Newcastle Announces First Quarter 2010 Results
First Quarter 2010 Financial Results
NEW YORK--(BUSINESS WIRE)-- Newcastle Investment Corp. (NYSE: NCT) reported that for the quarter ended March 31, 2010, income applicable to common stockholders ("GAAP income") was $180.2 million, or $3.36 per diluted share, compared to a loss applicable to common stockholders of $242.2 million, or $4.59 per diluted share, for the quarter ended March 31, 2009.
GAAP income of $180.2 million consisted of the following: $12.6 million of net interest income less expenses (net of preferred dividends), $56.6 million of other income, $43.0 million representing the excess of the carrying amount of the exchanged preferred stock over the fair value of the consideration paid ("gain on preferred stock exchange"), and $68.0 million from the reversal of prior valuation allowances on loans net of the impairment on securities.
Other income is primarily related to a gain on the extinguishment of CDO debt. In the first quarter, Newcastle repurchased a face amount of $56.3 million of CDO bonds for $7.6 million. As a result, Newcastle recorded a gain on the extinguishment of CDO debt of $48.3 million.
During the quarter, the Company announced and settled the offer to exchange (the "Exchange Offer") shares of its common stock and cash for a total of 1,152,679 shares of its Series B Preferred Stock, 1,104,000 shares of its Series C Preferred Stock and 1,380,000 shares of its Series D Preferred Stock. Upon settlement, the Company issued 9,091,698 shares of its Common Stock and paid an aggregate of $16.0 million in cash. In addition, the Company paid accumulated and unpaid dividends to all holders of its Preferred Stock and recorded a $43.0 million gain on the preferred stock exchange.
During the quarter, the Company entered into an Exchange Agreement, dated as of January 29, 2010, to exchange $51.9 million aggregate principal amount of junior subordinated notes due 2035 for $37.6 million face amount of previously issued CDO bonds and $9.7 million of cash.
For a reconciliation of income (loss) applicable to common stockholders to net interest income less expenses (net of preferred dividends), please refer to the tables following the presentation of the GAAP results.
Subsequent Event
On April 15, 2010, the Company completed a securitization transaction to refinance its Manufactured Housing Loans Portfolio I. The Company sold $164.1 million outstanding principal balance of manufactured housing loans to Newcastle MH I LLC (the "Issuer"), an indirect wholly-owned subsidiary of the Company. The Issuer issued $134.5 million aggregate principal amount of asset backed notes, of which $97.6 million was sold to third parties and $36.9 million was sold to certain CDOs managed and consolidated by the Company. At the closing of the transaction, the Company used the gross proceeds received from the issuance and repaid the existing debt in full, terminated the existing related interest rate swap contracts and paid related transaction costs. The Company received unrestricted cash of $14 million and retained the residual interest in the securitization.
Recourse Debt Financing and Liquidity
In the first quarter, the Company reduced its non-agency recourse debt by $22 million and repaid all of its remaining FNMA/FHLMC recourse debt. In April, the Company repaid its remaining $13 million of non-agency recourse debt financing real estate securities, loans, and properties. As detailed below, the Company's unrestricted cash balance currently exceeds its non-agency recourse liabilities (excluding its junior subordinated notes, which are long-term obligations).
Certain details regarding the Company's liquidity and current financings are set forth below as of May 5, 2010:
-- Cash - The Company had unrestricted cash of $25 million. In addition,
the Company had $160 million of restricted cash for reinvestment in its
CDOs;
-- Margin Exposure - The Company had no financings or derivatives subject
to margin calls as all of its outstanding repurchase agreements were
repaid in full and its remaining interest rate swap agreements subject
to margin calls were terminated.
The following table illustrates the change in unrestricted cash and recourse financings, excluding junior subordinated notes ($ in millions):
May 5, March 31, December 31,
2010 2010 2009
Unrestricted Cash $ 25 $ 12 $ 68
Recourse Financings
Non-FNMA/FHLMC (non-agency)
Real Estate Securities, Loans, and Properties - 13 32
Manufacturing Housing Loans 6 7 10
Subtotal 6 20 42
FNMA/FHLMC Investments - - 40
Total Recourse Financings $ 6 $ 20 $ 82
The remaining $6 million of recourse debt on the Manufacturing Housing Loans is due over the next six months.
CDO Financings
The following table summarizes the cash receipts in the first quarter of 2010 from the Company's consolidated CDO financings, their related coverage tests, and negative watch assets ($ in thousands):
IntereOver Collateralization Excess (Deficiency)
Apr 30, 2010(2)erage % Mar 31, Dec 31, Assets
Primary 2010(2) 2009(2) on
Excess
Collateral Receipts Negative
(1) (Deficiency)
Type % $ % $ % Watch(3) $
Apr 30,
2010(2)
CDO Securities $ 152 148.0 % -7.1 % (26,531 ) -7.1 % (26,531 ) -6.8 % (25,763 ) $ 118,808
IV
CDO V Securities 158 198.5 % -4.0 % (17,622 ) -4.0 % (17,622 ) -3.8 % (17,120 ) 123,561
CDO Securities 132 -50.4 % -36.6 % (159,008 ) -24.8 % (108,077 ) -21.8 % (95,647 ) 124,657
VI
CDO Loans 3,017 311.0 % 14.0 % 90,182 9.7 % 62,404 9.8 % 63,502 154,811
VIII
CDO Loans 3,740 206.6 % 7.8 % 50,582 10.9 % 70,156 10.5 % 68,089 21,750
IX
CDO X Securities 5,309 91.0 % 5.6 % 68,436 6.0 % 73,577 2.8 % 34,769 300,411
Total $ 12,508 $ 843,998
Represents net cash received from each CDO based on all of the interests in
such CDO (including senior management fees). Cash receipts for the quarter
(1) ended March 31, 2010 may not be indicative of cash receipts for subsequent
periods. See Forward-Looking Statements below for risks and uncertainties
that could cause cash receipts for subsequent periods to differ materially
from these amounts.
Represents excess or deficiency under the applicable interest coverage or
over collateralization test to the first threshold at which cash flow would
be redirected. The Company generally does not receive material cash flow
(2) from a CDO until a deficiency is corrected. The information regarding
coverage tests is based on data from the most recent remittance date on or
before April 30, 2010, March 31, 2010, or December 31, 2009, as applicable.
The CDO IV and V tests are conducted only on a quarterly basis (December,
March, June and September).
Represents the face amount of assets on negative watch for possible
downgrade by at least one rating agency (Moody's, S&P or Fitch). Amounts
are as of the determination date pertaining to March 2010 remittances for
(3) CDO IV and V (these tests are conducted only on a quarterly basis) and as
of the determination date pertaining to April 2010 remittances for all
other CDOs. The amounts include $140.2 million of CDO bonds issued by
Newcastle, which are eliminated in consolidation and not reflected in the
investment portfolio disclosures.
-- The cash receipts above include $1.6 million of non-recurring fees
received in the CDOs.
-- Results for April 30, 2010 include the effect of the default of the $60
million Stuyvesant Mezzanine loan held and subsequently sold out of CDO
IX.
-- Effective January 1, 2010, under new accounting guidance issued by the
FASB, the Company deconsolidated one of its non-recourse financing
structures, CDO VII. The Company determined that it is no longer the
primary beneficiary of CDO VII under the new guidance, as an event of
default had occurred and the Company may be removed as the collateral
manager by a single party. The deconsolidation has reduced the Company's
assets by $149.4 million, liabilities by $437.8 million, and
stockholder's deficit by $288.4 million.
Book Value
GAAP book value increased by $614 million or $14.87 per share. As of March 31, 2010, GAAP book value was $(1.2) billion or $(19.02) per share compared to $(1.8) billion or $(33.89) per share at December 31, 2009.
Dividends
For the quarter ended March 31, 2010, Newcastle's Board of Directors elected not to pay a common stock dividend. The Board of Directors declared accumulated and unpaid dividends as well as a dividend for the period February 1, 2010 through April 30, 2010 on Newcastle's 9.75% Series B, 8.05% Series C and 8.38% Series D Cumulative Redeemable Preferred Stock in the aggregate amounts of $3.66, $3.02 and $3.14 per share, respectively.
Investment Portfolio
Newcastle's $5.0 billion investment portfolio (with a basis of $3.0 billion) consists of commercial, residential and corporate debt. During the quarter, the portfolio decreased by $600 million, primarily as a result of the deconsolidation of CDO VII (which had $429 million of assets as of January 1, 2010), sales of $193 million and principal repayments of $81 million, offset by purchases of $127 million.
The following table describes the investment portfolio as of March 31, 2010 ($ in millions):
% of Weighted
Face Basis Number of
Total Credit(2) Average
Amount $ Amount $(1) Investments
Basis Life
(yrs)(3)
Commercial
Assets
CMBS $ 2,127 $ 1,415 46.7 % 271 BB+ 3.1
Mezzanine 717 250 8.3 % 21 69% 1.9
Loans
B-Notes 308 101 3.4 % 11 76% 2.0
Whole Loans 56 29 1.0 % 3 18% 4.7
CDO (4) 79 - 0.0 % 4 C 0.0
Total
Commercial 3,287 1,795 59.4 % 2.7
Assets
Residential
Assets
MH and
Residential 471 401 13.2 % 12,314 699 6.8
Loans
Subprime 418 167 5.5 % 94 B 4.2
Securities
Real Estate 83 62 2.0 % 24 BB+ 4.3
ABS
972 630 20.7 % 5.5
FNMA/FHLMC 4 4 0.1 % 1 AAA 3.6
Securities
Total
Residential 976 634 20.8 % 5.5
Assets
Corporate
Assets
REIT Debt 395 394 13.0 % 46 BB+ 3.8
Corporate 292 208 6.8 % 9 CCC- 3.7
Bank Loans
Total
Corporate 687 602 19.8 % 3.8
Assets
Total/Weighted $ 4,950 $ 3,031 100.0 % 3.4
Average(5)
(1) Net of impairment.
Credit represents the weighted average of minimum ratings for rated assets,
the Loan to Value ratio (based on the appraised value at the time of
purchase) for non-rated commercial assets, or the FICO score for non-rated
(2) residential assets and an implied AAA rating for FNMA/FHLMC securities.
Ratings provided above were determined by third party rating agencies as of
a particular date, may not be current and are subject to change (including
the assignment of a "negative watch") at any time.
(3) Weighted average life is based on the timing of expected principal
reduction on the asset.
(4) Includes one CDO bond issued by a third party and three CDO bonds issued by
CDO VII, which was deconsolidated, and held as investments by the Company.
(5) Excludes operating real estate held for sale of $10 million and loans
subject to call option with a face amount of $406 million.
Commercial Assets
The Company owns $3.3 billion of commercial assets (with a basis of $1.8 billion), which includes CMBS, mezzanine loans, B-Notes and whole loans.
-- During the quarter, the Company purchased $101 million, sold $78
million, had principal repayments of $32 million and had $13 million of
actual principal writedowns. The Company purchased 13 CMBS assets with
an average rating of "A-."
-- The Company had one commercial asset or $3 million upgraded, one
security or $3 million affirmed and 37 securities or $316 million
downgraded (from an average rating of BB+ to B).
CMBS portfolio ($ in thousands):
Average Weighted
Face Basis % of Delinquency Principal
Vintage Minimum Number Total Average
(1) Amount $ Amount $ 60+/FC/REO Subordination
Rating Basis (3) (4) Life
(2) (yrs)(5)
Pre 2004 BBB 86 434,488 416,264 29.4% 5.5% 12.4% 2.8
2004 BB 63 438,217 297,633 21.1% 3.2% 5.7% 3.4
2005 BB- 33 340,667 141,691 10.0% 3.7% 7.3% 3.1
2006 BB+ 51 488,676 346,859 24.5% 2.5% 10.7% 3.0
Post BB- 38 425,547 212,210 15.0% 4.9% 12.8% 3.2
2007
TOTAL/WA BB+ 271 2,127,595 1,414,657 100.0% 3.9% 9.9% 3.1
(1) The year in which the securities were issued.
Ratings provided above were determined by third party rating agencies as of
a particular date, which may not be current and are subject to change
(2) (including the assignment of a "negative watch") at any time. The Company
had approximately $557 million of CMBS assets that are on negative watch
for possible downgrade by at least one rating agency as of March 31, 2010.
(3) The percentage of underlying loans that are 60+ days delinquent, or in
foreclosure or considered real estate owned (REO).
(4) The percentage of the outstanding face amount of securities that is
subordinate to the Company's investments.
(5) Weighted average life is based on the timing of expected principal
reduction on the asset.
Mezzanine loans, B-Notes and whole loans portfolio ($ in thousands):
WA First WA Last $
Face Basis % of $
Asset Number Total Loan to Delinquency
Type Amount Amount Loan to (%)(2)
($) ($) Basis Value(1)
Value(1)
Mezzanine 21 717,134 250,066 65.7% 55.5% 69.3% 18.2%
Loans
B-Notes 11 308,006 101,452 26.7% 61.7% 75.8% 42.7%
Whole 3 56,085 29,111 7.6% 0.0% 18.2% 0.0%
Loans
Total/WA 35 1,081,225 380,629 100.0% 54.4% 68.5% 24.2%
(1) Loan To Value is based on the appraised value at the time of purchase.
(2) The percentage of underlying loans that are non-performing, in foreclosure,
under bankruptcy filing or considered real estate owned.
Residential Assets
The Company owns $976 million of residential assets (with a basis of $634 million), which includes manufactured housing ("MH") loans, residential loans, subprime securities and FNMA/FHLMC securities.
-- During the quarter, the Company purchased $26 million, sold $55 million,
had principal repayments of $41 million and actual principal writedowns
of $16 million. The Company purchased two ABS assets with an average
rating of "AAA."
-- The Company had no ABS securities upgraded, seven securities or $67
million affirmed, and 11 securities or $57 million downgraded (from an
average rating of BB+ to BB).
Manufactured housing and residential loan portfolios ($ in thousands):
Face Basis % of Average Delinquency Cumulative
Original
Deal Amount Amount Total Loan Age 90+/FC/REO Loss to
$ $ Balance $ (1) Date
Basis (months)
MH Loans 166,684 134,419 33.5% 101 327,855 1.1% 5.9%
Portfolio 1
MH Loans 236,065 215,695 53.7% 129 434,743 1.2% 3.9%
Portfolio 2
Residential
Loans 63,900 47,657 11.9% 82 646,357 7.9% 0.3%
Portfolio 1
Residential
Loans 3,794 3,509 0.9% 67 83,950 0.0% 0.0%
Portfolio 2
TOTAL/WA 470,443 401,280 100.0% 112 1,492,905 2.1% 4.1%
(1) The percentage of loans that are 90+ days delinquent, or in foreclosure or
considered real estate owned (REO).
Subprime Securities portfolio ($ in thousands):
Security Characteristics:
Average % of
Face Basis Principal Excess
Vintage Minimum Number Total
(1) Amount $ Amount $ Subordination Spread(4)
Rating Basis (3)
(2)
2003 BB- 15 21,400 12,836 7.7% 21.8% 4.0%
2004 B 30 100,652 36,458 21.8% 16.1% 4.1%
2005 B+ 27 105,380 32,026 19.2% 26.8% 4.8%
2006 CCC 12 93,068 32,131 19.3% 13.6% 5.0%
Post BB 10 97,768 53,406 32.0% 17.1% 3.5%
2007
TOTAL/WA B 94 418,268 166,857 100.0% 18.7% 4.3%
Collateral Characteristics:
Average
Collateral 3 Month Delinquency Cumulative
Vintage(1) Loan Age
Factor(5) CPR(6) 90+/FC/REO(7) Loss to Date
(months)
2003 85 0.10 7.9% 18.6% 2.9%
2004 71 0.15 8.7% 21.5% 3.2%
2005 59 0.22 11.5% 36.2% 7.8%
2006 47 0.48 9.8% 38.9% 11.8%
Post 2007 34 0.54 8.9% 26.2% 10.1%
TOTAL/WA 55 0.33 9.6% 30.0% 7.9%
Real Estate ABS portfolios ($ in thousands):
Security Characteristics:
Average % of
Face Basis Principal Excess
Asset Type Minimum Number Total
Amount $ Amount $ Subordination Spread
Rating Basis (3) (4)
(2)
Manufactured BBB+ 9 50,534 49,108 79.7% 37.2% 2.5%
Housing
Small
Business B 15 32,780 12,520 20.3% 18.3% 3.0%
Loans
TOTAL/WA BB+ 24 83,314 61,628 100.0% 29.7% 2.7%
Collateral Characteristics:
Average
Collateral 3 Month Delinquency Cumulative
Asset Type Loan Age
Factor(5) CPR(6) 90+/FC/REO(7) Loss to Date
(months)
Manufactured Housing 113 0.37 2.3% 4.8% 10.2%
Small Business Loans 68 0.57 3.4% 26.9% 4.7%
TOTAL/WA 95 0.45 2.7% 13.5% 8.0%
(1) The year in which the securities were issued.
Ratings provided above were determined by third party rating agencies as of
a particular date, may not be current and are subject to change (including
(2) the assignment of a "negative watch") at any time. The Company had
approximately $165 million of subprime and ABS securities that are on
negative watch for possible downgrade by at least one rating agency as of
March 31, 2010.
(3) The percentage of the outstanding face amount of securities and residual
interests that is subordinate to the Company's investments.
The annualized amount of interest received on the underlying loans in
(4) excess of the interest paid on the securities, as a percentage of the
outstanding collateral balance.
(5) The ratio of original unpaid principal balance of loans still outstanding.
(6) Three month average constant prepayment rate.
(7) The percentage of underlying loans that are 90+ days delinquent, or in
foreclosure or considered real estate owned (REO).
Corporate Assets
The Company owns $687 million of corporate assets (with a basis of $602 million), including REIT debt and corporate bank loans.
-- During the quarter, the Company sold $60 million and had principal
repayments of $8 million. The sales consisted of six REIT assets and one
bank loan with an average rating of "B+."
-- The Company had no REIT assets upgraded or affirmed and one bank loan or
$60 million downgraded (from a rating of CCC+ to CC).
REIT debt portfolio ($ in thousands):
Average % of
Face Basis
Industry Minimum Number Total
Amount $ Amount $
Rating(1) Basis
Retail BBB- 11 80,660 76,856 19.5%
Diversified CCC+ 10 106,836 107,723 27.3%
Office BBB 11 115,469 117,387 29.8%
Multifamily BBB 3 12,765 12,836 3.2%
Hotel BBB 4 30,220 30,727 7.8%
Healthcare BBB- 5 41,600 41,721 10.6%
Storage A- 1 5,000 5,068 1.3%
Industrial BB- 1 2,000 2,078 0.5%
TOTAL/WA BB+ 46 394,550 394,396 100.0%
Corporate bank loan portfolio ($ in thousands):
Average % of
Face Basis
Industry Minimum Number Total
Amount $ Amount $
Rating(1) Basis
Real Estate C 3 64,625 41,157 19.9%
Media CC 2 111,765 54,765 26.4%
Resorts BB- 1 68,833 68,489 33.0%
Restaurant B 2 19,375 17,185 8.3%
Transportation NR 1 27,000 25,650 12.4%
TOTAL/WA CCC- 9 291,598 207,246 100.0%
Ratings provided above were determined by third party rating agencies as of
a particular date, may not be current and are subject to change (including
(1) the assignment of a "negative watch") at any time. The Company had
approximately $22 million of REIT assets that are on negative watch for
possible downgrade by at least one rating agency as of March 31, 2010.
Conference Call
Newcastle's management will conduct a live conference call today, May 7, 2010, at 1:00 P.M. Eastern Time to review the financial results for the quarter ended March 31, 2010. All interested parties are welcome to participate on the live call. You can access the conference call by dialing (888) 243-2046 (from within the U.S.) or (706) 679-1533 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "Newcastle First Quarter 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 site and download the necessary software required to listen to the internet broadcast.
A telephonic replay of the conference call will also be available until 11:59 P.M. Eastern Time on Friday, May 14, 2010 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference access code "71825005."
About Newcastle
Newcastle Investment Corp. owns and manages a portfolio of diversified, credit sensitive real estate debt that is primarily financed with match funded debt. Newcastle is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes. Newcastle is managed by an affiliate of Fortress Investment Group LLC, a global investment management firm. For more information regarding Newcastle Investment Corp. or to be added to our e-mail distribution list, please visit www.newcastleinv.com.
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, including, but not limited to, statements relating to our liquidity, future losses and impairment charges, our ability to acquire assets with attractive returns and the delinquent and loss rates on our subprime portfolios. 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. Newcastle can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Newcastle's expectations include, but are not limited to, the risk that the ongoing challenging credit and liquidity conditions continue to cause downgrades of a significant number of our securities and recording of additional impairment charges or reductions in shareholders' equity; the risk that we can find additional suitably priced investments; the risk that investments made or committed to be made cannot be financed on the basis and for the term at which we expect; the relationship between yields on assets which are paid off and yields on assets in which such monies can be reinvested; and the relative spreads between the yield on the assets we invest in and the cost and availability of debt and equity financing. 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 affect 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 Quarterly Report on Form 10-Q, which is available on the Company's website (www.newcastleinv.com). In addition, 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. Newcastle 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.
Consolidated Statements of Operations (Unaudited)
(dollars in thousands, except per share data)
Three Months Ended March 31
2010 2009
Interest income $ 70,092 $ 124,473
Interest expense 45,589 60,544
Net interest income 24,503 63,929
Impairment
Valuation allowance (reversal) on loans (95,774 ) 120,888
Other-than-temporary impairment on securities 64,856 186,582
Portion of other-than-temporary impairment on
(37,114 ) -
securities recognized in other comprehensive
income
(68,032 ) 307,470
Net interest income (loss) after impairment 92,535 (243,541 )
Other Income (Loss)
Gain (loss) on settlement of investments, net 9,677 (8,047 )
Gain (losses) on extinguishment of debt 48,346 26,845
Other income (loss), net (1,565 ) (6,494 )
Equity in earnings (losses) of equity method 85 13
investees
56,543 12,317
Expenses
Loan and security servicing expense 1,035 1,402
General and administrative expense 3,038 1,626
Management fee to affiliate 4,477 4,491
Depreciation and amortization 63 72
8,613 7,591
Income (loss) from continuing operations 140,465 (238,815 )
Income (loss) from discontinued operations (40 ) (33 )
Net Income (Loss) 140,425 (238,848 )
Preferred dividends (3,268 ) (3,375 )
Excess of carrying amount of exchanged preferred
stock 43,043 -
over fair value of consideration paid
Income (Loss) Applicable to Common Stockholders $ 180,200 $ (242,223 )
Income (loss) Per Share of Common Stock
Basic $ 3.36 $ (4.59 )
Diluted $ 3.36 $ (4.59 )
Income (loss) from continuing operations per
share of common stock,
after preferred dividends and excess of carrying
amount of
exchanged preferred stock over fair value of
consideration paid
Basic $ 3.36 $ (4.59 )
Diluted $ 3.36 $ (4.59 )
Income (loss) from discontinued operations per
share
of common stock
Basic $ - $ -
Diluted $ - $ -
Weighted Average Number of Shares of Common Stock
Outstanding
Basic 53,619,643 52,807,232
Diluted 53,619,643 52,807,232
Dividends Declared per Share of Common Stock $ - $ -
Newcastle Investment Corp.
Consolidated Balance Sheets
(dollars in thousands, except share data)
March 31, 2010
(Unaudited) December 31, 2009
Assets
Non-Recourse VIE Financing Structures
Real estate securities, available for sale $ 1,762,830 $ 1,784,487
Real estate related loans, held for sale, net 578,166 554,367
Residential mortgage loans, held for sale, 404,474 380,123
net
Subprime mortgage loans subject to call 403,190 403,006
option
Restricted cash 233,979 200,251
Receivables from brokers, dealers and 843 -
clearing organizations
Receivables and other assets 33,271 36,643
3,416,753 3,358,877
Recourse Financing Structures and Unlevered
Assets
Real estate securities, available for sale 1,597 46,308
Real estate related loans, held for sale, net 9,722 19,495
Residential mortgage loans, held for sale, 3,516 3,524
net
Investments in equity method investees 41 193
Operating real estate, held for sale 9,966 9,966
Cash and cash equivalents 11,838 68,300
Restricted cash 54 5,127
Receivables from brokers, dealers and 16,116 -
clearing organizations
Receivables and other assets 1,640 2,838
54,490 155,751
$ 3,471,243 $ 3,514,628
Liabilities and Stockholders' Equity (Deficit)
Liabilities
Non-Recourse VIE Financing Structures
CDO bonds payable $ 3,623,503 $ 4,058,928
Other bonds payable 292,486 303,697
Notes payable 4,681 -
Financing of subprime mortgage loans subject 403,190 403,006
to call option
Derivative liabilities 184,798 203,054
Accrued expenses and other liabilities 2,444 2,992
4,511,102 4,971,677
Recourse Financing Structures and Other
Liabilities
Repurchase agreements 12,889 71,309
Junior subordinated notes payable 51,257 103,264
Derivative liabilities - 4,100
Dividends payable 78 -
Due to affiliates 1,482 1,497
Payables to brokers, dealers and clearing 7,407 -
organizations
Accrued expenses and other liabilities 4,806 3,433
77,919 183,603
4,589,021 5,155,280
Stockholders' Equity (Deficit)
Preferred stock, $0.01 par value, 100,000,000
shares authorized,
1,347,321 and 2,500,000 shares of 9.75%
Series B Cumulative Redeemable Preferred
Stock
496,000 and 1,600,000 shares of 8.05% Series
C Cumulative Redeemable Preferred Stock, and
620,000 and 2,000,000 shares of 8.375% Series
D Cumulative Redeemable Preferred Stock
liquidation preference $25.00 per share,
issued and outstanding as of March 31, 2010
and
December 31, 2009, respectively 61,583 152,500
Common stock, $0.01 par value, 500,000,000
shares authorized, 62,004,181 and
52,912,513 shares issued and outstanding at
March 31, 2010 and
December 31, 2009, respectively 620 529
Additional paid-in capital 1,065,302 1,033,520
Accumulated deficit (1,809,759 ) (2,193,383 )
Accumulated other comprehensive income (loss) (435,524 ) (633,818 )
(1,117,778 ) (1,640,652 )
$ 3,471,243 $ 3,514,628
Newcastle Investment Corp.
Reconciliation of Net Interest Income Less Expenses (Net of Preferred
Dividends)
(dollars in thousands)
(Unaudited)
Three Months Ended
March 31, 2010 March 31, 2009
Income (Loss) Applicable to Common Stockholders $ 180,200 $ (242,223 )
Add (Deduct):
Impairment (68,032 ) 307,470
Other (Income) Loss (56,543 ) (12,317 )
Excess of carrying amount of exchanged preferred (43,043 ) -
stock over fair value of consideration paid
Loss from discontinued operations 40 33
Net Interest Income less Expenses (Net of $ 12,622 $ 52,963
Preferred Dividends)
Source: Newcastle Investment Corp.
Released May 7, 2010