x |
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF
1934
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
Maryland
|
81-0559116
|
|
(State
or other jurisdiction of incorporation
|
(I.R.S.
Employer Identification No.)
|
|
or
organization)
|
1345
Avenue of the Americas, New York, NY
|
10105
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title
of each class:
|
Name
of exchange on which registered:
|
|
Common
Stock, $0.01 par value per share
|
New
York Stock Exchange (NYSE)
|
|
9.75%
Series B Cumulative Redeemable Preferred Stock, $0.01 par value per
share
|
New
York Stock Exchange (NYSE)
|
|
8.05%
Series C Cumulative Redeemable Preferred Stock, $0.01 par value per
share
|
New
York Stock Exchange (NYSE)
|
1.
|
Portions
of the Registrant’s definitive proxy statement for the Registrant’s 2006
annual meeting, to be filed within 120 days after the close of the
Registrant’s fiscal year, are incorporated by reference into Part III of
this Annual Report on Form 10-K.
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1)
|
Real
Estate Securities:
|
We
underwrite and acquire a diversified portfolio of moderately credit
sensitive real estate securities, including commercial mortgage backed
securities (CMBS), senior unsecured REIT debt issued by property
REITs,
real estate related asset backed securities (ABS) and agency residential
mortgage backed securities (RMBS). We generally target investments
rated A
through BB, except for our agency RMBS which are generally considered
AAA
rated. As of December 31, 2005, our investments in real estate securities
represented 80% of our assets.
|
2)
|
Real
Estate Related Loans:
|
We
acquire and originate loans to well capitalized real estate owners
with
strong track records and compelling business plans, including B-notes,
mezzanine loans, bank loans, and real estate loans. As of December
31,
2005, our investments in real estate related loans represented 9%
of our
assets.
|
3)
|
Residential
Mortgage Loans:
|
We
acquire residential mortgage loans, including manufactured housing
loans
and subprime residential loans, that we believe will produce attractive
risk-adjusted returns. As of December 31, 2005, our investments in
residential mortgage loans represented 10% of our assets. In addition,
we
acquired a $1.5 billion portfolio of subprime residential loans subsequent
to year end, as described in “Our Investing Activities- Residential
Mortgage Loans” below.
|
4)
|
Operating
Real Estate:
|
We
acquire direct and indirect interests in operating real estate. As
of
December 31, 2005, our investments in operating real estate represented
1%
of our assets.
|
Total
Portfolio (1)
|
Core
Investment Portfolio (2)
|
||||||||||||
December
31,
|
December
31,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
Face
amount
|
$
|
6,111,464
|
$
|
4,493,274
|
$
|
5,413,142
|
$
|
4,294,092
|
|||||
Percentage
of total assets
|
99
|
%
|
91
|
%
|
87
|
%
|
87
|
%
|
|||||
Weighted
average asset yield
|
6.59
|
%
|
5.91
|
%
|
6.85
|
%
|
5.98
|
%
|
|||||
Weighted
average liability cost
|
5.12
|
%
|
4.15
|
%
|
5.22
|
%
|
4.17
|
%
|
|||||
Weighted
average net spread
|
1.47
|
%
|
1.76
|
%
|
1.63
|
%
|
1.81
|
%
|
|||||
(1) |
Excluding
the ICH loans, as described
below.
|
(2)
|
Excluding
the ICH loans and Agency RMBS, as described
below.
|
Year
|
Shares
Issued
|
Range
of Issue
Prices
(1)
|
Net
Proceeds
(millions)
|
|||||||
Formation
|
16,488,517
|
N/A
|
N/A
|
|||||||
2002
|
7,000,000
|
$
|
13.00
|
$
|
80.0
|
|||||
2003
|
7,886,316
|
$
|
20.35-$22.85
|
$
|
163.4
|
|||||
2004
|
8,484,648
|
$
|
26.30-$31.40
|
$
|
224.3
|
|||||
2005
|
4,053,928
|
$
|
29.60
|
$
|
108.2
|
|||||
December
31, 2005
|
43,913,409
|
|||||||||
(1) |
Excludes
prices of shares issued pursuant to the exercise of options and
shares
issued to Newcastle's independent
directors.
|
Weighted
Average
|
||||||||||||||||||||||
Asset
Type
|
Current
Face Amount
|
Carrying
Value
|
Number
of
Securities
|
S&P
Equivalent
Rating
|
Coupon
|
Yield
|
Maturity
(Years)
|
|||||||||||||||
CMBS-Conduit
|
$
|
1,455,345
|
$
|
1,397,329
|
197
|
BBB-
|
5.84
|
%
|
6.61
|
%
|
7.87
|
|||||||||||
CMBS-Large
Loan
|
578,331
|
584,163
|
61
|
BBB-
|
6.64
|
%
|
6.75
|
%
|
2.10
|
|||||||||||||
CMBS-B
Note
|
180,201
|
180,631
|
32
|
BBB-
|
6.62
|
%
|
6.95
|
%
|
5.97
|
|||||||||||||
Unsecured
REIT Debt
|
916,262
|
942,746
|
99
|
BBB-
|
6.34
|
%
|
5.96
|
%
|
6.95
|
|||||||||||||
ABS-Manufactured
Housing
|
178,915
|
163,066
|
10
|
A-
|
7.12
|
%
|
8.65
|
%
|
6.64
|
|||||||||||||
ABS-Home
Equity
|
525,004
|
524,477
|
89
|
B
|
6.03
|
%
|
6.10
|
%
|
3.16
|
|||||||||||||
ABS-Franchise
|
70,837
|
69,622
|
18
|
BBB+
|
6.66
|
%
|
8.12
|
%
|
5.14
|
|||||||||||||
Agency
RMBS
|
698,322
|
692,485
|
19
|
AAA
|
4.76
|
%
|
4.67
|
%
|
4.90
|
|||||||||||||
Total/Average
|
$
|
4,603,217
|
$
|
4,554,519
|
525
|
BBB+
|
5.99
|
%
|
6.25
|
%
|
5.81
|
Industry
|
%
of Face
Amount
|
|||
Residential
|
40.42
|
%
|
||
Retail
|
21.03
|
%
|
||
Office
|
18.73
|
%
|
||
Lodging
|
5.70
|
%
|
||
Health
Care
|
4.73
|
%
|
||
Industrial
|
3.63
|
%
|
||
Other
|
5.76
|
%
|
Loan
Type
|
Current
Face
Amount
|
Carrying
Value
|
Loan
Count
|
Weighted
Avg. Yield
|
Weighted
Avg.
Maturity
(Years)
|
|||||||||||
B-Notes
|
$
|
72,173
|
$
|
72,520
|
13
|
8.46
|
%
|
2.40
|
||||||||
Mezzanine
Loans (1)
|
302,740
|
302,816
|
8
|
8.44
|
%
|
1.94
|
||||||||||
Bank
Loans
|
56,274
|
56,563
|
3
|
6.58
|
%
|
2.51
|
||||||||||
Real
Estate Loans
|
23,082
|
22,364
|
1
|
20.02
|
%
|
2.00
|
||||||||||
ICH
Loans (2)
|
165,514
|
161,288
|
96
|
8.64
|
%
|
1.55
|
||||||||||
Total
|
$
|
619,783
|
$
|
615,551
|
121
|
8.74
|
%
|
1.94
|
||||||||
(1)
|
One
of these loans has a contractual exit fee which Newcastle will begin
to
accrue if and when management believes it is probable that such exit
fee
will be received.
|
(2)
|
In
October 2003, pursuant to Financial Accounting Standards Board
Interpretation No. 46 “Consolidation of Variable Interest Entities,” we
consolidated an entity that holds a portfolio of commercial mortgage
loans
which has been securitized. This investment, which we refer to as
ICH, was
previously treated as a non-consolidated residual interest in such
securitization. The primary effect of the consolidation is the requirement
that we reflect the gross loan assets and gross bonds payable of
this
entity on our balance sheet, as well as the related gross interest
income
and expense in our statement of
income.
|
Current
Face
Amount
|
Carrying
Value
|
Loan
Count
|
Weighted
Avg. Yield
|
|||||||
$
28,974
|
$
|
17,802
|
91
|
16.08
|
%
|
Reference
Asset
|
Notional
Amount
|
Margin
Amount
|
Receive
Interest
Rate
|
Pay
Interest
Rate
|
Maturity
Date
|
Fair
Value
|
|||||||||||||
Term
loan to a retail mall
REIT
|
$
|
106,083
|
$
|
18,149
|
LIBOR
+ 2.000%
|
|
LIBOR
+ 0.500%
|
|
Nov
2008
|
$
|
1,008
|
||||||||
Term
loan to a diversified real estate
and finance company
|
97,997
|
19,599
|
LIBOR
+ 3.000%
|
|
LIBOR
+ 0.625%
|
|
Feb
2008
|
877
|
|||||||||||
Mezzanine
loan to a hotel company
|
15,000
|
5,224
|
LIBOR
+4.985%
|
|
LIBOR
+ 1.350%
|
|
Jun
2007
|
101
|
|||||||||||
Term
loan to a diversified real estate
company
|
94,954
|
9,495
|
LIBOR
+1.750%
|
|
LIBOR
+ 0.500%
|
|
Aug
2007
|
904
|
|||||||||||
Term
loan to a retail company
|
100,000
|
19,960
|
LIBOR
+3.000%
|
|
LIBOR
+ 0.500%
|
|
Dec
2008
|
206
|
|||||||||||
$
|
414,034
|
$
|
72,427
|
$
|
3,096
|
Current
Face
Amount
|
Carrying
Value
|
Loan
Count
|
Weighted
Avg.
Yield
|
Weighted
Avg.
Maturity
(Years) (1)
|
||||||||||||
Residential
loans
|
$
|
326,100
|
$
|
333,226
|
919
|
4.79
|
%
|
2.73
|
||||||||
Manufactured
housing loans
|
284,870
|
267,456
|
7,067
|
7.84
|
%
|
5.78
|
||||||||||
Total
|
$
|
610,970
|
$
|
600,682
|
7,986
|
6.15
|
%
|
4.15
|
||||||||
(1) |
Weighted
average maturity was calculated based on a constant prepayment
rate (CPR)
of approximately 30% for residential loans and 10% for manufactured
housing loans.
|
Property
Address
|
City
/ Submarket
|
State/
Province
|
Net
Rentable
Sq
Ft
|
Year
Built/ Renovated
|
Use
|
||||||||||||||||||||
100
Dundas St.
|
London
(Central
business
district)
|
ON
|
323,411
|
1980
|
Office
|
||||||||||||||||||||
|
|||||||||||||||||||||||||
Tenant
|
%
of Total Sq Ft Leased
|
Tenant
Net Rentable Sq Ft
|
Lease
Start
Date
|
Lease
End
Date
|
Annual
Rent
(1)
(2)
|
Current
Rent per Sq Ft (1)
|
Annual
Real Estate Taxes (1)
|
Tenant
Credit Rating
|
|||||||||||||||||
Bell
Canada - Office
|
89.89
|
%
|
290,706
|
03/26/98
|
3/31/06
(4
|
)
|
$
|
1,751
|
$
|
6.02
|
$
|
1,146
|
A
|
||||||||||||
Bell
Canada - Storage
|
3.99
|
%
|
12,890
|
03/26/98
|
03/31/06
|
55
|
4.30
|
A
|
|||||||||||||||||
Bell
Canada - Communication
|
0.52
|
%
|
1,686
|
03/26/98
|
03/31/47
|
29
|
17.21
|
A
|
|||||||||||||||||
Mactel
|
0.16
|
%
|
519
|
03/01/03
|
(3)
|
|
4
|
6.88
|
|||||||||||||||||
Tony
& Fay Gardiner
|
0.15
|
%
|
475
|
09/01/02
|
08/31/07
|
4
|
9.04
|
||||||||||||||||||
O&Y
Enterprise Office
|
0.46
|
%
|
1,478
|
03/26/98
|
03/31/06
|
13
|
9.04
|
||||||||||||||||||
COMTECH
|
0.03
|
%
|
96
|
01/01/00
|
(3)
|
|
1
|
6.88
|
|||||||||||||||||
Vacant
|
N/A
|
15,561
|
N/A
|
N/A
|
N/A
|
N/A
|
|
|
|||||||||||||||||
Total
|
95.20
|
%
|
323,411
|
|
|
$
|
1,857
|
|
$
|
1,146
|
|
Year
|
Number
of Tenant
Leases
Expiring
|
Square
Feet of
Expiring
Leases
|
Annual
Rent of
Expiring
Leases (1)
|
%
of Gross Annual
Rent
Represented
by
Expiring Leases
|
|||||||||
Vacant
|
N/A
|
15,561
|
N/A
|
N/A
|
|||||||||
2006
(4)
|
5
|
305,689
|
$
|
1,824
|
98.2
|
%
|
|||||||
2007
|
1
|
475
|
4
|
0.2
|
%
|
||||||||
2047
|
1
|
1,686
|
29
|
1.6
|
%
|
||||||||
Total
|
7
|
323,411
|
$
|
1,857
|
100.0
|
%
|
|||||||
(1)
|
Monetary
amounts are in U.S. dollars based on the December 31, 2005 Canadian
dollar
exchange rate of 1.1620.
|
(2) |
Certain
operating expenses are reimbursed by tenants at rates ranging up
to 15%
above actual cost.
|
(3) |
These
leases are running month to month.
|
(4) |
184,504
square feet have been released to Bell Canada for six years commencing
in
April 2006 for $6.02 per square foot per
annum, before adjustment for lease incentives, with one five year
renewal
option.
|
Debt
Obligation
|
Current
Face
Amount
|
Carrying
Value
|
Weighted
Average
Funding
Cost
(1)
|
Weighted
Average Maturity
(Years)
|
Face
Amount
of
Floating
Rate
Debt
|
Collateral
Carrying
Value
|
Collateral
Weighted Average Maturity
(Years)
|
Face
Amount
of
Floating Rate Collateral
|
Aggregate
Notional
Amount
of
Current
Hedges
|
|||||||||||||||||||
CBO
Bonds Payable
|
$
|
3,560,953
|
$
|
3,530,384
|
5.27
|
%
|
6.55
|
$
|
3,275,603
|
$
|
4,002,158
|
5.86
|
$
|
1,107,164
|
$
|
1,960,808
|
||||||||||||
Other
Bonds Payable
|
353,330
|
353,330
|
5.94
|
%
|
0.63
|
215,624
|
428,744
|
4.23
|
9,961
|
227,576
|
||||||||||||||||||
Notes
Payable
|
260,441
|
260,441
|
4.70
|
%
|
1.21
|
260,441
|
288,683
|
2.69
|
282,589
|
—
|
||||||||||||||||||
Repurchase
Agreements
|
1,048,203
|
1,048,203
|
4.68
|
%
|
0.10
|
1,048,203
|
1,170,435
|
4.29
|
341,591
|
755,368
|
||||||||||||||||||
Credit
Facility
|
20,000
|
20,000
|
6.86
|
%
|
2.55
|
20,000
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Total
debt obligations
|
$
|
5,242,927
|
$
|
5,212,358
|
5.17
|
%
|
4.59
|
$
|
4,819,871
|
$
|
5,890,020
|
5.27
|
$
|
1,741,305
|
$
|
2,943,752
|
||||||||||||
(1) |
Including
the effect of applicable
hedges.
|
·
|
no
investment is to be made which would cause us to fail to qualify
as a
REIT;
|
·
|
no
investment is to be made which would cause us to be regulated as
an
investment company;
|
·
|
no
more than 20% of our total equity, determined as of the date of such
investment, is to be invested in any single
asset;
|
·
|
our
leverage is not to exceed 90% of the sum of our total debt and our
total
equity; and
|
·
|
we
are not to co-invest with the manager or any of its affiliates unless
(i)
our co-investment is otherwise in accordance with these guidelines
and
(ii) the terms of such co-investment are at least as favorable to
us as to
the manager or such affiliate (as applicable) making such
co-investment.
|
· |
any
person who beneficially owns 10% or more of the voting power of the
corporation's outstanding shares; or
|
· |
an
affiliate or associate of a corporation who, at any time within the
two-year period prior to the date in question, was the beneficial
owner of
10% or more of the voting power of the then outstanding stock of
the
corporation.
|
·
|
80%
of the votes entitled to be cast by holders of outstanding shares
of
voting stock of the corporation voting together as a single group;
and
|
·
|
two-thirds
of the votes entitled to be cast by holders of voting stock of the
corporation other than shares held by the interested stockholder
with whom
or with whose affiliate the business combination is to be effected
or held
by an affiliate or associate of the interested stockholder voting
together
as a single voting group.
|
2005
|
High
|
Low
|
Last
Sale
|
Distributions
Declared
|
|||||||||
First
Quarter
|
$
|
31.95
|
$
|
29.27
|
$
|
29.60
|
$
|
0.625
|
|||||
Second
Quarter
|
$
|
32.31
|
$
|
28.25
|
$
|
30.15
|
$
|
0.625
|
|||||
Third
Quarter
|
$
|
31.25
|
$
|
27.00
|
$
|
27.90
|
$
|
0.625
|
|||||
Fourth
Quarter
|
$
|
27.96
|
$
|
24.74
|
$
|
24.85
|
$
|
0.625
|
|||||
2004
|
High
|
Low
|
Last
Sale
|
Distributions
Declared
|
|||||||||
First
Quarter
|
$
|
33.89
|
$
|
25.51
|
$
|
33.70
|
$
|
0.600
|
|||||
Second
Quarter
|
$
|
33.40
|
$
|
24.51
|
$
|
29.95
|
$
|
0.600
|
|||||
Third
Quarter
|
$
|
31.74
|
$
|
27.97
|
$
|
30.70
|
$
|
0.600
|
|||||
Fourth
Quarter
|
$
|
32.87
|
$
|
29.84
|
$
|
31.78
|
$
|
0.625
|
Number
of Securities to be Issued Upon Exercise of Outstanding
Options
|
Weighted
Average Exercise Price of Outstanding Options
|
Number
of Securities Remaining Available for Future Issuance Under Equity
Compensation Plans
|
||||||||
Equity
Compensation Plans Approved
|
||||||||||
by
Security Holders:
|
||||||||||
Newcastle
Investment Corp. Nonqualified
|
||||||||||
Stock
Option and Incentive Award Plan
|
1,811,807
(1
|
)
|
$
|
25.14
|
7,320,577
(2
|
)
|
||||
Equity
Compensation Plans Not Approved
|
||||||||||
by
Security Holders:
|
||||||||||
None
|
N/A
|
N/A
|
N/A
|
|||||||
(1)
|
Includes
options for (i) 1,170,317 shares held by an affiliate of our manager;
(ii)
627,490 shares granted to our manager and assigned to certain of
the
manager’s employees; and (iii) an aggregate of 14,000 shares held by our
directors, other than Mr. Edens.
|
(2) |
The
maximum available for issuance is equal to 10% of the number of
outstanding equity interests, subject to a maximum of 10,000,000
shares in
the aggregate over the term of the plan. The number of securities
remaining available for future issuance is net of an aggregate of
5,696
shares of our common stock awards to our directors, other than Mr.
Edens,
representing the aggregate annual automatic stock awards to each
such
director for 2003 through 2005, and of 861,920 shares issued to certain
of
our directors and employees of our manager upon the exercise of previously
granted options.
|
Year
Ended December 31,
|
||||||||||||||||
2005
|
2004
|
2003
|
2002
|
2001
|
||||||||||||
Operating
Data
|
(2)
|
(1)
|
||||||||||||||
Revenues
|
||||||||||||||||
Interest
income
|
$
|
348,516
|
$
|
225,761
|
$
|
133,183
|
$
|
73,620
|
$
|
48,729
|
||||||
Other
income
|
29,697
|
23,908
|
18,901
|
18,716
|
50,348
|
|||||||||||
378,213
|
249,669
|
152,084
|
92,336
|
99,077
|
||||||||||||
Expenses
|
||||||||||||||||
Interest
expense
|
226,446
|
136,398
|
76,877
|
44,238
|
30,495
|
|||||||||||
Other
expense
|
42,529
|
29,259
|
20,828
|
18,197
|
36,865
|
|||||||||||
268,975
|
165,657
|
97,705
|
62,435
|
67,360
|
||||||||||||
Equity
in earnings of unconsolidated subsidiaries
|
5,930
|
12,465
|
862
|
362
|
2,807
|
|||||||||||
Income
taxes on related taxable subsidiaries
|
(321
|
)
|
(2,508
|
)
|
—
|
—
|
—
|
|||||||||
5,609
|
9,957
|
862
|
362
|
2,807
|
||||||||||||
Income
from continuing operations
|
114,847
|
93,969
|
55,241
|
30,263
|
34,524
|
|||||||||||
Income
from discontinued operations
|
2,108
|
4,446
|
877
|
1,232
|
9,147
|
|||||||||||
Net
income
|
116,955
|
98,415
|
56,118
|
31,495
|
43,671
|
|||||||||||
Preferred
dividends and related accretion
|
(6,684
|
)
|
(6,094
|
)
|
(4,773
|
)
|
(1,162
|
)
|
(2,540
|
)
|
||||||
Income
available for common stockholders
|
$
|
110,271
|
$
|
92,321
|
$
|
51,345
|
$
|
30,333
|
$
|
41,131
|
||||||
Net
income per share of common stock, diluted
|
$
|
2.51
|
$
|
2.46
|
$
|
1.96
|
$
|
1.68
|
$
|
2.49
|
||||||
Income
from continuing operations per share of common
|
||||||||||||||||
stock,
after preferred dividends and related accretion, diluted
|
$
|
2.46
|
$
|
2.34
|
$
|
1.93
|
$
|
1.61
|
$
|
1.94
|
||||||
Weighted
average number of shares of common stock
|
||||||||||||||||
outstanding,
diluted
|
43,986
|
37,558
|
26,141
|
18,090
|
16,493
|
|||||||||||
Dividends
declared per share of common stock
|
$
|
2.500
|
$
|
2.425
|
$
|
1.950
|
$
|
2.050
|
$
|
2.000
|
||||||
As
Of December 31,
|
||||||||||||||||
2005
|
2004
|
2003
|
2002
|
2001
(1)
|
||||||||||||
Balance
Sheet Data
|
||||||||||||||||
Real
estate securities, available for sale
|
$
|
4,554,519
|
$
|
3,369,496
|
$
|
2,192,727
|
$
|
1,025,010
|
$
|
501,509
|
||||||
Real
estate related loans, net
|
615,551
|
591,890
|
402,784
|
26,417
|
20,662
|
|||||||||||
Residential
mortgage loans, net
|
600,682
|
654,784
|
586,237
|
258,198
|
—
|
|||||||||||
Operating
real estate, net
|
16,673
|
57,193
|
102,995
|
113,652
|
524,834
|
|||||||||||
Cash
and cash equivalents
|
21,275
|
37,911
|
60,403
|
45,463
|
31,360
|
|||||||||||
Total
assets
|
6,209,699
|
4,932,720
|
3,550,299
|
1,574,828
|
1,262,509
|
|||||||||||
Debt
|
5,212,358
|
4,021,396
|
2,924,552
|
1,217,007
|
897,390
|
|||||||||||
Total
liabilities
|
5,291,696
|
4,136,005
|
3,010,936
|
1,288,326
|
928,637
|
|||||||||||
Common
stockholders' equity
|
815,503
|
734,215
|
476,863
|
284,241
|
310,545
|
|||||||||||
Preferred
stock
|
102,500
|
62,500
|
62,500
|
—
|
—
|
|||||||||||
Supplemental
Balance Sheet Data
|
||||||||||||||||
Common
shares outstanding
|
43,913
|
39,859
|
31,375
|
23,489
|
16,489
|
|||||||||||
Book
value per share of common stock, subsequent to
|
||||||||||||||||
initial
public offering
|
$
|
18.57
|
$
|
18.42
|
$
|
15.20
|
$
|
12.10
|
N/A
|
|||||||
|
(1) |
Represents
the operations and financial position of our
predecessor.
|
(2) |
Includes
the operations of our predecessor through the date of commencement
of our
operations, July 12,
2002.
|
Year
Ended December 31,
|
||||||||||||||||
2005
|
2004
|
2003
|
2002
|
2001
|
||||||||||||
Other
Data
|
||||||||||||||||
Cash
Flow provided by (used in):
|
||||||||||||||||
Operating
activities
|
$
|
98,763
|
$
|
90,355
|
$
|
38,454
|
$
|
21,919
|
$
|
37,255
|
||||||
Investing
activities
|
(1,334,746
|
)
|
(1,332,164
|
)
|
(1,659,026
|
)
|
(683,053
|
)
|
103,246
|
|||||||
Financing
activities
|
1,219,347
|
1,219,317
|
1,635,512
|
675,237
|
(119,716
|
)
|
||||||||||
Funds
from Operations (FFO) (1)
|
104,031
|
86,201
|
54,380
|
37,633
|
48,264
|
|||||||||||
(1)
|
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 depreciation
of
our operating real estate, 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 our
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.
|
Year
Ended December 31,
|
||||||||||||||||
2005
|
2004
|
2003
|
2002
|
2001
|
||||||||||||
Calculation
of Funds From Operations (FFO):
|
||||||||||||||||
Income
available for common stockholders
|
$
|
110,271
|
$
|
92,321
|
$
|
51,345
|
$
|
30,333
|
$
|
41,131
|
||||||
Operating
real estate depreciation
|
702
|
2,199
|
3,035
|
7,994
|
12,909
|
|||||||||||
Accumulated
depreciation on operating real estate sold
|
(6,942
|
)
|
(8,319
|
)
|
—
|
(2,847
|
)
|
—
|
||||||||
Other-Fund
I (1)
|
—
|
—
|
—
|
2,153
|
(5,776
|
)
|
||||||||||
Funds
from operations (FFO)
|
$
|
104,031
|
$
|
86,201
|
$
|
54,380
|
$
|
37,633
|
$
|
48,264
|
||||||
(1) |
Related
to an investment retained by our
predecessor.
|
Year
|
Shares
Issued
|
Range
of Issue Prices per Share (1)
|
Net
Proceeds (millions)
|
|||||||
Formation
|
16,488,517
|
N/A
|
N/A
|
|||||||
2002
|
7,000,000
|
$
|
13.00
|
$
|
80.0
|
|||||
2003
|
7,886,316
|
$
|
20.35-$22.85
|
$
|
163.4
|
|||||
2004
|
8,484,648
|
$
|
26.30-$31.40
|
$
|
224.3
|
|||||
2005
|
4,053,928
|
$
|
29.60
|
$
|
108.2
|
|||||
December
31, 2005
|
43,913,409
|
|||||||||
(1) |
Excludes
prices of shares issued pursuant to the exercise of options and
shares
issued to Newcastle’s independent
directors.
|
For
the Year Ended
|
Real
Estate Securities and Real Estate Related Loans
|
Residential
Mortgage Loans
|
Operating
Real Estate
|
Unallocated
|
Total
|
|||||||||||
December
31, 2005
|
$
|
321,889
|
$
|
48,844
|
$
|
6,772
|
$
|
708
|
$
|
378,213
|
||||||
December
31, 2004
|
$
|
225,236
|
$
|
19,135
|
$
|
4,745
|
$
|
553
|
$
|
249,669
|
||||||
December
31, 2003
|
$
|
134,348
|
$
|
12,892
|
$
|
4,264
|
$
|
580
|
$
|
152,084
|
Year-to-Year
Increase
(Decrease)
|
Year-to-Year
Percent
Change
|
Explanation
|
|||||||||||||||||
2005/2004
|
|
2004/2003
|
|
2005/2004
|
|
2004/2003
|
|
2005/2004
|
|
2004/2003
|
|||||||||
Interest
income
|
$
|
122,755
|
$
|
92,578
|
54.4
|
%
|
69.5
|
%
|
(1
|
)
|
(1
|
)
|
|||||||
Rental
and escalation income
|
1,903
|
506
|
40.1
|
%
|
11.9
|
%
|
(2
|
)
|
(2
|
)
|
|||||||||
Gain
on sale of investments
|
1,991
|
5,135
|
10.9
|
%
|
39.0
|
%
|
(3
|
)
|
(3
|
)
|
|||||||||
Other
income
|
1,895
|
(634
|
)
|
222.9
|
%
|
(42.7
|
%)
|
(4
|
)
|
||||||||||
Interest
expense
|
90,048
|
59,521
|
66.0
|
%
|
77.4
|
%
|
(1
|
)
|
(1
|
)
|
|||||||||
Property
operating expense
|
(212
|
)
|
148
|
(8.2
|
%)
|
6.1
|
%
|
(2
|
)
|
(2
|
)
|
||||||||
Loan
and security servicing expense
|
2,936
|
903
|
96.0
|
%
|
41.9
|
%
|
(1
|
)
|
(1
|
)
|
|||||||||
Provision
for credit losses
|
8,421
|
-
|
N/A
|
N/A
|
(5
|
)
|
|||||||||||||
General
and administrative expense
|
(438
|
)
|
1,449
|
(9.5
|
%)
|
46.0
|
%
|
(6
|
)
|
(6
|
)
|
||||||||
Management
fee to affiliate
|
2,705
|
4,152
|
25.5
|
%
|
64.2
|
%
|
(7
|
)
|
(7
|
)
|
|||||||||
Incentive
compensation to affiliate
|
(332
|
)
|
1,733
|
(4.2
|
%)
|
27.8
|
%
|
(7
|
)
|
(7
|
)
|
||||||||
Depreciation
and amortization
|
190
|
46
|
42.1
|
%
|
11.4
|
%
|
(8
|
)
|
(8
|
)
|
|||||||||
Equity
in earnings of
|
|||||||||||||||||||
unconsolidated
subsidiaries, net of taxes on related taxable subsidiaries
|
(4,348
|