  • Rental income increased 9% to $27.2 million during the quarter ended March 31, 2013 from $24.8 million during the quarter ended March 31, 2012.
  • Average effective rent per unit per month in RAIT's multifamily portfolio increased 4% to $720 for the quarter ended March 31, 2013 from $691 for the quarter ended March 31, 2012.
  • As of March 31, 2013, RAIT has approximately $483.0 million of capital available for investment into eligible bridge, mezzanine and conduit loans.
  • On April 3, 2013, RAIT raised proceeds of $70.2 million in an underwritten public offering of RAIT's common shares.
  • RAIT declared a first quarter 2013 common dividend of $0.12 per share, representing a 20% increase from the prior quarter's dividend of $0.10 per common share and a 50% increase from the first quarter 2012 dividend of $0.08 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 the quarter, we funded $95 million of loans and sold $41 million conduit loans. Net operating income, in our equity portfolio, increased 16% in the first quarter of 2013 compared to the first quarter of 2012. This success has led to a 50% increase in the common dividend from the first quarter of 2012 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."

First Quarter 2013 Results

RAIT reported AFFO, a non-GAAP financial measure, for the three-month period ended March 31, 2013 of $18.6 million, or $0.31 per share - diluted based on 60.4 million weighted-average shares outstanding - diluted, as compared to AFFO for the three-month period ended March 31, 2012 of $9.3 million, or $0.21 per share - diluted based on 44.2 million weighted-average shares outstanding - diluted. RAIT reported a net loss allocable to common shares for the three-month period ended March 31, 2013 of $90.5 million, or $1.50 total loss per share - diluted based on 60.4 million weighted-average shares outstanding - diluted, as compared to net loss allocable to common shares for the three-month period ended March 31, 2012 of $107.0 million, or $2.42 total loss per share - diluted based on 44.2 million weighted-average shares outstanding - diluted. The first quarter 2013 net loss includes $99.8 million of unrealized losses relating primarily 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 March 31, 2013, RAIT had investments in real estate of $914.9 million as compared to $918.2 million at December 31, 2012.
  • Average Occupancy. The average occupancy of RAIT's portfolio of investments in real estate increased to 85.9% at March 31, 2013 from 85.1% at December 31, 2012.
  • CRE CDO Coverage Tests. As of the most recent reporting date, RAIT CRE CDO I, Ltd's overcollateralization test was passing at 126.8% with a trigger of 116.2% and RAIT Preferred Funding II, Ltd's overcollateralization test was passing at 117.7% with a trigger of 111.7%.
  • Provision for losses. Provision for losses on RAIT's commercial real estate loan portfolio was $500,000 for the quarter ended March 31, 2013 unchanged from the quarter ended March 31, 2012.
  • Dividends. On March 15, 2013, RAIT declared a first quarter common dividend of $0.12 per common share to shareholders of record on April 3, 2013. The dividend was paid on April 30, 2013. 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 were 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

             

March 31,
2013

  

December
31, 2012

  

September
30, 2012

  

June 30,
2012

  

March 31,
2012

Financial Statistics:
 
Assets under management$3,669,564$3,630,959$3,598,503$3,642,189$3,549,029
Total revenue$58,251$54,922$52,193$47,873$45,796
Earnings per share - diluted$(1.50)$(0.99)$(0.37)$(0.14)$(2.42)
Funds from Operations ("FFO") per share$(1.37)$(0.83)$(0.21)$0.01$(2.25)
AFFO per share$0.31$0.33$0.30$0.25$0.21
Common dividend declared$0.12$0.10$0.09$0.08$0.08
 

Commercial Real Estate ("CRE") Loan Portfolio:

CRE loans -- unpaid principal

$1,118,519$1,068,984$1,042,047$1,072,655$990,321
Non-accrual loans -- unpaid principal$68,257$69,080$70,419$73,592$56,113
Non-accrual loans as a % of reported loans6.1%6.5%6.8%6.9%5.7%
Reserve for losses$26,206$30,400$32,738$35,426$35,527
Reserves as a % of non-accrual loans38.4%44.0%46.5%48.1%63.3%
Provision for losses$500$500$500$500$500
 
CRE Property Portfolio:
Reported investments in real estate$914,919$918,189$906,487$911,128$887,130
Net operating income$12,759$12,184$12,158$12,053$11,034
Number of properties owned5959585856
Multifamily units owned8,2068,2068,0148,0148,014
Office square feet owned2,015,5242,015,5242,015,5242,015,5241,786,860
Retail square feet owned1,422,5721,422,5721,422,4811,422,2981,358,257
Land (acres owned)21.9221.9221.9221.9221.92
 
Average occupancy data:
Multifamily92.6%90.0%90.2%91.2%90.4%
Office70.3%72.8%71.9%71.0%70.7%
Retail68.9%  73.2%  73.2%  70.0%  66.9%
Total85.9%85.1%84.6%85.2%85.0%
 
Average Effective Rent per Unit/Square Foot (1):
Multifamily (2)$720$718$699$695$691
Office (3)$18.91$18.82$19.08$19.07$21.53
Retail (3)$11.95$12.53$11.74$12.44$10.59
 
  

(1)

 

Based on properties owned as of March 31, 2013.

(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, May 2, 2013 from the home page of the RAIT Financial Trust website at www.raitft.com or by dialing 866.515.2913, access code 16769610. 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, May 9, 2013, by dialing 888.286.8010, access code 91207640.

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
March 31

Revenues:2013  2012
Net interest margin:  
Investment Interest income$31,280$27,956
Investment Interest expense (7,483)   (8,449)
Net interest margin23,79719,507
Rental income27,16924,831
Fee and other income 7,285   1,458
Total revenue58,25145,796
Expenses:
Interest expense9,66610,899
Real estate operating expense14,41013,797
Compensation expense6,9475,738
General and administrative expense3,7763,825
Provision for loan losses500500
Depreciation and amortization 8,570   7,663
Total expenses43,86942,422
Operating income14,3823,374
Interest and other income (expense)7633
Gains (losses) on sale of assets(3)11
Gains (losses) on extinguishment of debt-1,574
Change in fair value of financial instruments (99,757)   (108,923)
Income (loss) before taxes and discontinued operations(85,302)(103,931)
Income tax benefit (provision) (39)   267
Income (loss) from continuing operations(85,341)(103,664)
Income (loss) from discontinued operations -   -
Net income (loss)(85,341)(103,664)
(Income) loss allocated to preferred shares(5,218)(3,410)
(Income) loss allocated to noncontrolling interests 27   55
Net income (loss) allocable to common shares$(90,532)  $(107,019)
Earnings (loss) per share—Basic:
Continuing operations$(1.50)$(2.42)
Discontinued operations -   -
Total earnings (loss) per share—Basic$(1.50)  $(2.42)
Weighted-average shares outstanding—Basic 60,363,153   44,150,924
Earnings (loss) per share—Diluted:
Continuing operations$(1.50)$(2.42)
Discontinued operations -   -
Total earnings (loss) per share—Diluted$(1.50)  $(2.42)
Weighted-average shares outstanding—Diluted 60,363,153   44,150,924
 
     

RAIT Financial Trust
Consolidated Balance Sheets
(Dollars in thousands, except share and per share information)
(unaudited)

 

As of
March 31,
2013

  

As of
December 31,
2012

Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred equity interests$  1,124,044$1,075,129
Allowance for losses   (26,206)   (30,400)
Total investments in mortgages and loans1,097,8381,044,729
Investments in real estate914,919918,189
Investments in securities and security-related receivables, at fair value670,245655,509
Cash and cash equivalents63,854100,041
Restricted cash88,397
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