Newcastle Announces Fourth Quarter and Year End 2007 Results
NEW YORK, Feb. 27 /PRNewswire-FirstCall/ --
Highlights
-- FFO loss of $105.9 million, or $2.01 per diluted share, for the quarter
ended December 31, 2007. FFO excluding the effect of charges was $37.1
million, or $0.70 per diluted share for the quarter ended December 31,
2007.
-- Adjusted book value per share was $16.39 and GAAP book value per share
was $5.59 as of December 31, 2007.
-- Since year end, the Company has reduced its recourse debt by $888
million and increased cash available to invest from $29 million to $120
million.
Financial Results
Fourth Quarter 2007
Newcastle Investment Corp. (NYSE: NCT) reported that for the quarter ended December 31, 2007, Funds from Operations ("FFO") loss was $105.9 million, or $2.01 per diluted share, compared to FFO of $0.70 per diluted share for quarter ended December 31, 2006. Fourth quarter FFO includes charges of $143.0 million. Excluding the effect of such charges, we generated FFO of $37.1 million, or $0.70 per diluted share, and an FFO return on average invested equity of 14.4%.
For the three months ended December 31, 2007, the loss attributable to common stockholders was $106.2 million, or $2.01 per diluted share, compared to income of $0.70 per diluted share for the fourth quarter 2006. Excluding the effect of charges, income available for common stockholders was $36.7 million, or $0.70 per diluted share for the quarter ended December 31, 2007.
Of the $143.0 million of charges recorded in the fourth quarter 2007, $128.8 million represented other than temporary impairment under U.S. GAAP. These charges resulted in a reduction in FFO and income available to common stockholders of $2.71 per diluted share.
Full Year 2007
FFO loss for the year ended December 31, 2007 was $77.0 million, or $1.50 per diluted share, compared to FFO of $2.69 per diluted share for the year ended December 31, 2006. Full year FFO includes total charges of $224.1 million. Excluding the effect of such charges, we generated FFO of $147.1 million, or $2.86 per diluted share, and an FFO return on average invested equity of 14.2%.
For 2007, the loss attributable to common stockholders was $78.1 million, or $1.52 per diluted share, compared to income of $2.67 per diluted share for 2006. Excluding the effect of charges, income available for common stockholders was $146.0 million, or $2.84 per diluted share, for the year ended December 31, 2007.
Of the $224.1 million of charges recorded in the year ended December 31, 2007, $202.6 million represented other than temporary impairment under U.S. GAAP. These charges resulted in a reduction in FFO and income available to common stockholders of $4.36 per diluted share.
Net Book Value
Our GAAP common equity book value decreased to $5.59 per share, or $295.1 million at December 31, 2007, down from $12.66 per share at September 30, 2007. Under U.S. GAAP, we are required to mark our available for sale security investments and our derivatives to fair value, but not our loan investments or liabilities. If we marked all of our assets and liabilities to fair value, we estimate our net book value per share would have been $16.39 at December 31, 2007. Our GAAP book value would equal our adjusted book value if we elected to mark all of our financial assets and liabilities to fair value under SFAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities."
For a reconciliation and discussion of GAAP income available to common stockholders to FFO and GAAP book equity to invested common equity as well as GAAP net book value to adjusted net book value, please refer to the tables following the presentation of GAAP results.
Dividends
For the quarter ended December 31, 2007, Newcastle's Board of Directors declared a dividend of $0.72 per common share. Common dividends declared in 2007 totaled $2.85 per share. In 2007, we declared preferred dividends on our 9.75% Series B, 8.05% Series C and 8.38% Series D Cumulative Redeemable Preferred Stock in the amounts of $2.438, $2.013 and $1.838 per share, respectively.
First Quarter 2008 Activity
Given the uncertain market environment, since year end the Company has focused on strengthening its balance sheet by reducing its recourse debt exposure and increasing liquidity. As a result, the Company sold $1.3 billion of assets, reduced its recourse debt by $888 million, reduced its non-recourse debt by $379 million and increased its cash available to invest from $29 million to $120 million. In connection with these sales, we realized a net loss of $14.2 million.
Asset sales since December 31, 2007 through February 25, 2008 included:
-- $547 million of real estate securities and loans:
-- $254 million of REIT debt with an average rating of BBB and an
average life of 3.7 years
-- $248 million of CMBS with an average rating of A- and an average
life of 2.5 years
-- $25 million of a non-rated commercial real estate whole loan with
an average life of 4.0 years
-- $20 million of other real estate assets ($9 million of corporate
bank loans rated B-, $8 million B-Note rated AAA and $3 million of
non-rated mezzanine debt)
-- $770 million of FNMA and FHLMC securities with an implied AAA rating.
The following table compares the face amount of our liabilities as of
December 31, 2007 adjusted for sales through February 25, 2008 ($ in
millions):
February 25, December 31,
2008 2007
Recourse Financings
Real Estate Securities and Loans (1) $471 $601
FNMA/FHLMC Securities 448 1,206
Total Recourse Financings 919 1,807
Non-Recourse Financings
CBOs and Other 4,901 5,280
Total Financings $5,820 $7,087
Recourse Financings as % of
Total Financings 16% 25%
(1) Recourse financings on our real estate securities and loans
include off-balance sheet debt (in the form of total return
swaps) of $93 million at February 25, 2008 and $172 million
at December 31, 2007.
Investment Portfolio
Newcastle's current $6.9 billion investment portfolio consists primarily of commercial, residential and corporate debt. During the fourth quarter, we purchased $145 million, sold $40 million and had paydowns of $346 million for a net decrease of $241 million. Since 2007 year end, we sold an additional $1.3 billion of assets.
All tables pertaining to our investment portfolio are as of December 31, 2007 adjusted for sales through February 25, 2008.
The following table describes our investment portfolio ($ in millions):
Dec 31, Assets
2007 Sold Adjusted Adjusted
Face Through Face Face Weighted
Amount Feb 25, Amount Amount Credit Average
$ 2008 $ % Number (1) Life
Commercial Assets
CMBS $ 2,529 $248 $2,281 32.9% 258 BBB- 5.7
Mezzanine Loans 823 3 820 11.8% 23 68% 1.9
B-Notes 398 8 390 5.6% 13 63% 1.7
Whole Loans 115 25 90 1.3% 4 77% 1.4
Investment in
Joint Ventures (2) 21 - 21 0.3% 2 NR -
3,886 284 3,602 51.9% 4.3
Residential Assets (3)
MH and Residential
Loans 645 - 645 9.3% 16,012 696 5.5
Subprime Securities 586 - 586 8.4% 122 BB+ 3.7
Residual and
Retained Securities 145 - 145 2.1% 8 BB+/634 6.2
Real Estate ABS 106 - 106 1.5% 26 BBB 5.1
1,482 - 1,482 21.3% 4.8
Corporate Assets
REIT Debt 921 254 667 9.6% 67 BBB- 5.6
Corporate Bank
Loans 662 9 653 9.4% 14 B 3.1
1,583 263 1,320 19.0% 4.6
Total Core Portfolio 6,951 547 6,404 92.2% 4.4
Other Assets
FNMA/FHLMC
Securities 1,229 770 459 6.6% 15 AAA 3.3
ICH Loans 85 - 85 1.2% 46 NR 0.3
1,314 770 544 7.8% 3.1
Total/Weighted
Average $ 8,265 $1,317 $6,948 100.0% 4.2
(1) Credit statistics represents weighted average rating for rated
assets, loan-to-value for non-rated commercial assets, FICO score for
non-rated residential assets and implied AAA for FNMA/FHLMC
securities.
(2) Excludes other operating real estate of $40 million.
(3) Excludes $406 million of loans subject to call option.
The following table compares certain supplemental data relating to our investment portfolio ($ in millions):
Total Portfolio Core Portfolio
Feb. Dec. Sept. Feb. Dec. Sept.
25, 31, 30, 25, 31, 30,
2008 2007 2007 2008 2007 2007
Face Amount $6,948 $8,265 $8,523 $6,404 $6,951 $7,149
Weighted average asset
yield 7.32% 7.08% 7.27% 7.45% 7.42% 7.64%
Weighted average
liability cost 5.41% 5.39% 5.64% 5.42% 5.49% 5.77%
Weighted average net
spread 1.91% 1.69% 1.63% 2.03% 1.93% 1.87%
Commercial Assets
We own $3.6 billion of adjusted face amount of commercial assets, which includes CMBS, mezzanine loans, B-Notes, whole loans and investments in joint ventures.
-- During the fourth quarter, we purchased $75 million, sold $40 million
and had paydowns of $206 million for a net decrease of $171 million.
-- Since year end, we sold a total of $284 million of assets comprised of
$248 million of CMBS, $25 million of whole loans, $8 million of B-Notes
and $3 million of mezzanine debt for a net realized loss of $5 million.
-- We had three CMBS securities or $13 million upgraded (from an average
rating of A+ to AA-) with five securities or $74 million downgraded
(from an average rating of BB- to B-).
The following table summarizes our CMBS portfolio ($ in thousands):
Weighted
Weighted Adjusted Adjusted Average Weighted
Average Face Face Delinquency Credit Average
Vintage Rating Number Amount $ Amount % 60+/FC/REO Enhancement Life
Pre 2004 BBB+ 82 $442,932 19.4% 0.8% 12.8% 4.6
2004 BBB- 59 436,119 19.1% 0.1% 5.2% 6.0
2005 BB+ 50 586,494 25.7% 0.2% 4.2% 6.7
2006 BBB- 36 448,938 19.7% 0.0% 5.4% 4.1
2007 BBB 31 366,673 16.1% 0.0% 7.3% 6.8
Total/
Weighted
Average BBB- 258 $2,281,156 100.0% 0.2% 6.8% 5.7
In the fourth quarter, we recorded a $13 million charge on two securities. The majority of the charge was related to a $11 million impairment in a CDO security managed by a third party. Our GAAP basis in this asset subsequent to this impairment is $640,000. We currently do not own any other CDO securities managed by third parties.
The following table summarizes the loan-to-value ratios on our mezzanine loans, B-Notes and whole loan portfolio ($ in thousands):
Whole
Mezzanine B-Note Loan Total
Adjusted Face Amount $819,603 $390,130 $89,935 $1,299,668
Weighted Average First $ Loan
To Value 57.0% 46.8% 12.6% 50.9%
Weighted Average Last $ Loan To
Value 68.0% 63.4% 77.4% 67.3%
Delinquency 0.0% 0.0% 0.0% 0.0%
Residential Assets
We own $1.5 billion of adjusted face amount of residential assets, which includes manufactured housing (MH), residential loans and subprime securities.
-- During the fourth quarter, we made no purchases or sales and had
paydowns of $69 million of which $42 million was related to subprime
securities.
-- We had one real estate ABS or $2 million upgraded (from a rating of A
to A+) with 43 securities or $251 million downgraded (from an average
rating of BBB- to B-).
-- Our two manufactured housing loan portfolios totaling $542 million
continue to perform well as only 0.92% of the underlying loans are 60+
days delinquent versus 0.75% for the third quarter 2007.
The following tables summarize our subprime securities portfolio excluding
our residuals and retained interests in our own securitizations ($ in
thousands):
Security Characteristics
Weighted Adjusted Adjusted
Average Face GAAP Principal Excess
Vintage Rating Number Amount $ Basis $ Subordination Spread
2003 A 16 $42,066 $40,236 23.0% 1.7%
2004 A- 30 176,018 167,263 16.5% 2.0%
2005 BBB 44 200,752 186,605 14.8% 2.9%
2006 CCC 29 159,497 22,303 4.0% 2.6%
2007 BBB- 3 7,750 4,384 10.3% 2.4%
Total/Weighted
Average BB+ 122 $586,083 $420,792 12.9% 2.4%
Collateral Characteristics
Deal Cumulative
Age Collateral Delinquency Loss 3 Month
Vintage (Months) Factor 90+/FC/REO To Date CPR (1)
2003 52 0.14 10.0% 2.1% 18.9%
2004 42 0.18 13.3% 1.3% 22.0%
2005 29 0.38 18.8% 1.3% 27.8%
2006 17 0.72 18.6% 0.8% 17.2%
2007 9 0.91 9.4% 0.0% 9.4%
Total/Weighted
Average 31 0.40 16.3% 1.2% 22.3%
(1) CPR is constant prepayment rate.
In the fourth quarter, we recorded an $84 million charge related to our $586 million subprime securities portfolio. The majority of the charge was related to a $59 million impairment of our 2006 vintage securities, reducing our GAAP basis in these securities to $22 million. In addition, we recorded a $25 million impairment on 13 other subprime securities with a face amount of $67 million.
We own $76 million of securities and $69 million of residual interests in two subprime portfolio securitizations from 2006 ("Portfolio 1") and 2007 ("Portfolio 2"). The following table summarizes our subprime portfolio securitizations ($ in thousands):
Security Characteristics
Adjusted
Face GAAP
Deal Amount $ Basis $
Portfolio 1 $68,773 $52,333
Portfolio 2 75,855 60,448
Portfolio Characteristics
Actual Projected
Weighted Cumula- Cumula-
Average Securi- tive tive
Loan Age tization Current Delinquency Loss Loss
Deal (Months) Balance $ Balance $ 90+/FC/REO To Date To Date
Portfolio 1 28 $1,502,181 $898,456 10.0% 0.2% 0.5%
Portfolio 2 11 1,087,942 1,019,905 2.3% 0.0% 0.0%
In the fourth quarter, even though the portfolios have been out-performing our initial underwriting, we updated our future loss and prepayment assumptions based on current market conditions. Under the new assumptions, we recorded impairments of $13 million on the residuals and $13 million on the retained securities. The following summarizes the changes in our prepayment and loss assumptions on both portfolios:
Portfolio Characteristics
Portfolio 1 Portfolio 2
Cumulative Loss
Original Underwriting 5.3% 8.0%
Revised Underwriting 7.5% 13.7%
Change +2.2% +5.7%
Lifetime Constant
Voluntary Prepayment Rate
Original Underwriting 28.0% 30.1%
Revised Underwriting 21.9% 19.7%
Change -6.1% -10.4%
In addition, prior to securitization of Portfolio 2, the seller repurchased $185 million (or 14.6%) of the original loan pool due to early payment defaults. We believe these loans would otherwise have contributed to significantly higher delinquencies and ultimately greater losses in the deal.
Corporate Assets
We own $1.3 billion of adjusted face amount of corporate assets, including REIT debt and corporate bank loans.
-- During the quarter, we purchased $70 million and had paydowns of $11
million for a net increase of $59 million.
-- Since year end, we sold a total of $263 million of assets comprised of
$254 million of REIT debt and $9 million of bank loans for a net
realized loss of $6 million.
-- We had two REIT assets totaling $11 million upgraded (from an average
rating of BBB- to BBB), one bank loan of $85 million upgraded (from a
rating of B+ to BB) and two bank loans totaling $70 million downgraded
(from an average rating of BB- to B+).
The following table summarizes our REIT debt portfolio ($ in thousands):
Weighted Adjusted Adjusted
Average Face Face
Industry Rating Number Amount $ Amount %
Retail BBB- 17 $204,435 30.7%
Office BBB 14 137,919 20.7%
Diversified BBB 14 141,463 21.2%
Hotel BBB- 4 47,720 7.2%
Multifamily BBB+ 8 44,508 6.7%
Healthcare BBB- 5 46,359 7.0%
Industrial BBB 3 20,865 3.1%
Storage A- 2 23,406 3.5%
Total/Weighted Average BBB- 67 $666,675 100.0%
The following table summarizes our corporate bank loan portfolio ($ in
thousands):
Corporate Bank Loan
Weighted Adjusted Adjusted
Average Face Face
Industry Rating Number Amount $ Amount %
Real Estate B- 4 $186,952 28.6%
Resorts BB- 1 118,038 18.1%
Media B+ 1 112,000 17.2%
Retail B- 1 100,000 15.3%
Restaurant B- 2 44,426 6.8%
Transportation C 2 37,175 5.7%
Gaming B+ 2 29,759 4.6%
Theatres BB- 1 24,591 3.8%
Total/Weighted Average B 14 $652,940 100.0%
Conference Call
Newcastle's management will conduct a live conference call today, February 27, 2008, at 1:00 P.M. Eastern Time to review the financial results for the quarter ended December 31, 2007. 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 Fourth 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. An online replay of the webcast will be available until March 31, 2008.
A telephonic replay of the conference call will also be available until 11:59 P.M. eastern time on Wednesday, March 12, 2008 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference access code "34057948."
About Newcastle
Newcastle Investment Corp. owns and manages a $6.9 billion highly diversified real estate debt portfolio with moderate credit risk that is primarily financed with match funded debt. Our business strategy is to "lock in" and optimize the difference between the yield on our assets and the cost of our liabilities. 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 alternative asset management firm with approximately $40 billion in assets under management as of September 30, 2007. For more information regarding Newcastle Investment Corp. or to be added to our e-mail distribution list, please visit www.newcastleinv.com.
Safe Harbor
Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to 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 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 them. 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
(dollars in thousands, except share data)
(Unaudited)
Year Ended Three Months Ended
December 31, December 31,
2007 2006 2007 2006
Revenues
Interest income $680,551 $530,006 $156,691 $151,562
Rental and escalation
income 6,673 4,861 2,775 1,245
Gain on sale of
investments, net 14,056 12,998 42 2,276
Other income (loss) (13,223) 5,402 (12,666) 857
688,057 553,267 146,842 155,940
Expenses
Interest expense 476,988 374,269 108,880 109,156
Loss on extinguishment of
debt 15,032 658 - -
Property operating expense 5,514 3,805 2,415 997
Loan and security
servicing expense 9,719 6,944 1,947 1,984
Provision for credit losses 10,394 9,438 2,449 3,570
Provision for losses,
loans held for sale 7,325 4,127 1,571 -
General and
administrative expense 6,041 4,946 1,891 967
Management fee to affiliate 17,645 14,018 4,597 3,598
Incentive compensation to
affiliate 6,209 12,245 - 3,465
Depreciation and amortization 1,412 1,085 382 318
556,279 431,535 124,132 124,055
Income before other gains
(losses) 131,778 121,732 22,710 31,885
Other Gains (Losses)
Other than temporary
impairment (202,602) - (128,789) -
Income (loss) before
equity in earnings of
unconsolidated subsidiaries (70,824) 121,732 (106,079) 31,885
Equity in earnings of
unconsolidated subsidiaries 5,390 5,968 3,236 2,052
Income taxes on related
taxable subsidiaries - - - -
Income (loss) from
continuing operations (65,434) 127,700 (102,843) 33,937
Income (loss) from
discontinued operations (23) 223 (21) 10
Net Income (Loss) (65,457) 127,923 (102,864) 33,947
Preferred dividends (12,640) (9,314) (3,375) (2,329)
Income (Loss) Attributable
To Common Stockholders $(78,097) $118,609 $(106,239) $31,618
Net Income (Loss) Per
Share of Common Stock
Basic $(1.52) $2.68 $(2.01) $0.70
Diluted $(1.52) $2.67 $(2.01) $0.70
Income (loss) from
continuing operations per
share of common stock,
after preferred dividends
Basic $(1.52) $2.67 $(2.01) $0.70
Diluted $(1.52) $2.67 $(2.01) $0.70
Income (loss) from
discontinued operations
per share of common stock
Basic $- $0.01 $- $-
Diluted $- $- $- $-
Weighted Average Number of
Shares of Common Stock
Outstanding
Basic 51,369,486 44,268,575 52,779,179 45,128,969
Diluted 51,369,486 44,417,113 52,779,179 45,384,810
Dividends Declared per
Share of Common Stock $2.85 $2.62 $0.72 $0.69
Newcastle Investment Corp.
Consolidated Balance Sheets
(dollars in thousands, except share data)
(Unaudited)
As of As of
December 31, December 31,
2007 2006
Assets
Real estate securities, available
for sale $4,835,884 $5,581,228
Real estate related loans, net 1,856,978 1,568,916
Residential mortgage loans, net 634,605 809,097
Subprime mortgage loans, held for sale - -
Subprime mortgage loans subject to
call option 393,899 288,202
Investments in unconsolidated subsidiaries 24,477 22,868
Operating real estate, net 34,399 29,626
Cash and cash equivalents 55,916 5,371
Restricted cash 133,126 184,169
Derivative assets 4,114 62,884
Receivables and other assets 64,372 52,031
$8,037,770 $8,604,392
Liabilities and Stockholders' Equity
Liabilities
CBO bonds payable $4,716,535 $4,313,824
Other bonds payable 546,798 675,844
Notes payable - 128,866
Repurchase agreements 1,634,362 760,346
Repurchase agreements subject to
ABCP facility - 1,143,749
Financing of subprime mortgage loans
subject to call option 393,899 288,202
Credit facility - 93,800
Junior subordinated notes payable
(security for trust preferred) 100,100 100,100
Derivative liabilities 133,510 17,715
Dividends payable 40,251 33,095
Due to affiliates 7,741 13,465
Accrued expenses and other liabilities 16,949 33,406
7,590,145 7,602,412
Stockholders' Equity
Preferred stock, $0.01 par value,
100,000,000 shares authorized,
2,500,000 shares of 9.75% Series
B Cumulative Redeemable Preferred Stock
1,600,000 shares of 8.05% Series C
Cumulative Redeemable Preferred
Stock, and 2,000,000 shares of 8.375%
Series D Cumulative Redeemable
Preferred Stock liquidation preference
$25.00 per share, issued and outstanding
(Series D issued in 2007) 152,500 102,500
Common stock, $0.01 par value,
500,000,000 shares authorized, 52,779,179
and 45,713,817 shares issued and
outstanding at December 31, 2007
and December 31, 2006, respectively 528 457
Additional paid-in capital 1,033,326 833,887
Dividends in excess of earnings (236,213) (10,848)
Accumulated other comprehensive
income (loss) (502,516) 75,984
447,625 1,001,980
$8,037,770 $8,604,392
Newcastle Investment Corp.
Reconciliation of GAAP Net Income to FFO
(dollars in thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2007 2007
Net income (loss) attributable
to common stockholders $(106,239) $(78,097)
Operating real estate depreciation 309 1,121
Funds from operations ("FFO") $(105,930) $(76,976)
We believe FFO is one appropriate measure of the operating performance of real estate companies because it provides investors with information regarding our ability to service debt and make capital expenditures. We also believe that FFO is an appropriate supplemental disclosure of operating performance for a REIT due to its widespread acceptance and use within the REIT and analyst communities. Furthermore, FFO is used to compute our incentive compensation to our manager. FFO, for our purposes, represents net income available for common stockholders (computed in accordance with GAAP), excluding extraordinary items, plus real estate depreciation, and after adjustments for unconsolidated subsidiaries, if any. We consider gains and losses on resolution of our investments to be a normal part of our recurring operations and therefore do not exclude such gains and losses when arriving at FFO. Adjustments for unconsolidated subsidiaries, if any, are calculated to reflect FFO on the same basis. FFO 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 liquidity and is not necessarily indicative of cash available to fund cash needs. Our calculation of FFO may be different from the calculation used by other companies and, therefore, comparability may be limited.
Newcastle Investment Corp.
Reconciliation of GAAP Book Equity to Invested Common Equity
(dollars in thousands)
(Unaudited)
December 31, 2007
Book equity $447,625
Preferred stock (152,500)
Accumulated depreciation on operating real estate 6,000
Accumulated other comprehensive (income) loss 502,516
Invested common equity $803,641
Newcastle Investment Corp.
Reconciliation of GAAP Book Value to Adjusted Book Value
(dollars in thousands, except per share)
(Unaudited)
Amount Per Share
GAAP Book Value $295,125 $5.59
Adjustments to Fair Value:
Commercial Real Estate Loans (88,405) (1.67)
CDO Liabilities 641,382 12.15
Other Assets/Liabilities 17,004 0.32
Total Adjustments 569,981 10.80
Adjusted Book Value $865,106 $16.39
SOURCE Newcastle Investment Corp.
Released February 27, 2008