Newcastle Announces Second Quarter 2013 Results
Newcastle Announces Second Quarter 2013 Results
NEW YORK--(BUSINESS WIRE)-- Newcastle (NYSE: NCT; the "Company") today reported the following information for the quarter ended June 30, 2013:
Income available for common stockholders ("GAAP Income") of $52.3 million, or $0.20 per diluted share, an increase of 43% and 33%, respectively, compared to Q1 2013
Core earnings of $43.0 million, an increase from $37.4 million in Q1 2013, and core earnings per diluted share of $0.16, in-line with Q1 2013
The Company's second quarter results include forty-five days of earnings attributable to the operations of New Residential Investment Corp. (NYSE: NRZ; "New Residential"), which was spun off on May 15, 2013. Excluding earnings attributable to New Residential, the Company's GAAP Income was $27.8 million, or $0.11 per diluted share, and core earnings was $23.3 million, or $0.09 per diluted share.
Q1 2013 | Q2 2013 | Q2 2013, Pro forma Excluding NRZ | |||||||||||||
Summary Operating Results: | |||||||||||||||
GAAP Income | $36.6 million | $52.3 million | $27.8 million | ||||||||||||
GAAP Income per Diluted Share | $0.15 | $0.20 | $0.11 | ||||||||||||
Non-GAAP Results: | |||||||||||||||
Core Earnings | $37.4 million | $43.0 million | $23.3 million | ||||||||||||
Core Earnings per Diluted Share | $0.16 | $0.16 | $0.09 |
At quarter end, the Company had approximately $216 million of cash to invest. If this cash were fully invested at a 15% return, the Company expects that it could add approximately $0.03 to future quarterly earnings. The Company's cash on hand as of August 5, 2013 was fully committed.
For a reconciliation of GAAP Income to core earnings and Pro forma GAAP Income to pro forma core earnings, please refer to the table below following the presentation of GAAP results.
Highlights for the quarter ended June 30, 2013:
Spin-Off of New Residential - Completed the spin-off of New Residential on May 15, 2013.
Investment Activity - Invested $119 million in debt related investments, including $43 million to purchase debt backed by CDO VIII notes.
CDO IV Collapse - Generated $68 million of proceeds to the Company by selling all of the collateral in CDO IV at an average price of 95% of par, or $145 million, and paying off $77 million of third-party debt (including $5 million to CDO VIII) at par. Proceeds included $60 million on debt that the Company had repurchased at an average price of 52% of par.
Dividend - Dividend of $0.17 per common share, or $43 million, for the second quarter declared on June 3, 2013.
Capital Raise- Raisedapproximately $200 million of gross proceeds from the sale of 40 million shares of common stock, which priced on June 11, 2013.
Highlights subsequent to June 30, 2013:
Senior Living Acquisitions - Invested $86 million to purchase 17 senior living assets financed with $177 million of non-recourse debt at a weighted average rate of 4.3% and a weighted average maturity of 5.2 years, for a total gross initial investment of $263 million, including related transaction costs and working capital.
Other Investment Activity - Invested or committed to invest up to approximately $115 million in opportunistic investments, with total equity expected to be $80 million after financing.
ADDITIONAL INFORMATION
For additional information that management believes to be useful for investors, please refer to the presentation posted on the Investor Relations section of Newcastle's website, www.newcastleinv.com. For consolidated investment portfolio information, please refer to the Company's Quarterly Report on Form 10-Q, which is also available on the Company's website, www.newcastleinv.com.
Newcastle Investment Corp. | ||||||||||||||||
Investment Portfolio as of June 30, 2013 | ||||||||||||||||
($ in millions) | ||||||||||||||||
% of | Weighted | |||||||||||||||
Outstanding Face | Amortized | Total | Carrying | Number of | Average | |||||||||||
Amount $ | Cost Basis(1) | Basis | Value | Investments | Credit(2) | Life (years)(3) | ||||||||||
Investment | ||||||||||||||||
Real Estate Debt & Other Assets | ||||||||||||||||
Commercial Assets | ||||||||||||||||
CMBS | $ | 353 | 227 | 11.1% | 281 | 51 | BB- | 3.6 | ||||||||
Mezzanine Loans | 431 | 350 | 17.1% | 350 | 15 | 80% | 1.0 | |||||||||
B-Notes | 111 | 94 | 4.6% | 94 | 4 | 77% | 1.1 | |||||||||
Whole Loans | 30 | 30 | 1.5% | 30 | 2 | 48% | 0.7 | |||||||||
CDO Securities (4) | 93 | 66 | 3.2% | 69 | 5 | BB | 2.9 | |||||||||
Other Investments (5) | 68 | 68 | 3.3% | 68 | 3 | -- | -- | |||||||||
Total Commercial Assets | 1,086 | 835 | 40.8% | 892 | 2.1 | |||||||||||
Residential Assets | ||||||||||||||||
MH and Residential Loans | 307 | 271 | 13.3% | 271 | 8,316 | 705 | 5.8 | |||||||||
Non-Agency RMBS | 108 | 42 | 2.1% | 59 | 34 | CCC | 4.8 | |||||||||
Real Estate ABS | 8 | - | 0.0% | - | 1 | C | 4.4 | |||||||||
423 | 313 | 15.3% | 330 | 5.5 | ||||||||||||
FNMA/FHLMC Securities | 312 | 329 | 16.1% | 329 | 39 | AAA | 3.7 | |||||||||
Total Residential Assets | 735 | 642 | 31.4% | 659 | 4.7 | |||||||||||
Corporate Assets | ||||||||||||||||
REIT Debt | 29 | 29 | 1.4% | 31 | 5 | BB+ | 2.1 | |||||||||
Corporate Bank Loans | 783 | 363 | 17.9% | 363 | 7 | CC | 1.5 | |||||||||
Total Corporate Assets | 812 | 392 | 19.3% | 394 | 1.5 | |||||||||||
Total Real Estate Debt & Other Assets | 2,633 | 1,869 | 91.4% | 1,945 | 2.7 | |||||||||||
Senior Living Facilities(6) | 188 | 175 | 8.6% | 175 | 12 | -- | -- | |||||||||
Total Portfolio/Weighted Average | $ | 2,821 | 2,044 | 100.0% | 2,120 | 2.7 | ||||||||||
WA - Weighted average, in all tables
1) Net of impairment.
2) Credit represents the weighted average minimum rating for rated assets, the loan-to-value ratio (based on the appraised value at the time of purchase or refinancing) for non-rated commercial assets, or the FICO score for non-rated residential assets and an implied AAA rating for FNMA/FHLMC securities. Ratings provided above were determined by third party rating agencies, represent the most recent credit ratings available as of the reporting date and may not be current.
3) Weighted average life is based on the timing of expected principal reduction on the asset.
4) Represents non-consolidated CDO securities, excluding eight securities with a zero value, which had an aggregate face amount of $109 million.
5) Represents a $25 million equity investment in a real estate owned property and $43 million related to a linked transaction.
6) Face amount of Senior Living Facilities investments represents the gross carrying amount, including intangibles, which excludes accumulated depreciation and amortization.
Newcastle Investment Corp. | |||||||||||||||||
Unaudited Consolidated Statements of Income | |||||||||||||||||
(dollars in thousands, except share data) | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Interest income | $ | 62,824 | $ | 77,956 | $ | 124,156 | $ | 150,818 | |||||||||
Interest expense | 21,998 | 29,462 | 44,708 | 59,627 | |||||||||||||
Net interest income | 40,826 | 48,494 | 79,448 | 91,191 | |||||||||||||
Impairment (Reversal) | |||||||||||||||||
Valuation allowance (reversal) on loans | (709 | ) | (3,223 | ) | 1,525 | (12,254 | ) | ||||||||||
Other-than-temporary impairment on securities | 3,430 | 10,859 | 4,405 | 16,742 | |||||||||||||
Portion of other-than-temporary impairment on securities recognized in other comprehensive income (loss), net of reversal of other comprehensive loss into net income (loss) | 480 | 863 | 44 | (3,069 | ) | ||||||||||||
Total impairment | 3,201 | 8,499 | 5,974 | 1,419 | |||||||||||||
Net interest income after impairment/reversal | 37,625 | 39,995 | 73,474 | 89,772 | |||||||||||||
Other Revenues | |||||||||||||||||
Rental income | 11,721 | 515 | 23,195 | 1,024 | |||||||||||||
Care and ancillary income | 2,292 | - | 4,318 | - | |||||||||||||
Total other revenues | 14,013 | 515 | 27,513 | 1,024 | |||||||||||||
Other Income (Loss) | |||||||||||||||||
Gain (loss) on settlement of investments, net | 5,066 | (1,177 | ) | 5,063 | 3,646 | ||||||||||||
Gain on extinguishment of debt | - | 39 | 1,206 | 20,782 | |||||||||||||
Other income (loss), net | 3,024 | (3,744 | ) | 7,591 | (774 | ) | |||||||||||
Total other income (loss) | 8,090 | (4,882 | ) | 13,860 | 23,654 | ||||||||||||
Expenses | |||||||||||||||||
Loan and security servicing expense | 1,021 | 1,104 | 2,055 | 2,202 | |||||||||||||
Property operating expenses | 8,409 | 231 | 16,772 | 457 | |||||||||||||
General and administrative expense | 9,938 | 4,841 | 14,151 | 7,003 | |||||||||||||
Management fee to affiliate | 8,148 | 5,631 | 17,713 | 10,607 | |||||||||||||
Depreciation and amortization | 4,070 | 2 | 8,149 | 4 | |||||||||||||
Total expenses | 31,586 | 11,809 | 58,840 | 20,273 | |||||||||||||
Income from continuing operations | 28,142 | 23,819 | 56,007 | 94,177 | |||||||||||||
Income (loss) from discontinued operations | 25,581 | 6,620 | 35,729 | 9,733 | |||||||||||||
Net Income | 53,723 | 30,439 | 91,736 | 103,910 | |||||||||||||
Preferred dividends | |||||||||||||||||
