RAIT Financial Trust (“RAIT”) (NYSE: RAS) today announced second
quarter 2015 financial results.
Highlights:
Financial Performance
Quarter over Quarter Highlights
- Cash Available for Distribution (“CAD”)
per share grew 95% to $0.37 for the quarter ended June 30, 2015
compared to $0.19 for the quarter ended March 31, 2015.
- Net interest margin increased 1.2% to
$16.5 million for the quarter ended June 30, 2015 compared to $16.3
million for the quarter ended March 31, 2015.
- Fee and other income increased 32.1% to
$7.4 million for the quarter ended June 30, 2015 from $5.6 million
for the quarter ended March 31, 2015.
Year over Year Highlights
- CAD per share grew 54.2% to $0.37 for
the quarter ended June 30, 2015 compared to $0.24 for the quarter
ended June 30, 2014.
- Total revenues grew 8.3% to $79.4
million for the quarter ended June 30, 2015 from $73.3 million for
the quarter ended June 30, 2014.
Commercial Real Estate (“CRE”) Lending Business
- RAIT originated $218.6 million of loans
during the quarter ended June 30, 2015 consisting of $118.3 million
of fixed-rate conduit loans, $95.3 million of floating-rate bridge
loans and a $5 million mezzanine loan. RAIT originated $437.4
million of loans during the six-month period ended June 30, 2015
consisting of $247.0 million of fixed-rate conduit loans, $185.4
million of floating-rate bridge loans and a $5 million mezzanine
loan.
- RAIT sold $130.4 million of conduit
loans during the quarter ended June 30, 2015 which generated fee
income of $3.7 million. RAIT sold $223.3 million of conduit loans
during the six-month period ended June 30, 2015 which generated fee
income of $5.7 million.
- On May 22, 2015, RAIT closed RAIT
2015-FL4 Trust, a $223 million non-recourse, floating-rate CMBS
securitization collateralized by floating-rate bridge loans. RAIT
issued $181.2 million of investment grade notes with a weighted
average cost of LIBOR plus 1.84%. RAIT retained the below
investment grade and un-rated subordinate interests totaling
approximately $41.8 million.
- Investments in mortgages and loans
increased 8.0% to $1.49 billion at June 30, 2015 from $1.38 billion
at December 31, 2014.
- CRE loan repayments were $113.4 million
for the quarter ended June 30, 2015 as compared to $17.1 million
for the quarter ended March 31, 2015.
CRE Property Portfolio
- On June 23, 2015, RAIT sold a 420 unit
apartment property located in Houston, Texas and recognized a net
cash gain of approximately $13.1 million after costs and full
repayment of the underlying debt.
- As of June 30, 2015, RAIT’s investments
in real estate were $1.6 billion which includes $685.4 million 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 June 30, 2015, RAIT owned 23% of IRT’s
outstanding common stock.
- On May 11, 2015, IRT entered into a
definitive merger agreement (the “Merger Agreement”) to acquire the
common stock of Trade Street Residential, Inc. (“TSRE”) (NASDAQ:
TSRE). IRT has disclosed that, upon completion of the merger (the
“Merger”) contemplated by the Merger Agreement, it expects to have
over $1.4 billion of total capitalization with 50 properties with
14,044 units with enhanced scale, improved portfolio quality,
accelerated market penetration and immediate financial benefit for
IRT. RAIT expects the Merger to benefit RAIT through RAIT’s
ownership of IRT common stock and increased fees paid to RAIT by
IRT.
- Rental income increased 41.6% to $55.5
million during the quarter ended June 30, 2015 from $39.2 million
for the quarter ended June 30, 2014 driven largely by the
acquisition of 28 properties during 2014 and improved rental and
occupancy rates.
- Average effective rent per unit per
month in RAIT’s multifamily portfolio increased 7.9% to $834 for
the quarter ended June 30, 2015 from $773 for the quarter ended
June 30, 2014.
Asset & Property Management
- Total assets under management increased
6.7% to $4.8 billion at June 30, 2015 from $4.5 billion at December
31, 2014.
- RAIT’s property management companies
managed 15,721 apartment units and 26.8 million square feet of
office and retail space at June 30, 2015.
Dividends
- On June 22, 2015, RAIT’s Board of
Trustees (the “Board”) declared a second quarter 2015 cash dividend
on RAIT’s common shares of $0.18 per common share. The dividend
will be paid on July 31, 2015 to holders of record on July 10,
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 will be paid
on September 30, 2015 to holders of record on September 1,
2015.
Scott Schaeffer, RAIT’s Chairman and CEO, said, “During the
second quarter we originated $218.6 million of loans, closed our
fourth RAIT sponsored floating-rate securitization and delivered
$0.37 of CAD which more than covered the $0.18 quarterly dividend
to common shareholders. We see a strong third quarter loan pipeline
which is in various stages of due diligence. RAIT’s property
portfolio continues to deliver stable operating income led by our
multi-family portfolio and we generated a $13.1 million cash gain
from a property sale during the quarter.”
Financial Results
RAIT reported CAD, a non-GAAP financial measure, for the
three-month period ended June 30, 2015 of $30.3 million, or $0.37
per share based on 82.2 million weighted-average shares
outstanding, as compared to CAD for the three-month period ended
June 30, 2014 of $19.7 million, or $0.24 per share based on 81.8
million weighted-average shares outstanding. RAIT reported a net
income allocable to common shares for the three-month period ended
June 30, 2015 of $19.0 million, or $0.21 total earnings per share -
diluted based on 89.3 million weighted-average shares outstanding –
diluted, as compared to net loss allocable to common shares for the
three-month period ended June 30, 2014 of $25.7 million, or $0.31
total loss per share – diluted based on 81.8 million
weighted-average shares outstanding – diluted.
RAIT reported CAD for the six-month period ended June 30, 2015
of $45.6 million, or $0.56 per share based on 82.1 million
weighted-average shares outstanding, as compared to CAD for the
six-month period ended June 30, 2014 of $37.0 million, or $0.46 per
share – diluted based on 80.6 million weighted-average shares
outstanding – diluted. RAIT reported a net income allocable to
common shares for the six-month period ended June 30, 2015 of $11.9
million, or $0.14 total earnings per share based on 84.1 million
weighted-average shares outstanding – diluted, as compared to net
loss allocable to common shares for the six-month period ended June
30, 2014 of $40.2 million, or $0.50 total loss per share based on
80.6 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
June 30, March 31, December 31,
September 30, June 30, 2015
2015 2014 2014
2014 Financial Statistics: Total revenue $79,413
$75,897 $73,857 $75,293 $73,256 Net interest margin $16,525 $16,334
$22,569 $25,637 $27,123 Fee and other income $7,415 $5,594 $5,167
$7,842 $6,919 Earnings (loss) per share – diluted $0.21 $(0.09)
$(3.11) $(0.28) $(0.31) Funds from Operations (“FFO”) per share
$0.15 $0.05 $(2.97) $(0.17) $(0.20) CAD per share $0.37 $0.19 $0.26
$0.00(5) $0.24 Common dividend declared per share $0.18 $0.18 $0.18
$0.18 $0.18 Assets under management $4,764,259 $4,607,413
$4,485,525 $5,417,579 $5,266,296
Commercial Real Estate (“CRE”) Loan
Portfolio:
CRE loans-- unpaid principal $1,524,159 $1,518,969 $1,409,254
$1,369,138 $1,325,748 CRE loans-- weighted average coupon 6.1% 6.6%
6.5% 6.6% 6.8% Non-accrual loans -- unpaid principal $24,851
$24,851 $25,281 $40,741 $30,269 Non-accrual loans as a % of
reported loans 1.6% 1.6% 1.8% 3.0% 2.3% Reserve for losses $12,796
$10,797 $9,218 $15,662 $15,336 Reserves as a % of non-accrual loans
51.5% 43.4% 36.5% 38.4% 50.7% Provision for losses $2,000 $2,000
$2,000 $1,500 $1,000
CRE Property Portfolio:
Reported investments in real estate $1,605,316(1) $1,658,659
$1,671,971 $1,400,715 $1,268,769 Net operating income $29,116(1)
$27,990 $23,148 $20,932 $19,524 Number of properties owned 87(1) 89
89 80 74 Multifamily units owned – RAIT 5,911 7,043 7,043 7,043
7,043 Multifamily units owned – IRT 9,055(1) 8,819 8,819 6,473
5,345 Office square feet owned 2,498,803 2,498,803 2,498,803
2,286,284 2,248,321 Retail square feet owned 1,378,171 1,378,171
1,356,487 1,356,487 986,427 Redevelopment square feet owned 436,719
435,307 434,482 434,482 434,482 Land (acres owned) 21.92 21.92
21.92 21.92 21.92 Average occupancy data: Multifamily – RAIT
93.3% 93.5% 92.0% 92.8% 92.7% Multifamily – IRT 92.5%(1) 94.0%
92.7% 92.6% 93.1% Office 77.7% 75.0% 75.6% 75.0% 74.3% Retail(6)
69.1% 70.4% 70.5% 71.1% 62.1% Average Effective Rent per
Unit/Square Foot (2): Multifamily - RAIT (3) $834 $817 $785 $783
$773 Multifamily - IRT (3) $840(1) $824 $789 $789 $765 Office (4)
$21.44 $21.01 $21.53 $19.64 $20.10 Retail (4) (6) $15.30 $14.53
$15.11 $14.11 $13.82 (1) Includes 31 apartment
properties owned by IRT with 9,055 units and a book value of $685.4
million and a net operating income of $12.2 million at June 30,
2015. (2) Based on properties owned as of June 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 52.5% and average effective rent per square foot of
$9.93 for the quarter ended June 30, 2015.
Conference Call
All interested parties can listen to the live conference call
webcast at 9:00 AM ET on Thursday, July 30, 2015 from the home page
of the RAIT Financial Trust website at www.rait.com or by dialing
877.299.4454, access code 76901070. 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, August 6, 2015, by dialing 888.286.8010, access code
93207351.
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," “look forward” 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 loans in its pipeline are advisable to make and
will be able to make such loans, (iii) the availability of
financing and capital, (iv) the occurrence of any event,
change or other circumstances that could give rise to the
termination of the Merger Agreement, (v) the inability to
complete the Merger within the currently contemplated time period
or at all, and (vi) 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 For the
Six-Month Periods Ended Periods Ended June
30, June 30, Revenues:
2015
2014(1) 2015 2014(1) Net
interest margin: Investment Interest income $ 24,107
$ 34,646 $ 47,355 $ 69,609 Investment Interest expense
(7,582) (7,523) (14.496)
(14,706) Net interest margin 16,525 27,123 32,859 54,903 Rental
income 55,473 39,214 109,442 74,390 Fee and other income
7,415 6,919 13,009 11,271 Total
revenue 79,413 73,256 155,310 140,564 Expenses: Interest expense
19,673 13,241 39,356 24.846 Real estate operating expense 26,357
19,690 52,336 37,773 Compensation expense 6,568 7,376 12,676 15,931
General and administrative expense 5,065 4,655 10,465 8,483
Acquisition expense 985 219 1,942 592 Provision for losses 2,000
1,000 4,000 2,000 Depreciation and amortization expense
17,005 13,441 36,022 25,483
Total expenses 77,653 59,622 156,797
115,108 Operating income 1,760 13,634 (1,487) 25,456
Other income (expense) (241) 5 (636) 15 Gains (losses) on assets
17,281 (7,599) 17,281 (5,375) Gains (losses) on extinguishment of
debt - - - 2,421 Change in fair value of financial instruments
8,356 (25,071) 12,846
(49,210) Income (loss) before taxes and discontinued operations
27,156 (19,031) 28,004 (26,693) Income tax benefit (provision)
(715) 21 (1,297) 260 Net
income (loss) 26,441 (19,010) 26,707 (26,433) (Income) loss
allocated to preferred shares (8,221) (7,415) (16,080) (13,221)
(Income) loss allocated to noncontrolling interests 736
775 1,232 (583) Net income
(loss) allocable to common shares $ 18,956 $ (25,650) $
11,859 $ (40,237) Earnings (loss) per share—Basic: Total
earnings (loss) per share—Basic $ 0.23 $ (0.31) $ 0.14
$ (0.50) Weighted-average shares outstanding—Basic
82,150,475 81,778,947 82,115,941
80,636,895 Earnings (loss) per share—Diluted: Total earnings (loss)
per share—Diluted $ 0.21 $ (0.31) $ 0.14 $ (0.50)
Weighted-average shares outstanding—Diluted 89,268,462
81,778,947 84,134,040 80,636,895
(1) Net interest margin for the three and six month
periods ended June 30, 2014 includes $5.5 million and $10.5 million
from the Taberna business we exited in December 2014; operating
income for the three and six month periods ended June 30, 2014
includes $1.6. million and $9.3 million from such Taberna business;
net income (loss) available to common shares for the three and six
month periods ended June 30, 2014 includes ($30.0) million and
($50.4) million from such Taberna business; earnings (loss) per
share – diluted for the three and six month periods ended June 30,
2014 includes ($0.36) and ($0.62) 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 June
30, December 31, 2015 2014
Assets Investments in mortgages and loans, at amortized
cost: Commercial mortgages, mezzanine loans, other loans and
preferred equity interests $ 1,506,542 $ 1,392,436 Allowance for
losses (12,796) (9,218) Total investments in
mortgages and loans 1,493,746 1,383,218 Investments in real estate,
net of accumulated depreciation of $178,572 and $168,480,
respectively 1,605,316 1,671,971 Investments in securities and
security-related receivables, at fair value - 31,412 Cash and cash
equivalents 104,772 121,726 Restricted cash 179,878 124,220 Accrued
interest receivable 56,844 51,640 Other assets 77,708 72,023
Deferred financing costs, net of
accumulated amortization of $30,896 and $26,056, respectively
25,117 27,802
Intangible assets, net of accumulated
amortization of $20,935 and $13,911, respectively
32,195 29,463
Total assets $ 3,575,576
$ 3,513,475
Liabilities and Equity
Indebtedness: Recourse indebtedness $ 497,430 $ 509,701
Non-recourse indebtedness 2,164,098 2,105,965
Total indebtedness 2,661,528 2,615,666 Accrued interest payable
11,042 10,269 Accounts payable and accrued expenses 52,728 54,962
Derivative liabilities 12,154 20,695 Deferred taxes, borrowers’
escrows and other liabilities 172,621 144,733
Total liabilities 2,910,073 2,846,325
Series D
Preferred Shares, 4,000,000 shares authorized, 4,000,000 and
2,600,000 shares issued and outstanding
82,513
79,308
Equity:
Preferred shares, $0.01 par value per
share, 25,000,000 shares authorized:
7.75% Series A cumulative redeemable
preferred shares, liquidation preference $25.00 per share,
8,069,288 shares authorized, 5,303,591 shares issued and
outstanding
53
48
8.375% Series B cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 4,300,000 shares authorized, 2,325,626
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, 1,640,100
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, 82,895,723 and 82,506,606 issued and outstanding,
including 743,014 and 541,575 unvested restricted common share
awards
2,487
2,473
Additional paid in capital 2,039,594 2,025,683 Accumulated other
comprehensive income (loss) (11,605) (20,788) Retained earnings
(deficit) (1,651,613) (1,633,911) Total
shareholders’ equity 378,956 373,545 Noncontrolling interests
204,034 214,297
Total equity
582,990 587,842
Total liabilities and equity $
3,575,576 $ 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 Ended June 30, For the Six-Month
Period Ended June 30, 2015
2014 2015
2014
Amount
Per Share(2)
Amount
Per Share(3)
Amount
Per Share(2)
Amount
Per Share(3)
Cash Available for Distribution: Net income (loss) allocable
to common shares $ 18,956 $ 0.23 $ (25,650) $ (0.31) $ 11,859 $
0.14 $ (40,237) $ (0.50) Adjustments: Depreciation and amortization
expense 17,005 0.21 13,441 0.16 36,022 0.45 25,483 0.32 Change in
fair value of financial instruments (8,356) (0.10) 25,071 0.32
(12,846) (0.16) 49,210 0.61 (Gains) losses on assets (4,196) (0.05)
7,599 0.09 (3,371) (0.04) 5,375 0.07 (Gains) losses on
extinguishment of debt - - - - - - (2,421) (0.03) Taberna VIII and
Taberna IX securitizations, net effect - - (7,028) (0.09) - -
(14,088) (0.18) Straight-line rental adjustments 23 0.00 24 0.00 25
0.00 (91) 0.00 Share-based compensation 1,046 0.01 1,180 0.01 2,394
0.03 2,629 0.03 Origination fees and other deferred items 8,253
0.10 5,181 0.06 16,636 0.20 9,732 0.12 Provision for losses 2,000
0.02 1,000 0.01 4,000 0.05 2,000 0.03 Noncontrolling interest
effect from certain adjustments (4,421) (0.05)
(1,095) (0.01) (9,134)
(0.11) (635) (0.01) Cash
Available for Distribution $ 30,310 $ 0.37 $ 19,723
$ 0.24 $ 45,585 $ 0.56 $ 36,957
$ 0.46 (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 82,150,475 and 82,115,941 weighted-average
shares outstanding for the three-month period and six-month period
ended June 30, 2015. The weighted-average shares outstanding
excludes the dilutive effect of securities totaling 7,117,987 and
2,018,099 shares for the three-month period and six-month period
ended June 30, 2015, as these securities are not outstanding for
purposes of our quarterly dividends. These securities will be
included in weighted average shares for purposes of CAD when, and
if, these securities are converted to common shares. (3)
Based on 81,778,947 and 80,636,895 weighted-average shares
outstanding for the three-month period and six-month period ended
June 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 June 30, 2015 Amount
Per Share (2) Total shareholders’ equity $ 378,956 $
4.57 Liquidation value of preferred shares characterized as
equity(3) (231,733) (2.80) Book value 147,223 1.77
Adjustments: RAIT I and RAIT II derivative liabilities 12,154 0.15
Fair value for warrants and investor SARs 22,181 0.27 Accumulated
depreciation and amortization 263,464 3.17 Valuation of recurring
collateral, property management fees and other items (4)
75,106 0.91 Total adjustments $ 372,905 $ 4.50 Adjusted book
value $ 520,128 $ 6.27 (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 82,895,723 common shares outstanding as
of June 30, 2015. (3) Based on 5,303,591 Series A preferred
shares, 2,325,626 Series B preferred shares, and 1,640,100 Series C
preferred shares outstanding as of June 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 June 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 June 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 June 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
Three-Month Period Ended June 30, For the Six-Month
Period Ended June 30, 2015
2014 2015
2014
Amount
Per Share(2)
Amount
Per Share(3)
Amount
Per Share(2)
Amount
Per Share (3)
Funds From Operations: Net income (loss) allocable to common
shares
$
18,956
$
0.23
$
(25,650)
$ (0.31)
$
11,859
$ 0.14 $ (40,237) $ (0.50) Adjustments: Real estate depreciation
and amortization 10,246 0.12 9,315 0.11 21,444 0.26 18,134 0.23
(Gains) losses on the sale of real estate
(17,281) (0.20) - -
(17,281) (0.20) 321
0.00 Funds From Operations
$
11,921
$
0.15
$
(16,335)
$ (0.20)
$
16,022
$ 0.20 $ (21,782) $ (0.27) (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
82,150,475 and 82,115,941 weighted-average shares outstanding for
the three-month period and six-month period ended June 30, 2015.
The weighted-average shares outstanding excludes the dilutive
effect of securities totaling 7,117,987 and 2,018,099 shares for
the three-month period and six-month period ended June 30, 2015, as
the respective securities are not actual shares outstanding.
(3) Based on 81,778,947 and 80,636,895 weighted-average shares
outstanding-diluted for the three-month period and six-month period
ended June 30, 2014.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150730005739/en/
RAIT Financial TrustAndres Viroslav,
215-243-9000aviroslav@rait.com
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