Newcastle Investment Corp. (NYSE:NCT; “Newcastle”, the
“Company”) today reported the following information for the quarter
ended March 31, 2014.
FIRST QUARTER FINANCIAL
HIGHLIGHTS
- GAAP Income of $4 million, or $0.01 per
basic share
- Core Earnings of $34 million, or $0.10
per basic share
- Completed the spin-off of New Media
Investment Group (NYSE:NEWM) on February 13, 2014 – stock up 16%
from its fair market value of $12.30 at the time of
distribution
1Q 2014 4Q 2013 Summary Operating Results:
GAAP Income $4 million* $29 million GAAP Income per Basic Share
$0.01* $0.09
Non-GAAP Results: Core Earnings** $34
million $27 million Core Earnings per Basic Share** $0.10 $0.08
GAAP Book Value: $2.12*** $3.14
*1Q 2014 GAAP Income includes total
depreciation and amortization of $34 million, or $0.10 per basic
share, including $4 million, or $0.01 per share from New Media,
which is recorded in discontinued operations.
**For a reconciliation of GAAP Income to
Core Earnings, please refer to the Reconciliation of Core Earnings
below.
***Book Value decline is largely a result
of the spin-off of New Media.
Highlights for the quarter ended March 31, 2014
- Senior Housing – In January,
Newcastle invested $9 million of equity to acquire 2 managed senior
housing properties for a total purchase price of $26 million,
including transaction costs and working capital. Newcastle is also
in contract to acquire 15 properties for a total purchase price of
$319 million, which the Company expects will require an equity
investment of $230 million. There can be no assurance that the
Company will complete investments under contract, which are subject
to the completion of diligence and other closing conditions.
- CDOs & Other
- Intrawest Resort
Holdings Third-Lien Pay Down – In February, Newcastle
received $83 million of proceeds from Intrawest Resort Holdings as
a partial prepayment of a third-lien loan held in CDO VIII &
CDO IX. As a result of Newcastle’s direct holdings in CDO VIII, the
Company received approximately $22 million of principal
recovery.
- Sold 100% of
Agency RMBS Portfolio – In January, Newcastle sold $503
million face amount of Agency RMBS at an average price of 105.8%,
or $532 million. After paying off the related financing, the
Company received $28 million of principal recovery, which
represented a $2 million gain on sale.
- New Media Investment Group – In
February, Newcastle completed the spin-off of the Company’s 85%
ownership interest in New Media Investment Group. Holders of
Newcastle common stock as of the record date, February 6, 2014,
were issued approximately 0.07219 common shares of New Media
Investment Group per common share of Newcastle.
- Dividend – In December,
Newcastle declared a first quarter dividend of $0.10 per common
share.
ADDITIONAL INFORMATION
For additional information that management believes to be useful
for investors, please refer to the presentation posted on the
Investor Relations section of Newcastle’s website,
www.newcastleinv.com. For consolidated investment portfolio
information, please refer to the Company’s Quarterly Report on Form
10-Q, which will be available on the Company’s website,
www.newcastleinv.com.
EARNINGS CONFERENCE CALL
Newcastle’s management will host a conference call on Friday,
May 2, 2014 at 10:00 A.M. Eastern Time. A copy of the earnings
release will be posted to the Investor Relations section of
Newcastle’s website, www.newcastleinv.com.
All interested parties are welcome to participate on the live
call. The conference call may be accessed by dialing 1-888-243-2046
(from within the U.S.) or 1-706-679-1533 (from outside of the U.S.)
ten minutes prior to the scheduled start of the call; please
reference “Newcastle First Quarter 2014 Earnings Call.”
A simultaneous webcast of the conference call will be available
to the public on a listen-only basis at www.newcastleinv.com.
Please allow extra time prior to the call to visit the website and
download any necessary software required to listen to the internet
broadcast.
A telephonic replay of the conference call will also be
available two hours following the call’s completion through 11:59
P.M. Eastern Time on Friday, May 16, 2014 by dialing 1-855-859-2056
(from within the U.S.) or 1-404-537-3406 (from outside of the
U.S.); please reference access code “35067808.”
Investment
Portfolio as of March 31, 2014
($ in millions, except where otherwise
noted)
Outstanding
Face Amount
Amortized Cost
Basis (1)
Percentage of
Total Amortized
Cost Basis
Carrying
Value
Number of
Investments
Credit (2)
Weighted
Average Life
(years) (3)
Debt
Investment
Commercial Assets CMBS $ 330 $ 230 8.20 % $ 286 49 BB- 2.4
Mezzanine Loans 158 125 4.50 % 125 8 87% 1.4 B-Notes 96 90 3.20 %
90 3 74% 1.4 Whole Loans 1 1 0.00 % 1 1 9% 0.6 CDO Securities (4)
72 56 2.00 % 60 2 BB+ 3.2 Other Investments (5) 60 60
2.20 % 60 2 — — Total Commercial Assets $ 717 $ 562 20.10 %
$ 622 2.1
Residential Assets MH and Residential Loans
270 243 8.70 % 243 7,515 706 5.3 Non-Agency RMBS 93 40 1.50 % 62 33
CCC+ 4.7 Real Estate ABS 8 — 0.00 % — 1 C —
Total Residential Assets 371 283 10.20 % 305
5.0
Corporate Assets REIT Debt 29 29 1.00 % 31 5 BB+
1.3 Corporate Bank Loans 175 97 3.50 % 97 5 C 2.3
Total Corporate Assets 204 126 4.50 % 128 2.2
Total Debt Investments 1,292 971 34.80 % 1,055 3.1
Other
Investments
Senior Housing Investments (6) 1,521 1,466 52.60 %
1,466
Golf Investment (6) 360 352 12.60
% 352
Total Portfolio/Weighted
Average
$ 3,173 $ 2,789 100.00 % $ 2,873
Reconciliation to GAAP total assets:
Other Assets
Subprime mortgageloans subject to call
option (7)
406
Other commercial real estate 7 Cash and restricted cash 126 Other
109 GAAP total assets $ 3,521 (1)
Net of impairment.
(2)
Credit represents the weighted average of
minimum rating for rated assets, the loan-to-value ratio (based on
the appraised value at the time of purchase or refinancing) for
non-rated commercial assets, or the FICO score for non-rated
residential assets. Ratings provided above were determined by third
party rating agencies, represent the most recent credit ratings
available as of the reporting date and may not be current.
(3)
Weighted average life is based on the
timing of expected principal reduction on the asset.
(4)
Represents non-consolidated CDO
securities, excluding nine securities with a zero value, which had
an aggregate face amount of $115.3 million.
(5)
Represents $25.8 million of equity
investment in a real estate owned property and $34.0 million
relating to a linked transaction.
(6)
Face amount of senior housing and golf
investments represents the gross carrying amount, including
intangibles, and excludes accumulated depreciation and
amortization.
(7)
Our subprime mortgage loans subject to
call option are excluded from the presentation of our consolidated
investment portfolio because they represent an option, not an
obligation, to repurchase loans, and the option is a noneconomic
interest until exercised, and is offset by a liability in an amount
equal to the GAAP asset on the consolidated balance sheet.
Unaudited Consolidated Statements of Income
($ in thousands, except per share
data)
Three Months Ended March 31, 2014
2013 Interest income $ 46,452 $
61,332 Interest expense 35,855
22,710 Net interest income
10,597 38,622
Impairment/(Reversal)
Valuation allowance (reversal) on
loans
1,246 2,234 Other-than-temporary impairment on securities — 422
Portion of other-than-temporary impairment
on securities recognized in other
comprehensive income (loss), net of the
reversal of other comprehensive loss
into net income (loss) — 117 Total impairment (reversal)
1,246 2,773 Net
interest income after impairment/reversal 9,351 35,849
Operating
Revenues Rental income 52,890 12,887 Care and ancillary income
5,461 613 Golf course operations 40,389 — Sales of food and
beverages - golf 13,539 — Other golf revenue
9,350 — Total operating revenues
121,629 13,500
Other Income Gain (loss) on settlement of
investments, net 2,332 (3 ) Gain on extinguishment of debt — 1,206
Other income, net 13,474
4,567 Total other income 15,806
5,770
Expenses Loan and
security servicing expense 857 1,034 Property operating expenses
23,804 8,670 Operating expenses - golf 58,338 — Cost of sales -
golf 5,956 — General and administrative expense 9,212 3,906
Management fee to affiliate 8,037 9,565 Depreciation and
amortization 30,359
4,079 Total expenses 136,563
27,254 Income from continuing
operations before income tax 10,223 27,865 Income tax expense
295 —
Income from continuing operations 9,928 27,865 Income (loss) from
discontinued operations, net of tax (5,305 )
10,148
Net Income 4,623 38,013
Preferred dividends (1,395 ) (1,395 )
Net loss attributable to noncontrolling
interests
661 —
Income Applicable to Common Stockholders $
3,889 $ 36,618
Income Per Share of Common Stock
Basic
$ 0.01 $ 0.16 Diluted $
0.01 $ 0.15
Income from continuing operations per
share of common stock, after preferred
dividends and noncontrolling
interests
Basic $ 0.03 $ 0.11
Diluted $ 0.03 $ 0.11
Income (loss) from discontinued operations per share of
common stock Basic $ (0.02 ) $ 0.05
Diluted $ (0.02 ) $ 0.04
Weighted Average Number of Shares of Common Stock
Outstanding Basic 351,453,495
235,136,756 Diluted
363,066,769 240,079,144
Dividends Declared per Share of Common Stock $
0.10 $ 0.22
Consolidated Balance Sheet
($ in thousands)
March 31, 2014
December 31, 2013
(Unaudited) Assets Real estate securities,
available-for-sale $ 439,023 $ 984,263 Real estate
related and other loans, held-for-sale, net 313,250 437,530
Residential mortgage loans, held-for-investment, net — 255,450
Residential mortgage loans, held-for-sale, net 248,299 2,185
Subprime mortgage loans subject to call option 406,217 406,217
Investments in senior housing real estate, net of accumulated
depreciation 1,374,710 1,362,900 Investments in other real estate,
net of accumulated depreciation 262,403 266,170 Intangibles, net of
accumulated amortization 187,101 199,725 Other investments 25,795
25,468 Cash and cash equivalents 122,053 74,133 Restricted cash
4,314 5,889 Receivables and other assets 137,444 141,887 Assets of
discontinued operations —
690,746
Total Assets $ 3,520,609 $
4,852,563
Liabilities and Equity
Liabilities CDO bonds payable $ 408,813 $ 544,525 Other
bonds and notes payable 221,305 230,279 Repurchase agreements
74,863 556,347 Mortgage notes payable 1,091,823 1,076,828 Credit
facilities, golf 152,961 152,498 Financing of subprime mortgage
loans subject to call option 406,217 406,217 Junior subordinated
notes payable 51,236 51,237 Dividends payable 36,075 36,075
Accounts payable, accrued expenses and other liabilities 271,841
277,166 Liabilities of discontinued operations —
295,267
Total Liabilities $
2,715,134 $ 3,626,439
Equity
Preferred stock, $0.01 par value,
100,000,000 shares authorized, 1,347,321 shares of 9.75% Series B
Cumulative Redeemable Preferred Stock, 496,000 shares of 8.05%
Series C Cumulative Redeemable Preferred Stock, and 620,000 shares
of 8.375% Series D Cumulative Redeemable Preferred Stock,
liquidation preference $25.00 per share, issued and outstanding as
of March 31, 2014 and December 31, 2013
$
61,583
$
61,583
Common stock, $0.01 par value,
1,000,000,000 shares authorized, 351,453,495 shares issued and
outstanding, at March 31, 2014 and December 31, 2013
3,515 3,515 Additional paid-in capital 2,970,786 2,970,786
Accumulated deficit (2,310,496 ) (1,947,913 ) Accumulated other
comprehensive income 79,860
76,874 Total Newcastle Stockholders' Equity 805,248
1,164,845 Noncontrolling interests 227
61,279
Total Equity $ 805,475 $
1,226,124
Total Liabilities and Equity
$ 3,520,609 $ 4,852,563
Reconciliation
of Core Earnings
($ in thousands)
Three Months Ended March 31, Year Ended
December 31, 2014 2013 2013 Income
available for common stockholders $ 3,889 $
36,618 $ 145,833 Add
(Deduct): Impairment (reversal) 1,246 2,773 (19,769 ) Other
(income) loss (15,847 ) (8,597 ) (35,401 ) Impairment (reversal),
other (income) loss, depreciation and amortization and other
adjustments from discontinued operations 5,792 16 (6,429 )
Depreciation and amortization(A) 32,039 4,079 33,093 Acquisition
and spin-off related expenses 6,602
2,546
23,576 Core Earnings $
33,721 $ 37,435 $
140,903 (A)
Including accretion of membership deposit
liability of $1.7 million in the three months ended March 31,
2014.
CORE EARNINGS
Newcastle has the following primary variables that impact its
operating performance: (i) the current yield earned on its
investments that are not included in non-recourse financing
structures (i.e., unlevered investments, including investments in
equity method investees and investments subject to recourse debt),
(ii) the net yield it earns from its non-recourse financing
structures, (iii) the interest expense and dividends incurred under
its recourse debt and preferred stock, (iv) the net operating
income on its real estate and golf investments, (v) its operating
expenses and (vi) its realized and unrealized gains or losses,
including any impairment, on its investments, derivatives and debt
obligations. Core Earnings is a non-GAAP measure of the operating
performance of Newcastle excluding the sixth variable listed above
and adjusting the consumer loans portfolio accounting to a level
yield methodology. It also excludes depreciation and amortization
charges, including accretion of membership deposit liability, and
acquisition and spin-off related expenses.
Core Earnings is used by management to gauge the current
performance of Newcastle without taking into account gains and
losses, which, although they represent a part of our recurring
operations, are subject to significant variability and are only a
potential indicator of future economic performance. It is the
judgment of management that depreciation and amortization charges
are not indicative of operating performance and that acquisition
and spin-off related expenses are not part of our core operations.
Management believes that the exclusion from Core Earnings of the
items specified above allows investors and analysts to readily
identify the operating performance of the assets that form the core
of our activity, assists in comparing the core operating results
between periods, and enables investors to evaluate Newcastle’s
current performance using the same measure that management uses to
operate the business, which is among the factors considered when
determining the amount of distributions to our shareholders.
Core Earnings does not represent cash generated from operating
activities in accordance with GAAP and therefore should not be
considered an alternative to net income as an indicator of our
operating performance or as an alternative to cash flow as a
measure of its liquidity and is not necessarily indicative of cash
available to fund cash needs. The Company’s calculation of Core
Earnings may be different from the calculation used by other
companies and, therefore, comparability may be limited.
ABOUT NEWCASTLE
The Company focuses on investing in, and actively managing, real
estate related assets and primarily invests in: (1) Senior Housing
Assets (2) Real Estate Debt and (3) Golf & Other Investments.
The Company conducts its operations to qualify as a real estate
investment trust ("REIT") for federal income tax purposes. The
Company is managed by an affiliate of Fortress Investment Group
LLC, a global investment management firm.
FORWARD-LOOKING STATEMENTS
Certain items in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
based on management's current expectations and beliefs and are
subject to a number of trends and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements, many of which are beyond our control.
The Company can give no assurance that its expectations will be
attained. Accordingly, you should not place undue reliance on any
forward-looking statements contained in this press release. For a
discussion of some of the risks and important factors that could
cause actual results to differ from such forward-looking
statements, see the sections entitled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operation” in the Company’s most recent Annual Report on
Form 10-K and Quarterly Report on Form 10-Q. Furthermore, new risks
and uncertainties emerge from time to time, and it is not possible
for the Company to predict or assess the impact of every factor
that may cause its actual results to differ from those contained in
any forward-looking statements. Such forward-looking statements
speak only as of the date of this press release. The Company
expressly disclaims any obligation to release publicly any updates
or revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
Newcastle Investment Corp.Investor Relations, 212-479-3195
New Senior Investment (NYSE:SNR)
Historical Stock Chart
From Feb 2024 to Mar 2024
New Senior Investment (NYSE:SNR)
Historical Stock Chart
From Mar 2023 to Mar 2024