Exhibit 99.1
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NEWCASTLE INVESTMENT CORP.
Contact: FOR IMMEDIATE RELEASE
Lilly H. Donohue
Director of Investor Relations
212-798-6118
Newcastle Announces Fourth Quarter and Year End 2004 Results
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2004 Highlights
- Total assets ended at $4.9 billion, a $1.4 billion increase
from 2003.
- Common equity book value totaled $734.2 million, or $18.42 per
common share, up 54% from 2003.
- FFO of $86.2 million, or $2.30 per diluted common share, up 11%
from 2003 on a per diluted common share basis.
- Income available for common stockholders of $92.3 million, or
$2.46 per diluted common share, up 26% from 2003 on a per
diluted common share basis.
- FFO return on average invested common equity was 14.5%.
- Declared total dividends of $2.425 per share of common stock.
- Issued 8.4 million shares of common stock, raising net proceeds
of approximately $222.8 million.
Fourth Quarter 2004 Highlights
- FFO of $0.57 per diluted common share, up 4% from fourth
quarter 2003 on a per diluted common share basis.
- Income available for common stockholders of $0.69 per diluted
common share, up 33% from fourth quarter 2003 on a per diluted
common share basis.
- Increased dividend to $0.625 per share of common stock.
- Issued 1.6 million shares of common stock, raising net proceeds
of approximately $50.1 million.
New York, NY. February 14, 2004 - Newcastle Investment Corp. (NYSE: NCT)
reported that for the quarter ended December 31, 2004, Funds from Operations
("FFO") were $22.6 million, or $0.57 per diluted common share, up from $16.2
million, or $0.55 per diluted common share for the quarter ended December 31,
2003. FFO excluding the effect of the reversal of accumulated depreciation
from the sale of certain real estate properties was $27.5 million, or $0.69
per diluted common share. The Company generated a FFO return on average
invested equity of 13.9% for the fourth quarter 2004 and 16.9% excluding the
reversal of accumulated depreciation.
FFO for the year ended December 31, 2004 was $86.2 million, or $2.30 per
diluted common share. FFO excluding the effect of the reversal of accumulated
depreciation from the sale of certain real estate properties was $94.5
million, or $2.52 per diluted common share. The Company generated a FFO return
on average invested common equity of 14.5% for the year ended December 31,
2004 and 15.8% excluding the reversal of accumulated depreciation.
For the three months ended December 31, 2004, income available for common
stockholders was $26.9 million, or $0.69 per diluted common share, compared
with $15.4 million, or $0.52 per diluted common share, in the fourth quarter
2003.
For the year ended December 31, 2004, income available for common stockholders
was $92.3 million or $2.46 per diluted common share. For the quarter ended
December 31, 2004, Newcastle declared a dividend of $0.625 per share of common
stock. Dividends declared in 2004 totaled $2.425 per common share.
Our GAAP common equity book value was $734.2 million at December 31, 2004. For
the year ended December 31, 2004, the Company's assets increased approximately
40%, with total assets at the end of the year of $4.9 billion, up from $3.5
billion at December 31, 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 Year Ended
December 31, 2004 December 31, 2004
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Operating Data (Unaudited):
Funds from operations $ 22,616 $ 86,201
Income available for common stockholders 26,898 92,321
As of As of
December 31, 2004 December 31, 2003
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Balance Sheet Data (Unaudited):
Real estate securities $ 3,369,496 $ 2,192,727
Real estate related loans 591,890 402,784
Total assets 4,932,720 3,550,299
CBO bond obligations 2,656,510 1,793,533
Common stockholders' equity 734,215 476,863
Preferred stock 62,500 62,500
Supplemental Real Estate Securities and Real Estate Related Loans Data (Unaudited):
December 31, 2004
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Real estate securities and real estate related loans* $ 3,758,710
Percentage of total assets 76%
Weighted average asset yield 6.27%
Weighted average liability cost 4.46%
Weighted average net spread 1.81%
Weighted average credit rating BBB-
Weighted average asset credit spread 280
Percentage investment grade 70%
Number of securities and loans 455
* Excluding ICH loans (as disclosed in our SEC filings).
Wesley R. Edens, Chairman and Chief Executive Officer, commented, "We are
pleased with our results for the quarter and the year. The Company's earnings
continue to grow as we accretively deploy new capital. In 2004, our net income
on a per share basis increased by 26%."
Capital Markets Activity
In November 2004, Newcastle issued approximately 1.625 million shares of
common stock, raising net proceeds of approximately $50.1 million. In January
2005, Newcastle issued another 3.3 million shares of common stock for net
proceeds of approximately $96.6 million.
Consistent with the Company's funding discipline, Newcastle financed a $606.2
million (face amount) portfolio of residential mortgage loans with three-year
term debt. This portfolio was previously financed with short-term repurchase
agreements.
Mr. Edens commented, "We successfully accessed the capital markets throughout
2004, raising over $220 million of equity. Since year end, we have raised
another $100 million of equity capital. To date, substantially all of this
equity has been invested or committed to new investments."
Fourth Quarter Investment Activity
During the fourth quarter, we purchased or committed to purchase approximately
$911 million in face amount of real estate securities and real estate related
loans. We sold approximately $21 million of securities with an average credit
rating of BBB- during the fourth quarter of 2004 and closed on the sale of two
Belgian properties.
Real estate securities and real estate related loans. Total purchases in
the quarter were 71% real estate securities and 29% real estate related
loans with an average credit rating of BBB.
Operating real estate. In the quarter, we closed on the sale of two
Belgian properties. Upon sale of real estate, accumulated depreciation is
reversed for purposes of calculating FFO. As a result of this sale, we
recorded a net FFO gain of $0.4 million, or $0.01 per diluted share. The
net FFO gain is comprised of gain on sale of $0.13 per diluted share
($5.3 million) and reversal of accumulated depreciation of $0.12 per
diluted share ($4.9 million).
Kenneth Riis, Newcastle's President, commented "We had a highly productive
fourth quarter, purchasing approximately $1 billion of assets. We continue to
see good investment opportunities and have, since year end, purchased or
committed to purchase approximately $533 million of new assets."
Real Estate Securities and Real Estate Related Loans
As of December 31, 2004, our aggregate $3.8 billion real estate securities and
real estate related loan portfolio was well diversified with 455 securities
and loans. Of such amount, 68% were fixed rate investments and the remaining
32% were floating rate. The portfolio consisted of 68% CMBS and REIT debt, 16%
ABS, 5% agency RMBS, 6% B-note and mezzanine loans and 5% real estate loans
and bank loans.
As of December 31, 2004, the average credit quality of our aggregate real
estate securities and real estate related loan portfolio was BBB- and 70% of
these investments were rated investment grade. Our average investment size was
$8.1 million and our largest single investment was $86.7 million. The weighted
average credit spread was 280 basis points as of December 31, 2004. The
weighted average credit spread represents the yield premium on our investments
over the comparable US Treasury rate or LIBOR.
The Company's 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. The Company's real estate
securities and real estate related loan portfolio and the respective
liabilities have a weighted average life of 5.37 years and 5.72 years. As of
December 31, 2004, a 100 basis point increase in short term interest rates
would increase our earnings by $730,000 per annum, or $0.018 per share.
Our real estate securities and real estate related loan portfolio continues to
perform as expected. As of December 31, 2004, none of our owned securities or
loans had defaulted, and there have been no principal losses in our real
estate securities and real estate related loan 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
Management will conduct a conference call on February 15, 2004 to review the
Company's fourth quarter financial results for the period ended December 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) 428-4473 ten minutes prior to the
scheduled start of the call; please reference "Newcastle Fourth Quarter 2004
Earnings Call." International callers should dial (612) 332-0923.
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 February 22nd by dialing (800)
475-6701; please reference access code "767875." International callers should
dial (320) 365-3844 to access the replay.
About Newcastle
Newcastle Investment Corp. invests in real estate securities, real estate
related loans 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. and 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 locate suitable investment
opportunities and our expectation regarding the performance of our real estate
securities and real estate related loan 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; 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, continued ability to source new investments
which we deem suitable for this portfolio, changes in the capital markets,
including changes in interest rates and/or credit spreads; changes in the
economy which might affect default rates; 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)
Three Months Ended
December 31, 2004 Year Ended
Revenues (Unaudited) December 31, 2004
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Interest income $ 65,737 $ 226,674
Rental and escalation income 3,179 13,502
Gain on settlement of investments, net 2,161 17,970
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71,077 258,146
Expenses
Interest expense 42,621 138,847
Property operating expense 1,808 7,281
Loan and security servicing expense 672 3,057
General and administrative expense 1,121 4,638
Management fee to affiliate 2,870 10,620
Incentive compensation to affiliate 1,855 7,959
Depreciation and amortization 346 1,304
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51,293 173,706
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Income before equity in earnings of unconsolidated subsidiaries 19,784 84,440
Equity in earnings of unconsolidated subsidiaries 4,131 12,465
Income taxes on related taxable subsidiaries (794) (2,508)
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Income from continuing operations 23,121 94,397
Income from discontinued operations 5,301 4,018
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Net income 28,422 98,415
Preferred dividends (1,524) (6,094)
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Income available for common stockholders $ 26,898 $ 92,321
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Net income per share of common stock
Basic $ 0.70 $ 2.50
Diluted $ 0.69 $ 2.46
Income from continuing operations per share of common stock, after preferred
dividends
Basic $ 0.56 $ 2.39
Diluted $ 0.55 $ 2.35
Income from discontinued operations per share of common stock
Basic $ 0.14 $ 0.11
Diluted $ 0.14 $ 0.11
Weighted average number of shares of common stock outstanding
Basic 38,941,003 36,943,752
Diluted 39,662,680 37,557,790
Dividends declared per share of common stock $ 0.625 $ 2.425
Newcastle Investment Corp.
Consolidated Balance Sheets
(dollars in thousands, except share data)
December 31, 2004
Assets (Unaudited) December 31, 2003
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Real estate securities, available for sale $ 3,369,496 $ 2,192,727
Real estate securities portfolio deposit 25,411 19,541
Real estate related loans, net 591,890 402,784
Investments in unconsolidated subsidiaries 41,230 30,640
Operating real estate, net 57,193 102,995
Real estate held for sale 12,376 29,404
Residential mortgage loans, net 654,784 586,237
Cash and cash equivalents 37,911 60,403
Restricted cash 77,974 70,103
Derivative assets 27,122 25,512
Deferred costs, net 2,043 2,010
Receivables and other assets 35,290 27,943
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$ 4,932,720 $ 3,550,299
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Liabilities and Stockholders' Equity
CBO bonds payable $ 2,656,510 $ 1,793,533
Other bonds payable 222,266 260,674
Notes payable 652,000 154,562
Repurchase agreements 490,620 715,783
Derivative liabilities 39,661 49,675
Dividends payable 25,928 16,703
Due to affiliates 8,963 2,445
Accrued expenses and other liabilities 40,057 17,561
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4,136,005 3,010,936
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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, $0.01 par value, 500,000,000 shares authorized,
39,859,481 and 31,374,833 shares issued and outstanding at December 31,
2004 and 2003, respectively 399 314
Additional paid-in capital 676,015 451,806
Dividends in excess of earnings (13,969) (14,670)
Accumulated other comprehensive income 71,770 39,413
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796,715 539,363
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$ 4,932,720 $ 3,550,299
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Newcastle Investment Corp.
Reconciliation of GAAP Net Income to FFO
(In thousands)
(Unaudited)
Three Months Ended Year Ended December 31,
December 31, 2004 2004
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Net income available for common stockholders $ 26,898 $ 92,321
Operating real estate depreciation 568 2,199
Accumulated depreciation on operating real estate sold (4,850) (8,319)
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Funds from operations ("FFO") $ 22,616 $ 86,201
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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)
December 31, 2004
Book equity $ 796,715
Preferred stock (62,500)
Accumulated depreciation on operating real estate 8,498
Accumulated other comprehensive income (71,770)
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Invested common equity $ 670,943
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