BEVERLY HILLS, Calif.–(BUSINESS WIRE)–
International real estate investment and services firm Kennedy Wilson (NYSE: KW – News) today announced the sale of NoHo-14, a 180-unit, 14-story luxury apartment building located in the NoHo Arts District of Los Angeles’ San Fernando Valley. The signature asset was sold for $74 million, representing a 4.1% cap rate on in place income. The seller assumed the $40 million Cigna fixed rate financing.
“We are very pleased to have sold this iconic property at a very opportune time in the market,” said Robert Hart, president of KW Multifamily Management Group. “NoHo-14 is just one of Kennedy Wilson’s ventures with Guardian Life and is an excellent example of our commitment to investing and creating value in multifamily real estate projects together.”
Kennedy Wilson originally acquired the building along with partners Guardian Life Insurance Company and RECP/Urban Partners as an REO asset in June 2010. The company converted the condominiums into apartments, implementing a new leasing program and enhancing property management to concierge level service, effectively upgrading the resident profile and growing the annual net operating income of the property from $2.3 million to $3.1 million. The company also renovated the building’s amenities, including the leasing office, recreation room, health club quality fitness center and high-tech business center as well as other aesthetics. Additionally, the 11,000 sq. ft. ground floor retail space at NoHo-14 was leased by Kennedy Wilson’s brokerage group to Roger Dunn Golf in a $3.8 million deal that relocated the golf superstore from its original location of over 30 years.
“NoHo-14 is the only Class A luxury tower of its kind in the North Hollywood area and is the only high-rise multifamily rental community in the entire San Fernando Valley,” commented Hart.
Kennedy Wilson’s multifamily portfolio now consists of 13,005 units in the U.S. and Japan.
About Kennedy Wilson
Founded in 1977, Kennedy Wilson is an international real estate investment and services company headquartered in Beverly Hills, CA with 23 offices in the U.S., Europe and Japan. The company offers a comprehensive array of real estate services including auction, conventional sales, property services and investment management. Through its fund management and separate account businesses, Kennedy Wilson is a strategic investor of real estate investments in the U.S., Europe and Japan. For further information on Kennedy Wilson, please visit www.kennedywilson.com.
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2012年3月1日星期四
AG Mortgage Investment Trust, Inc. Reports Fourth Quarter Earnings
NEW YORK–(BUSINESS WIRE)–
AG Mortgage Investment Trust, Inc. (“MITT” or the “Company”) (NYSE: MITT – News) today reported net income for the quarter ended December 31, 2011 of $5.8 million and net book value of $20.52 per share.
FINANCIAL HIGHLIGHTS
AG Mortgage Investment Trust, Inc. is an actively managed REIT that opportunistically invests in a diversified risk-adjusted portfolio of Agency RMBS, Non-Agency RMBS, CMBS and ABS. For the fourth quarter, the Company had net income of $5.8 million, or $0.58 per diluted share, and Core Earnings of $6.5 million, or $0.65 per diluted share. For the period from March 7, 2011 to December 31, 2011, the Company had net income of $19.0 million, or $3.20 per diluted share (7), and for the period from July 6, 2011 to December 31, 2011 (“period ended December 31, 2011”), the Company had Core Earnings of $12.4 million, or $1.24 per diluted share. Core Earnings represents a non-GAAP financial measure and is defined as net income (loss) excluding (i) net realized gain (loss) on investments and terminations on derivative contracts and (ii) net unrealized appreciation (depreciation) on investments and derivative contacts. (See “Non-GAAP Financial Measure” below for further detail on Core Earnings)
David Roberts, Chief Executive Officer, commented “We are pleased to announce our fourth quarter earnings. During the quarter, Core Earnings increased to $0.65 per share and we announced our first full quarter dividend of $0.70 per share. In addition to meeting our financial goals, we continued to diversify funding relationships and in January we were able to successfully complete an equity raise which has improved our stock’s liquidity. We are proud of our accomplishments over the last two quarters and look forward to the opportunities ahead.”
“Amidst uncertainty in the global markets, European liquidity difficulties and year-end funding pressures, we continued to optimize our Agency portfolio, opportunistically rotate the credit portfolio and retain capital for potential market dislocations,” said Jonathan Lieberman, Chief Investment Officer. “While Agency RMBS yields have compressed, we believe the low interest rate environment and a carefully selected investment portfolio will continue to support attractive risk-adjusted returns. Over the course of the quarter, we rotated a significant portion of the Agency portfolio into securities with more favorable prepayment attributes to further mitigate prepayment risk. Allocations to credit securities were concentrated in less volatile short duration Non-Agency securities and CMBS tranches with superior intrinsic value. We believe MITT is well positioned to continue to produce sustainable returns and take advantage of the opportunities ahead in both the Agency RMBS and credit markets. With the success of the European Central Bank’s Long-Term Refinancing Operation, funding risks have materially declined and we anticipate deploying capital in a more aggressive style. New capital from our January equity transaction allows greater latitude to the investment team to selectively increase our capital allocation to credit opportunities.”
INVESTMENT PORTFOLIO
The following summarizes the Company’s investment portfolio as of December 31, 2011 (2):
As of December 31, 2011, the weighted average yield on the Company’s investment portfolio was 3.16% and its weighted average cost of funds was 0.91%. This resulted in a net interest margin of 2.25% as of December 31, 2011. (6)
The CPR for the Agency RMBS portfolio was 5.0% for the fourth quarter and 5.0% for the month of December 2011. (5)
The weighted average cost basis of the Agency investment portfolio, excluding interest-only securities, was 103.5% as of December 31, 2011. The amortization of premiums (net of any accretion of discounts) on Agency securities for the fourth quarter was $1.9 million, or $(0.19) per share. The unamortized net Agency premium as of December 31, 2011 was $42.0 million.
Premiums and discounts associated with purchases of the Company’s securities are amortized or accreted into interest income over the estimated life of such securities, using the effective yield method. Since the cost basis of the Company’s Agency securities, excluding interest-only securities, exceeds the underlying principal balance by 3.5% as of December 31, 2011, slower actual and projected prepayments can have a meaningful positive impact, while faster actual or projected prepayments can have a meaningful negative impact on the Company’s asset yields.
We have also entered into “to-be-announced” (“TBA”) positions to facilitate the future purchase of Agency RMBS. Under the terms of these TBAs, the Company agrees to purchase, for future delivery, Agency RMBS with certain principal and interest specifications and certain types of underlying collateral, but the particular Agency RMBS to be delivered are not identified until shortly before (generally two days) the TBA settlement date. At December 31, 2011, we had $100 million net notional amount of TBA positions with a net weighted average purchase price of 103.8%. As of December 31, 2011, our TBA portfolio had a net weighted average yield at purchase of 3.01% and a net weighted average settlement date of February 5, 2012. We have recorded derivative assets of $1.4 million and derivative liabilities of $0.5 million, reflecting these TBA positions.
LEVERAGE AND HEDGING ACTIVITIES
The investment portfolio is financed with repurchase agreements as of December 31, 2011 as summarized below:
As of December 31, 2011, the Company had entered into repurchase agreements with twenty-one counterparties. We continue to rebalance our exposures to counterparties and add new counterparties.
We have entered into interest rate swap agreements to hedge our portfolio. The Company’s swaps as of December 31, 2011 are summarized as follows:
TAXABLE INCOME
The primary differences between taxable income and GAAP net income include (i) unrealized gains and losses associated with investment and derivative portfolios are marked-to-market in current income for GAAP purposes, but excluded from taxable income until realized or settled, (ii) temporary differences related to amortization of net premiums paid on investments (iii) the timing and amount of deductions related to stock-based compensation and (iv) excise taxes. As of December 31, 2011, the Company had undistributed taxable income of approximately $0.46 per share.
DIVIDEND
On December 14, 2011, the Company declared a dividend of $0.70 per share of common stock to stockholders of record as of December 30, 2011 and paid such dividend on January 27, 2012. The Company declared dividends of $1.10 per share for the period ended December 31, 2011.
SUBSEQUENT EVENT
On January 24, 2012, the Company completed a follow-on offering of 5,000,000 shares of its common stock and subsequently issued an additional 750,000 shares of common stock pursuant to the underwriters’ over-allotments at a price of $19.00 per share, for gross proceeds of approximately $109.3 million. Net proceeds to the Company from the offerings were approximately $104.1 million, net of issuance costs of approximately $5.2 million.
SHAREHOLDER CALL
The Company invites shareholders, prospective shareholders and analysts to attend MITT’s fourth quarter earnings conference call on March 1, 2012 at 11:00 am Eastern Time. The shareholder call can be accessed by dialing (888) 424-8151 (U.S. domestic) or (847) 585-4422 (international). Please enter code number 8732511#.
A presentation will accompany the conference call and will be available on the Company’s website at www.agmit.com. Select the Q4 2011 Earnings Presentation link to download and print the presentation in advance of the shareholder call.
An audio replay of the shareholder call combined with the presentation will be made available on our website after the call. The replay will be available until midnight on March 15, 2012. If you are interested in hearing the replay, please dial (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international). The conference ID number is 8732511#.
For further information or questions, please contact Allan Krinsman, the Company’s General Counsel, at (212) 883-4180 or akrinsman@angelogordon.com.
ABOUT AG MORTGAGE INVESTMENT TRUST, INC.
AG Mortgage Investment Trust, Inc. is a real estate investment trust that invests in, acquires and manages a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets. AG Mortgage Investment Trust, Inc. is externally managed and advised by AG REIT Management, LLC, a subsidiary of Angelo, Gordon & Co., L.P., an SEC-registered investment adviser that specializes in alternative investment activities.
Additional information can be found on the Company’s website at www.agmit.com.
ABOUT ANGELO, GORDON & CO.
Angelo, Gordon & Co. was founded in 1988 and has approximately $22 billion under management. Currently, the firm’s investment disciplines encompass five principal areas: (i) distressed debt and leveraged loans, (ii) real estate, (iii) mortgage-backed securities and other structured credit, (iv) private equity and special situations and (v) a number of hedge fund strategies. Angelo, Gordon & Co. employs over 250 employees, including more than 90 investment professionals, and is headquartered in New York, with associated offices in Amsterdam, Chicago, Los Angeles, London, Hong Kong Seoul, Shanghai, Sydney and Tokyo.
FORWARD LOOKING STATEMENTS
This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, changes in interest rates, changes in the yield curve, changes in prepayment rates, the availability and terms of financing, changes in the market value of our assets, general economic conditions, market conditions, conditions in the market for Agency securities, and legislative and regulatory changes that could adversely affect the business of the Company. Additional information concerning these and other risk factors are contained in the Company’s most recent filings with the Securities and Exchange Commission (“SEC”). Copies are available on the SEC’s website, http://www.sec.gov/. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.
Non-GAAP Financial Measure
This press release contains Core Earnings, a non-GAAP financial measure. AG Mortgage Investment Trust’s management believes that this non-GAAP measure, when considered with GAAP, provides supplemental information useful in evaluating the results of the Company’s operations. This non-GAAP measure should not be considered a substitute, or superior to, the financial measures calculated in accordance with GAAP. Our GAAP financial results and the reconciliations from these results should be carefully evaluated.
Core Earnings are defined by the Company as net income excluding both realized and unrealized gains (losses) on the sale or termination of securities, including underlying linked transactions and derivatives. As defined, Core Earnings include the net interest earned on these transactions, including credit derivatives, linked transactions, inverse Agency securities, interest rate derivatives or any other investment activity that may earn net interest. One of the objectives of the Company is to generate net income from net interest margin on the portfolio and management uses Core Earnings to measure this objective.
A reconciliation of GAAP net income to Core Earnings for the quarter and period ended December 31, 2011 is set forth below:
Footnotes
(1) Per share figures are calculated using outstanding shares including all shares granted to our Manager and our independent directors under our equity incentive plans as of quarter end.
(2) Generally when we purchase a security and finance it with a repurchase agreement, the security is included in our assets and the repurchase agreement is separately reflected in our liabilities on our balance sheet. For securities with certain characteristics (including those which are not readily obtainable in the market place) that are purchased and then simultaneously sold back to the seller under a repurchase agreement, US GAAP requires these transactions be netted together and recorded as a forward purchase commitment. Throughout this press release where we disclose our investment portfolio and the repurchase agreements that finance it, including our leverage metrics, we have un-linked the transaction and used the gross presentation as used for all other securities. This presentation is consistent with how the Company’s management evaluates the business, and believes provides the most accurate depiction of the Company’s investment portfolio and financial condition.
(3) Calculated by dividing total repurchase agreements, including $39.2 million included in linked transactions, plus payable on unsettled trades on our GAAP balance sheet by our GAAP stockholders’ equity.
(4) The total investment portfolio is calculated by summing the fair market value of our Agency RMBS, Non-Agency RMBS, CMBS and ABS assets, including linked transactions. The percentage of Agency RMBS and credit investments are calculated by dividing the respective fair market value of each, including linked transactions, by the total investment portfolio.
(5) This represents the weighted average monthly CPRs published during the period for our in-place portfolio during the same period.
(6) Net interest margin is calculated by subtracting the weighted average cost of funds from the weighted average yield for the Company’s investment portfolio, which excludes cash held by the Company. See footnotes (9) and (10) for further detail.
(7) Diluted per share figures are calculated using weighted average outstanding shares in accordance with GAAP. For the period from March 7, 2011 to December 31, 2011, the calculation reflected the impact of 100 shares outstanding from July 1, 2011 through the settlement date of our IPO.
(8) The swap ratio was calculated by dividing the notional value of our interest rate swaps by total repurchase agreements, including those included in linked transactions, plus payable on unsettled trades.
(9) The yield on our investment portfolio during the period represents an effective interest rate, which utilizes all estimates of future cash flows and adjusts for actual prepayment and cash flow activity as of quarter end. This calculation excludes cash held by the Company.
(10) The cost of funds was calculated as the sum of the weighted average rate on the repurchase agreements outstanding at quarter end and the weighted average net pay rate on our interest rate swaps. Both elements of the cost of funds were weighted by the repurchase agreements outstanding at quarter end.
(11) The management fee percentage at quarter end was calculated by annualizing management fees incurred during the quarter and dividing by quarter-ended stockholders’ equity.
(12) The other operating expenses percentage at quarter end was calculated by annualizing other operating expenses recorded during the quarter and dividing by quarter-ended stockholders’ equity.
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AG Mortgage Investment Trust, Inc. (“MITT” or the “Company”) (NYSE: MITT – News) today reported net income for the quarter ended December 31, 2011 of $5.8 million and net book value of $20.52 per share.
FINANCIAL HIGHLIGHTS
- Net income of $5.8 million, or 0.58 per share for the fourth quarter
- Net income of $19.0 million, or $3.20 per share for the period from March 7, 2011 to December 31, 2011
- Core Earnings of $6.5 million or $0.65 per share for the quarter
- Core Earnings of $12.4 million, or $1.24 per share for the period from July 6, 2011 (the consummation of our initial public offering) to December 31, 2011
- Net realized gains of $2.9 million, or $0.29 per share, on Agency RMBS for the fourth quarter and $7.2 million, or $0.72 per share, for the period from July 6, 2011 to December 31, 2011
- Net realized losses of ($3.5) million, or ($0.35) per share, on credit investments for the fourth quarter and for the period from July 6, 2011 to December 31, 2011
- $0.70 per share dividend declared for the fourth quarter and $1.10 per share dividends declared for the period ended December 31, 2011
- Approximately $0.46 per share of undistributed taxable income as of December 31, 2011(1)
- $20.52 net book value per share as of December 31, 2011(1)
- $1.4 billion investment portfolio value as of December 31, 2011 (2) (4)
- 5.86x leverage as of December 31, 2011 (2) (3)
- 91.0% Agency RMBS investment portfolio (4)
- 9.0% credit investment portfolio, comprising Non-Agency RMBS, CMBS and ABS assets (4)
- 5.0% constant prepayment rate (“CPR”) for the fourth quarter on the Agency RMBS investment portfolio (5)
- 2.25% net interest margin as of December 31, 2011 (6)
AG Mortgage Investment Trust, Inc. is an actively managed REIT that opportunistically invests in a diversified risk-adjusted portfolio of Agency RMBS, Non-Agency RMBS, CMBS and ABS. For the fourth quarter, the Company had net income of $5.8 million, or $0.58 per diluted share, and Core Earnings of $6.5 million, or $0.65 per diluted share. For the period from March 7, 2011 to December 31, 2011, the Company had net income of $19.0 million, or $3.20 per diluted share (7), and for the period from July 6, 2011 to December 31, 2011 (“period ended December 31, 2011”), the Company had Core Earnings of $12.4 million, or $1.24 per diluted share. Core Earnings represents a non-GAAP financial measure and is defined as net income (loss) excluding (i) net realized gain (loss) on investments and terminations on derivative contracts and (ii) net unrealized appreciation (depreciation) on investments and derivative contacts. (See “Non-GAAP Financial Measure” below for further detail on Core Earnings)
David Roberts, Chief Executive Officer, commented “We are pleased to announce our fourth quarter earnings. During the quarter, Core Earnings increased to $0.65 per share and we announced our first full quarter dividend of $0.70 per share. In addition to meeting our financial goals, we continued to diversify funding relationships and in January we were able to successfully complete an equity raise which has improved our stock’s liquidity. We are proud of our accomplishments over the last two quarters and look forward to the opportunities ahead.”
“Amidst uncertainty in the global markets, European liquidity difficulties and year-end funding pressures, we continued to optimize our Agency portfolio, opportunistically rotate the credit portfolio and retain capital for potential market dislocations,” said Jonathan Lieberman, Chief Investment Officer. “While Agency RMBS yields have compressed, we believe the low interest rate environment and a carefully selected investment portfolio will continue to support attractive risk-adjusted returns. Over the course of the quarter, we rotated a significant portion of the Agency portfolio into securities with more favorable prepayment attributes to further mitigate prepayment risk. Allocations to credit securities were concentrated in less volatile short duration Non-Agency securities and CMBS tranches with superior intrinsic value. We believe MITT is well positioned to continue to produce sustainable returns and take advantage of the opportunities ahead in both the Agency RMBS and credit markets. With the success of the European Central Bank’s Long-Term Refinancing Operation, funding risks have materially declined and we anticipate deploying capital in a more aggressive style. New capital from our January equity transaction allows greater latitude to the investment team to selectively increase our capital allocation to credit opportunities.”
| KEY STATISTICS (2) | ||||||||||||
| Weighted Average at | Weighted Average | |||||||||||
| December 31, 2011 | at September 30, 2011 | |||||||||||
| Investment portfolio | $ | 1,388,006,801 | $ | 1,332,205,377 | ||||||||
| Repurchase agreements | $ | 1,189,303,407 | $ | 1,126,859,885 | ||||||||
| Stockholders’ equity | $ | 206,283,920 | $ | 207,413,703 | ||||||||
| Leverage ratio | 5.86x | (3 | ) | 5.70x | (3 | ) | ||||||
| Swap ratio | 66 | % | (8 | ) | 51 | % | (8 | ) | ||||
| Yield on investment portfolio | 3.16 | % | (9 | ) | 3.26 | % | (9 | ) | ||||
| Cost of funds | 0.91 | % | (10 | ) | 0.82 | % | (10 | ) | ||||
| Net interest margin | 2.25 | % | (6 | ) | 2.44 | % | (6 | ) | ||||
| Management fees | 1.49 | % | (11 | ) | 1.43 | % | (11 | ) | ||||
| Other operating expenses | 1.57 | % | (12 | ) | 1.58 | % | (12 | ) | ||||
| Book value, per share | $ | 20.52 | (1 | ) | $ | 20.64 | (1 | ) | ||||
| Dividend, per share | $ | 0.70 | $ | 0.40 | ||||||||
INVESTMENT PORTFOLIO
The following summarizes the Company’s investment portfolio as of December 31, 2011 (2):
| Weighted Average | |||||||||||||||||
| Current Face | Premium (Discount) | Amortized Cost | Fair Value | Coupon | Yield | ||||||||||||
| Agency RMBS: | |||||||||||||||||
| 15-Year Fixed Rate | $ | 738,344,948 | $ | 22,525,476 | $ | 760,870,424 | $ | 772,310,909 | 3.32 | % | 2.62 | % | |||||
| 20-Year Fixed Rate | 227,566,114 | 7,362,001 | 234,928,115 | 237,586,837 | 3.69 | % | 3.00 | % | |||||||||
| 30-Year Fixed Rate | 232,890,169 | 12,162,512 | 245,052,681 | 246,679,482 | 3.99 | % | 3.18 | % | |||||||||
| Interest Only | 43,505,596 | (34,046,500 | ) | 9,459,096 | 6,636,871 | 5.50 | % | 3.45 | % | ||||||||
| Non-Agency RMBS | 102,246,062 | (8,980,754 | ) | 93,265,308 | 90,368,316 | 5.90 | % | 6.31 | % | ||||||||
| CMBS | 19,500,000 | (5,411,965 | ) | 14,088,035 | 13,537,851 | 5.88 | % | 13.44 | % | ||||||||
| ABS | 21,046,150 | (34,497 | ) | 21,011,653 | 20,886,535 | 4.50 | % | 4.50 | % | ||||||||
| Total | $ | 1,385,099,039 | $ | (6,423,727 | ) | $ | 1,378,675,312 | $ | 1,388,006,801 | 3.81 | % | 3.16 | % | ||||
As of December 31, 2011, the weighted average yield on the Company’s investment portfolio was 3.16% and its weighted average cost of funds was 0.91%. This resulted in a net interest margin of 2.25% as of December 31, 2011. (6)
The CPR for the Agency RMBS portfolio was 5.0% for the fourth quarter and 5.0% for the month of December 2011. (5)
The weighted average cost basis of the Agency investment portfolio, excluding interest-only securities, was 103.5% as of December 31, 2011. The amortization of premiums (net of any accretion of discounts) on Agency securities for the fourth quarter was $1.9 million, or $(0.19) per share. The unamortized net Agency premium as of December 31, 2011 was $42.0 million.
Premiums and discounts associated with purchases of the Company’s securities are amortized or accreted into interest income over the estimated life of such securities, using the effective yield method. Since the cost basis of the Company’s Agency securities, excluding interest-only securities, exceeds the underlying principal balance by 3.5% as of December 31, 2011, slower actual and projected prepayments can have a meaningful positive impact, while faster actual or projected prepayments can have a meaningful negative impact on the Company’s asset yields.
We have also entered into “to-be-announced” (“TBA”) positions to facilitate the future purchase of Agency RMBS. Under the terms of these TBAs, the Company agrees to purchase, for future delivery, Agency RMBS with certain principal and interest specifications and certain types of underlying collateral, but the particular Agency RMBS to be delivered are not identified until shortly before (generally two days) the TBA settlement date. At December 31, 2011, we had $100 million net notional amount of TBA positions with a net weighted average purchase price of 103.8%. As of December 31, 2011, our TBA portfolio had a net weighted average yield at purchase of 3.01% and a net weighted average settlement date of February 5, 2012. We have recorded derivative assets of $1.4 million and derivative liabilities of $0.5 million, reflecting these TBA positions.
LEVERAGE AND HEDGING ACTIVITIES
The investment portfolio is financed with repurchase agreements as of December 31, 2011 as summarized below:
| Agency RMBS | Non-Agency RMBS / CMBS / Other | |||||||||||
| Repurchase Agreements Maturing Within: | Balance | Weighted Average Rate | Balance | Weighted Average Rate | ||||||||
| 30 days or less | $ | 652,002,000 | 0.35 | % | $ | 68,187,000 | 1.74 | % | ||||
| 31-60 days | 334,825,407 | 0.42 | % | 1,749,000 | 1.95 | % | ||||||
| 61-90 days | 118,340,000 | 0.37 | % | 14,200,000 | 1.80 | % | ||||||
| Greater than 90 days | - | - | - | - | ||||||||
| Total / Weighted Average | $ | 1,105,167,407 | 0.37 | % | $ | 84,136,000 | 1.75 | % | ||||
As of December 31, 2011, the Company had entered into repurchase agreements with twenty-one counterparties. We continue to rebalance our exposures to counterparties and add new counterparties.
We have entered into interest rate swap agreements to hedge our portfolio. The Company’s swaps as of December 31, 2011 are summarized as follows:
| Maturity | Notional Amount | Weighted Average Pay Rate | Weighted Average Receive Rate* | Weighted Average Years to Maturity | |||||||
| 2012 | $ | 100,000,000 | 0.354 | % | 0.285 | % | 0.14 | ||||
| 2013 | 182,000,000 | 0.535 | % | 0.286 | % | 1.78 | |||||
| 2014 | 204,500,000 | 1.000 | % | 0.395 | % | 2.54 | |||||
| 2015 | 184,025,000 | 1.412 | % | 0.380 | % | 3.56 | |||||
| 2016 | 87,500,000 | 1.625 | % | 0.328 | % | 4.63 | |||||
| 2018 | 35,000,000 | 1.728 | % | 0.511 | % | 6.88 | |||||
| Total/Wtd Avg | $ | 793,025,000 | 1.008 | % | 0.350 | % | 2.72 | ||||
| * Approximately 50% of our interest rate swap notionals reset monthly based on one-month LIBOR and 50% of our interest rate swap notionals reset quarterly based on three-month LIBOR. | |||||||||||
TAXABLE INCOME
The primary differences between taxable income and GAAP net income include (i) unrealized gains and losses associated with investment and derivative portfolios are marked-to-market in current income for GAAP purposes, but excluded from taxable income until realized or settled, (ii) temporary differences related to amortization of net premiums paid on investments (iii) the timing and amount of deductions related to stock-based compensation and (iv) excise taxes. As of December 31, 2011, the Company had undistributed taxable income of approximately $0.46 per share.
DIVIDEND
On December 14, 2011, the Company declared a dividend of $0.70 per share of common stock to stockholders of record as of December 30, 2011 and paid such dividend on January 27, 2012. The Company declared dividends of $1.10 per share for the period ended December 31, 2011.
SUBSEQUENT EVENT
On January 24, 2012, the Company completed a follow-on offering of 5,000,000 shares of its common stock and subsequently issued an additional 750,000 shares of common stock pursuant to the underwriters’ over-allotments at a price of $19.00 per share, for gross proceeds of approximately $109.3 million. Net proceeds to the Company from the offerings were approximately $104.1 million, net of issuance costs of approximately $5.2 million.
SHAREHOLDER CALL
The Company invites shareholders, prospective shareholders and analysts to attend MITT’s fourth quarter earnings conference call on March 1, 2012 at 11:00 am Eastern Time. The shareholder call can be accessed by dialing (888) 424-8151 (U.S. domestic) or (847) 585-4422 (international). Please enter code number 8732511#.
A presentation will accompany the conference call and will be available on the Company’s website at www.agmit.com. Select the Q4 2011 Earnings Presentation link to download and print the presentation in advance of the shareholder call.
An audio replay of the shareholder call combined with the presentation will be made available on our website after the call. The replay will be available until midnight on March 15, 2012. If you are interested in hearing the replay, please dial (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international). The conference ID number is 8732511#.
For further information or questions, please contact Allan Krinsman, the Company’s General Counsel, at (212) 883-4180 or akrinsman@angelogordon.com.
ABOUT AG MORTGAGE INVESTMENT TRUST, INC.
AG Mortgage Investment Trust, Inc. is a real estate investment trust that invests in, acquires and manages a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets. AG Mortgage Investment Trust, Inc. is externally managed and advised by AG REIT Management, LLC, a subsidiary of Angelo, Gordon & Co., L.P., an SEC-registered investment adviser that specializes in alternative investment activities.
Additional information can be found on the Company’s website at www.agmit.com.
ABOUT ANGELO, GORDON & CO.
Angelo, Gordon & Co. was founded in 1988 and has approximately $22 billion under management. Currently, the firm’s investment disciplines encompass five principal areas: (i) distressed debt and leveraged loans, (ii) real estate, (iii) mortgage-backed securities and other structured credit, (iv) private equity and special situations and (v) a number of hedge fund strategies. Angelo, Gordon & Co. employs over 250 employees, including more than 90 investment professionals, and is headquartered in New York, with associated offices in Amsterdam, Chicago, Los Angeles, London, Hong Kong Seoul, Shanghai, Sydney and Tokyo.
FORWARD LOOKING STATEMENTS
This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, changes in interest rates, changes in the yield curve, changes in prepayment rates, the availability and terms of financing, changes in the market value of our assets, general economic conditions, market conditions, conditions in the market for Agency securities, and legislative and regulatory changes that could adversely affect the business of the Company. Additional information concerning these and other risk factors are contained in the Company’s most recent filings with the Securities and Exchange Commission (“SEC”). Copies are available on the SEC’s website, http://www.sec.gov/. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.
| AG Mortgage Investment Trust, Inc. and Subsidiaries | |||||||
| Consolidated Balance Sheets | |||||||
| December 31, 2011 | April 1, 2011 | ||||||
| Assets | (Unaudited) | ||||||
| Real Estate securities, at fair value | |||||||
| Agency – $1,186,149,842 pledged as collateral | $ | 1,263,214,099 | $ | - | |||
| Non-Agency – $47,227,005 pledged as collateral | 58,787,051 | - | |||||
| CMBS – $2,747,080 pledged as collateral | 13,537,851 | - | |||||
| ABS – $4,526,620 pledged as collateral | 4,526,620 | - | |||||
| Linked transactions, net, at fair value | 8,787,180 | - | |||||
| Cash and cash equivalents | 35,851,249 | 1,000 | |||||
| Restricted cash | 3,037,055 | - | |||||
| Interest receivable | 4,219,640 | - | |||||
| Derivative assets, at fair value | 1,428,595 | - | |||||
| Prepaid expenses | 317,950 | - | |||||
| Due from broker | 341,491 | ||||||
| Due from affiliates | 104,994 | - | |||||
| Deferred costs | 52,176 | - | |||||
| Total Assets | $ | 1,394,205,951 | $ | 1,000 | |||
| Liabilities | |||||||
| Repurchase agreements | $ | 1,150,149,407 | $ | - | |||
| Payable on unsettled trades | 18,759,200 | - | |||||
| Interest payable | 2,275,138 | - | |||||
| Derivative liabilities, at fair value | 7,908,308 | - | |||||
| Dividend payable | 7,011,171 | - | |||||
| Due to affiliates | 770,341 | - | |||||
| Accrued expenses | 668,552 | - | |||||
| Due to broker | 379,914 | - | |||||
| Total Liabilities | 1,187,922,031 | - | |||||
| Stockholders’ Equity (Deficit) | |||||||
| Common stock, par value $0.01 per share; 450,000,000 and 1,000 shares of common stock authorized and 10,009,958 and 100 shares issued and outstanding at December 31, 2011 and April 1, 2011, respectively | 100,100 | 1 | |||||
| Additional paid-in capital | 198,228,694 | 999 | |||||
| Retained earnings | 7,955,126 | - | |||||
| 206,283,920 | 1,000 | ||||||
| Total Liabilities & Equity | $ | 1,394,205,951 | $ | 1,000 | |||
| AG Mortgage Investment Trust, Inc. and Subsidiaries | |||||||||
| Consolidated Statements of Operations | |||||||||
| (Unaudited) | |||||||||
| Period from | |||||||||
| Quarter Ended | March 7, 2011 to | ||||||||
| December 31, 2011 | December 31, 2011 | ||||||||
| Net Interest Income | |||||||||
| Interest income | $ | 10,022,275 | $ | 18,748,669 | |||||
| Interest expense | 1,106,097 | 1,696,344 | |||||||
| 8,916,178 | 17,052,325 | ||||||||
| Other Income (Loss) | |||||||||
| Net realized gain (loss) | (589,747 | ) | 3,701,392 | ||||||
| Gain (loss) on linked transactions, net | (1,013,291 | ) | (808,564 | ) | |||||
| Realized loss on periodic interest settlements of interest rate swaps, net | (1,175,788 | ) | (2,162,290 | ) | |||||
| Unrealized gain (loss) on derivative instruments, net | 70,663 | (6,491,430 | ) | ||||||
| Unrealized gain (loss) on real estate securities | 1,346,237 | 11,040,692 | |||||||
| (1,361,926 | ) | 5,279,800 | |||||||
| Expenses | |||||||||
| Management fee to affiliate | 770,341 | 1,512,898 | |||||||
| Other operating expenses | 811,372 | 1,566,642 | |||||||
| Equity based compensation to affiliate | 97,343 | 176,165 | |||||||
| Excise tax | 105,724 | 105,724 | |||||||
| 1,784,780 | 3,361,429 | ||||||||
| Net Income (Loss) | $ | 5,769,472 | $ | 18,970,696 | |||||
| Earnings Per Share of Common Stock | |||||||||
| Basic | $ | 0.58 | $ | 3.20 | |||||
| Diluted | $ | 0.58 | $ | 3.20 | |||||
| Weighted Average Number of Shares of Common Stock Outstanding | |||||||||
| Basic | 10,009,958 | 5,933,930 | |||||||
| Diluted | 10,010,799 | 5,933,930 | |||||||
| Dividends Declared per Share of Common Stock | $ | 0.70 | $ | 1.10 | |||||
Non-GAAP Financial Measure
This press release contains Core Earnings, a non-GAAP financial measure. AG Mortgage Investment Trust’s management believes that this non-GAAP measure, when considered with GAAP, provides supplemental information useful in evaluating the results of the Company’s operations. This non-GAAP measure should not be considered a substitute, or superior to, the financial measures calculated in accordance with GAAP. Our GAAP financial results and the reconciliations from these results should be carefully evaluated.
Core Earnings are defined by the Company as net income excluding both realized and unrealized gains (losses) on the sale or termination of securities, including underlying linked transactions and derivatives. As defined, Core Earnings include the net interest earned on these transactions, including credit derivatives, linked transactions, inverse Agency securities, interest rate derivatives or any other investment activity that may earn net interest. One of the objectives of the Company is to generate net income from net interest margin on the portfolio and management uses Core Earnings to measure this objective.
A reconciliation of GAAP net income to Core Earnings for the quarter and period ended December 31, 2011 is set forth below:
| Period from | ||||||||
| Quarter Ended | March 7, 2011 to | |||||||
| December 31, 2011 | December 31, 2011 | |||||||
| Net income/loss | $ | 5,769,472 | $ | 18,970,696 | ||||
| Add (Deduct): | ||||||||
| Net realized gain | 589,747 | (3,701,392 | ) | |||||
| Gain/loss on linked transactions, net | 1,013,291 | 808,564 | ||||||
| Net interest income on linked transactions | 554,729 | 900,638 | ||||||
| Unrealized gain/loss on derivative instruments, net | (70,663 | ) | 6,491,430 | |||||
| Unrealized gain/loss on real estate securities | (1,346,237 | ) | (11,040,692 | ) | ||||
| Core Earnings | $ | 6,510,339 | $ | 12,429,244 | ||||
Footnotes
(1) Per share figures are calculated using outstanding shares including all shares granted to our Manager and our independent directors under our equity incentive plans as of quarter end.
(2) Generally when we purchase a security and finance it with a repurchase agreement, the security is included in our assets and the repurchase agreement is separately reflected in our liabilities on our balance sheet. For securities with certain characteristics (including those which are not readily obtainable in the market place) that are purchased and then simultaneously sold back to the seller under a repurchase agreement, US GAAP requires these transactions be netted together and recorded as a forward purchase commitment. Throughout this press release where we disclose our investment portfolio and the repurchase agreements that finance it, including our leverage metrics, we have un-linked the transaction and used the gross presentation as used for all other securities. This presentation is consistent with how the Company’s management evaluates the business, and believes provides the most accurate depiction of the Company’s investment portfolio and financial condition.
(3) Calculated by dividing total repurchase agreements, including $39.2 million included in linked transactions, plus payable on unsettled trades on our GAAP balance sheet by our GAAP stockholders’ equity.
(4) The total investment portfolio is calculated by summing the fair market value of our Agency RMBS, Non-Agency RMBS, CMBS and ABS assets, including linked transactions. The percentage of Agency RMBS and credit investments are calculated by dividing the respective fair market value of each, including linked transactions, by the total investment portfolio.
(5) This represents the weighted average monthly CPRs published during the period for our in-place portfolio during the same period.
(6) Net interest margin is calculated by subtracting the weighted average cost of funds from the weighted average yield for the Company’s investment portfolio, which excludes cash held by the Company. See footnotes (9) and (10) for further detail.
(7) Diluted per share figures are calculated using weighted average outstanding shares in accordance with GAAP. For the period from March 7, 2011 to December 31, 2011, the calculation reflected the impact of 100 shares outstanding from July 1, 2011 through the settlement date of our IPO.
(8) The swap ratio was calculated by dividing the notional value of our interest rate swaps by total repurchase agreements, including those included in linked transactions, plus payable on unsettled trades.
(9) The yield on our investment portfolio during the period represents an effective interest rate, which utilizes all estimates of future cash flows and adjusts for actual prepayment and cash flow activity as of quarter end. This calculation excludes cash held by the Company.
(10) The cost of funds was calculated as the sum of the weighted average rate on the repurchase agreements outstanding at quarter end and the weighted average net pay rate on our interest rate swaps. Both elements of the cost of funds were weighted by the repurchase agreements outstanding at quarter end.
(11) The management fee percentage at quarter end was calculated by annualizing management fees incurred during the quarter and dividing by quarter-ended stockholders’ equity.
(12) The other operating expenses percentage at quarter end was calculated by annualizing other operating expenses recorded during the quarter and dividing by quarter-ended stockholders’ equity.
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2012年2月28日星期二
Manhattan Lures REITs Capitalizing on Rising Rents as Sales Lag: Mortgages
Tom Toomey, chief executive officer of real estate investment firm UDR Inc. (UDR), is betting the best rental deal in Manhattan is owning the whole building.
The nation’s third-largest apartment real estate investment trust bought a five-tower apartment complex on Columbus Avenue between West 97th and 100th streets for about $630 million last month, with rents from $2,500 for a studio or one-bedroom apartment to more than $10,000 a month for a penthouse suite. It’s Toomey’s fifth purchase in Manhattan in the past year as rents soar and financing difficulties make it harder for individuals to buy.
“Financing and underwriting are much tighter,” Toomey said in a telephone interview. With purchases requiring larger down payments, “people are going to stay renters for a long time,” said Toomey, who’s based in Highlands Ranch, Colorado.
Strict lending standards for so-called jumbo mortgages have contributed to declining home buying across the U.S. by even the most creditworthy borrowers as issuance of the loans has dropped 68 percent since 2007. Nowhere is that more evident than in Manhattan, where the median price of a two-bedroom apartment is about $1.2 million, almost twice the limit backed by government- supported mortgage companies Fannie Mae and Freddie Mac.
Manhattan rents rose 9.5 percent last quarter to an average $3,121, Miller Samuel Inc. and Prudential Douglas Elliman Real Estate said in a report last month. That’s about three times the rate for the 44 largest apartment markets in the U.S., according to Marcus & Millichap, a real estate brokerage firm. Manhattan rental apartment vacancy rates fell to a four-year low of 0.96 percent last year, down from 1.2 percent a year earlier and 1.9 percent in 2009, according to brokerage Citi Habitats. Vacancy bottomed in 2006 at 0.76 percent.
Jumbo loans exceed limits set for government-controlled mortgage companies by congress. For New York that’s $625,500.
Wall Street’s pay practices are also making it harder to buy, as financial firms increasingly pay bonuses in stock and deferred cash, said Alan Johnson, managing director of compensation consultant Johnson Associates Inc.
Morgan Stanley, Credit Suisse Group AG and Citigroup Inc. have all reduced senior investment bankers’ pay for last year as revenue slows. Morgan Stanley is capping immediate cash bonuses at $125,000, people with knowledge of the move said last month.
Renters outnumber homeowners in the country’s largest cities including New York, Los Angeles and Chicago. More than 77 percent of Manhattan’s occupied units were rented in the decade ended 2010, compared with nearly 23 that were owned, data from the Census Bureau showed.
Nationally, the home ownership rate fell 1.1 percent to 65.1 percent from 2000 to 2010, the largest decrease since the Great Depression, according to the U.S. Census Bureau.
Low vacancy rates and rents that are likely to continue climbing this year have made apartments the “darling” of commercial real estate, according to Ryan Severino, economist at research firm Reis Inc.
Toomey said in August that the REIT planned to invest as much as $1.8 billion in Manhattan apartment buildings. Its most recent purchase, about 700 apartment units at Columbus Square on the Upper West Side, was a joint venture with MetLife Inc. (MET), the biggest U.S. life insurer.
They partly funded the purchase with $302.3 million of 10- year fixed- and floating-rate debt from Fannie Mae, the government-supported mortgage company, UDR said in a statement last month. The loans pay 3.8 percent interest.
That compares with a rate of 4.85 percent for a 30-year jumbo mortgage to an individual in New York (ILMJNY) and 4.73 percent nationally, according to Bankrate.com data. For conforming Freddie Mac (NMCMFUS) loans, rates are 3.95 percent, after falling to 3.87 percent this month, the lowest in records dating to 1971.
For Fannie Mae and Freddie Mac, the conforming limit is $625,500 in high-priced markets such as New York, San Francisco and the Florida Keys, compared with $417,000 for most of the rest of the country. The Federal Housing Administration (FHAVARM$), a government agency with the goal of expanding ownership for “underserved” communities, according to its website, will insure loans up to $729,750 in New York.
Banks and mortgage lenders issued $110 billion in jumbo loans last year, up 5.8 percent from 2010, according to Guy Cecala, publisher of Inside Mortgage Finance. The market has contracted from $348 billion in 2007 after peaking in 2003 at $650 billion.
Lenders and bankers, no longer able to package jumbo loans and sell them to investors, are required to have enough capital to carry non-conforming debt on their books until maturity.
“Some don’t have the ability to keep it on their balance sheets,” Monte N. Redman, president of bank holding company Astoria Financial Corp., said in a telephone interview.
FHA loans are also harder to get in Manhattan, and aren’t available at all for co-op apartments, because borrowers purchase shares in the building’s management company instead of buying the property itself. The FHA does limited lending for condominiums, units individually grouped into a cluster. It insured 107 mortgages for condos in Manhattan last year, compared with 90 in 2010 and 42 in 2009, the FHA said.
Non-conforming loans nationally accounted for nearly 2 percent of all purchase applications last year, up 33 percent relative to 2010, according to the Mortgage Bankers Association’s monthly profile of state and national mortgage activity.
Those loans have tougher standards such as high interest rates and down payments ranging from 25 to 40 percent, according to Mike Fratantoni, vice president of research for the Mortgage Bankers Association.
“They’re only available to the best credit borrowers,” Fratantoni said.
Financing a purchase with loans above government limits won’t get easier until the secondary market grows an appetite for jumbo loans, according to Miller of Miller Samuel.
The secondary market comprises mortgage bankers, savings and loan associations and large private investment institutions that buy mortgages from primary lenders or investors.
Redwood Trust Inc. (RWT), a real estate investment trust based in Mill Valley, California, has completed four sales of bonds totaling about $1 billion tied to new U.S. home loans since 2010, according to Mike McMahon, managing director of Redwood, which specializes in jumbo loans.
Wells Fargo & Co., the nation’s largest home lender, plans to trim credit requirements this year as it aims to increase its loan volume, according to Greg Gwizdz, sales manager for the eastern U.S. for Wells Fargo Home Mortgage. The bank reduced the cost of loans over $2 million last month and is lowering post- closing requirements for cash reserves, he said.
“We’re seeing a fair amount of demand, we have a strong appetite and we’re doing a lot of volume,” Gwizdz said in a telephone interview.
Wells Fargo funded $13.7 billion in non-conforming loans across the nation for the nine month period ending September, the San Francisco-based lender said. In Manhattan its volume of loans without government backing increased 56 percent from a year earlier.
“Without the conversion, the condos wouldn’t have sold or would have sold at half the price,” Bob Scaglion of Rose Associates, the company’s manager, said. Eventually, the owners want to put the condominiums back on the purchase market, according to Heather McDonough, broker for Prudential Real Estate who works to sell William Beaver units.
“The rentals are in high demand,” McDonough said. “In a few years, maybe it will be different.”
To contact the reporter on this story: Christine Harvey in New York at charvey32@bloomberg.net
To contact the editor responsible for this story: Rob Urban at robprag@bloomberg.net
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The nation’s third-largest apartment real estate investment trust bought a five-tower apartment complex on Columbus Avenue between West 97th and 100th streets for about $630 million last month, with rents from $2,500 for a studio or one-bedroom apartment to more than $10,000 a month for a penthouse suite. It’s Toomey’s fifth purchase in Manhattan in the past year as rents soar and financing difficulties make it harder for individuals to buy.
“Financing and underwriting are much tighter,” Toomey said in a telephone interview. With purchases requiring larger down payments, “people are going to stay renters for a long time,” said Toomey, who’s based in Highlands Ranch, Colorado.
Strict lending standards for so-called jumbo mortgages have contributed to declining home buying across the U.S. by even the most creditworthy borrowers as issuance of the loans has dropped 68 percent since 2007. Nowhere is that more evident than in Manhattan, where the median price of a two-bedroom apartment is about $1.2 million, almost twice the limit backed by government- supported mortgage companies Fannie Mae and Freddie Mac.
Manhattan rents rose 9.5 percent last quarter to an average $3,121, Miller Samuel Inc. and Prudential Douglas Elliman Real Estate said in a report last month. That’s about three times the rate for the 44 largest apartment markets in the U.S., according to Marcus & Millichap, a real estate brokerage firm. Manhattan rental apartment vacancy rates fell to a four-year low of 0.96 percent last year, down from 1.2 percent a year earlier and 1.9 percent in 2009, according to brokerage Citi Habitats. Vacancy bottomed in 2006 at 0.76 percent.
Wall Street Pay
“The key to the strength of the rental market is tightness of credit,” Jonathan Miller, president of appraiser Miller Samuel, said in a telephone interview. “It takes quadruple-A bizarre credit requirements to get approved.”Jumbo loans exceed limits set for government-controlled mortgage companies by congress. For New York that’s $625,500.
Wall Street’s pay practices are also making it harder to buy, as financial firms increasingly pay bonuses in stock and deferred cash, said Alan Johnson, managing director of compensation consultant Johnson Associates Inc.
Morgan Stanley, Credit Suisse Group AG and Citigroup Inc. have all reduced senior investment bankers’ pay for last year as revenue slows. Morgan Stanley is capping immediate cash bonuses at $125,000, people with knowledge of the move said last month.
Shorter Commitment
“It’s not a great sign for the financial sector contributing to purchasing apartments because there’s no sense of urgency to buy,” said Johnson. “Rentals are a much shorter commitment.”Renters outnumber homeowners in the country’s largest cities including New York, Los Angeles and Chicago. More than 77 percent of Manhattan’s occupied units were rented in the decade ended 2010, compared with nearly 23 that were owned, data from the Census Bureau showed.
Nationally, the home ownership rate fell 1.1 percent to 65.1 percent from 2000 to 2010, the largest decrease since the Great Depression, according to the U.S. Census Bureau.
Low vacancy rates and rents that are likely to continue climbing this year have made apartments the “darling” of commercial real estate, according to Ryan Severino, economist at research firm Reis Inc.
Apartment Indices
The Bloomberg REIT Apartment Index (BBREAPT) of 16 publicly traded landlords returned 10 percent in the past year, including reinvested dividends, compared with returns of 6.8 percent for the Bloomberg REIT Index (BBREIT) and 5.2 percent for the Standard & Poor’s 500 Index. Equity Residential (EQR), the largest U.S. apartment REIT, returned 11.2 percent in the past year, according to data compiled by Bloomberg, and UDR gained 10.8 percent.Toomey said in August that the REIT planned to invest as much as $1.8 billion in Manhattan apartment buildings. Its most recent purchase, about 700 apartment units at Columbus Square on the Upper West Side, was a joint venture with MetLife Inc. (MET), the biggest U.S. life insurer.
They partly funded the purchase with $302.3 million of 10- year fixed- and floating-rate debt from Fannie Mae, the government-supported mortgage company, UDR said in a statement last month. The loans pay 3.8 percent interest.
That compares with a rate of 4.85 percent for a 30-year jumbo mortgage to an individual in New York (ILMJNY) and 4.73 percent nationally, according to Bankrate.com data. For conforming Freddie Mac (NMCMFUS) loans, rates are 3.95 percent, after falling to 3.87 percent this month, the lowest in records dating to 1971.
Housing Limits
Lenders have been wary to issue mortgages for non- conforming loans including jumbos since the housing market started falling in 2006 and losses on mortgage securities propelled the nation into the worst financial crisis since the Great Depression.For Fannie Mae and Freddie Mac, the conforming limit is $625,500 in high-priced markets such as New York, San Francisco and the Florida Keys, compared with $417,000 for most of the rest of the country. The Federal Housing Administration (FHAVARM$), a government agency with the goal of expanding ownership for “underserved” communities, according to its website, will insure loans up to $729,750 in New York.
Banks and mortgage lenders issued $110 billion in jumbo loans last year, up 5.8 percent from 2010, according to Guy Cecala, publisher of Inside Mortgage Finance. The market has contracted from $348 billion in 2007 after peaking in 2003 at $650 billion.
Origination Volumes
Mortgage origination overall was down 17 percent year-over- year to $1.35 trillion, the lowest in over a decade, according to Cecala.Lenders and bankers, no longer able to package jumbo loans and sell them to investors, are required to have enough capital to carry non-conforming debt on their books until maturity.
“Some don’t have the ability to keep it on their balance sheets,” Monte N. Redman, president of bank holding company Astoria Financial Corp., said in a telephone interview.
FHA loans are also harder to get in Manhattan, and aren’t available at all for co-op apartments, because borrowers purchase shares in the building’s management company instead of buying the property itself. The FHA does limited lending for condominiums, units individually grouped into a cluster. It insured 107 mortgages for condos in Manhattan last year, compared with 90 in 2010 and 42 in 2009, the FHA said.
Manhattan Sales
Manhattan co-op and condominium sales totaled 2,011 in the fourth quarter, 12.4 percent less a year earlier, according to Miller Samuel and Prudential.Non-conforming loans nationally accounted for nearly 2 percent of all purchase applications last year, up 33 percent relative to 2010, according to the Mortgage Bankers Association’s monthly profile of state and national mortgage activity.
Those loans have tougher standards such as high interest rates and down payments ranging from 25 to 40 percent, according to Mike Fratantoni, vice president of research for the Mortgage Bankers Association.
“They’re only available to the best credit borrowers,” Fratantoni said.
Financing a purchase with loans above government limits won’t get easier until the secondary market grows an appetite for jumbo loans, according to Miller of Miller Samuel.
The secondary market comprises mortgage bankers, savings and loan associations and large private investment institutions that buy mortgages from primary lenders or investors.
MBS Sales
There are signs of revival for mortgage-backed securities, according to Jan Scheck, managing director at DE Capital Mortgage, a New York-based mortgage consulting firm.Redwood Trust Inc. (RWT), a real estate investment trust based in Mill Valley, California, has completed four sales of bonds totaling about $1 billion tied to new U.S. home loans since 2010, according to Mike McMahon, managing director of Redwood, which specializes in jumbo loans.
Wells Fargo & Co., the nation’s largest home lender, plans to trim credit requirements this year as it aims to increase its loan volume, according to Greg Gwizdz, sales manager for the eastern U.S. for Wells Fargo Home Mortgage. The bank reduced the cost of loans over $2 million last month and is lowering post- closing requirements for cash reserves, he said.
“We’re seeing a fair amount of demand, we have a strong appetite and we’re doing a lot of volume,” Gwizdz said in a telephone interview.
Wells Fargo funded $13.7 billion in non-conforming loans across the nation for the nine month period ending September, the San Francisco-based lender said. In Manhattan its volume of loans without government backing increased 56 percent from a year earlier.
William Beaver House
For now, building owners don’t have time to wait for the rebound. William Beaver House in Manhattan’s Financial District was mostly empty in 2010, two years after the 47-story condominium tower was built. It’s almost 90 percent occupied after owner CIM Group converted the units to luxury rentals costing more than $8,000 a month for a three-bedroom. A down payment on a $3 million apartment at William Beaver would range anywhere from $750,000 to over $1 million, per jumbo loan standards. A pre-recession down payment, averaging 20 percent or less, would have cost $600,000.“Without the conversion, the condos wouldn’t have sold or would have sold at half the price,” Bob Scaglion of Rose Associates, the company’s manager, said. Eventually, the owners want to put the condominiums back on the purchase market, according to Heather McDonough, broker for Prudential Real Estate who works to sell William Beaver units.
“The rentals are in high demand,” McDonough said. “In a few years, maybe it will be different.”
To contact the reporter on this story: Christine Harvey in New York at charvey32@bloomberg.net
To contact the editor responsible for this story: Rob Urban at robprag@bloomberg.net
http://tourism9.com/ http://vkins.com/
2012年2月25日星期六
Tightening the EPF Act
Proper investment policy, disclosure, governance and accountability should be mandated under the law for EPF’s near half a trillion ringgit funds
THE recent brouhaha over the Employees Provident Fund (EPF) financing a government-sponsored RM1.5bil housing scheme highlights several issues facing the nation’s premier retirement fund.
Considering that it is a major heavyweight, which manages almost RM470bil belonging to some 12 million members, it is important to ensure that the EPF does its job, and does it as well as it should.
Questions swirl around three main issues: The kind of projects that the EPF should finance and the risk they bear; the amount of government influence over what the EPF should do; and the level of transparency and accountability that the fund shows to its members.
Sadly, on all three counts, it shows serious deficiencies. Although it has improved in recent years, in terms of the quality of investments, it has in the past made some dubious investments which have never been fully explained.
In part this is due to substantial government influence over its operations, specifically, the Finance Minister, who not only appoints board members but also has substantial influence over them, the law requiring directors in most cases to be subservient to the Finance Minister.
Meantime, the way the EPF reports its results, and its investments and losses and gains, leaves much to be desired. It is impossible for a fund member or anyone else to independently verify the soundness of its investment decisions. There is no or little statutory requirement for appropriate standards of disclosure, governance and accountability.
Because of its huge size, approaching half a trillion ringgit (it should exceed that mark easily this year), a multitude of sins can be easily hidden in its massive books. That’s all the more reason for an eagle eye to be kept on it at all times.
The way to ensure that the EPF keeps on the straight and narrow is to mandate that unambiguously through an amendment to the EPF Act. That should start with clear definitions of directors’ qualifications, requiring them to be those who have impeccable integrity and have an unblemished and distinguished record of service in the finance, accounting and investment fields.
The current Act gives the power to the Government, through the Finance Minister, to nominate the board members, but this should be preferably done through a committee rather than a single individual.
The Act should then specify clearly the role of the directors, which would be to oversee the implementation of measures which will follow a highly specified investment policy and return objectives.
The investment policy should specify a low risk approach that would preserve members’ contributions, while at the same time providing a moderate rate of return.
It should also specify very broad allocation strategy between various classes of assets, for example Malaysian Government Securities, other investment-grade bonds, equities, property and real estate and other investments.
Changes to the EPF Act should clearly specify that directors and the fund should at all times act solely in the interest of members who own the funds in the first place. While the Government can borrow money from the EPF, it has no business inducing it to invest in businesses that have high risk.
That will stop the board from making a decision to invest in a project just because the Finance Minister or someone else told it so. Those with long memories will remember that the EPF has made strange investments before, like Time dotCom.
The changes to the Act should also specify in fairly specific terms the kind of disclosure that it makes. It should itemise all the investments it makes, and state when they were made and at what price, and how much it is losing or making on each one.
Averages have a way of disguising major outliers. On average, gains may be respectable but that does not mean major losses may not have been made on some investments. The only way to ensure that does not get buried under the mountain of funds is to disclose it.
These are not unrealistic changes. Many retirement funds act this way. Take CalPERS or California Public Employees’ Retirement System, the United States’ largest public pension fund with assets totalling some US$220bil (about RM660bil).
It publicly discloses its investment policy and asset allocation decisions. Those interested can view its investment track record. Journalists can ask for and receive its investment details for specific companies, areas and regions.
Here’s what it says in its own words: “Our goal is to efficiently and effectively manage investments to achieve the highest possible return at an acceptable level of risk. In doing so, CalPERS has generated strong long-term returns.”
We want EPF, whose size is not very far away from CalPERS, to do the same for all its members. The EPF does not belong to the Government and therefore the Government must not have full powers over the way it acts.
Until these changes to the Act are made and the EPF board acts professionally and above board in every decision it makes, taking all the required professional advice, we can’t ever be sure that EPF is always acting purely in the interests of its constituents – the Malaysian working public.
Independent consultant P Gunasegaram (t.p.guna@gmail.com) is happy that the EPF declared 6% dividends. He hopes it can continue to do so.
http://tourism9.com/ http://vkins.com/
THE recent brouhaha over the Employees Provident Fund (EPF) financing a government-sponsored RM1.5bil housing scheme highlights several issues facing the nation’s premier retirement fund.
Considering that it is a major heavyweight, which manages almost RM470bil belonging to some 12 million members, it is important to ensure that the EPF does its job, and does it as well as it should.
Questions swirl around three main issues: The kind of projects that the EPF should finance and the risk they bear; the amount of government influence over what the EPF should do; and the level of transparency and accountability that the fund shows to its members.
Sadly, on all three counts, it shows serious deficiencies. Although it has improved in recent years, in terms of the quality of investments, it has in the past made some dubious investments which have never been fully explained.
In part this is due to substantial government influence over its operations, specifically, the Finance Minister, who not only appoints board members but also has substantial influence over them, the law requiring directors in most cases to be subservient to the Finance Minister.
Meantime, the way the EPF reports its results, and its investments and losses and gains, leaves much to be desired. It is impossible for a fund member or anyone else to independently verify the soundness of its investment decisions. There is no or little statutory requirement for appropriate standards of disclosure, governance and accountability.
Because of its huge size, approaching half a trillion ringgit (it should exceed that mark easily this year), a multitude of sins can be easily hidden in its massive books. That’s all the more reason for an eagle eye to be kept on it at all times.
The way to ensure that the EPF keeps on the straight and narrow is to mandate that unambiguously through an amendment to the EPF Act. That should start with clear definitions of directors’ qualifications, requiring them to be those who have impeccable integrity and have an unblemished and distinguished record of service in the finance, accounting and investment fields.
The current Act gives the power to the Government, through the Finance Minister, to nominate the board members, but this should be preferably done through a committee rather than a single individual.
The Act should then specify clearly the role of the directors, which would be to oversee the implementation of measures which will follow a highly specified investment policy and return objectives.
The investment policy should specify a low risk approach that would preserve members’ contributions, while at the same time providing a moderate rate of return.
It should also specify very broad allocation strategy between various classes of assets, for example Malaysian Government Securities, other investment-grade bonds, equities, property and real estate and other investments.
Changes to the EPF Act should clearly specify that directors and the fund should at all times act solely in the interest of members who own the funds in the first place. While the Government can borrow money from the EPF, it has no business inducing it to invest in businesses that have high risk.
That will stop the board from making a decision to invest in a project just because the Finance Minister or someone else told it so. Those with long memories will remember that the EPF has made strange investments before, like Time dotCom.
The changes to the Act should also specify in fairly specific terms the kind of disclosure that it makes. It should itemise all the investments it makes, and state when they were made and at what price, and how much it is losing or making on each one.
Averages have a way of disguising major outliers. On average, gains may be respectable but that does not mean major losses may not have been made on some investments. The only way to ensure that does not get buried under the mountain of funds is to disclose it.
These are not unrealistic changes. Many retirement funds act this way. Take CalPERS or California Public Employees’ Retirement System, the United States’ largest public pension fund with assets totalling some US$220bil (about RM660bil).
It publicly discloses its investment policy and asset allocation decisions. Those interested can view its investment track record. Journalists can ask for and receive its investment details for specific companies, areas and regions.
Here’s what it says in its own words: “Our goal is to efficiently and effectively manage investments to achieve the highest possible return at an acceptable level of risk. In doing so, CalPERS has generated strong long-term returns.”
We want EPF, whose size is not very far away from CalPERS, to do the same for all its members. The EPF does not belong to the Government and therefore the Government must not have full powers over the way it acts.
Until these changes to the Act are made and the EPF board acts professionally and above board in every decision it makes, taking all the required professional advice, we can’t ever be sure that EPF is always acting purely in the interests of its constituents – the Malaysian working public.
Independent consultant P Gunasegaram (t.p.guna@gmail.com) is happy that the EPF declared 6% dividends. He hopes it can continue to do so.
http://tourism9.com/ http://vkins.com/
2012年2月23日星期四
First Industrial Realty Trust Reports Fourth Quarter and Full Year 2011 Results
CHICAGO, Feb. 22, 2012 /PRNewswire/ — First Industrial Realty Trust, Inc. (NYSE: FR – News), a leading owner and operator of industrial real estate and provider of supply chain solutions, today announced results for the fourth quarter and full year 2011. Diluted net loss available to common stockholders per share (EPS) was $(0.05) in the fourth quarter, compared to $(0.43) a year ago. Full year 2011 diluted net loss available to common stockholders was $(0.34) per share, compared to $(3.53) per share in 2010.
(Logo: http://photos.prnewswire.com/prnh/20040106/FRLOGO)
First Industrial’s fourth quarter FFO was $0.23 per share/unit on a diluted basis, compared to $0.15 per share/unit last year. Full year 2011 FFO was $0.89 per share/unit on a diluted basis versus $0.80 per share/unit in 2010.
FFO per share results for the fourth quarter of 2011 include a $0.01 per share loss on retirement of debt and a $0.01 per share reversal of impairment on undepreciated real estate. FFO results for the full year 2011 include a $0.06 loss on retirement of debt, $0.02 per share of restructuring charges and an $0.08 per share reversal of impairment on undepreciated assets.
“The First Industrial team continued to deliver on all fronts in 2011 – driving occupancy, strengthening our capital base, and improving our portfolio through targeted asset sales and a return to investing,” said Bruce W. Duncan, First Industrial’s president and CEO. “We are positioned for growth in 2012 by leasing our vacancies and making disciplined new investments, while we continue to refine our portfolio through select asset sales.”
Portfolio Performance for On Balance Sheet Properties – Fourth Quarter 2011
In the fourth quarter, the Company:
Investment and Divestment Activities
In the fourth quarter, the Company:
First Industrial’s dividend policy is determined by our board of directors, and is dependent on multiple factors, including cash flow and capital expenditure requirements, as well as ensuring we meet the minimum distribution requirements set forth in the Code. We met these requirements in 2011.
Outlook for 2012
Mr. Duncan stated, “Industry fundamentals continue to be good, as leasing markets are active and new supply remains limited largely to bulk distribution centers in select coastal markets. As the economy continues to grow moderately, we expect tenants will continue to absorb industrial space which will benefit our portfolio. We expect our occupancy to decline in the first quarter due to seasonality and known moveouts, and increase over the balance of the year.”
The following assumptions were used:
FFO Definition
First Industrial reports FFO in accordance with the NAREIT definition to provide a comparative measure to other REITs. NAREIT recommends that REITs define FFO as net income, excluding gains (or losses) from the sale of previously depreciated property, plus depreciation and amortization, excluding impairments from previously depreciated assets, and after adjustments for unconsolidated partnerships and joint ventures.
About First Industrial Realty Trust, Inc.
First Industrial Realty Trust, Inc. (NYSE: FR – News) is a leading owner and operator of industrial real estate and provider of supply chain solutions to multinational corporations and regional customers. Across major markets in North America, our local market experts manage, lease, buy, (re)develop, and sell bulk and regional distribution centers, light industrial, and other industrial facility types. We have a track record of industry leading customer service, and in total, we own, manage and have under development approximately 70.9 million square feet of industrial space. For more information, please visit us at www.firstindustrial.com. We post or otherwise make available on this website from time to time information that may be of interest to investors.
Forward-Looking Information
This press release and the presentation to which it refers may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “seek,” “target,” “potential,” “focus,” “may,” “should” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a materially adverse effect on our operations and future prospects include, but are not limited to: changes in national, international, regional and local economic conditions generally and real estate markets specifically; changes in legislation/regulation (including changes to laws governing the taxation of real estate investment trusts) and actions of regulatory authorities (including the Internal Revenue Service); our ability to qualify and maintain our status as a real estate investment trust; the availability and attractiveness of financing (including both public and private capital) to us and to our potential counterparties; the availability and attractiveness of terms of additional debt repurchases; interest rates; our credit agency ratings; our ability to comply with applicable financial covenants; competition; changes in supply and demand for industrial properties (including land, the supply and demand for which is inherently more volatile than other types of industrial property) in the Company’s current and proposed market areas; difficulties in consummating acquisitions and dispositions; risks related to our investments in properties through joint ventures; environmental liabilities; slippages in development or lease-up schedules; tenant creditworthiness; higher-than-expected costs; changes in asset valuations and related impairment charges; changes in general accounting principles, policies and guidelines applicable to real estate investment trusts; international business risks; and those additional factors described under the heading “Risk Factors” and elsewhere in the Company’s annual report on Form 10-K for the year ended December 31, 2010 and in the Company’s subsequent ’34 Act reports. We caution you not to place undue reliance on forward-looking statements, which reflect our outlook only and speak only as of the date of this press release or the dates indicated in the statements. We assume no obligation to update or supplement forward-looking statements. For further information on these and other factors that could impact the Company and the statements contained herein, reference should be made to the Company’s filings with the Securities and Exchange Commission.
A schedule of selected financial information is attached.
First Industrial Realty Trust, Inc. (NYSE: FR – News), a leading owner and operator of industrial real estate and provider of supply chain solutions, will host its quarterly conference call on Thursday, February 23, 2012 at 11:00 a.m. EST (10:00 a.m. CST). The conference call may be accessed by dialing (866) 542-2938 and entering reservation code 51563038. The conference call will also be webcast live on the Investor Relations page of the Company’s website at www.firstindustrial.com. The replay will also be available on the website.
The Company’s fourth quarter and full year supplemental information can be viewed on First Industrial’s website, www.firstindustrial.com, under the “Investor Relations” tab.
a) In accordance with GAAP, the diluted weighted average number of shares/units outstanding and the diluted weighted average number of shares outstanding are the same as the basic weighted average number of shares/units outstanding and the basic weighted average number of shares outstanding, respectively, for periods in which continuing operations is a loss, as the dilutive effect of stock options and restricted units would be antidilutive to the loss from continuing operations per share. The Company has conformed with the GAAP computation of diluted common shares in computing per share amounts for items included on the Statement of Operations, including FFO and FAD.
GAAP requires unvested equity based compensation awards that have nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) to be included in the two class method of the computation of EPS. For the three and twelve months ended December 31, 2011 and December 31, 2010, there was no impact on basic and diluted EPS as participating security holders are not obligated to share in losses. The Company conforms the calculation of FFO and FAD with the calculation of EPS.
b) Represents the Company’s pro rata share of net income (loss), depreciation and amortization on real estate and Non-NAREIT compliant gain (loss).
c) Investors in and analysts following the real estate industry utilize funds from operations (“FFO”), net operating income (“NOI”), EBITDA and funds available for distribution (“FAD”), variously defined, as supplemental performance measures. While the Company believes net income (loss) available to First Industrial Realty Trust, Inc.’s common stockholders and participating securities, as defined by GAAP, is the most appropriate measure, it considers FFO, NOI, EBITDA and FAD, given their wide use by and relevance to investors and analysts, appropriate supplemental performance measures. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets. NOI provides a measure of rental operations, and does not factor in depreciation and amortization and non-property specific expenses such as general and administrative expenses. EBITDA provides a tool to further evaluate the ability to incur and service debt and to fund dividends and other cash needs. FAD provides a tool to further evaluate the ability to fund dividends. In addition, FFO, NOI, EBITDA and FAD are commonly used in various ratios, pricing multiples/yields and returns and valuation calculations used to measure financial position, performance and value.
From January 1, 2009 until September 30, 2011, the Company calculated FFO to be equal to net income (loss) available to First Industrial Realty Trust, Inc.’s common stockholders and participating securities, plus depreciation and amortization on real estate less non-NAREIT compliant gain (loss) in accordance with NAREIT’s definition of FFO. In the fourth quarter of 2011, NAREIT modified its definition of FFO to exclude impairment write downs of depreciable real estate from FFO. Beginning in the fourth quarter of 2011, the Company adopted NAREIT’s updated FFO definition and restated FFO for the year ended December 31, 2011 and December 31, 2010 in accordance with NAREIT’s updated FFO definition. The impact of this change was to increase FFO by $4.5 million or $0.05 per share for the year ended December 31, 2011 and to increase FFO by $171.9 million or $2.51 per share for the year ended December 31, 2010. The Company also restated the three months ended December 31, 2010. The impact of this change was to increase FFO by $12.3 million or $0.17 per share.
NOI is defined as revenues of the Company, minus property expenses such as real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses. NOI includes NOI from discontinued operations.
EBITDA is defined as NOI plus the equity in FFO of the Company’s joint ventures, which are accounted for under the equity method of accounting, plus or minus NAREIT compliant economic gain (loss), plus foreign exchange loss, plus or minus mark-to-market gain or loss on interest rate protection agreements, minus general and administrative expenses. EBITDA includes EBITDA from discontinued operations.
FAD is defined as EBITDA minus GAAP interest expense, minus restructuring costs, minus preferred stock dividends, minus straight-line rental income, minus provision for income taxes or plus benefit for income taxes, minus or plus mark-to-market gain or loss on interest rate protection agreements, plus restricted stock amortization, minus non-incremental capital expenditures. Non-incremental capital expenditures are building improvements and leasing costs required to maintain current revenues. See footnote (aa).
FFO, NOI, EBITDA and FAD do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the repayment of principal on debt and payment of dividends and distributions. FFO, NOI, EBITDA and FAD should not be considered as substitutes for net income (loss) available to common stockholders and participating securities (calculated in accordance with GAAP) as a measure of results of operations or cash flows (calculated in accordance with GAAP) as a measure of liquidity. FFO, NOI, EBITDA and FAD as currently calculated by the Company may not be comparable to similarly titled, but variously calculated, measures of other REITs.
In addition, the Company considers cash-basis same store NOI (“SS NOI”) to be a useful supplemental measure of its operating performance. Same store properties, for the period beginning January 1, 2011, include all properties owned prior to January 1, 2010 and held as an operating property through the end of the current reporting period, and developments and redevelopments that were placed in service or were substantially completed for 12 months prior to January 1, 2010 (the “Same Store Pool”). The Company defines SS NOI as NOI, less NOI of properties not in the Same Store Pool, less the impact of straight-line rent, the amortization of lease inducements and the amortization of above/below market rent. For the quarters ended December 31, 2011 and December 31, 2010, NOI was $55,091 and $57,422, respectively; NOI of properties not in the Same Store Pool was $(269) and $950, respectively; the impact of straight-line rent, the amortization of lease inducements and the amortization of above/below market rent was $1,940 and $2,396, respectively. The Company excludes straight-line rent, amortization of lease inducements and above/below market rent in calculating SS NOI because the Company believes it provides a better measure of actual cash basis rental growth for a year-over-year comparison. In addition, the Company believes that SS NOI helps the investing public compare the operating performance of a company’s real estate as compared to other companies. While SS NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income (loss) as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. SS NOI also does not reflect general and administrative expenses, interest expenses, depreciation and amortization costs, capital expenditures and leasing costs, or trends in development and construction activities that could materially impact our results from operations. Further, the Company’s computation of SS NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating SS NOI.http://tourism9.com/ http://vkins.com/
(Logo: http://photos.prnewswire.com/prnh/20040106/FRLOGO)
First Industrial’s fourth quarter FFO was $0.23 per share/unit on a diluted basis, compared to $0.15 per share/unit last year. Full year 2011 FFO was $0.89 per share/unit on a diluted basis versus $0.80 per share/unit in 2010.
FFO per share results for the fourth quarter of 2011 include a $0.01 per share loss on retirement of debt and a $0.01 per share reversal of impairment on undepreciated real estate. FFO results for the full year 2011 include a $0.06 loss on retirement of debt, $0.02 per share of restructuring charges and an $0.08 per share reversal of impairment on undepreciated assets.
“The First Industrial team continued to deliver on all fronts in 2011 – driving occupancy, strengthening our capital base, and improving our portfolio through targeted asset sales and a return to investing,” said Bruce W. Duncan, First Industrial’s president and CEO. “We are positioned for growth in 2012 by leasing our vacancies and making disciplined new investments, while we continue to refine our portfolio through select asset sales.”
Portfolio Performance for On Balance Sheet Properties – Fourth Quarter 2011
- In-service occupancy was 87.9% at the end of the quarter, up 130 basis points from 86.6% at the end of the third quarter 2011, and up 290 basis points from 85.0% at the end of the fourth quarter of 2010.
- Retained tenants in 69.9% of square footage up for renewal.
- Excluding lease termination fees, same store cash basis net operating income (NOI) increased 0.5%. Including lease termination fees, same store cash basis NOI decreased 1.2%.
- Rental rates decreased 11.3% on a cash basis; leasing costs were $2.93 per square foot.
In the fourth quarter, the Company:
- Closed a new $450 million senior unsecured revolving credit facility with a three year term and one year extension option, with interest-only payments currently at LIBOR plus 210 basis points, and a facility fee on the unused portion that ranges from 25-35 basis points.
- Repurchased $6.0 million of its senior unsecured notes due 2028, $5.1 million of its 7.5% senior unsecured notes due 2017, $5.0 million of its 5.95% senior unsecured notes due 2017, $1.1 million of its senior unsecured notes due 2014, and $0.5 million of its senior unsecured notes due 2016.
Investment and Divestment Activities
In the fourth quarter, the Company:
- Completed asset sales for gross proceeds of approximately $12.4 million comprised of five industrial properties totaling approximately 468,000 square feet.
- Acquired its joint venture partner’s 85% interest in a 390,000 square-foot Class A distribution center in Central Pennsylvania for a total investment of $21.8 million at an in-place cap rate of 7.1%.
- Completed the construction of its First Inland Logistics Center development, a 692,000 square-foot state-of-the-art distribution center in Southern California.
First Industrial’s dividend policy is determined by our board of directors, and is dependent on multiple factors, including cash flow and capital expenditure requirements, as well as ensuring we meet the minimum distribution requirements set forth in the Code. We met these requirements in 2011.
Outlook for 2012
Mr. Duncan stated, “Industry fundamentals continue to be good, as leasing markets are active and new supply remains limited largely to bulk distribution centers in select coastal markets. As the economy continues to grow moderately, we expect tenants will continue to absorb industrial space which will benefit our portfolio. We expect our occupancy to decline in the first quarter due to seasonality and known moveouts, and increase over the balance of the year.”
| Low End of | High End of | |||||
| Guidance for 2012 | Guidance for 2012 | |||||
| (Per share/unit) | (Per share/unit) | |||||
| Net Income (Loss) Available to Common Stockholders | (0.40) | (0.30) | ||||
| Add: Real Estate Depreciation/Amortization | 1.33 | 1.33 | ||||
| FFO (NAREIT Definition) | $ 0.93 | $ 1.03 | ||||
- Average in-service occupancy of 87.5% to 89.0%.
- Same-store NOI of positive 2% to 4% for the full year.
- JV FFO of approximately $0.8 million.
- General and administrative expense of approximately $21.5 million to $22.5 million.
- The Company plans to sell properties in 2012 depending upon market conditions the impact of which is not included in our FFO and EPS guidance above. Guidance does not include the impact of any future impairment gains or losses.
- Guidance does not include the impact of any future property investments; however, guidance does reflect the impact of the 390,000 square-foot acquisition completed in 1Q12 described above.
- Guidance does not include the impact of any future debt repurchases prior to maturity or future debt issuances.
- Guidance does not include the impact of issuing additional equity, which the Company may elect to do, depending on market conditions.
FFO Definition
First Industrial reports FFO in accordance with the NAREIT definition to provide a comparative measure to other REITs. NAREIT recommends that REITs define FFO as net income, excluding gains (or losses) from the sale of previously depreciated property, plus depreciation and amortization, excluding impairments from previously depreciated assets, and after adjustments for unconsolidated partnerships and joint ventures.
About First Industrial Realty Trust, Inc.
First Industrial Realty Trust, Inc. (NYSE: FR – News) is a leading owner and operator of industrial real estate and provider of supply chain solutions to multinational corporations and regional customers. Across major markets in North America, our local market experts manage, lease, buy, (re)develop, and sell bulk and regional distribution centers, light industrial, and other industrial facility types. We have a track record of industry leading customer service, and in total, we own, manage and have under development approximately 70.9 million square feet of industrial space. For more information, please visit us at www.firstindustrial.com. We post or otherwise make available on this website from time to time information that may be of interest to investors.
Forward-Looking Information
This press release and the presentation to which it refers may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “seek,” “target,” “potential,” “focus,” “may,” “should” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a materially adverse effect on our operations and future prospects include, but are not limited to: changes in national, international, regional and local economic conditions generally and real estate markets specifically; changes in legislation/regulation (including changes to laws governing the taxation of real estate investment trusts) and actions of regulatory authorities (including the Internal Revenue Service); our ability to qualify and maintain our status as a real estate investment trust; the availability and attractiveness of financing (including both public and private capital) to us and to our potential counterparties; the availability and attractiveness of terms of additional debt repurchases; interest rates; our credit agency ratings; our ability to comply with applicable financial covenants; competition; changes in supply and demand for industrial properties (including land, the supply and demand for which is inherently more volatile than other types of industrial property) in the Company’s current and proposed market areas; difficulties in consummating acquisitions and dispositions; risks related to our investments in properties through joint ventures; environmental liabilities; slippages in development or lease-up schedules; tenant creditworthiness; higher-than-expected costs; changes in asset valuations and related impairment charges; changes in general accounting principles, policies and guidelines applicable to real estate investment trusts; international business risks; and those additional factors described under the heading “Risk Factors” and elsewhere in the Company’s annual report on Form 10-K for the year ended December 31, 2010 and in the Company’s subsequent ’34 Act reports. We caution you not to place undue reliance on forward-looking statements, which reflect our outlook only and speak only as of the date of this press release or the dates indicated in the statements. We assume no obligation to update or supplement forward-looking statements. For further information on these and other factors that could impact the Company and the statements contained herein, reference should be made to the Company’s filings with the Securities and Exchange Commission.
A schedule of selected financial information is attached.
First Industrial Realty Trust, Inc. (NYSE: FR – News), a leading owner and operator of industrial real estate and provider of supply chain solutions, will host its quarterly conference call on Thursday, February 23, 2012 at 11:00 a.m. EST (10:00 a.m. CST). The conference call may be accessed by dialing (866) 542-2938 and entering reservation code 51563038. The conference call will also be webcast live on the Investor Relations page of the Company’s website at www.firstindustrial.com. The replay will also be available on the website.
The Company’s fourth quarter and full year supplemental information can be viewed on First Industrial’s website, www.firstindustrial.com, under the “Investor Relations” tab.
| FIRST INDUSTRIAL REALTY TRUST, INC. | |||||||||
| Selected Financial Data | |||||||||
| (In thousands, except for per share/unit) | |||||||||
| (Unaudited) | |||||||||
| Three Months Ended | Year Ended | ||||||||
| December 31, | December 31, | December 31, | December 31, | ||||||
| 2011 | 2010 | 2011 | 2010 | ||||||
| Statement of Operations and Other Data: | |||||||||
| Total Revenues | $ 79,677 | $ 80,127 | $ 317,835 | $ 321,778 | |||||
| Property Expenses | (27,546) | (27,326) | (108,590) | (108,651) | |||||
| General & Administrative Expense | (5,585) | (5,358) | (20,638) | (26,589) | |||||
| Restructuring Costs | - | (309) | (1,553) | (1,858) | |||||
| Impairment of Real Estate | 1,006 | (15,516) | 8,807 | (112,904) | |||||
| Depreciation of Corporate F,F&E | (328) | (458) | (1,426) | (1,975) | |||||
| Depreciation and Amortization of Real Estate | (32,351) | (29,298) | (120,178) | (123,323) | |||||
| Construction Expenses | - | (51) | - | (507) | |||||
| Total Expenses | (64,804) | (78,316) | (243,578) | (375,807) | |||||
| Interest Income | 888 | 1,244 | 3,922 | 4,364 | |||||
| Interest Expense | (23,196) | (27,159) | (100,127) | (105,898) | |||||
| Amortization of Deferred Financing Costs | (726) | (1,061) | (3,963) | (3,473) | |||||
| Loss from Retirement of Debt | (855) | (320) | (5,459) | (4,304) | |||||
| Mark-to-Market (Loss) Gain on Interest Rate Protection Agreements | (158) | 681 | (1,718) | (1,107) | |||||
| Foreign Currency Exchange Loss | - | - | (332) | (190) | |||||
| Loss from Continuing Operations Before Gain on Sale of Joint Venture Interest, | |||||||||
| Equity in Income of Joint Ventures, Gain on Change in Control of Interests | |||||||||
| and Income Tax Provision | (9,174) | (24,804) | (33,420) | (164,637) | |||||
| Gain on Sale of Joint Venture Interest | - | 1,352 | - | 11,226 | |||||
| Equity in Income of Joint Ventures (b) | 73 | 950 | 980 | 675 | |||||
| Gain on Change in Control of Interests | - | - | 689 | - | |||||
| Income Tax Provision | (424) | (536) | (450) | (2,963) | |||||
| Loss from Continuing Operations | (9,525) | (23,038) | (32,201) | (155,699) | |||||
| Discontinued Operations: | |||||||||
| Income (Loss) Attributable to Discontinued Operations | 1,464 | (3,702) | 2,920 | (77,529) | |||||
| Gain on Sale of Real Estate | 7,068 | 1,525 | 20,419 | 11,092 | |||||
| Benefit (Provision) for Income Taxes Allocable to Discontinued Operations | 817 | - | (1,246) | - | |||||
| Total Discontinued Operations | 9,349 | (2,177) | 22,093 | (66,437) | |||||
| Loss Before Gain on Sale of Real Estate | (176) | (25,215) | (10,108) | (222,136) | |||||
| Gain on Sale of Real Estate | - | - | 1,370 | 859 | |||||
| Provision for Income Taxes Allocable to Gain on Sale of Real Estate | - | - | (452) | (342) | |||||
| Net Loss | (176) | (25,215) | (9,190) | (221,619) | |||||
| Net Loss Attributable to the Noncontrolling Interest | 255 | 2,241 | 1,745 | 18,798 | |||||
| Net Income (Loss) Attributable to First Industrial Realty Trust, Inc. | 79 | (22,974) | (7,445) | (202,821) | |||||
| Preferred Dividends | (4,763) | (4,854) | (19,565) | (19,677) | |||||
| Net Loss Available to First Industrial Realty Trust, Inc.’s | |||||||||
| Common Stockholders and Participating Securities | $ (4,684) | $ (27,828) | $ (27,010) | $ (222,498) | |||||
| RECONCILIATION OF NET LOSS AVAILABLE TO | |||||||||
| FIRST INDUSTRIAL REALTY TRUST, INC.’S COMMON | |||||||||
| STOCKHOLDERS AND PARTICIPATING SECURITIES TO FFO (c) AND FAD (c) | |||||||||
| Net Loss Available to First Industrial Realty Trust, Inc.’s | |||||||||
| Common Stockholders and Participating Securities | $ (4,684) | $ (27,828) | $ (27,010) | $ (222,498) | |||||
| Depreciation and Amortization of Real Estate | 32,351 | 29,298 | 120,178 | 123,323 | |||||
| Depreciation and Amortization of Real Estate Included in Discontinued Operations | 230 | 1,192 | 2,145 | 11,273 | |||||
| Noncontrolling Interest | (255) | (2,241) | (1,745) | (18,798) | |||||
| Depreciation and Amortization of Real Estate from Joint Ventures (b) | 102 | (187) | 551 | 947 | |||||
| Impairment of Depreciated Real Estate | (400) | 6,265 | (1,687) | 90,204 | |||||
| Impairment of Depreciated Real Estate Included in Discontinued Operations | 648 | 6,019 | 6,146 | 81,648 | |||||
| Gain on Change in Control of Interests | - | - | (689) | - | |||||
| Non-NAREIT Compliant Gain | (7,068) | (1,525) | (20,419) | (11,073) | |||||
| Non-NAREIT Compliant Gain from Joint Ventures (b) | - | (350) | (616) | (231) | |||||
| Funds From Operations (NAREIT) (“FFO”) (c) | $ 20,924 | $ 10,643 | $ 76,854 | $ 54,795 | |||||
| Loss from Retirement of Debt | 855 | 320 | 5,459 | 4,304 | |||||
| Restricted Stock Amortization | 991 | 1,373 | 3,759 | 6,040 | |||||
| Amortization of Deferred Financing Costs | 726 | 1,061 | 3,963 | 3,473 | |||||
| Depreciation of Corporate F,F&E | 328 | 458 | 1,426 | 1,975 | |||||
| Impairment of Undepreciated Real Estate | (606) | 9,251 | (7,120) | 22,700 | |||||
| Mark-to-Market Loss (Gain) on Interest Rate Protection Agreements | 158 | (681) | 1,718 | 1,107 | |||||
| Non-Incremental Capital Expenditures | (18,306) | (16,289) | (56,038) | (42,476) | |||||
| Straight-Line Rent | (1,987) | (2,113) | (7,733) | (7,041) | |||||
| Funds Available for Distribution (“FAD”) (c) | $ 3,083 | $ 4,023 | $ 22,288 | $ 44,877 | |||||
| FIRST INDUSTRIAL REALTY TRUST, INC. | |||||||||
| Selected Financial Data | |||||||||
| (In thousands, except for per share/unit) | |||||||||
| (Unaudited) | |||||||||
| Three Months Ended | Year Ended | ||||||||
| December 31, | December 31, | December 31, | December 31, | ||||||
| 2011 | 2010 | 2011 | 2010 | ||||||
| RECONCILIATION OF NET LOSS AVAILABLE TO | |||||||||
| FIRST INDUSTRIAL REALTY TRUST, INC.’S COMMON | |||||||||
| STOCKHOLDERS AND PARTICIPATING SECURITIES TO EBITDA (c) AND NOI (c) | |||||||||
| Net Loss Available to First Industrial Realty Trust, Inc.’s | |||||||||
| Common Stockholders and Participating Securities | $ (4,684) | $ (27,828) | $ (27,010) | $ (222,498) | |||||
| Interest Expense | 23,196 | 27,159 | 100,127 | 105,898 | |||||
| Interest Expense Included in Discontinued Operations | - | 66 | 63 | 268 | |||||
| Restructuring Costs | - | 309 | 1,553 | 1,858 | |||||
| Impairment of Undepreciated Real Estate | (606) | 9,251 | (7,120) | 22,700 | |||||
| Impairment of Depreciated Real Estate | (400) | 6,265 | (1,687) | 90,204 | |||||
| Impairment of Depreciated Real Estate Included in Discontinued Operations | 648 | 6,019 | 6,146 | 81,648 | |||||
| Depreciation and Amortization of Real Estate | 32,351 | 29,298 | 120,178 | 123,323 | |||||
| Depreciation and Amortization of Real Estate Included in Discontinued Operations | 230 | 1,192 | 2,145 | 11,273 | |||||
| Preferred Dividends | 4,763 | 4,854 | 19,565 | 19,677 | |||||
| (Benefit) Provision for Income Taxes | (393) | 536 | 2,148 | 3,305 | |||||
| Noncontrolling Interest | (255) | (2,241) | (1,745) | (18,798) | |||||
| Loss from Retirement of Debt | 855 | 320 | 5,459 | 4,304 | |||||
| Amortization of Deferred Financing Costs | 726 | 1,061 | 3,963 | 3,473 | |||||
| Depreciation of Corporate F,F&E | 328 | 458 | 1,426 | 1,975 | |||||
| Depreciation and Amortization of Real Estate from Joint Ventures (b) | 102 | (187) | 551 | 947 | |||||
| Gain on Change in Control of Interests | - | - | (689) | - | |||||
| Non-NAREIT Compliant Gain | (7,068) | (1,525) | (20,419) | (11,073) | |||||
| Non-NAREIT Compliant Gain from Joint Ventures (b) | - | (350) | (616) | (231) | |||||
| EBITDA (c) | $ 49,793 | $ 54,657 | $ 204,038 | $ 218,253 | |||||
| General and Administrative Expense | 5,585 | 5,358 | 20,638 | 26,589 | |||||
| Foreign Currency Exchange Loss | - | - | 332 | 190 | |||||
| Mark-to-Market Loss (Gain) on Interest Rate Protection Agreements | 158 | (681) | 1,718 | 1,107 | |||||
| NAREIT Compliant Economic Gain (c) | - | - | (1,370) | (878) | |||||
| FFO of Joint Ventures (c) | (445) | (1,912) | (1,885) | (17,569) | |||||
| Net Operating Income (“NOI”) (c) | $ 55,091 | $ 57,422 | $ 223,471 | $ 227,692 | |||||
| RECONCILIATION OF GAIN ON SALE OF REAL ESTATE | |||||||||
| TO NAREIT COMPLIANT ECONOMIC GAIN (c) | |||||||||
| Gain on Sale of Real Estate | $ - | $ - | $ 1,370 | $ 859 | |||||
| Gain on Sale of Real Estate included in Discontinued Operations | 7,068 | 1,525 | 20,419 | 11,092 | |||||
| Non-NAREIT Compliant Gain | (7,068) | (1,525) | (20,419) | (11,073) | |||||
| NAREIT Compliant Economic Gain (c) | $ - | $ - | $ 1,370 | $ 878 | |||||
| Weighted Avg. Number of Shares/Units Outstanding – Basic/Diluted (a) | 91,200 | 69,413 | 85,913 | 68,327 | |||||
| Weighted Avg. Number of Shares Outstanding – Basic/Diluted (a) | 85,941 | 64,049 | 80,616 | 62,953 | |||||
| Per Share/Unit Data: | |||||||||
| FFO (NAREIT) Allocable to Common Stockholders and Unitholders | $ 20,924 | $ 10,643 | $ 76,854 | $ 54,795 | |||||
| - Basic/Diluted (a) | $ 0.23 | $ 0.15 | $ 0.89 | $ 0.80 | |||||
| Loss from Continuing Operations, including Gain on Sale of Real Estate, Net of Income Tax | $ (9,525) | $ (23,038) | $ (31,283) | $ (155,182) | |||||
| Add: Noncontrolling Interest Allocable to Continuing Operations and Gain on Sale of Real Estate | 798 | 2,065 | 3,097 | 13,623 | |||||
| Less: Preferred Dividends | (4,763) | (4,854) | (19,565) | (19,677) | |||||
| Loss from Continuing Operations Available to First Industrial Realty Trust, Inc.’s Common Stockholders | $ (13,490) | $ (25,827) | $ (47,751) | $ (161,236) | |||||
| - Basic/Diluted (a) | $ (0.16) | $ (0.40) | $ (0.59) | $ (2.56) | |||||
| Net Loss Available to First Industrial Realty Trust, Inc.’s Common Stockholders | $ (4,684) | $ (27,828) | $ (27,010) | $ (222,498) | |||||
| - Basic/Diluted (a) | $ (0.05) | $ (0.43) | $ (0.34) | $ (3.53) | |||||
| Balance Sheet Data (end of period): | |||||||||
| Real Estate Before Accumulated Depreciation | $ 2,992,096 | $ 2,618,767 | |||||||
| Real Estate and Other Held For Sale, Net | 91,659 | 392,291 | |||||||
| Total Assets | 2,666,657 | 2,750,054 | |||||||
| Debt | 1,479,483 | 1,742,782 | |||||||
| Total Liabilities | 1,594,062 | 1,857,910 | |||||||
| Total Equity | $ 1,072,595 | $ 892,144 | |||||||
GAAP requires unvested equity based compensation awards that have nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) to be included in the two class method of the computation of EPS. For the three and twelve months ended December 31, 2011 and December 31, 2010, there was no impact on basic and diluted EPS as participating security holders are not obligated to share in losses. The Company conforms the calculation of FFO and FAD with the calculation of EPS.
b) Represents the Company’s pro rata share of net income (loss), depreciation and amortization on real estate and Non-NAREIT compliant gain (loss).
c) Investors in and analysts following the real estate industry utilize funds from operations (“FFO”), net operating income (“NOI”), EBITDA and funds available for distribution (“FAD”), variously defined, as supplemental performance measures. While the Company believes net income (loss) available to First Industrial Realty Trust, Inc.’s common stockholders and participating securities, as defined by GAAP, is the most appropriate measure, it considers FFO, NOI, EBITDA and FAD, given their wide use by and relevance to investors and analysts, appropriate supplemental performance measures. FFO, reflecting the assumption that real estate asset values rise or fall with market conditions, principally adjusts for the effects of GAAP depreciation and amortization of real estate assets. NOI provides a measure of rental operations, and does not factor in depreciation and amortization and non-property specific expenses such as general and administrative expenses. EBITDA provides a tool to further evaluate the ability to incur and service debt and to fund dividends and other cash needs. FAD provides a tool to further evaluate the ability to fund dividends. In addition, FFO, NOI, EBITDA and FAD are commonly used in various ratios, pricing multiples/yields and returns and valuation calculations used to measure financial position, performance and value.
From January 1, 2009 until September 30, 2011, the Company calculated FFO to be equal to net income (loss) available to First Industrial Realty Trust, Inc.’s common stockholders and participating securities, plus depreciation and amortization on real estate less non-NAREIT compliant gain (loss) in accordance with NAREIT’s definition of FFO. In the fourth quarter of 2011, NAREIT modified its definition of FFO to exclude impairment write downs of depreciable real estate from FFO. Beginning in the fourth quarter of 2011, the Company adopted NAREIT’s updated FFO definition and restated FFO for the year ended December 31, 2011 and December 31, 2010 in accordance with NAREIT’s updated FFO definition. The impact of this change was to increase FFO by $4.5 million or $0.05 per share for the year ended December 31, 2011 and to increase FFO by $171.9 million or $2.51 per share for the year ended December 31, 2010. The Company also restated the three months ended December 31, 2010. The impact of this change was to increase FFO by $12.3 million or $0.17 per share.
NOI is defined as revenues of the Company, minus property expenses such as real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses. NOI includes NOI from discontinued operations.
EBITDA is defined as NOI plus the equity in FFO of the Company’s joint ventures, which are accounted for under the equity method of accounting, plus or minus NAREIT compliant economic gain (loss), plus foreign exchange loss, plus or minus mark-to-market gain or loss on interest rate protection agreements, minus general and administrative expenses. EBITDA includes EBITDA from discontinued operations.
FAD is defined as EBITDA minus GAAP interest expense, minus restructuring costs, minus preferred stock dividends, minus straight-line rental income, minus provision for income taxes or plus benefit for income taxes, minus or plus mark-to-market gain or loss on interest rate protection agreements, plus restricted stock amortization, minus non-incremental capital expenditures. Non-incremental capital expenditures are building improvements and leasing costs required to maintain current revenues. See footnote (aa).
FFO, NOI, EBITDA and FAD do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the repayment of principal on debt and payment of dividends and distributions. FFO, NOI, EBITDA and FAD should not be considered as substitutes for net income (loss) available to common stockholders and participating securities (calculated in accordance with GAAP) as a measure of results of operations or cash flows (calculated in accordance with GAAP) as a measure of liquidity. FFO, NOI, EBITDA and FAD as currently calculated by the Company may not be comparable to similarly titled, but variously calculated, measures of other REITs.
In addition, the Company considers cash-basis same store NOI (“SS NOI”) to be a useful supplemental measure of its operating performance. Same store properties, for the period beginning January 1, 2011, include all properties owned prior to January 1, 2010 and held as an operating property through the end of the current reporting period, and developments and redevelopments that were placed in service or were substantially completed for 12 months prior to January 1, 2010 (the “Same Store Pool”). The Company defines SS NOI as NOI, less NOI of properties not in the Same Store Pool, less the impact of straight-line rent, the amortization of lease inducements and the amortization of above/below market rent. For the quarters ended December 31, 2011 and December 31, 2010, NOI was $55,091 and $57,422, respectively; NOI of properties not in the Same Store Pool was $(269) and $950, respectively; the impact of straight-line rent, the amortization of lease inducements and the amortization of above/below market rent was $1,940 and $2,396, respectively. The Company excludes straight-line rent, amortization of lease inducements and above/below market rent in calculating SS NOI because the Company believes it provides a better measure of actual cash basis rental growth for a year-over-year comparison. In addition, the Company believes that SS NOI helps the investing public compare the operating performance of a company’s real estate as compared to other companies. While SS NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income (loss) as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. SS NOI also does not reflect general and administrative expenses, interest expenses, depreciation and amortization costs, capital expenditures and leasing costs, or trends in development and construction activities that could materially impact our results from operations. Further, the Company’s computation of SS NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating SS NOI.http://tourism9.com/ http://vkins.com/
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