Exhibit 99.1
[Graphic Omitted] NEWCASTLE INVESTMENT CORP.
Contact: FOR IMMEDIATE RELEASE
Lilly H. Donohue
Director of Investor Relations
212-798-6118
Newcastle Announces First Quarter 2004 Results
___________________________________________________________
First Quarter 2004 Highlights
- FFO of $20.9 million, or $0.60 per diluted common share, up 22.4% from
the first quarter 2003.
- Income available for common stockholders of $20.3 million, or $0.58 per
diluted common share, up 26.1% from the first quarter 2003.
- FFO return on average invested common equity of 16.2%.
- Declared dividend of $0.60 per share of common stock, representing a 20%
increase from the fourth quarter 2003.
- Issued approximately 3.3 million shares of common stock in January 2004,
raising net proceeds of approximately $85.8 million.
- Issued $414 million face amount of non-recourse debt through a
collateralized bond obligation in March 2004.
New York, NY. April 28, 2004 - Newcastle Investment Corp. (NYSE: NCT) reported
that for the quarter ended March 31, 2004, Funds from Operations ("FFO") were
$20.9 million, or $0.60 per diluted common share, up from $11.6 million, or
$0.49 per diluted common share for the quarter ended March 31, 2003. The
Company generated a FFO return on average invested common equity of 16.2% for
the first quarter 2004.
For the three months ended March 31, 2004, income available for common
stockholders was $20.3 million, or $0.58 per diluted common share, compared
with $10.9 million, or $0.46 per diluted common share, in the first quarter
2003. For the quarter ended March 31, 2004, Newcastle declared a dividend of
$0.60 per share of common stock, representing a 20% increase over the fourth
quarter 2003 dividend.
Our common book value per share increased to $16.74 at March 31, 2004 from
$15.20 at December 31, 2003. GAAP common equity book value was $581.0 million
at March 31, 2004, up $104.1 million from December 31, 2003. For the quarter
ended March 31, 2004, the Company's assets grew 16.0% to $4.1 billion as
compared to $3.5 billion at the end of the year 2003.
For a reconciliation and discussion of GAAP net income to FFO and GAAP book
equity to invested common equity, please refer to the tables following the
presentation of GAAP results.
Selected Financial Data
(in thousands)
Three Months Ended Three Months Ended
March 31, 2004 March 31, 2003
------------------ ------------------
Operating Data (Unaudited):
Funds from operations $ 20,910 $ 11,604
Income available for common stockholders $ 20,328 $ 10,900
As of
March 31, 2004 As of
(Unaudited) December 31, 2003
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Balance Sheet Data:
Total real estate and other securities $ 2,851,262 $ 2,330,830
Total assets $ 4,099,562 $ 3,533,081
CBO bond obligations $ 2,204,187 $ 1,793,533
Preferred stock $ 62,500 $ 62,500
Common stockholders' equity $ 581,001 $ 476,863
Supplemental Total Real Estate and Other Securities Data as of March 31, 2004
(Unaudited):
Weighted average asset yield 6.41%
Weighted average liability cost 4.26%
Weighted average net spread 2.15%
Weighted average credit rating BBB-
Weighted average asset credit spread 3.04%
Percentage investment grade 72.9%
Number of securities 367
Capital Markets Activity
In January 2004, Newcastle issued 3.3 million shares of common stock for net
proceeds of approximately $86 million through an underwritten public offering.
The Company will use these proceeds to acquire real estate debt securities and
other real estate related investments. Wesley R. Edens, Chairman and Chief
Executive Officer, commented, "We had a solid first quarter and are currently
in the process of investing the proceeds from our most recent capital raise in
January. We expect to be fully invested by the end of the second quarter." In
addition, Newcastle issued $414 million face amount of non-recourse debt
through our fifth collateralized bond obligation in March 2004.
First Quarter Investment Activity
During the first quarter, we invested approximately $75 million of capital. We
purchased or committed to purchase approximately $441 million in face amount
of real estate securities, real estate related loans and operating real
estate.
Real estate securities. Purchased approximately $316 million of CMBS, ABS
and REIT debt with an average credit rating of BBB-. In addition, we sold
approximately $30 million of real estate securities with an average credit
rating of BBB.
Real estate related loans. Purchased a $50 million participation in a $75
million facility to a Ba3 rated office REIT. The loan is a senior unsecured
corporate obligation of the REIT. In addition, it is secured by net cash
flows generated from a multi-building office complex.
Operating real estate. Purchased a 49% interest in a $153 million portfolio
of approximately 200 convenience and retail gas stores located in ten
states throughout the Southeast and Southwestern regions of the US. The
properties are subject to a sale-leaseback arrangement under long-term
triple net leases with a 15 year minimum term.
Real Estate Securities
As of March 31, 2004, our aggregate $2.9 billion real estate securities
portfolio was well diversified with 367 securities, of which 75% were fixed
rate securities with a weighted average maturity of 7.34 years and the
remaining 25% were floating rate securities with a weighted average maturity
of 2.73 years. The portfolio consisted of 59% commercial mortgage backed
securities, 23% senior unsecured REIT debt and 18% asset backed securities. As
of March 31, 2004, the average credit quality of our aggregate real estate
securities portfolio was BBB- and 73% of the real estate securities were rated
investment grade. Our average investment size was $7 million and our largest
investment in a single security was $61 million. The weighted average credit
spread was 3.04% as of March 31, 2004. The weighted average credit spread
represents the yield premium on our securities over the comparable US Treasury
rate or LIBOR.
Kenneth Riis, Newcastle's President, noted that "Even though credit spreads
are at historically tight levels, we are selectively putting capital to work
and have a solid pipeline of investment opportunities. In addition, we believe
that credit spreads may widen as interest rates rise and that we are well
positioned to opportunistically deploy uninvested capital."
The Company's core business strategy is to invest in a diverse portfolio of
moderately credit sensitive real estate debt investments. Our business model
is to lock in the difference between the yield on our assets and the cost of
our liabilities and optimize this difference, which we refer to as "net
spread." Newcastle seeks to match fund these investments with respect to
interest rates and maturities in order to minimize the impact of interest rate
fluctuations on earnings, and to reduce the risk of refinancing our
liabilities prior to the maturity of our assets. As of March 31, 2004, an
immediate 100 basis point increase in interest rates would affect our earnings
by no more than $1.2 million per annum. The weighted average maturity of our
real estate securities and their related liabilities was 6.20 years and 6.51
years, respectively, as of March 31, 2004.
Mr. Riis noted that "We have built our business to generate stable
cash flows to support our dividends to stockholders. Fundamental to our
investment and financing strategy is to insulate our earnings as much as
possible from changes in interest rates. In a period of rising interest rates,
we believe our ability to pay a stable dividend will set us apart from other
REITs."
Our real estate securities portfolio continues to perform as expected.
As of March 31, 2004, none of our owned securities had defaulted, and there
have been no principal losses in our real estate securities portfolio to date.
We continue to seek investments that will generate superior risk adjusted
returns with a long-term objective of capital preservation and earnings
stability in varying interest rate and credit cycles.
Conference Call and Annual Meeting
Management will conduct a conference call on April 29, 2004 to review the
Company's first quarter financial results for the period ended March 31, 2004.
The conference call is scheduled for 4:30 P.M. eastern time. All interested
parties are welcome to participate on the live call. You can access the
conference call by dialing (888) 470-0905 ten minutes prior to the scheduled
start of the call; please reference "Newcastle First Quarter 2004 Earnings
Call." International callers should dial (303) 242-0016.
For those who are not available to listen to the live call, a replay will be
available until 11:59 P.M. eastern time on Friday, May 7, 2004 by dialing (800)
475-6701; please reference access code "729354." International callers should
dial (320) 365-3844 to access the replay.
Newcastle will hold its annual meeting of stockholders at the Four Seasons
Hotel, located at 57 East 57th Street, New York, NY 10022 on Thursday, May 27,
2004 at 8:00A.M. local time. All stockholders are cordially invited to attend.
About Newcastle
Newcastle Investment Corp. invests in real estate securities and other real
estate-related assets. Newcastle is organized and conducts its operations to
qualify as a real estate investment trust (REIT) for federal income tax
purposes. For more information on Newcastle Investment Corp. or to be added to
our email distribution list, please visit www.newcastleinv.com.
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 invest existing cash balances,
our ability to finance our next portfolio of real estate securities, our ability
to pay dividends and the performance of our real estate securities portfolio.
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; 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, our continued ability
to source new investments, including securities which we deem suitable for our
securities portfolios; changes in the capital markets, including changes in
interest rates and/or credit spreads; changes in particular sectors of the
economy which might adversely affect the credit quality of our securities
portfolios and thereby their performance; and other risks detailed from time to
time in Newcastle's SEC reports. 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 Income
(dollars in thousands, except share data)
(Unaudited)
Three Months Ended March 31,
----------------------------
2004 2003
------------ ------------
Revenue
Interest income $ 49,030 $ 25,029
Rental and escalation income 5,797 4,913
Gain on settlement of investments 5,136 2,491
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59,963 32,433
Expenses
Interest expense 29,419 14,357
Property operating expense 2,391 2,352
Loan and security servicing expense 782 402
General and administrative expense 1,198 830
Management fee to affiliate 2,397 1,305
Incentive compensation to affiliate 2,374 1,330
Depreciation and amortization 553 456
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Total Expenses 39,114 21,032
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Income before equity in earnings of unconsolidated subsidiaries 20,849 11,401
Equity in earnings of unconsolidated subsidiaries 1,223 -
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Income from continuing operations 22,072 11,401
Income (loss) from discontinued operations (221) (298)
------------ ------------
Net income 21,851 11,103
Preferred dividends (1,523) (203)
------------ ------------
Income available for common stockholders $ 20,328 $ 10,900
============ =============
Net income per share of common stock
Basic $ 0.59 $ 0.46
Diluted $ 0.58 $ 0.46
Income from continuing operations, after preferred dividends,
per share of common stock
Basic $ 0.60 $ 0.47
Diluted $ 0.59 $ 0.47
Income (loss) from discontinued operations per share of common stock
Basic $ (0.01) $ (0.01)
Diluted $ (0.01) $ (0.01)
Weighted average number shares of common stock outstanding
Basic 34,401,800 23,488,517
Diluted 34,976,378 23,619,909
Dividends declared per common share $ 0.60 $ 0.45
Newcastle Investment Corp.
Consolidated Balance Sheets
(dollars in thousands, except share data)
As of
March 31, 2004 As of
(Unaudited) December 31, 2003
----------- ------------------
Assets
Real estate securities, available for sale $ 2,598,620 $ 2,089,712
Real estate securities portfolio deposit - 19,541
Other securities, available for sale 252,642 221,577
Real estate related loans, net 384,262 341,193
Investments in unconsolidated subsidiaries 52,743 30,640
Operating real estate, net 89,741 102,995
Real estate held for sale 39,917 29,404
Residential mortgage loans, net 569,621 586,237
Cash and cash equivalents 56,251 60,403
Restricted cash 19,496 13,132
Deferred costs, net 8,118 10,304
Receivables and other assets 28,151 27,943
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$ 4,099,562 $ 3,533,081
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Liabilities and Stockholders' Equity
CBO bonds payable $ 2,204,187 $ 1,793,533
Other bonds payable 253,380 260,674
Notes payable 189,845 154,562
Repurchase agreements 708,635 715,783
Derivative liabilities 63,991 32,457
Dividends payable 21,843 16,703
Due to affiliates 3,242 2,445
Accrued expenses and other liabilities 10,938 17,561
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3,456,061 2,993,718
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Stockholders' Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 2,500,000
shares of Series B Cumulative Redeemable Preferred Stock, liquidation
preference $25.00 per share, issued and outstanding 62,500 62,500
Common stock, $0.01 par value, 500,000,000 shares authorized,
34,711,833 and 31,374,833 shares issued and outstanding at March 31,
2004 and December 31, 2003, respectively 347 314
Additional paid-in capital 538,057 451,806
Dividends in excess of earnings (15,169) (14,670)
Accumulated other comprehensive income 57,766 39,413
----------- -----------
643,501 539,363
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$ 4,099,562 $ 3,533,081
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Newcastle Investment Corp.
Reconciliation of GAAP Net Income to FFO
(In thousands)
(Unaudited)
Three Months Ended Three Months Ended
March 31, 2004 March 31, 2003
-------------- --------------
Net income available for common stockholders $ 20,328 $ 10,900
Operating real estate depreciation 582 704
Funds from operations ("FFO") $ 20,910 $ 11,604
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
(In thousands)
(Unaudited)
March 31, 2004
--------------
Book equity $ 643,501
Preferred stock (62,500)
Accumulated depreciation on operating real estate 10,567
Accumulated other comprehensive income (57,766)
Invested common equity $ 533,802