NEW YORK, Nov. 14, 2018 /PRNewswire/ -- Hunt
Companies Finance Trust, Inc. (NYSE: HCFT) ("we", "HCFT"
or "the Company") today announced its financial results for the
third quarter ended September 30,
2018. For the third quarter, the Company reported GAAP net
income attributable to common shareholders of $3.5 million, or $0.15 per share, a comprehensive gain of
$3.5 million, or $0.15 per share, and core
earnings (1) of $2.5
million, or $0.10 per share.
The Company also reported a net book value of $4.85 per share at September 30, 2018.
"The third quarter of 2018 reflects positively on the execution
of our new strategic direction of focusing on floating-rate
commercial loans. During the quarter, the Company closed Hunt
CRE 2018-FL2, Ltd., a $285 million
commercial real estate Collateralized Loan Obligation, which
financed 20 first lien floating-rate commercial real estate
mortgage assets acquired from Hunt Finance Company, LLC, an
affiliate of the Company's Manager. With this transaction
completed, as of September 30, 2018
our portfolio was 98% comprised of floating-rate commercial real
estate mortgage loans," noted CEO James
Flynn. Mr. Flynn continued, "While the Company
continues to evaluate opportunities to monetize the 2% of our
portfolio comprised of legacy Multi-family MBS and Residential
MSRs, we have already significantly simplified the balance sheet
and have reduced our total leverage to 3.5x as of September 30, 2018, from 16.9x as of December 31, 2017. Our operating
performance is responding positively, as comprehensive income per
share has improved every quarter since Hunt took over as manager in
the first quarter of 2018."
(1)
|
Core Earnings is a
non-GAAP measure. Please refer to the reconciliation of the
most comparable GAAP measure below.
|
Investment Portfolio and Capital Allocation
The following table summarizes certain characteristics of our
investment portfolio and the related allocation of our equity
capital on a non-GAAP combined basis as of September 30, 2018:
For the period
ended
September 30, 2018
|
Multi-Family
MBS(1)(2)
|
Commercial
Mortgage Loans
|
MSRs
|
Unrestricted
Cash(3)
|
Total
|
|
|
Market
Value
|
5,331,931
|
544,586,537
|
4,209,124
|
9,912,051
|
564,039,643
|
|
|
Collateralized loan
obligations
|
-
|
(503,487,121)
|
-
|
-
|
(503,487,121)
|
|
|
Other(4)
|
4,071
|
17,920,855
|
-
|
(4,109,446)
|
13,815,480
|
|
|
Restricted Cash and
Due to Broker
|
-
|
77,694,264
|
-
|
-
|
77,694,264
|
|
|
Equity
Allocated
|
5,336,002
|
136,714,535
|
4,209,124
|
5,802,605
|
152,062,266
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Information with
respect to Multi-Family MBS and the resulting total is presented on
a non-GAAP basis. On a GAAP basis, which excludes the impact of
consolidation of the FREMF 2012-KF01 Trust, the fair value
of our investments in Multi-Family MBS is eliminated on
consolidation.
|
(2)
|
Includes the fair
value of our net investments in the FREMF 2012-KF01
Trust.
|
(3)
|
Includes cash and
cash equivalents.
|
(4)
|
Includes principal
receivable, interest receivable, prepaid and other assets, interest
payable, dividend payable and accrued expenses and other
liabilities.
|
|
|
|
|
|
|
|
|
|
Dividends
The Company previously announced that, with effect from the
third quarter of 2018, it would switch from paying dividends on its
common stock on a monthly basis to a quarterly basis.
Accordingly, the Company announced on September 10, 2018, its third quarter common
stock dividend of $0.06 per share of
common stock, payable on October 15,
2018 to stockholders of record on September 28, 2018.
In accordance with the terms of the 8.75% Cumulative Redeemable
Preferred Stock ("Series A Preferred Stock") of the Company, the
board of directors also declared monthly cash dividend rates for
the fourth quarter of 2018 of $0.1823 per share of Series A Preferred
Stock:
Fourth Quarter 2018 Series A Preferred Stock
Dividends
Month
|
Dividend
|
Record
Date
|
Payment
Date
|
|
|
|
|
October
2018
|
$0.1823
|
October 15,
2018
|
October 26,
2018
|
|
|
|
|
November
2018
|
$0.1823
|
November 15,
2018
|
November 27,
2018
|
|
|
|
|
December
2018
|
$0.1823
|
December 17,
2018
|
December 27,
2018
|
Conference Call and Webcast Information
The Company will also host a conference call on Thursday, November 15, 2018, at 9:30 AM ET to provide a business update and
discuss the financial results in the Third Quarter 2018
Report. The conference call may be accessed by dialing +1
(201) 689-8890, or US, Canada toll
free (877) 485-3103 with passcode 13685029, or by live webcast, on
a listen-only basis, which can be accessed through the URL:
https://event.webcasts.com/starthere.jsp?ei=1220155&tp_key=d6105655d8
Financial Information
FIVE OAKS
INVESTMENT CORP. AND SUBSIDIARIES
|
|
|
|
Consolidated Balance
Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
09/30/2018
|
|
12/31/2017
|
ASSETS
|
(unaudited)
|
|
|
Cash and cash
equivalents
|
$
9,912,051
|
|
$
34,347,339
|
Restricted
cash
|
77,694,265
|
|
11,275,263
|
Available-for-sale
securities, at fair value (includes pledged securities of $0 and
$1,295,225,428 for June 30, 2018 and December 31, 2017,
respectively)
|
-
|
|
1,290,825,648.00
|
Commercial mortgage
loans, held-for-investment, at amortized cost
|
544,586,537
|
|
-
|
Multi-family loans
held in securitization trusts, at fair value
|
24,787,988
|
|
1,130,874,274
|
Residential loans
held in securitization trusts, at fair value
|
-
|
|
119,756,455
|
Mortgage servicing
rights, at fair value
|
4,209,124
|
|
2,963,861
|
Deferred offering
costs
|
122,233
|
|
179,382
|
Accrued interest
receivable
|
2,542,868
|
|
8,852,036
|
Investment related
receivable
|
16,242,900
|
|
7,461,128
|
Derivative assets, at
fair value
|
-
|
|
5,349,613
|
Other
assets
|
713,762
|
|
656,117
|
|
|
|
|
Total
assets
|
$
680,811,728
|
|
$
2,612,541,116
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
LIABILITIES:
|
|
|
|
Repurchase
agreements:
|
|
|
|
Available-for-sale
securities
|
$
-
|
|
$
1,234,522,000
|
Collateralized loan
obligations net of discount of $2,716,862 and deferred financing
cost of $3,977,017 for September 30, 2018)
|
503,487,121
|
|
-
|
Multi-family
securitized debt obligations
|
19,462,838
|
|
1,109,204,743
|
Residential
securitized debt obligations
|
-
|
|
114,418,318
|
Accrued interest
payable
|
854,060
|
|
6,194,464
|
Dividends
payable
|
1,450,609
|
|
39,132
|
Deferred
income
|
397,203
|
|
222,518
|
Due to
broker
|
-
|
|
1,123,463
|
Fees and expenses
payable to Manager
|
3,001,338
|
|
752,000
|
Other accounts
payable and accrued expenses
|
96,293
|
|
273,201
|
|
|
|
|
Total
liabilities
|
$
528,749,462
|
|
$
2,466,749,839
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES (NOTE 15)
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
Preferred Stock: par
value $0.01 per share; 50,000,000 shares authorized, 8.75% Series A
cumulative redeemable, $25 liquidation preference, 1,610,000 and
1,610,000 issued and outstanding at September 30, 2018 and December
31, 2017, respectively
|
37,156,972
|
|
37,156,972
|
Common Stock: par
value $0.01 per share; 450,000,000 shares authorized, 23,687,664
and 22,143,758 shares issued and outstanding, at September 30, 2018
and December 31, 2017, respectively
|
236,787
|
|
221,393
|
Additional paid-in
capital
|
231,296,687
|
|
224,048,169
|
Accumulated other
comprehensive income (loss)
|
-
|
|
(12,617,794)
|
Cumulative
distributions to stockholders
|
(112,438,915)
|
|
(104,650,235)
|
Accumulated earnings
(deficit)
|
(4,189,265)
|
|
1,632,772
|
|
|
|
|
Total stockholders'
equity
|
152,062,266
|
|
145,791,277
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
680,811,728
|
|
$
2,612,541,116
|
FIVE OAKS
INVESTMENT CORP. AND SUBSIDIARIES
|
Condensed
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues:
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
Interest
income:
|
|
|
|
|
|
|
|
Available-for-sale
securities
|
$
-
|
|
$
7,827,281
|
|
$
10,748,966
|
|
$
21,308,582
|
Residential mortgage
loans held-for-sale
|
-
|
|
12,082
|
|
-
|
|
69,416
|
Commercial mortgage
loans held-for-investment
|
9,365,400
|
|
-
|
|
15,259,400
|
|
-
|
Multi-family loans
held in securitization trusts
|
336,824
|
|
13,473,913
|
|
20,540,942
|
|
40,992,241
|
Residential loans
held in securitization trusts
|
-
|
|
1,249,966
|
|
2,102,352
|
|
3,903,924
|
Cash and cash
equivalents
|
17,024
|
|
63,264
|
|
134,002
|
|
138,745
|
Interest
expense:
|
|
|
|
|
|
|
|
Repurchase agreements
- available-for-sale securities
|
-
|
|
(4,118,639)
|
|
(7,637,242)
|
|
(9,087,956)
|
Collateralized loan
obligations
|
(4,366,632)
|
|
-
|
|
(7,255,799)
|
|
-
|
Multi-family
securitized debt obligations
|
(237,980)
|
|
(12,766,808)
|
|
(19,404,532)
|
|
(38,866,888)
|
Residential
securitized debt obligations
|
-
|
|
(995,293)
|
|
(1,685,971)
|
|
(3,100,616)
|
Net interest
income
|
5,114,636
|
|
4,745,766
|
|
12,802,118
|
|
15,357,448
|
Other
income:
|
|
|
|
|
|
|
|
Realized gain (loss)
on sale of investments, net
|
(13,617)
|
|
(5,148,445)
|
|
(33,358,905)
|
|
(14,616,997)
|
Change in unrealized
gain (loss) on fair value option securities
|
-
|
|
-
|
|
-
|
|
9,448,270
|
Realized gain (loss)
on derivative contracts, net
|
-
|
|
(1,636,725)
|
|
25,984,870
|
|
2,049,400
|
Change in unrealized
gain (loss) on derivative contracts, net
|
-
|
|
307,263
|
|
(5,349,613)
|
|
(8,583,100)
|
Realized gain (loss)
on mortgage loans held-for-sale, net
|
-
|
|
(221,197)
|
|
-
|
|
(221,620)
|
Change in unrealized
gain (loss) on mortgage loans held-for-sale
|
-
|
|
28,794
|
|
-
|
|
17,727
|
Change in unrealized
gain (loss) on mortgage servicing rights
|
103,512
|
|
(102,945)
|
|
1,245,264
|
|
(457,720)
|
Change in unrealized
gain (loss) on multi-family loans held in securitization
trusts
|
957,549
|
|
694,730
|
|
(5,861,373)
|
|
2,797,566
|
Change in unrealized
gain (loss) on residential loans held in securitization
trusts
|
-
|
|
(155,252)
|
|
5,650,199
|
|
(773,674)
|
Other interest
expense
|
-
|
|
-
|
|
-
|
|
(152,322)
|
Servicing
income
|
285,745
|
|
276,211
|
|
702,127
|
|
721,468
|
Other
income
|
27,942
|
|
8,369
|
|
88,434
|
|
33,275
|
Total other income
(loss)
|
1,361,131
|
|
(5,949,197)
|
|
(10,898,997)
|
|
(9,737,727)
|
Expenses:
|
|
|
|
|
|
|
|
Management
fee
|
586,926
|
|
573,412
|
|
1,767,252
|
|
1,670,804
|
General and
administrative expenses
|
796,600
|
|
1,288,978
|
|
3,148,945
|
|
4,120,807
|
Operating expenses
reimbursable to Manager
|
548,132
|
|
915,452
|
|
1,865,057
|
|
3,086,304
|
Other operating
expenses
|
136,400
|
|
225,502
|
|
742,059
|
|
770,189
|
Compensation
expense
|
54,683
|
|
49,562
|
|
201,845
|
|
155,384
|
Total
expenses
|
2,122,741
|
|
3,052,906
|
|
7,725,158
|
|
9,803,488
|
Net income
(loss)
|
4,353,026
|
|
(4,256,337)
|
|
(5,822,037)
|
|
(4,183,767)
|
Dividends to
preferred stockholders
|
(880,509)
|
|
(880,509)
|
|
(2,631,744)
|
|
(2,631,744)
|
Net income (loss)
attributable to common stockholders
|
$
3,472,517
|
|
$
(5,136,846)
|
|
$
(8,453,781)
|
|
$
(6,815,511)
|
Earnings (loss)
per share:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common stockholders (basic and diluted)
|
$
3,472,517
|
|
$
(5,136,846)
|
|
$
(8,453,781)
|
|
$
(6,815,511)
|
Weighted average
number of shares of common stock outstanding
|
23,687,273
|
|
22,139,258
|
|
23,588,688
|
|
19,342,188
|
Basic and diluted
income (loss) per share
|
$
0.15
|
|
$
(0.23)
|
|
$
(0.36)
|
|
$
(0.35)
|
Dividends declared
per weighted average share of common stock
|
$
0.06
|
|
$
0.15
|
|
$
0.22
|
|
$
0.45
|
Non-GAAP Financial Measures
For financial statement reporting purposes, GAAP requires us to
consolidate the assets and liabilities of the FREMF 2012-KF01
Trust. However, our maximum exposure to loss from
consolidation of the trusts is limited to the fair value of our net
investment therein. We therefore have also presented certain
information as of September 30, 2018,
and June 30, 2018, that includes our
net investments in the consolidated trust. This information as well
as core earnings, economic return and comparative expenses
constitute non-GAAP financial measures within the meaning of Item
10(e) of Regulation S-K, as promulgated by the SEC. While we
believe the non-GAAP information included in this press release
provides supplemental information to assist investors in analyzing
our remaining agency multifamily MBS position and Non-Agency RMBS,
and to assist investors in comparing our results with other peer
issuers, these measures are not in accordance with GAAP, and they
should not be considered a substitute for, or superior to, our
financial information calculated in accordance with GAAP. Our GAAP
financial results and the reconciliations from these results should
be carefully evaluated.
GAAP to Core
Earnings Reconciliation
|
Three months
Ended
|
|
Three months
Ended
|
|
September 30,
2018
|
|
June 30,
2018
|
Reconciliation of
GAAP to non-GAAP Information
|
|
|
|
Net Income (loss)
attributable to common shareholders
|
$
3,472,517
|
|
$
(22,360,401)
|
Adjustments for
non-core earnings
|
|
|
|
Realized (Gain) Loss
on sale of investments, net
|
$
13,617
|
|
$
30,497,281
|
Realized (Gain) Loss
on derivative contracts, net
|
$
-
|
|
$
(23,192,076)
|
Unrealized (Gain)
Loss on derivative contracts, net
|
$
-
|
|
$
18,132,701
|
Unrealized (Gain)
Loss on mortgage servicing rights
|
$
(103,512)
|
|
$
(1,084,063)
|
Unrealized (Gain)
Loss on multi-family loans held in securitization trusts
|
$
(957,549)
|
|
$
5,463,148
|
Unrealized (Gain)
Loss on residential loans held in securitization trusts
|
$
-
|
|
$
(5,905,602)
|
Subtotal
|
$
(1,047,444)
|
|
$
23,911,389
|
|
|
|
|
Other
Adjustments
|
|
|
|
Recognized
compensation expense related to restricted common stock
|
$
8,733
|
|
$
4,857
|
Adjustment for
consolidated securities
|
$
39,551
|
|
$
493,498
|
Adjustment for
one-time charges
|
$
-
|
|
$
-
|
Subtotal
|
$
48,284
|
|
$
498,355
|
|
|
|
|
Core
Earnings
|
$
2,473,357
|
|
$
2,049,343
|
|
|
|
|
Weighted average
shares outstanding - Basic and Diluted
|
23,687,273
|
|
23,683,164
|
Core Earnings per
weighted share outstanding - Basic and Diluted
|
$
0.10
|
|
$
0.09
|
Additional Information
As of September 30, 2018, we have
determined that we were the primary beneficiary of one Multi-Family
MBS securitization trust, FREMF 2012-KF01 Trust. As a result, we
are required to consolidate the trusts' underlying multi-family
loans together with their liabilities, income and expenses in our
consolidated financial statements. We have elected the fair value
option on the assets and liabilities held within the trust, which
requires that changes in valuation in the assets and liabilities of
this trust be reflected in our consolidated statements of
operations.
A reconciliation of our net capital investment in multi-family
investments to our financial statements as of September 30, 2018, is set forth below:
Multi-Family Loans
held in Securitization Trusts, at fair
value(1)
|
$
|
24,898,204
|
Multi-Family
Securitized Debt Obligations
(non-recourse)(2)
|
$
|
(19,566,273)
|
Net Carrying
Value
|
$
|
5,331,931
|
Cash and
Other
|
$
|
4,071
|
Net Capital in
Multi-Family
|
$
|
5,336,002
|
|
(1) Includes interest
receivable
|
(2) Includes interest
payable
|
Hunt Companies Finance Trust
Hunt Companies Finance Trust is a real estate investment trust
("REIT") focused with its subsidiaries on investing in, financing
and managing transitional multi-family and commercial real estate
loans, securities backed by multi-family mortgage loans or
multi-family mortgage-backed securities ("Multi-Family MBS"), and
other mortgage related investment including mortgage servicing
rights. The Company's objective is to deliver attractive cash flow
returns over time to its investors.
Hunt Companies Finance Trust is externally managed and advised
by Hunt Investment Management, LLC. For additional
information about Hunt Investment Management, LLC, please see its
form ADV and brochure (Part 2A of Form ADV) available at
https://www.adviserinfo.sec.gov.
Additional Information and Where to Find It
Investors, security holders and other interested persons may
find additional information regarding the Company at the SEC's
Internet site at http://www.sec.gov/ or the Company
website www.huntcompaniesfinancetrust.com or by directing
requests to: Hunt Companies Finance Trust, 230 Park Avenue, 19th
Floor, New York, NY 10169,
Attention: Investor Relations.
Forward-Looking Statements
Certain statements included in this press release and any
related webcast / conference call, may constitute forward-looking
statements intended to qualify for the safe harbor contained in
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act, as amended. Forward-looking
statements are subject to risks and uncertainties. These
forward-looking statements include information about possible or
assumed future results of our business, financial condition,
liquidity, results of operations, plans and objectives. You can
identify forward-looking statements by use of words such as
"believe," "expect," "anticipate," "estimate," "plan," "continue,"
"intend," "should," "may," "will," "seek," "would," "could," or
similar expressions or other comparable terms, or by discussions of
strategy, plans or intentions. Statements regarding the following
subjects, among others, may be forward-looking: the return on
equity; the yield on investments; the ability to borrow to finance
assets; and risks associated with investing in real estate assets,
including changes in business conditions and the general economy.
Forward-looking statements are based on our beliefs, assumptions
and expectations of our future performance, taking into account all
information currently available to us on the date of this press
release. Actual results may differ from expectations, estimates and
projections. Readers are cautioned not to place undue reliance on
forward-looking statements in this press release and/or any related
webcast / conference call and should consider carefully the factors
described in Part I, Item IA "Risk Factors" in our annual report on
Form 10-K/A for the year ended December
31, 2017, and the risk factor described in Part II, Item 1A
"Risk Factors" in our quarterly report on Form 10-Q/A for the
fiscal quarter ended June 30, 2018,
as such factors may be updated from time to time in our periodic
filings with the Securities and Exchange Commission ("SEC"), when
evaluating these forward-looking statements. Forward-looking
statements are subject to substantial risks and uncertainties, many
of which are difficult to predict and are generally beyond our
control. Additional information concerning these and other risk
factors are contained in our 2017 10-K/A which is available on the
Securities and Exchange Commission's website at www.sec.gov.
Except as required by applicable law, we disclaim any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise.
CONTACT: Evan N. Abrams, Senior
Vice President, Hunt Companies Finance Trust, (212) 588 2166
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SOURCE Hunt Companies Finance Trust, Inc.