ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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94-6181186
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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410 Park Avenue, 14
th
Floor, New York, NY
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10022
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(Address of principal executive offices)
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(Zip Code)
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(212) 655-0220
(Registrant's telephone number, including area code)
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller Reporting Company
ý
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Part I.
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Financial Information | ||
Item 1:
|
1
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||
3
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|||
4
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|||
5
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|||
6
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|||
7
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|||
Item 2:
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49
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||
Item 3:
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71
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||
Item 4:
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72
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||
Part II.
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Other Information | ||
Item 1:
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73
|
||
Item 1A:
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73
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||
Item 2:
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73
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||
Item 3:
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73
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||
Item 4:
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73
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||
Item 5:
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73
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||
Item 6:
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74
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76
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ITEM 1.
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Financial Statements
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Capital Trust, Inc. and Subsidiaries
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Consolidated Balance Sheets
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June 30, 2012 and December 31, 2011
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(in thousands, except per share data)
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June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(unaudited)
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||||||||
Assets
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||||||||
Cash and cash equivalents
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$34,604 | $34,818 | ||||||
Loans receivable, net
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1,619 | 19,282 | ||||||
Equity investments in unconsolidated subsidiaries
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17,978 | 10,399 | ||||||
Deferred income taxes
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2,727 | 1,268 | ||||||
Prepaid expenses and other assets
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2,207 | 4,533 | ||||||
Subtotal
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59,135 | 70,300 | ||||||
Assets of Consolidated Entities
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||||||||
CT Legacy REIT
|
||||||||
Restricted cash
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15,433 | 12,985 | ||||||
Securities held-to-maturity
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— | 2,602 | ||||||
Loans receivable, net
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— | 206,514 | ||||||
Loans held-for-sale, net
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— | 30,875 | ||||||
Investment in CT Legacy Asset, at fair value
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90,700 | — | ||||||
Accrued interest receivable and other assets
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— | 2,119 | ||||||
Subtotal
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106,133 | 255,095 | ||||||
Securitization Vehicles
|
||||||||
Securities held-to-maturity
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166,630 | 358,972 | ||||||
Loans receivable, net
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241,644 | 612,598 | ||||||
Real estate held-for-sale
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— | 10,342 | ||||||
Accrued interest receivable and other assets
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10,695 | 59,009 | ||||||
Subtotal
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418,969 | 1,040,921 | ||||||
Total assets
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$584,237 | $1,366,316 |
Consolidated Balance Sheets
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June 30, 2012 and December 31, 2011
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(in thousands, except per share data)
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June 30,
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December 31,
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|||||||
2012
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2011
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|||||||
(unaudited)
|
||||||||
Liabilities & Equity (Deficit)
|
||||||||
Liabilities:
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||||||||
Accounts payable, accrued expenses and other liabilities
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$12,320 | $8,075 | ||||||
Secured notes
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8,176 | 7,847 | ||||||
Participations sold
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1,619 | 19,282 | ||||||
Subtotal
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22,115 | 35,204 | ||||||
Non-Recourse Liabilities of Consolidated Entities
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||||||||
CT Legacy REIT
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||||||||
Accounts payable, accrued expenses and other liabilities
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— | 743 | ||||||
Repurchase obligations
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— | 58,464 | ||||||
Mezzanine loan, net of unamortized discount
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— | 55,111 | ||||||
Participations sold
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— | 97,465 | ||||||
Interest rate hedge liabilities
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— | 8,817 | ||||||
Subtotal
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— | 220,600 | ||||||
Securitization Vehicles
|
||||||||
Accounts payable, accrued expenses and other liabilities
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549 | 3,102 | ||||||
Securitized debt obligations
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518,140 | 1,211,407 | ||||||
Interest rate hedge liabilities
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21,193 | 24,942 | ||||||
Subtotal
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539,882 | 1,239,451 | ||||||
Total liabilities
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561,997 | 1,495,255 | ||||||
Commitments and contingencies
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— | — | ||||||
Equity (Deficit):
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||||||||
Class A common stock, $0.01 par value, 100,000 shares authorized, 21,979
and 21,967 shares issued and outstanding as of June 30, 2012 and
December 31, 2011, respectively ("class A common stock")
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220 | 220 | ||||||
Restricted class A common stock, $0.01 par value, 537 and 244 shares
issued and outstanding as of June 30, 2012 and December 31, 2011,
respectively ("restricted class A common stock" and together with
class A common stock, "common stock")
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5 | 2 | ||||||
Additional paid-in capital
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597,344 | 597,049 | ||||||
Accumulated other comprehensive loss
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(33,679 | ) | (40,584 | ) | ||||
Accumulated deficit
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(598,275 | ) | (667,111 | ) | ||||
Total Capital Trust, Inc. shareholders' deficit
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(34,385 | ) | (110,424 | ) | ||||
Noncontrolling interests
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56,625 | (18,515 | ) | |||||
Total equity (deficit)
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22,240 | (128,939 | ) | |||||
Total liabilities and equity (deficit)
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$584,237 | $1,366,316 |
Consolidated Statements of Operations
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Three and Six Months Ended June 30, 2012 and 2011
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(in thousands, except share and per share data)
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(unaudited)
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Three Months Ended
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Six Months Ended
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|||||||||||||||
June 30,
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June 30,
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|||||||||||||||
2012
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2011
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2012
|
2011
|
|||||||||||||
Income from loans and other investments:
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||||||||||||||||
Interest and related income
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$6,763 | $32,554 | $21,479 | $69,545 | ||||||||||||
Less: Interest and related expenses
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5,413 | 32,296 | 28,754 | 58,543 | ||||||||||||
Income from loans and other investments, net
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1,350 | 258 | (7,275 | ) | 11,002 | |||||||||||
Other revenues:
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||||||||||||||||
Management fees from affiliates
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1,610 | 1,595 | 3,195 | 3,174 | ||||||||||||
Servicing fees
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1,365 | 438 | 3,385 | 748 | ||||||||||||
Total other revenues
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2,975 | 2,033 | 6,580 | 3,922 | ||||||||||||
Other expenses:
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||||||||||||||||
General and administrative
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4,740 | 4,649 | 9,052 | 14,928 | ||||||||||||
Total other expenses
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4,740 | 4,649 | 9,052 | 14,928 | ||||||||||||
Total other-than-temporary impairments of securities
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— | — | — | (4,933 | ) | |||||||||||
Portion of other-than-temporary impairments of securities
recognized in other comprehensive income
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— | — | (160 | ) | (3,271 | ) | ||||||||||
Net impairments recognized in earnings
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— | — | (160 | ) | (8,204 | ) | ||||||||||
Recovery of provision for loan losses
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— | 8,088 | 8 | 17,249 | ||||||||||||
Valuation allowance on loans held-for-sale
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— | (224 | ) | — | (224 | ) | ||||||||||
Gain on extinguishment of debt
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— | 937 | — | 250,976 | ||||||||||||
Fair value adjustment on investment in CT Legacy Assets
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3,704 | — | 7,657 | — | ||||||||||||
Gain on deconsolidation of subsidiary
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— | — | 146,380 | — | ||||||||||||
Income from equity investments
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205 | 842 | 901 | 1,797 | ||||||||||||
Income before income taxes
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3,494 | 7,285 | 145,039 | 261,590 | ||||||||||||
Income tax provision
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143 | 1,061 | 1,066 | 1,450 | ||||||||||||
Net income
|
$3,351 | $6,224 | $143,973 | $260,140 | ||||||||||||
Less: Net income attributable to noncontrolling interests
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(1,068 | ) | (8,069 | ) | (75,137 | ) | (7,400 | ) | ||||||||
Net income (loss) attributable to Capital Trust, Inc.
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$2,283 | ($1,845 | ) | $68,836 | $252,740 | |||||||||||
Per share information:
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||||||||||||||||
Net income (loss) per share of common stock:
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||||||||||||||||
Basic
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$0.10 | ($0.08 | ) | $3.01 | $11.19 | |||||||||||
Diluted
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$0.09 | ($0.08 | ) | $2.83 | $10.52 | |||||||||||
Weighted average shares of common stock outstanding:
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||||||||||||||||
Basic
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22,893,522 | 22,723,146 | 22,865,819 | 22,580,143 | ||||||||||||
Diluted
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24,426,857 | 22,723,146 | 24,353,388 | 24,024,222 |
Consolidated Statements of Comprehensive Income
|
Three and Six Months Ended June 30, 2012 and 2011
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(in thousands)
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(unaudited)
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Three Months Ended
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Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net income
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$3,351 | $6,224 | $143,973 | $260,140 | ||||||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Unrealized gain (loss) on derivative financial instruments
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1,965 | (999 | ) | 3,749 | 3,545 | |||||||||||
Gain on interest rate swaps no longer designated as cash
flow hedges
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— | 3,201 | 2,481 | 3,201 | ||||||||||||
Amortization of unrealized gains and losses on securities
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(8 | ) | (277 | ) | (765 | ) | (506 | ) | ||||||||
Amortization of deferred gains and losses on settlement
of swaps
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— | (23 | ) | (56 | ) | (47 | ) | |||||||||
Other-than-temporary impairments of securities related to
fair value adjustments in excess of expected credit
losses, net of amortization
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(174 | ) | 116 | 213 | 3,966 | |||||||||||
Other comprehensive income
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1,783 | 2,018 | 5,622 | 10,159 | ||||||||||||
Comprehensive income
|
$5,134 | $8,242 | $149,595 | $270,299 | ||||||||||||
Less: Comprehensive income attributable to
noncontrolling interests
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(1,068 | ) | (8,068 | ) | (75,147 | ) | (7,400 | ) | ||||||||
Comprehensive income attributable to
Capital Trust, Inc.
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$4,066 | $174 | $74,448 | $262,899 |
Consolidated Statements of Changes in Equity (Deficit)
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For the Six Months Ended June 30, 2012 and 2011
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(in thousands)
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(unaudited)
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Class A Common Stock
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Restricted Class A Common Stock
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Additional Paid-In Capital
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Accumulated Other Comprehensive Loss
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Accumulated Deficit
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Total Capital Trust, Inc. Shareholders' Deficit
|
Noncontrolling Interests
|
Total
|
||||||||||||||||||||||||||
Balance at January 1, 2011
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$219 | $— | $559,411 | ($50,462 | ) | ($920,355 | ) | ($411,187 | ) | $— | ($411,187 | ) | |||||||||||||||||||||
Net income
|
— | — | — | — | 252,740 | 252,740 | 7,400 | 260,140 | |||||||||||||||||||||||||
Other comprehensive income
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— | — | — | 10,159 | — | 10,159 | — | 10,159 | |||||||||||||||||||||||||
Allocation to noncontrolling interests
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— | — | 37,014 | — | — | 37,014 | (12,623 | ) | 24,391 | ||||||||||||||||||||||||
Restricted class A common stock earned, net of
shares deferred
|
1 | 2 | 230 | — | — | 233 | — | 233 | |||||||||||||||||||||||||
Deferred directors' compensation
|
— | — | 94 | — | — | 94 | — | 94 | |||||||||||||||||||||||||
Balance at June 30, 2011
|
$220 | $2 | $596,749 | ($40,303 | ) | ($667,615 | ) | ($110,947 | ) | ($5,223 | ) | ($116,170 | ) | ||||||||||||||||||||
Balance at January 1, 2012
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$220 | $2 | $597,049 | ($40,584 | ) | ($667,111 | ) | ($110,424 | ) | ($18,515 | ) | ($128,939 | ) | ||||||||||||||||||||
Net income
|
— | — | — | — | 68,836 | 68,836 | 75,137 | 143,973 | |||||||||||||||||||||||||
Other comprehensive income
|
— | — | — | 5,612 | — | 5,612 | 10 | 5,622 | |||||||||||||||||||||||||
Deconsolidation of CT Legacy Asset
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— | — | — | 1,293 | — | 1,293 | — | 1,293 | |||||||||||||||||||||||||
Distributions to noncontrolling interests
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— | — | — | — | — | — | (7 | ) | (7 | ) | |||||||||||||||||||||||
Restricted class A common stock earned, net of
shares deferred
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— | 3 | 182 | — | — | 185 | — | 185 | |||||||||||||||||||||||||
Deferred directors' compensation
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— | — | 113 | — | — | 113 | — | 113 | |||||||||||||||||||||||||
Balance at June 30, 2012
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$220 | $5 | $597,344 | ($33,679 | ) | ($598,275 | ) | ($34,385 | ) | $56,625 | $22,240 |
Capital Trust
, Inc. and Subsidiaries
|
Consolidated Statements of Cash Flows
|
For the Six Months Ended June 30, 2012 and 2011
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(in thousands)
|
(unaudited)
|
2012
|
2011
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$143,973 | $260,140 | ||||||
Adjustments to reconcile net income to net cash provided by
|
||||||||
operating activities:
|
||||||||
Net impairments recognized in earnings
|
160 | 8,204 | ||||||
Recovery of provision for loan losses
|
(8 | ) | (17,249 | ) | ||||
Valuation allowance on loans held-for-sale
|
— | 224 | ||||||
Gain on extinguishment of debt
|
— | (250,976 | ) | |||||
Gain on deconsolidation of CT Legacy Asset
|
(146,380 | ) | — | |||||
Fair value adjustment on CT Legacy Asset
|
(7,657 | ) | — | |||||
Income from equity investments
|
(901 | ) | (1,797 | ) | ||||
Distributions of income from equity investments
|
1,710 | — | ||||||
Employee stock-based compensation
|
210 | 317 | ||||||
Incentive awards plan expense
|
181 | 2,980 | ||||||
Deferred directors' compensation
|
113 | 94 | ||||||
Distributions from CT Legacy Assets
|
6,634 | — | ||||||
Amortization of premiums/discounts on loans and securities and deferred
interest on loans
|
(393 | ) | (912 | ) | ||||
Amortization of deferred gains and losses on settlement of swaps
|
(56 | ) | (47 | ) | ||||
Amortization of deferred financing costs and premiums/discounts on
|
||||||||
debt obligations
|
9,846 | 6,648 | ||||||
Loss on interest rate swaps not designated as cash flow hedges
|
2,772 | 3,970 | ||||||
Changes in assets and liabilities, net:
|
||||||||
Accrued interest receivable
|
(3,785 | ) | 2,617 | |||||
Deferred income taxes
|
(1,458 | ) | (939 | ) | ||||
Prepaid expenses and other assets
|
2,622 | 448 | ||||||
Accounts payable and accrued expenses
|
(1,075 | ) | (1,283 | ) | ||||
Net cash provided by operating activities
|
6,508 | 12,439 | ||||||
Cash flows from investing activities:
|
||||||||
Principal collections and proceeds from securities
|
28,122 | 31,435 | ||||||
Distributions from equity investments
|
— | 3,360 | ||||||
Principal collections of loans receivable
|
83,245 | 1,680,725 | ||||||
Proceeds from disposition of loans
|
— | 5,750 | ||||||
Contributions to unconsolidated subsidiaries
|
(4,030 | ) | (1,991 | ) | ||||
Distributions from unconsolidated subsidiaries
|
677 | 2,869 | ||||||
Increase in restricted cash
|
(2,448 | ) | (10,225 | ) | ||||
Net cash provided by investing activities
|
105,566 | 1,711,923 | ||||||
Cash flows from financing activities:
|
||||||||
Borrowings under repurchase obligations
|
123,977 | — | ||||||
Repayments under repurchase obligations
|
(58,464 | ) | (253,336 | ) | ||||
Repayments under senior credit facility
|
(63,000 | ) | (22,932 | ) | ||||
Repayment of junior subordinated notes
|
— | (4,640 | ) | |||||
Borrowing under mezzanine loan
|
— | 83,000 | ||||||
Repayments under mezzanine loan
|
— | (20,000 | ) | |||||
Repayment of securitized debt obligations
|
(114,768 | ) | (1,490,715 | ) | ||||
Payment of financing expenses
|
— | (11,126 | ) | |||||
Purchase of and distributions to noncontrolling interests
|
(8 | ) | (142 | ) | ||||
Purchase of secured notes
|
— | (405 | ) | |||||
Vesting of restricted Class A common stock
|
(25 | ) | (85 | ) | ||||
Net cash used in financing activities
|
(112,288 | ) | (1,720,381 | ) | ||||
Net (decrease) increase in cash and cash equivalents
|
(214 | ) | 3,981 | |||||
Cash and cash equivalents at beginning of period
|
34,818 | 24,449 | ||||||
Cash and cash equivalents at end of period
|
$34,604 | $28,430 |
1 -
|
Low Risk:
A loan that is expected to perform through maturity, with relatively lower LTV, higher in-place debt yield, and stable projected cash flow.
|
2 -
|
Average Risk:
A loan that is expected to perform through maturity, with medium LTV, average in-place debt yield, and stable projected cash flow.
|
3 -
|
Acceptable Risk:
A loan that is expected to perform through maturity, with relatively higher LTV, acceptable in-place debt yield, and some uncertainty (due to lease rollover or other factors) in projected cash flow.
|
4 -
|
Higher Risk:
A loan that is expected to perform through maturity, but has exhibited a material deterioration in cash flow and/or other credit factors. If negative trends continue, default could occur.
|
5 -
|
Low Probability of Default/Loss:
A loan with one or more identified weakness that we expect to have a 15% probability of default or principal loss.
|
6 -
|
Medium Probability of Default/Loss:
A loan with one or more identified weakness that we expect to have a 33% probability of default or principal loss.
|
7 -
|
High Probability of Default/Loss:
A loan with one or more identified weakness that we expect to have a 67% or higher probability of default or principal loss.
|
8 -
|
In Default:
A loan which is in contractual default and/or which has a very high likelihood of principal loss.
|
CTOPI
|
CT High
Grade II
|
Total
|
|||||||||||
December 31, 2011
|
$10,399 | $— | $10,399 | ||||||||||
Contributions
|
1,241 | 2,789 | 4,030 | ||||||||||
Income from equity investments
(1)
|
5,894 | 42 | 5,936 | ||||||||||
Distributions
|
(2,387 | ) | — | (2,387 | ) | ||||||||
June 30, 2012
|
$15,147 | $2,831 | $17,978 |
(1)
|
Includes $5.0 million of incentive income allocated to us from CTOPI under the equity method of accounting. This incentive income has not been recognized into earnings, but recorded as a deferred incentive income liability under accounts payable, accrued expenses and other liabilities on our consolidated balance sheet.
|
CMBS
|
CDOs & Other
|
Total
Book Value
|
|||||||||||
December 31, 2011
|
$1,346 | $1,256 | $2,602 | ||||||||||
Principal paydowns
|
(17 | ) | — | (17 | ) | ||||||||
Discount/premium amortization & other
|
18 | 7 | 25 | ||||||||||
Deconsolidation of CT Legacy Assets
(1)
|
(1,347 | ) | (1,263 | ) | (2,610 | ) | |||||||
June 30, 2012
|
$— | $— | $— |
(1)
|
As further described above, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, these securities are no longer included in our consolidated financial statements. |
June 30, 2012
|
December 31, 2011
|
|||
Number of securities
|
─
|
6
|
||
Number of issues
|
─
|
5
|
||
Rating
(1) (2)
|
N/A
|
CCC+
|
||
Fixed / Floating (in millions)
(3)
|
$─ / $─
|
$2 / $1
|
||
Coupon
(1) (4)
|
N/A
|
5.43%
|
||
Yield
(1) (4)
|
N/A
|
3.31%
|
||
Life (years)
(1) (5)
|
N/A
|
4.9
|
(1)
|
Represents a weighted average as of December 31, 2011.
|
|
(2) |
Weighted average ratings are based on the lowest rating published by Fitch Ratings, Standard & Poor’s or Moody’s Investors Service for each security.
|
|
(3) |
Represents the aggregate net book value of the portfolio allocated between fixed rate and floating rate securities.
|
|
(4) |
Coupon is based on the securities’ contractual interest rates, while yield is based on expected cash flows for each security, and considers discounts/premiums and asset non-performance. Calculations for floating rate securities are based on LIBOR of 0.30% as of December 31, 2011.
|
|
(5)
|
Weighted average life is based on the timing and amount of future expected principal payments through the expected repayment date of each respective investment.
|
Rating as of December 31, 2011
|
|||||||||||||
CCC and
|
|||||||||||||
Vintage
|
B |
Below
|
Total
|
||||||||||
2003
|
$— | $1,256 | $1,256 | ||||||||||
1997
|
179 | — | 179 | ||||||||||
1996
|
— | 1,167 | 1,167 | ||||||||||
Total
|
$179 | $2,423 | $2,602 |
Gross Other-Than-Temporary Impairments
|
Credit Related
Other-Than-Temporary
Impairments
|
Non-Credit Related
Other-Than-Temporary
Impairments
|
|||||||||||
December 31, 2011
|
$26,557 | $26,105 | $452 | ||||||||||
Amortization of other-than-temporary
impairments
|
(24 | ) | (11 | ) | (13 | ) | |||||||
Deconsolidation of CT Legacy Assets
(1)
|
(26,533 | ) | (26,094 | ) | (439 | ) | |||||||
June 30, 2012
|
$— | $— | $— |
(1)
|
As further described in Note 1 above, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, these securities, some of which were other-than-temporarily impaired, are no longer included in our consolidated financial statements. |
Less Than 12 Months
|
Greater Than 12 Months
|
Total | ||||||||||||||||||||||||||||
Gross
|
Gross
|
Gross
|
||||||||||||||||||||||||||||
Estimated
|
Unrealized
|
Estimated
|
Unrealized
|
Estimated
|
Unrealized
|
|||||||||||||||||||||||||
Fair Value
|
Loss
|
Fair Value
|
Loss
|
Fair Value
|
Loss
|
Book Value
(1)
|
||||||||||||||||||||||||
Floating Rate
|
$— | $— | $0.2 | ($1.1 | ) | $0.2 | ($1.1 | ) | $1.3 | |||||||||||||||||||||
Fixed Rate
|
1.2 | — | — | — | 1.2 | — | 1.2 | |||||||||||||||||||||||
Total
|
$1.2 | $— | $0.2 | ($1.1 | ) | $1.4 | ($1.1 | ) | $2.5 |
(1)
|
Excludes, as of December 31, 2011, $179,000 of securities which were carried at or below fair value and securities against which an other-than-temporary impairment equal to the entire book value was recognized in earnings.
|
Gross Book
Value
|
Provision for
Loan Losses
|
Net Book
Value
(1)
|
|||||||||||
December 31, 2011
|
$436,314 | ($229,800 | ) | $206,514 | |||||||||
Principal paydowns
|
(254 | ) | — | (254 | ) | ||||||||
Discount/premium amortization & other
|
28 | — | 28 | ||||||||||
Deconsolidation of CT Legacy Assets
(2)
|
(436,088 | ) | 229,800 | (206,288 | ) | ||||||||
June 30, 2012
|
$— | $— | $— |
(1)
|
Includes loans with a total principal balance of $436.0 million as of December 31, 2011. | |
(2) |
As further described above, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, these loans are no longer included in our consolidated financial statements.
|
June 30, 2012
|
December 31, 2011
|
|||
Number of investments
|
─
|
17
|
||
Fixed / Floating (in millions)
(1)
|
$─ / $─
|
$56 / $151
|
||
Coupon
(2) (3)
|
N/A
|
4.59%
|
||
Yield
(2) (3)
|
N/A
|
5.21%
|
||
Maturity (years)
(2) (4)
|
N/A
|
1.4
|
(1)
|
Represents the aggregate net book value of the portfolio allocated between fixed rate and floating rate loans.
|
|
(2) |
Represents a weighted average as of December 31, 2011.
|
|
(3) |
Calculations for floating rate loans are based on LIBOR of 0.30% as of December 31, 2011.
|
|
(4) |
Represents the final maturity of each investment assuming all extension options are executed.
|
June 30, 2012
|
December 31, 2011
|
|||||||||||||||
Asset Type
|
Book Value
|
Percentage
|
Book Value
|
Percentage
|
||||||||||||
Senior mortgages
|
$— | ― | % | $77,986 | 37 | % | ||||||||||
Subordinate interests in
mortgages
|
— | — | 58,078 | 28 | ||||||||||||
Mezzanine loans
|
— | — | 47,271 | 23 | ||||||||||||
Other
|
— | — | 23,179 | 12 | ||||||||||||
Total
|
$— | ― | % | $206,514 | 100 | % | ||||||||||
Property Type
|
Book Value
|
Percentage
|
Book Value
|
Percentage
|
||||||||||||
Office
|
$— | ― | % | $84,519 | 41 | % | ||||||||||
Hotel
|
— | — | 75,240 | 36 | ||||||||||||
Multifamily
|
— | — | 14,212 | 7 | ||||||||||||
Other
|
— | — | 32,543 | 16 | ||||||||||||
Total
|
$— | ― | % | $206,514 | 100 | % | ||||||||||
Geographic Location
|
Book Value
|
Percentage
|
Book Value
|
Percentage
|
||||||||||||
Northeast
|
$— | ― | % | $64,040 | 31 | % | ||||||||||
Southwest
|
— | — | 40,353 | 19 | ||||||||||||
West
|
— | — | 38,179 | 18 | ||||||||||||
Southeast
|
— | — | 20,076 | 10 | ||||||||||||
Northwest
|
— | — | 9,364 | 5 | ||||||||||||
International
|
— | — | 34,502 | 17 | ||||||||||||
Total
|
$— | ― | % | $206,514 | 100 | % |
Loans Receivable as of June 30, 2012
|
Loans Receivable as of December 31, 2011
|
||||||||||||||||||||||||||
Risk
Rating
|
Number
of Loans
|
Principal
Balance
|
Net
Book Value
|
Number
of Loans
|
Principal
Balance
|
Net
Book Value
|
|||||||||||||||||||||
1 - 3 | — | $— | $— | 5 | $91,940 | $92,333 | |||||||||||||||||||||
4 - 5 | — | — | — | 5 | 64,151 | 64,127 | |||||||||||||||||||||
6 - 8 | — | — | — | 7 | 279,882 | 50,054 | |||||||||||||||||||||
Total
|
— | $— | $— | 17 | $435,973 | $206,514 |
Senior Mortgage Loans | |||||||||||||||||||||||||||
as of June 30, 2012 | as of December 31, 2011 | ||||||||||||||||||||||||||
Risk
|
Number
|
Principal
|
Net
|
Number
|
Principal
|
Net
|
|||||||||||||||||||||
Rating
|
of Loans
|
Balance
|
Book Value
|
of Loans
|
Balance
|
Book Value
|
|||||||||||||||||||||
1 - 3 | — | $— | $— | 1 | $27,503 | $27,503 | |||||||||||||||||||||
4 - 5 | — | — | — | 2 | 21,000 | 20,976 | |||||||||||||||||||||
6 - 8 | — | — | — | 2 | 42,569 | 29,507 | |||||||||||||||||||||
Total
|
— | $— | $— | 5 | $91,072 | $77,986 | |||||||||||||||||||||
Subordinate Interests in Mortgages | |||||||||||||||||||||||||||
as of June 30, 2012 | as of December 31, 2011 | ||||||||||||||||||||||||||
Risk
|
Number
|
Principal
|
Net
|
Number
|
Principal
|
Net
|
|||||||||||||||||||||
Rating
|
of Loans
|
Balance
|
Book Value
|
of Loans
|
Balance
|
Book Value
|
|||||||||||||||||||||
1 - 3 | — | $— | $— | 1 | $13,000 | $13,000 | |||||||||||||||||||||
4 - 5 | — | — | — | 1 | 24,531 | 24,531 | |||||||||||||||||||||
6 - 8 | — | — | — | 4 | 85,024 | 20,547 | |||||||||||||||||||||
Total
|
— | $— | $— | 6 | $122,555 | $58,078 | |||||||||||||||||||||
Mezzanine & Other Loans | |||||||||||||||||||||||||||
as of June 30, 2012 | as of December 31, 2011 | ||||||||||||||||||||||||||
Risk
|
Number
|
Principal
|
Net
|
Number
|
Principal
|
Net
|
|||||||||||||||||||||
Rating
|
of Loans
|
Balance
|
Book Value
|
of Loans
|
Balance
|
Book Value
|
|||||||||||||||||||||
1 - 3 | — | $— | $— | 3 | $51,437 | $51,830 | |||||||||||||||||||||
4 - 5 | — | — | — | 2 | 18,620 | 18,620 | |||||||||||||||||||||
6 - 8 | — | — | — | 1 | 152,289 | — | |||||||||||||||||||||
Total
|
— | $— | $— | 6 | $222,346 | $70,450 |
Gross Book Value
|
Valuation Allowance
|
Net Book Value
|
|||||||||||
December 31, 2011
|
$32,331 | ($1,456 | ) | $30,875 | |||||||||
Deconsolidation of CT Legacy Assets
(1)
|
(32,331 | ) | 1,456 | (30,875 | ) | ||||||||
June 30, 2012
|
$— | $— | $— |
(1)
|
As further described above, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, these loans held-for-sale are no longer included in our consolidated financial statements. |
June 30,
|
December 31,
|
||||||||||||||||
2012
|
2011
|
||||||||||||||||
Debt Obligations
|
Principal
Balance
(1)
|
Book
Value
(1)
|
Principal
Balance
|
Book
Value
|
|||||||||||||
Repurchase obligation (JPMorgan)
|
$— | $— | $58,464 | $58,464 | |||||||||||||
Mezzanine loan
|
— | — | 65,275 | 55,111 | |||||||||||||
Total/Weighted Average
|
$— | $— | $123,739 | $113,575 |
(1)
|
As further described above, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, these debt obligations are no longer included in our consolidated financial statements. |
June 30,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
Participations sold assets
|
||||||||
Gross carrying value
|
$— | $97,465 | ||||||
Less: Provision for loan losses
|
— | (97,465 | ) | |||||
Net book value of assets
|
— | — | ||||||
Participations sold liabilities
|
||||||||
Net book value of liabilities
|
— | 97,465 | ||||||
Net impact to shareholders' equity
|
$— | ($97,465 | ) |
For the Period from February 11, 2012
|
||||
through June 30, 2012
(1)
|
||||
Income Statement
|
||||
Total revenues
|
$23,100 | |||
Total expenses
(2)
|
(23,102 | ) | ||
Net loss
|
($2 | ) | ||
As of June 30, 2012
|
||||
Balance Sheet
|
||||
Total assets, net book value
|
$687,058 |
(1)
|
Includes activity and balances of VIEs consolidated by CT Legacy Assets.
|
|
(2) |
Includes interest expense, general and administrative expenses, provisions and impairments.
|
CMBS
|
CDOs &
Other
|
Total
Book Value
(1)
|
|||||||||||
December 31, 2011
|
$357,037 | $1,935 | $358,972 | ||||||||||
Principal paydowns
|
(26,161 | ) | (1,935 | ) | (28,096 | ) | |||||||
Discount/premium amortization & other
(2)
|
(647 | ) | 140 | (507 | ) | ||||||||
Other-than-temporary impairments:
|
|||||||||||||
Recognized in earnings
|
(160 | ) | — | (160 | ) | ||||||||
Recognized in accumulated other
comprehensive income
|
160 | — | 160 | ||||||||||
Deconsolidation of CT Legacy Assets
(3)
|
(193,737 | ) | 29,998 | (163,739 | ) | ||||||||
June 30, 2012
|
$136,492 | $30,138 | $166,630 |
(1)
|
Includes securities with a total face value of $248.9 million and $490.9 million as of June 30, 2012 and December 31, 2011, respectively. | |
(2) |
Includes mark-to-market adjustments on securities previously classified as available-for-sale, amortization of other-than-temporary impairments, and losses, if any
|
|
(3) |
As further described above, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, the securities owned by its consolidated securitization vehicle are no longer included in our consolidated financial statements. Also, certain securities which are owned by our consolidated securitization vehicles, that had previously been eliminated in consolidation, are now included in our consolidated financial statements. See Note 6 for additional discussion on CT Legacy Assets.
|
CMBS
|
CDOs &
Other
|
Total
Securities
|
|||||||||||
Amortized cost basis
|
$148,978 | $30,138 | $179,116 | ||||||||||
Mark-to-market adjustments on securities
previously classified as available-for-sale
|
11 | — | 11 | ||||||||||
Other-than-temporary impairments recognized in
accumulated other comprehensive income
|
(12,497 | ) | — | (12,497 | ) | ||||||||
Total book value as of June 30, 2012
|
$136,492 | $30,138 | $166,630 |
June 30, 2012
|
December 31, 2011
|
|||
Number of securities
|
34
|
52
|
||
Number of issues
|
24
|
36
|
||
Rating
(1) (2)
|
B+
|
BB+
|
||
Fixed / Floating (in millions)
(3)
|
$166 / $1
|
$358 / $1
|
||
Coupon
(1) (4)
|
6.10%
|
6.49%
|
||
Yield
(1) (4)
|
6.61%
|
7.41%
|
||
Life (years)
(1) (5)
|
3.1
|
2.5
|
(1)
|
Represents a weighted average as of June 30, 2012 and December 31, 2011, respectively.
|
|
(2) |
Weighted average ratings are based on the lowest rating published by Fitch Ratings, Standard & Poor’s or Moody’s Investors Service for each security.
|
|
(3) |
Represents the aggregate net book value of the portfolio allocated between fixed rate and floating rate securities.
|
|
(4) |
Coupon is based on the securities’ contractual interest rates, while yield is based on expected cash flows for each security, and considers discounts/premiums and asset non-performance. Calculations for floating rate securities are based on LIBOR of 0.25% and 0.30% as of June 30, 2012 and December 31, 2011, respectively.
|
|
(5)
|
Weighted average life is based on the timing and amount of future expected principal payments through the expected repayment date of each respective investment.
|
Rating as of June 30, 2012
|
|||||||||||||||||||||||||||||||||
Vintage
|
AAA
|
AA
|
A |
BBB
|
BB
|
B |
CCC and
Below
|
Total
|
|||||||||||||||||||||||||
2006
|
$— | $— | $— | $— | $— | $— | $15,098 | $15,098 | |||||||||||||||||||||||||
2005
|
— | — | — | — | — | — | 36,700 | 36,700 | |||||||||||||||||||||||||
2004
|
— | — | 24,762 | — | — | — | — | 24,762 | |||||||||||||||||||||||||
2003
|
9,909 | — | — | 3,007 | 1,973 | — | — | 14,889 | |||||||||||||||||||||||||
2002
|
— | — | — | — | 6,724 | — | 2,371 | 9,095 | |||||||||||||||||||||||||
2001
|
— | — | — | — | — | 5,427 | 2,264 | 7,691 | |||||||||||||||||||||||||
2000
|
2,893 | — | — | — | 19,354 | — | 3,992 | 26,239 | |||||||||||||||||||||||||
1999
|
— | — | 5,155 | — | 15,022 | — | — | 20,177 | |||||||||||||||||||||||||
1998
|
— | 2,277 | 8,019 | — | 220 | — | 1,463 | 11,979 | |||||||||||||||||||||||||
Total
|
$12,802 | $2,277 | $37,936 | $3,007 | $43,293 | $5,427 | $61,888 | $166,630 |
Rating as of December 31, 2011 | |||||||||||||||||||||||||||||||||
CCC and
|
|||||||||||||||||||||||||||||||||
Vintage
|
AAA
|
AA
|
A |
BBB
|
BB
|
B |
Below
|
Total
|
|||||||||||||||||||||||||
2006
|
$— | $— | $— | $— | $— | $— | $14,884 | $14,884 | |||||||||||||||||||||||||
2005
|
— | — | — | — | — | — | 7,060 | 7,060 | |||||||||||||||||||||||||
2004
|
— | 24,780 | 1,935 | — | — | — | — | 26,715 | |||||||||||||||||||||||||
2003
|
9,908 | — | — | 3,011 | 1,966 | — | — | 14,885 | |||||||||||||||||||||||||
2002
|
— | — | — | — | 6,712 | — | 2,283 | 8,995 | |||||||||||||||||||||||||
2001
|
— | — | — | — | — | 5,426 | 1,730 | 7,156 | |||||||||||||||||||||||||
2000
|
2,891 | — | — | — | 19,935 | — | 3,985 | 26,811 | |||||||||||||||||||||||||
1999
|
— | — | 11,233 | 1,414 | 17,380 | — | — | 30,027 | |||||||||||||||||||||||||
1998
|
45,956 | 46,315 | 37,580 | 43,607 | 11,901 | — | 5,000 | 190,359 | |||||||||||||||||||||||||
1997
|
4,434 | — | 16,159 | — | 5,223 | 2,762 | 3,502 | 32,080 | |||||||||||||||||||||||||
Total
|
$63,189 | $71,095 | $66,907 | $48,032 | $63,117 | $8,188 | $38,444 | $358,972 |
Gross Other-Than-Temporary Impairments
|
Credit Related
Other-Than-Temporary
Impairments
|
Non-Credit Related
Other-Than-Temporary
Impairments
|
|||||||||||
December 31, 2011
|
$130,360 | $114,223 | $16,137 | ||||||||||
Additions due to change in expected
cash flows
|
— | 160 | (160 | ) | |||||||||
Amortization of other-than-temporary
impairments
|
106 | 145 | (39 | ) | |||||||||
Reductions due to realized losses
|
(26,022 | ) | (26,022 | ) | — | ||||||||
Deconsolidation of CT Legacy Assets
(1)
|
(25,567 | ) | (22,126 | ) | (3,441 | ) | |||||||
June 30, 2012
|
$78,877 | $66,380 | $12,497 |
(1)
|
As further described in Note 1, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, these securities, some of which were other-than-temporarily impaired, are no longer included in our consolidated financial statements.
|
Less Than 12 Months
|
Greater Than 12 Months
|
Total
|
||||||||||||||||||||||||||||
Estimated
Fair Value
|
Gross Unrealized Loss
|
Estimated
Fair Value
|
Gross Unrealized Loss
|
Estimated
Fair Value
|
Gross Unrealized Loss
|
Book Value
(1)
|
||||||||||||||||||||||||
Floating Rate
|
$— | $— | $— | $— | $— | $— | $— | |||||||||||||||||||||||
Fixed Rate
|
25.5 | (10.6 | ) | 86.3 | (10.1 | ) | 111.8 | (20.7 | ) | 132.5 | ||||||||||||||||||||
Total
|
$25.5 | ($10.6 | ) | $86.3 | ($10.1 | ) | $111.8 | ($20.7 | ) | $132.5 |
(1)
|
Excludes, as of June 30, 2012, $34.1 million of securities which were carried at or below fair value and securities against which an other-than-temporary impairment equal to the entire book value was recognized in earnings.
|
Less Than 12 Months
|
Greater Than 12 Months
|
Total | ||||||||||||||||||||||||||||
Gross
|
Gross
|
Gross
|
||||||||||||||||||||||||||||
Estimated
|
Unrealized
|
Estimated
|
Unrealized
|
Estimated
|
Unrealized
|
|||||||||||||||||||||||||
Fair Value
|
Loss
|
Fair Value
|
Loss
|
Fair Value
|
Loss
|
Book Value
(1)
|
||||||||||||||||||||||||
Floating Rate
|
$— | $— | $— | $— | $— | $— | $— | |||||||||||||||||||||||
Fixed Rate
|
154.1 | (4.7 | ) | 130.1 | (11.1 | ) | 284.2 | (15.8 | ) | 300.0 | ||||||||||||||||||||
Total
|
$154.1 | ($4.7 | ) | $130.1 | ($11.1 | ) | $284.2 | ($15.8 | ) | $300.0 |
(1)
|
Excludes, as of December 31, 2011, $59.0 million of securities which were carried at or below fair value and securities against which an other-than-temporary impairment equal to the entire book value was recognized in earnings.
|
Gross Book Value
|
Provision for Loan Losses |
Net Book Value
(1)
|
|||||||||||
December 31, 2011
|
$814,572 | ($201,974 | ) | $612,598 | |||||||||
Satisfactions
(2)
|
(33,000 | ) | — | (33,000 | ) | ||||||||
Principal paydowns
|
(1,741 | ) | — | (1,741 | ) | ||||||||
Discount/premium amortization & other
|
129 | — | 129 | ||||||||||
Recovery of provision for loan losses
|
— | 8 | 8 | ||||||||||
Realized loan losses
|
(5,450 | ) | 5,450 | — | |||||||||
Deconsolidation of CT Legacy Assets
(3)
|
(435,744 | ) | 99,394 | (336,350 | ) | ||||||||
June 30, 2012
|
$338,766 | ($97,122 | ) | $241,644 |
(1)
|
Includes loans with a total principal balance of $339.8 million and $815.7 million as of June 30, 2012 and December 31, 2011, respectively. | |
(2) |
Includes final maturities and full repayments.
|
|
(3) | As further described in Note 1, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, these loans are no longer included in our consolidated financial statements |
June 30, 2012
|
December 31, 2011
|
|||
Number of investments
|
18
|
71
|
||
Fixed / Floating (in millions)
(1)
|
$44 / $198
|
$280 / $333
|
||
Coupon
(2) (3)
|
4.40%
|
5.11%
|
||
Yield
(2) (3)
|
4.80%
|
5.72%
|
||
Maturity (years)
(2) (4)
|
3.0
|
3.6
|
(1)
|
Represents the aggregate net book value of the portfolio allocated between fixed rate and floating rate loans.
|
|
(2) |
Represents a weighted average as of June 30, 2012 and December 31, 2011, respectively.
|
|
(3) |
Calculations for floating rate loans are based on LIBOR of 0.25% and 0.30% as of June 30, 2012 and December 31, 2011, respectively.
|
|
(4) |
For loans in CT CDOs, assumes all extension options are executed. For loans in other consolidated securitization vehicles, maturity is based on information provided by the trustees of each respective entity.
|
June 30, 2012
|
December 31, 2011
|
|||||||||||||||
Asset Type
|
Book Value
|
Percentage
|
Book Value
|
Percentage
|
||||||||||||
Subordinate interests in
mortgages
|
$152,247 | 63 | % | $225,773 | 36 | % | ||||||||||
Senior mortgages
|
69,383 | 29 | 241,323 | 39 | ||||||||||||
Mezzanine loans
|
20,014 | 8 | 152,934 | 25 | ||||||||||||
Total
|
$241,644 | 100 | % | $620,030 | 100 | % | ||||||||||
Property Type
|
Book Value
|
Percentage
|
Book Value
|
Percentage
|
||||||||||||
Office
|
$186,442 | 77 | % | $317,940 | 51 | % | ||||||||||
Hotel
|
48,689 | 20 | 174,419 | 28 | ||||||||||||
Retail
|
— | — | 72,701 | 12 | ||||||||||||
Healthcare
|
— | — | 18,837 | 3 | ||||||||||||
Other
|
6,513 | 3 | 36,133 | 6 | ||||||||||||
Total
|
$241,644 | 100 | % | $620,030 | 100 | % | ||||||||||
Geographic Location
|
Book Value
|
Percentage
|
Book Value
|
Percentage
|
||||||||||||
Northeast
|
$98,893 | 41 | % | $199,361 | 32 | % | ||||||||||
West
|
78,697 | 33 | 152,774 | 25 | ||||||||||||
Southeast
|
34,747 | 14 | 124,456 | 20 | ||||||||||||
Southwest
|
27,434 | 11 | 57,046 | 9 | ||||||||||||
Midwest
|
1,873 | 1 | 24,957 | 4 | ||||||||||||
Diversified
|
— | — | 61,436 | 10 | ||||||||||||
Total
|
$241,644 | 100 | % | $620,030 | 100 | % | ||||||||||
Unallocated loan loss provision
(1)
|
— | (7,432 | ) | |||||||||||||
Net book value
|
$241,644 | $612,598 |
(1)
|
We have recorded a general provision for loan losses against certain pools of smaller loans in our consolidated securitization vehicles. This general provision is not specifically allocable to any loan asset type, collateral property type, or geographic location, but rather to an overall pool of loans. See Note 2 for additional details. |
(1)
|
We have recorded a general provision for loan losses against certain pools of smaller loans in our consolidated securitization vehicles. These loans have not been individually risk-rated, but have been assessed for loss based on macroeconomic factors. See Note 2 for additional information. |
Senior Mortgage Loans
|
|||||||||||||||||||||||||||
as of June 30, 2012
|
as of December 31, 2011
|
||||||||||||||||||||||||||
Risk
Rating
(1)
|
Number
of Loans
|
Principal
Balance
|
Net
Book Value
|
Number
of Loans
|
Principal
Balance
|
Net
Book Value
|
|||||||||||||||||||||
1 - 3 | 1 | $2,774 | $2,774 | 10 | $117,452 | $117,452 | |||||||||||||||||||||
4 - 5 | 1 | 65,000 | 65,000 | 1 | 12,551 | 12,551 | |||||||||||||||||||||
6 - 8 | 1 | 1,609 | 1,609 | 4 | 43,988 | 27,680 | |||||||||||||||||||||
N/A | — | — | — | 29 | 83,639 | 83,640 | |||||||||||||||||||||
Total
|
3 | $69,383 | $69,383 | 44 | $257,630 | $241,323 |
(1)
|
We have recorded a general provision for loan losses against certain pools of smaller loans in our consolidated securitization vehicles. These loans have not been individually risk-rated, but have been assessed for loss based on macroeconomic factors. See Note 2 for additional details. |
Subordinate Interests in Mortgages
|
|||||||||||||||||||||||||||
as of June 30, 2012
|
as of December 31, 2011
|
||||||||||||||||||||||||||
Risk
Rating
(1)
|
Number
of Loans
|
Principal
Balance
|
Net
Book Value
|
Number
of Loans
|
Principal
Balance
|
Net
Book Value
|
|||||||||||||||||||||
1 - 3 | 5 | $119,761 | $119,521 | 8 | $175,560 | $175,314 | |||||||||||||||||||||
4 - 5 | 1 | 13,700 | 13,610 | 2 | 31,506 | 31,394 | |||||||||||||||||||||
6 - 8 | 8 | 116,848 | 19,116 | 9 | 122,306 | 19,065 | |||||||||||||||||||||
N/A | — | — | — | — | — | — | |||||||||||||||||||||
Total
|
14 | $250,309 | $152,247 | 19 | $329,372 | $225,773 |
(1)
|
W e have recorded a general provision for loan losses against certain pools of smaller loans in our consolidated securitization vehicles. These loans have not been individually risk-rated, but have been assessed for loss based on macroeconomic factors. See Note 2 for additional details . |
Mezzanine & Other Loans
|
|||||||||||||||||||||||||||
as of June 30, 2012
|
as of December 31, 2011
|
||||||||||||||||||||||||||
Risk
Rating
(1)
|
Number
of Loans
|
Principal
Balance
|
Net
Book Value
|
Number
of Loans
|
Principal
Balance
|
Net
Book Value
|
|||||||||||||||||||||
1 - 3 | 1 | $20,116 | $20,014 | 4 | $123,020 | $122,895 | |||||||||||||||||||||
4 - 5 | — | — | — | — | — | — | |||||||||||||||||||||
6 - 8 | — | — | — | 4 | 105,694 | 30,039 | |||||||||||||||||||||
N/A | — | — | — | — | — | — | |||||||||||||||||||||
Total
|
1 | $20,116 | $20,014 | 8 | $228,714 | $152,934 |
(1)
|
We have recorded a general provision for loan losses against certain pools of smaller loans in our consolidated securitization vehicles. These loans have not been individually risk-rated, but have been assessed for loss based on macroeconomic factors. See Note 2 for additional details. |
June 30, 2012
|
|||||||||||||||||
Impaired Loans
|
No. of Loans
|
Gross Book Value
|
Provision for Loan Loss
|
Net Book Value
|
|||||||||||||
Performing loans
|
1 | $15,062 | ($15,062 | ) | $— | ||||||||||||
Non-performing loans
|
6 | 87,479 | (82,060 | ) | 5,419 | ||||||||||||
Total impaired loans
|
7 | $102,541 | ($97,122 | ) | $5,419 |
June 30, 2012
|
||||||||||||
Impaired Loans
|
Principal Balance
|
Provision for
Loan Loss
|
Loss Severity
|
|||||||||
Subordinate interests in mortgages
|
$103,149 | $97,122 | 94% | |||||||||
Total/Weighted Average
|
$103,149 | $97,122 | 94% |
(1)
|
Substantially all of the income recorded on impaired loans during the period was received in cash.
|
Gross Book
Value
|
Other-Than-Temporary
Impairment
|
Net Book
Value
|
|||||||||||
December 31, 2011
|
$24,960 | ($14,618 | ) | $10,342 | |||||||||
Deconsolidation of CT Legacy Assets
(1)
|
(24,960 | ) | 14,618 | (10,342 | ) | ||||||||
June 30, 2012
|
$— | $— | $— |
(1)
|
As further described in Note 1 above, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, the real estate held-for-sale is no longer included in our consolidated financial statements. |
June 30,
2012
|
December 31,
2011
|
June 30,
2012
|
|||||||||||||||||||||
Non-Recourse
Securitized Debt Obligations
|
Principal
Balance
|
Book
Value
|
Book
Value
|
Coupon
(1)
|
All-In
Cost
(1)
|
Maturity
Date
(2)
|
|||||||||||||||||
CT CDOs
|
|||||||||||||||||||||||
CT CDO I
|
$95,088 | $95,088 | $121,409 | 1.26 | % | 1.28 | % |
July 2039
|
|||||||||||||||
CT CDO II
|
160,743 | 160,743 | 199,751 | 0.94 | % | 1.21 | % |
March 2050
|
|||||||||||||||
CT CDO III
|
— | — | 199,553 | N/A | N/A | N/A | |||||||||||||||||
CT CDO IV
(3)
|
211,757 | 211,757 | 221,540 | 1.05 | % | 1.20 | % |
October 2043
|
|||||||||||||||
Total CT CDOs
|
467,588 | 467,588 | 742,253 | 1.06 | % | 1.22 | % |
February 2045
|
|||||||||||||||
Other securitization vehicles
|
|||||||||||||||||||||||
GMACC 1997-C1
|
— | — | 83,672 | N/A | N/A | N/A | |||||||||||||||||
GECMC 00-1 H
|
— | — | 24,847 | N/A | N/A | N/A | |||||||||||||||||
GSMS 2006-FL8A
|
50,552 | 50,552 | 50,552 | 1.09 | % | 1.09 | % |
June 2020
|
|||||||||||||||
MSC 2007-XLCA
|
— | — | 310,083 | N/A | N/A | N/A | |||||||||||||||||
JPMCC 2004-FL1A
|
— | — | — | N/A | N/A | N/A | |||||||||||||||||
Total other securitization vehicles
|
50,552 | 50,552 | 469,154 | 1.09 | % | 1.09 | % |
June 2020
|
|||||||||||||||
Total/Weighted Average
|
$518,140 | $518,140 | $1,211,407 | 1.06 | % | 1.21 | % (4) |
September 2042
|
(1)
|
Represents a weighted average for each respective facility, assuming LIBOR of 0.25% at June 30, 2012 for floating rate debt obligations. | |
(2) |
Maturity dates represent the contractual maturity of each securitization trust. Repayment of securitized debt is a function of collateral cash flows which are disbursed in accordance with the contractual provisions of each trust, and is generally expected to occur prior to the maturity date above.
|
|
(3) | Comprised, at June 30, 2012, of $198.0 million of floating rate notes sold and $13.8 million of fixed rate notes sold. | |
(4) |
Including the impact of interest rate hedges with an aggregate notional balance of $282.0 million as of June 30, 2012, the effective all-in cost of our consolidated securitization vehicles’ debt obligations would be 4.07% per annum.
|
June 30, 2012
|
June 30, 2012
|
December 31,
2011
|
||||||||||||||||||
Counterparty
|
Notional Amount
|
Interest Rate
(1)
|
Maturity
|
Fair Value
|
Fair Value
|
|||||||||||||||
Swiss RE Financial
|
$230,845 | 5.10 | % | 2015 | ($17,411 | ) | ($20,540 | ) | ||||||||||||
Bank of America
|
35,502 | 4.58 | % | 2014 | (1,788 | ) | (2,368 | ) | ||||||||||||
Bank of America
|
10,535 | 5.05 | % | 2016 | (1,419 | ) | (1,461 | ) | ||||||||||||
Bank of America
|
5,104 | 4.12 | % | 2016 | (575 | ) | (573 | ) | ||||||||||||
Total/Weighted Average
|
$281,986 | 5.01 | % | 2015 | ($21,193 | ) | ($24,942 | ) |
(1)
|
Represents the gross fixed interest rate we pay to our counterparties under these derivative instruments. We receive an amount of interest indexed to one-month LIBOR on all of our interest rate swaps. |
Amount of net loss recognized
|
Amount of loss reclassified from OCI
|
|||||||||||||||
in OCI for the six months ended
(1)
|
to income for the six months ended
(2)
|
|||||||||||||||
Hedge
|
June 30, 2012
|
June 30, 2011
|
June 30, 2012
|
June 30, 2011
|
||||||||||||
Interest rate swaps
|
($3,749 | ) | $2,613 | ($6,855 | ) | ($7,837 | ) |
(1)
|
Represents the amount of unrealized gains and losses recorded to other comprehensive income during the period, net of the amount reclassified to interest expense. | |
(2) |
Represents net amounts paid to swap counterparties during the period, which are included in interest expense, offset by an immaterial amount of non-cash swap amortization.
|
Accumulated Other Comprehensive Loss
|
Market on
Interest Rate
Hedges
|
Deferred Gains on Settled Hedges
|
Other-than-Temporary Impairments
|
Unrealized Gains on Securities
|
Total
|
||||||||||||||||
Total as of December 31, 2011
|
($27,423 | ) | $56 | ($16,578 | ) | $3,361 | ($40,584 | ) | |||||||||||||
Unrealized gain on derivative
financial instruments
|
3,749 | — | — | — | 3,749 | ||||||||||||||||
Ineffective portion of cash flow
hedges
(1)
|
2,481 | — | — | — | 2,481 | ||||||||||||||||
Amortization of net unrealized gains
on securities
|
— | — | — | (765 | ) | (765 | ) | ||||||||||||||
Amortization of net deferred gains
on settlement of swaps
|
— | (56 | ) | — | — | (56 | ) | ||||||||||||||
Other-than-temporary impairments
of securities
(2)
|
— | — | 203 | — | 203 | ||||||||||||||||
Deconsolidation of CT Legacy
Assets
(3)
|
— | — | 3,879 | (2,586 | ) | 1,293 | |||||||||||||||
Total as of June 30, 2012
|
($21,193 | ) | $— | ($12,496 | ) | $10 | ($33,679 | ) | |||||||||||||
Allocation to non-controlling interest
(3)
|
— | ||||||||||||||||||||
Accumulated other comprehensive loss as of June 30, 2012
|
($33,679 | ) |
(1)
|
As a result of the deconsolidation of CT Legacy Assets in the first quarter of 2012, the balance of accumlated other comprehensive income related to cash flow hedges of CT Legacy Assets was reclassified to interest expense.
|
|
(2) |
Represents other-than-temporary impairments of securities in excess of credit losses, including amortization of prior other-than-temporary impairments of $391,000.
|
|
(3) |
As further described in Note 1 above, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, the balances of accumulated other comprehensive income related to CT Legacy Assets, including those allocable to noncontrolling interests are no longer included in our consolidated financial statements.
|
Noncontrolling
Interests
|
||||
December 31, 2011
|
($18,515 | ) | ||
Net income attributable to noncontrolling interests
|
75,137 | |||
Other comprehensive income attributable to
noncontrolling interests
|
10 | |||
Distributions to noncontrolling interests
|
(7 | ) | ||
June 30, 2012
|
$56,625 |
Three Months Ended June 30, 2012
|
Six Months Ended June 30, 2012
|
|||||||||||||||||||||||
Net
|
Wtd. Avg.
|
Per Share
|
Net
|
Wtd. Avg.
|
Per Share
|
|||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic EPS:
|
||||||||||||||||||||||||
Net income allocable to
common stock
|
$2,283 | 22,893,522 | $0.10 | $68,836 | 22,865,819 | $3.01 | ||||||||||||||||||
Effect of Dilutive Securities:
|
||||||||||||||||||||||||
Warrants outstanding for the
purchase of common stock
|
— | 1,533,335 | — | 1,487,570 | ||||||||||||||||||||
Diluted EPS:
|
||||||||||||||||||||||||
Net income per share of
common stock and assumed
conversions
|
$2,283 | 24,426,857 | $0.09 | $68,836 | 24,353,388 | $2.83 |
Three Months Ended June 30, 2011
|
Six Months Ended June 30, 2011
|
|||||||||||||||||||||||
Net
|
Wtd. Avg.
|
Per Share
|
Net
|
Wtd. Avg.
|
Per Share
|
|||||||||||||||||||
Income
|
Shares
(1)
|
Amount
|
Income
|
Shares
(1)
|
Amount
|
|||||||||||||||||||
Basic EPS:
|
||||||||||||||||||||||||
Net (loss) income allocable to
common stock
|
($1,845 | ) | 22,723,146 | ($0.08 | ) | $252,740 | 22,580,143 | $11.19 | ||||||||||||||||
Effect of Dilutive Securities:
|
||||||||||||||||||||||||
Warrants outstanding for the
purchase of common stock
|
— | — | — | 1,444,079 | ||||||||||||||||||||
Diluted EPS:
|
||||||||||||||||||||||||
Net income (loss) per share of
common stock and assumed
conversions
|
($1,845 | ) | 22,723,146 | ($0.08 | ) | $252,740 | 24,024,222 | $10.52 |
(1)
|
Diluted EPS excludes 3.5 million warrants which were not dilutive for the period. These instruments could potentially impact Diluted EPS in future periods, depending on changes in our stock price. |
Six Months Ended June 30,
|
||||||||
General and Administrative Expenses
|
2012
|
2011
|
||||||
Personnel costs
|
$5,165 | $4,705 | ||||||
Restructuring awards
|
— | 2,750 | ||||||
Professional services
|
1,765 | 2,878 | ||||||
Operating and other costs
|
1,670 | 997 | ||||||
Subtotal
|
8,600 | 11,330 | ||||||
Non-cash personnel costs
|
||||||||
Management incentive awards plan - CT Legacy REIT
|
181 | 2,980 | ||||||
Employee stock-based compensation
|
210 | 317 | ||||||
Subtotal
|
391 | 3,297 | ||||||
Expenses of consolidated securitization vehicles
|
61 | 301 | ||||||
Total
|
$9,052 | $14,928 |
Benefit Type
(1)
|
1997 Director Plan
|
2007 Plan
|
2011 Plan
|
Total
|
||||||||||||
Restricted Class A Common Stock
|
||||||||||||||||
Beginning balance
|
— | 244,424 | — | 244,424 | ||||||||||||
Granted
|
— | 375,000 | — | 375,000 | ||||||||||||
Vested, deferred or forfeited
|
— | (82,888 | ) | — | (82,888 | ) | ||||||||||
Ending balance
(2)
|
— | 536,536 | — | 536,536 | ||||||||||||
Stock Units
(3)
|
||||||||||||||||
Beginning balance
|
68,544 | 438,260 | 55,531 | 562,335 | ||||||||||||
Granted and deferred
|
— | 60,000 | 35,784 | 95,784 | ||||||||||||
Ending balance
|
68,544 | 498,260 | 91,315 | 658,119 | ||||||||||||
Total outstanding
|
68,544 | 1,034,796 | 91,315 | 1,194,655 |
(1)
|
No stock options are outstanding under any of our plans.
|
|
(2) |
Includes (i) 275,000 performance based awards that contingently vest upon the attainment of certain pre-specified performance measures, and (ii) 250,000 time based awards that vest based upon an employee’s continued employment on pre-established vesting dates.
|
|
(3) | Stock units are granted to certain members of our board of directors in lieu of cash compensation for services and in lieu of dividends earned on previously granted stock units. In addition, certain of our employees have elected to defer the vesting of their restricted shares. |
Restricted Class A Common Stock
|
||||||||
Shares
|
Grant Date Fair Value
|
|||||||
Unvested at December 31, 2011
|
244,424 | $2.65 | ||||||
Granted
|
375,000 | 2.77 | ||||||
Vested, deferred or forfeited
|
(82,888 | ) | 3.56 | |||||
Unvested at June 30, 2012
|
536,536 | $2.64 |
Restricted Class A Common Stock
|
||||||||
Shares
|
Grant Date Fair Value
|
|||||||
Unvested at January 1, 2011
|
32,785 | $5.67 | ||||||
Granted
|
300,000 | 2.29 | ||||||
Vested
|
(88,361 | ) | 2.62 | |||||
Unvested at June 30, 2011
|
244,424 | $2.65 |
|
·
|
Level 1 generally includes only unadjusted quoted prices in active markets for identical assets or liabilities as of the reporting date.
|
|
·
|
Level 2 inputs are those which, other than Level 1 inputs, are observable for identical or similar assets or liabilities.
|
|
·
|
Level 3 inputs generally include anything which does not meet the criteria of Levels 1 and 2, particularly any unobservable inputs.
|
Fair Value Measurements Using
|
||||||||||||||||
Quoted Prices
|
Other
|
Significant
|
||||||||||||||
Total
|
in Active
|
Observable
|
Unobservable
|
|||||||||||||
Fair Value at
|
Markets
|
Inputs
|
Inputs
|
|||||||||||||
June 30, 2012
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Measured on a recurring basis:
|
||||||||||||||||
Investment in CT Legacy Assets
|
$90,700 | $— | $— | $90,700 | ||||||||||||
Securitization vehicles' interest rate
hedge liabilities
|
($21,193 | ) | $— | ($21,193 | ) | $— | ||||||||||
Measured on a nonrecurring basis:
|
||||||||||||||||
Securitization vehicles' impaired loans receivable
(1)
:
|
||||||||||||||||
Subordinate interests in mortgages
|
$5,419 | $— | $— | $5,419 |
(1)
|
Loans receivable against which we have recorded a provision for loan losses as of June 30, 2012. |
Loans
|
Real Estate
|
Investment in
|
||||||||||
Held-for-Sale
|
Held-for-Sale
|
CT Legacy Assets
|
||||||||||
December 31, 2011
|
$30,875 | $10,342 | $— | |||||||||
Deconsolidation of CT Legacy Assets
|
(30,875 | ) | (10,342 | ) | 89,677 | |||||||
Contributions to CT Legacy Assets
|
— | — | 31,938 | |||||||||
Distributions from CT Legacy Assets
|
— | — | (38,572 | ) | ||||||||
Adjustments to fair value included in earnings:
|
||||||||||||
Fair value adjustment on investment in CT Legacy Assets
|
— | — | 7,657 | |||||||||
June 30, 2012
|
$— | $— | $90,700 |
Assumption Ranges for Significant Unobservable Inputs (Level 3)
|
||||||
Collateral Type
|
Capitalization Rate
|
Occupancy
|
Loss Severity
(1)
|
|||
Office
|
N/A
|
N/A
|
50% - 100%
|
|||
Hotel
|
9% - 15%
|
75% - 83%
|
N/A
|
|||
Retail
|
10%
|
90%
|
N/A
|
|||
Mixed Use / Other
|
N/A
|
N/A
|
79%
|
(1)
|
In certain cases a loss severity based on inputs from third-parties including appraisals on, and bids for, underlying collateral were utilized to compute the fair value of the impaired loans.
|
Fair Value of Financial Instruments
|
||||||||||||||||||||||||
June 30, 2012
|
December 31, 2011
|
|||||||||||||||||||||||
Carrying
Amount
|
Face
Amount
|
Fair
Value
|
Carrying
Amount
|
Face
Amount
|
Fair
Value
|
|||||||||||||||||||
Financial assets:
|
||||||||||||||||||||||||
Cash and cash equivalents
|
$34,604 | $34,604 | $34,604 | $34,818 | $34,818 | $34,818 | ||||||||||||||||||
Loans receivable, net
|
1,619 | 1,619 | 1,586 | 19,282 | 19,282 | 17,354 | ||||||||||||||||||
CT Legacy REIT
|
||||||||||||||||||||||||
Restricted cash
|
15,433 | 15,433 | 15,433 | 12,985 | 12,985 | 12,985 | ||||||||||||||||||
Securities held-to-maturity
|
N/A | N/A | N/A | 2,602 | 29,251 | 1,638 | ||||||||||||||||||
Loans receivable, net
|
N/A | N/A | N/A | 206,514 | 435,973 | 180,439 | ||||||||||||||||||
Investment in CT Legacy Asset
|
90,700 | N/A | 90,700 | N/A | N/A | N/A | ||||||||||||||||||
Securitization Vehicles
|
||||||||||||||||||||||||
Securities held-to-maturity
|
166,630 | 248,862 | 157,843 | 358,972 | 490,940 | 350,180 | ||||||||||||||||||
Loans receivable, net
|
241,644 | 339,808 | 220,450 | 612,598 | 815,716 | 570,936 | ||||||||||||||||||
Financial liabilities:
|
||||||||||||||||||||||||
Secured notes
|
8,176 | 8,176 | 6,965 | 7,847 | 7,847 | 6,436 | ||||||||||||||||||
Participations sold
|
1,619 | 1,619 | 1,586 | 19,282 | 19,282 | 17,354 | ||||||||||||||||||
CT Legacy REIT
|
||||||||||||||||||||||||
Repurchase obligations
|
N/A | N/A | N/A | 58,464 | 58,464 | 54,556 | ||||||||||||||||||
Mezzanine loan
|
N/A | N/A | N/A | 55,111 | 55,111 | 71,475 | ||||||||||||||||||
Participations sold
|
N/A | N/A | N/A | 97,465 | 97,465 | — | ||||||||||||||||||
Securitization Vehicles
|
||||||||||||||||||||||||
Securitized debt obligations
|
518,140 | 518,140 | 301,960 | 1,211,407 | 1,210,992 | 767,619 |
Balance Sheet
|
Investment
|
Inter-Segment
|
||||||||||||||
Investment
|
Management
|
Activities
|
Total
|
|||||||||||||
Income from loans and other investments:
|
||||||||||||||||
Interest and related income
|
$21,479 | $— | $— | $21,479 | ||||||||||||
Less: Interest and related expenses
|
28,754 | — | — | 28,754 | ||||||||||||
Income from loans and other investments, net
|
(7,275 | ) | — | — | (7,275 | ) | ||||||||||
Other revenues:
|
||||||||||||||||
Management fees from affiliates
|
— | 4,433 | (1,238 | ) | 3,195 | |||||||||||
Servicing fees
|
— | 3,754 | (369 | ) | 3,385 | |||||||||||
Total other revenues
|
— | 8,187 | (1,607 | ) | 6,580 | |||||||||||
Other expenses
|
||||||||||||||||
General and administrative
|
3,171 | 7,119 | (1,238 | ) | 9,052 | |||||||||||
Servicing fees expense
|
369 | — | (369 | ) | — | |||||||||||
Total other expenses
|
3,540 | 7,119 | (1,607 | ) | 9,052 | |||||||||||
Total other-than-temporary impairments of
securities
|
— | — | — | — | ||||||||||||
Portion of other-than-temporary impairments of
securities recognized in other comprehensive
income
|
(160 | ) | — | — | (160 | ) | ||||||||||
Net impairments recognized in earnings
|
(160 | ) | — | — | (160 | ) | ||||||||||
Recovery of provision for loan losses
|
8 | — | — | 8 | ||||||||||||
Fair value adjustment on investment in CT
Legacy Assets
|
7,657 | — | — | 7,657 | ||||||||||||
Gain on deconsolidation of subsidiary
|
146,380 | — | — | 146,380 | ||||||||||||
Income from equity investments
|
— | 901 | — | 901 | ||||||||||||
Income before income taxes
|
143,070 | 1,969 | — | 145,039 | ||||||||||||
Income tax provision
|
300 | 766 | — | 1,066 | ||||||||||||
Net income
|
$142,770 | $1,203 | — | $143,973 | ||||||||||||
Less: Net income attributable to noncontrolling
interests
|
(75,137 | ) | — | — | (75,137 | ) | ||||||||||
Net income attributable to
Capital Trust, Inc.
|
$67,633 | $1,203 | $— | $68,836 | ||||||||||||
Total assets
|
$563,467 | $20,770 | $— | $584,237 |
Balance Sheet
|
Investment
|
Inter-Segment
|
||||||||||||||
Investment
|
Management
|
Activities
|
Total
|
|||||||||||||
Income from loans and other investments:
|
||||||||||||||||
Interest and related income
|
$69,545 | $— | $— | $69,545 | ||||||||||||
Less: Interest and related expenses
|
58,543 | — | — | 58,543 | ||||||||||||
Income from loans and other investments, net
|
11,002 | — | — | 11,002 | ||||||||||||
Other revenues:
|
||||||||||||||||
Management fees from affiliates
|
— | 3,800 | (626 | ) | 3,174 | |||||||||||
Servicing fees
|
— | 1,181 | (433 | ) | 748 | |||||||||||
Total other revenues
|
— | 4,981 | (1,059 | ) | 3,922 | |||||||||||
Other expenses:
|
||||||||||||||||
General and administrative
|
3,428 | 12,126 | (626 | ) | 14,928 | |||||||||||
Servicing fee expense
|
433 | — | (433 | ) | — | |||||||||||
Total other expenses
|
3,861 | 12,126 | (1,059 | ) | 14,928 | |||||||||||
Total other-than-temporary impairments of
securities
|
(4,933 | ) | — | — | (4,933 | ) | ||||||||||
Portion of other-than-temporary impairments of
securities recognized in other comprehensive
income
|
(3,271 | ) | — | — | (3,271 | ) | ||||||||||
Net impairments recognized in earnings
|
(8,204 | ) | — | — | (8,204 | ) | ||||||||||
Recovery of provision for loan losses
|
17,249 | — | — | 17,249 | ||||||||||||
Valuation allowance on loans held-for-sale
|
(224 | ) | — | — | (224 | ) | ||||||||||
Gain on extinguishment of debt
|
250,976 | — | — | 250,976 | ||||||||||||
Income from equity investments
|
— | 1,797 | — | 1,797 | ||||||||||||
Income (loss) before income taxes
|
266,938 | (5,348 | ) | — | 261,590 | |||||||||||
Income tax provision (benefit)
|
2,332 | (882 | ) | — | 1,450 | |||||||||||
Net income (loss)
|
$264,606 | ($4,466 | ) | $— | $260,140 | |||||||||||
Less: Net income attributable to noncontrolling
interests
|
(7,400 | ) | — | — | (7,400 | ) | ||||||||||
Net income (loss) attributable to
Capital Trust, Inc.
|
$257,206 | ($4,466 | ) | $— | $252,740 | |||||||||||
Total assets
|
$2,360,192 | $9,219 | ($4,011 | ) | $2,365,400 |
Balance Sheet
|
Investment
|
Inter-Segment
|
||||||||||||||
Investment
|
Management
|
Activities
|
Total
|
|||||||||||||
Income from loans and other investments:
|
||||||||||||||||
Interest and related income
|
$6,763 | $— | $— | $6,763 | ||||||||||||
Less: Interest and related expenses
|
5,413 | — | — | 5,413 | ||||||||||||
Income from loans and other investments, net
|
1,350 | — | — | 1,350 | ||||||||||||
Other revenues:
|
||||||||||||||||
Management fees from affiliates
|
— | 2,229 | (619 | ) | 1,610 | |||||||||||
Servicing fees
|
— | 1,498 | (133 | ) | 1,365 | |||||||||||
Total other revenues
|
— | 3,727 | (752 | ) | 2,975 | |||||||||||
Other expenses
|
||||||||||||||||
General and administrative
|
1,642 | 3,717 | (619 | ) | 4,740 | |||||||||||
Servicing fees expense
|
133 | — | (133 | ) | — | |||||||||||
Total other expenses
|
1,775 | 3,717 | (752 | ) | 4,740 | |||||||||||
Fair value adjustment on investment in CT
Legacy Assets
|
3,704 | — | — | 3,704 | ||||||||||||
Income from equity investments
|
— | 205 | — | 205 | ||||||||||||
Income (loss) before income taxes
|
3,279 | 215 | — | 3,494 | ||||||||||||
Income tax (benefit) provision
|
— | 143 | — | 143 | ||||||||||||
Net income (loss)
|
$3,279 | $72 | — | $3,351 | ||||||||||||
Less: Net income attributable to noncontrolling
interests
|
(1,068 | ) | — | — | (1,068 | ) | ||||||||||
Net income (loss) attributable to
Capital Trust, Inc.
|
$2,211 | $72 | $— | $2,283 | ||||||||||||
Total assets
|
$563,467 | $20,770 | $— | $584,237 |
Balance Sheet
|
Investment
|
Inter-Segment
|
||||||||||||||
Investment
|
Management
|
Activities
|
Total
|
|||||||||||||
Income from loans and other investments:
|
||||||||||||||||
Interest and related income
|
$32,554 | $— | $— | $32,554 | ||||||||||||
Less: Interest and related expenses
|
32,296 | — | — | 32,296 | ||||||||||||
Income from loans and other investments, net
|
258 | — | — | 258 | ||||||||||||
Other revenues:
|
||||||||||||||||
Management fees from affiliates
|
— | 1,786 | (191 | ) | 1,595 | |||||||||||
Servicing fees
|
— | 649 | (211 | ) | 438 | |||||||||||
Total other revenues
|
— | 2,435 | (402 | ) | 2,033 | |||||||||||
Other expenses:
|
||||||||||||||||
General and administrative
|
1,496 | 3,344 | (191 | ) | 4,649 | |||||||||||
Servicing fee expense
|
211 | — | (211 | ) | — | |||||||||||
Total other expenses
|
1,707 | 3,344 | (402 | ) | 4,649 | |||||||||||
Recovery of provision for loan losses
|
8,088 | — | — | 8,088 | ||||||||||||
Valuation allowance on loans held-for-sale
|
(224 | ) | — | — | (224 | ) | ||||||||||
Gain on extinguishment of debt
|
937 | — | — | 937 | ||||||||||||
Income from equity investments
|
— | 842 | — | 842 | ||||||||||||
Income (loss) before income taxes
|
7,352 | (67 | ) | — | 7,285 | |||||||||||
Income tax provision (benefit)
|
2,000 | (939 | ) | — | 1,061 | |||||||||||
Net income
|
$5,352 | $872 | $— | $6,224 | ||||||||||||
Less: Net income attributable to noncontrolling
|
||||||||||||||||
interests
|
(8,069 | ) | — | — | (8,069 | ) | ||||||||||
Net (loss) income attributable to
|
||||||||||||||||
Capital Trust, Inc.
|
($2,717 | ) | $872 | $— | ($1,845 | ) | ||||||||||
Total assets
|
$2,360,192 | $9,219 | ($4,011 | ) | $2,365,400 |
Investment Management Revenues
|
||||||||
June 30, 2012
|
June 30, 2011
|
|||||||
Fees generated as:
|
||||||||
Public company manager
|
$1,238 | $626 | ||||||
Private equity manager
|
3,195 | 3,174 | ||||||
CDO collateral manager
|
286 | 412 | ||||||
Special servicer
|
3,468 | 770 | ||||||
Total fees
|
$8,187 | $4,982 | ||||||
Eliminations
(1)
|
(1,607 | ) | (1,060 | ) | ||||
Total fees, net
|
$6,580 | $3,922 |
(1)
|
Fees received by CTIMCO from Capital Trust, Inc., or other consolidated subsidiaries, have been eliminated in consolidation. |
|
·
|
CT Opportunity Partners I, LP, or CTOPI, is currently investing capital. The fund held its final closing in July 2008 with $539.9 million in total equity commitments from 28 institutional and individual investors. Currently, $312.5 million of committed equity remains undrawn. We have a $25.0 million commitment to invest in the fund ($10.5 million currently funded, $14.5 million unfunded) and entities controlled by the chairman of our board of directors have committed to invest $20 million. In May 2010, the fund’s investment period was extended to December 13, 2011, and in December 2011, the fund’s investment period was further extended to September 13, 2012. The fund targets opportunistic investments in commercial real estate, specifically high yield debt, equity and hybrid instruments, as well as non-performing and sub-performing loans and securities. We earn base management fees of 1.3% per annum of invested capital, as well as net incentive management fees of 17.7% of profits after a 9% preferred return and a 100% return of capital. As of June 30, 2012, CTOPI has invested $470.5 million in 38 transactions, of which $194.4 million remains outstanding.
|
|
·
|
CT High Grade Partners II, LLC, or CT High Grade II, is no longer investing capital (its investment period expired in May 2011). The fund closed in June 2008 with $667 million of commitments from two institutional investors. The fund targeted senior debt opportunities in the commercial real estate sector and did not employ leverage. We earn a base management fee of 0.40% per annum on invested capital. In conjunction with the transfer of interests from one of CT High Grade II’s investors to the other in April 2012, we made a $2.8 million (0.44%) co-investment in CT High Grade II. As of June 30, 2012, CT High Grade II has invested $588.1 million in 33 transactions, of which $552.0 million remains outstanding.
|
|
·
|
CT High Grade Mezzanine
SM
, or CT High Grade I, is no longer formally investing capital (its investment period officially expired in July 2008), however we have continued investing the “high grade” strategy through CT High Grade I on a non-discretionary basis since the end of the CT High Grade II investment period in May 2011. The separate account closed in November 2006, with a single, related party institutional investor committing $250 million, which was subsequently increased to $350 million in July 2007. As a result of the re-opening of the platform in May 2011 and the reinvesting of certain realized assets, as of June 30, 2012, we have invested $534.0 million for this account. This separate account has a single investor, W. R. Berkley Corporation, or WRBC, which is our largest shareholder and designates an appointee to our board of directors. CT High Grade I targets lower LTV subordinate debt investments without leverage and invested $420.9 million in 12 transactions during its initial investment period, as well as $113.1 million in four transactions since the platform was re-opened in May 2011. We earn management fees of 0.25% per annum on invested capital for substantially all of CT High Grade I’s investments. As of June 30, 2012, $247.0 million of these investments remain outstanding.
|
|
·
|
CT Large Loan 2006, Inc., or CT Large Loan, is no longer investing capital (its investment period expired in May 2008). The fund closed in May 2006 with total equity commitments of $325 million from eight institutional investors. In light of the performance of this fund, we do not charge the full management fee of 0.75% per annum of fund assets (capped at 1.5% on invested equity), and instead voluntarily capped our fee at $805,000 per annum.
|
Investment Management Mandates, as of June 30, 2012
|
||||||||||||||
(in millions)
|
||||||||||||||
Base
|
Incentive
|
|||||||||||||
Total
|
Total Capital
|
Co-
|
Management
|
Management
|
||||||||||
Type
|
Investments
(1)
|
Commitments
|
Investment %
|
Fee
|
Fee
|
|||||||||
Investing:
|
||||||||||||||
CTOPI
|
Fund
|
$194
|
$540
|
4.63%
|
(2)
|
1.28% (Assets)
|
(3)
|
|||||||
CT High Grade I
|
Sep. Acc.
|
$247
|
$521
|
(4)
|
—
|
0.25% (Assets)
|
N/A
|
|||||||
Liquidating:
|
||||||||||||||
CT High Grade II
|
Fund
|
$552
|
$667
|
0.44%
|
(5)
|
0.40% (Assets)
|
N/A
|
|||||||
CT Large Loan
|
Fund
|
$172
|
$325
|
—
|
(6)
|
0.75% (Assets)
(7)
|
N/A
|
(1)
|
Represents total investments, on a cash basis, as of period-end.
|
|
(2) |
We have committed to invest $25.0 million in CTOPI.
|
|
(3) |
CTIMCO earns net incentive management fees of 17.7% of profits after a 9% preferred return on capital and a 100% return of capital, subject to a catch-up. We have allocated 45% of the CTOPI incentive management fees to our employees as long-term performance awards.
|
|
(4) |
CT High Grade I ultimately closed with capital commitments of $350 million. Subsequent to the expiration of the CT High Grade I investment period, we continued to invest on behalf of WRBC under the CT High Grade I platform on a non-discretionary basis, bringing WRBC’s total allocated capital to $521 million as of June 30, 2012.
|
|
(5)
|
In conjunction with the transfer of interests from one of CT High Grade II’s investors to the other in April 2012, we purchased a 0.44% interest in CT High Grade II for $2.8 million, representing a $2.9 million capital commitment. | |
(6) | We have co-invested on a pari passu, asset by asset basis with CT Large Loan. | |
(7) |
Capped at 1.5% of equity. In light of the performance of this fund, we do not charge the full management fee, and instead we have voluntarily capped our fee at $805,000 per annum.
|
Originations
(1)
|
||||
($ in millions)
|
Six months ended
June 30, 2012
|
Year ended
December 31, 2011
|
||
#
/
$
|
#
/
$
|
|||
Investment management
|
3 / $42
|
11 / $219
|
(1)
|
Includes total commitments, both funded and unfunded, net of any related purchase discounts. |
Capital Trust, Inc.'s Investment in CT Legacy REIT as of June 30, 2012
|
||||
(in thousands)
|
||||
CT Legacy REIT total adjusted assets (at fair value)
(1)
|
$106,133 | |||
CT Legacy REIT total adjusted liabilities
(1)
|
(625 | ) | ||
Total CT Legacy REIT adjusted equity
(1)
|
$105,508 | |||
CT Legacy REIT equity:
|
||||
Allocable to Class A-1 common stock
|
$40,222 | |||
Allocable to Class A-2 common stock
|
59,077 | |||
Allocable to Class B common stock
|
6,084 | |||
Allocable to Class B preferred stock
|
125 | |||
$105,508 | ||||
Capital Trust, Inc. ownership by class:
|
||||
Class A-1 common stock
|
100 | % | ||
Class A-2 common stock
|
14 | % | ||
Class B common stock
(2)
|
8 | % | ||
Capital Trust, Inc. adjusted equity allocation:
|
||||
Class A-1 common stock
|
40,222 | |||
Class A-2 common stock
|
8,168 | |||
Class B common stock
(2)
|
493 | |||
Total Capital Trust investment in CT Legacy REIT
|
$48,883 |
(1)
|
See section III below for a presentation and discussion of CT Legacy REIT’s adjusted balance sheet. | |
(2) |
The class B common stock is a subordinate class that entitles its holders to receive approximately 25% of the dividends that would otherwise be payable to the class A-1 common stock, after aggregate cash distributions of $50.0 million have been paid to all other classes of common stock.
|
Capital Trust, Inc.'s Net Investment in CT Legacy REIT as of June 30, 2012
|
||||
Gross investment in CT Legacy REIT
(1)
|
$48,883 | |||
Secured notes, including prepayment premium
(2)
|
(11,059 | ) | ||
Management incentive awards plan, fully vested
(3)
|
(7,120 | ) | ||
Investment in CT Legacy REIT, net
|
$30,704 |
(1)
|
Gross investment in CT Legacy REIT is calculated on an adjusted basis as detailed in the preceding table. See section III below for a presentation and discussion of CT Legacy REIT’s adjusted balance sheet.
|
|
(2) |
Includes the full potential prepayment premium on secured notes, as described below. We carry this liability at its amortized basis of $8.2 million on our balance sheet as of June 30, 2012. The remaining interest and prepayment premium will be recognized, as applicable, over the term of the secured notes as a component of interest expense.
|
|
(3) |
Assumes full payment of the management incentive awards plan, as described below, based on the hypothetical GAAP liquidation value of CT Legacy REIT as of June 30, 2012. We periodically accrue a payable for the management incentive awards plan based on the vesting schedule for the awards and continued employment of the award recipients. As of June 30, 2012, our balance sheet includes $3.2 million in accounts payable and accrued expenses for the management incentive awards plan.
|
Consolidated Interest Earning Assets
|
||||||||||||||||
June 30, 2012
|
December 31, 2011
|
|||||||||||||||
Book Value
|
Yield
(1)
|
Book Value
|
Yield
(1)
|
|||||||||||||
|
||||||||||||||||
CT Legacy REIT
|
||||||||||||||||
Securities held-to-maturity
|
$— | ― | % | $3 | 3.31 | % | ||||||||||
Loans receivable, net
(2)
|
— | — | 207 | 5.21 | ||||||||||||
Loans held-for-sale, net
|
— | — | 31 | 6.26 | ||||||||||||
Subtotal / Weighted Average
|
$— | — | $241 | 5.32 | % | |||||||||||
Securitization Vehicles
|
||||||||||||||||
Securities held-to-maturity
|
$167 | 6.61 | % | $359 | 7.41 | % | ||||||||||
Loans receivable, net
|
242 | 4.80 | 613 | 5.72 | ||||||||||||
Subtotal / Weighted Average
|
$409 | 5.54 | % | $972 | 6.34 | % | ||||||||||
Total / Weighted Average
|
$409 | 5.54 | % | $1,213 | 6.14 | % |
(1)
|
Yield on floating rate assets assumes LIBOR of 0.25% and 0.30% at June 30, 2012 and December 31, 2011, respectively. | |
(2) |
Excludes, as of December 31, 2011, loan participations sold with a net book value of zero that are net of $97.5 million of provisions for loan losses as of December 31, 2011.
|
(1)
|
Amounts represent net book value after provisions for loan losses, valuation allowances on loans-held-for-sale and other-than-temporary impairments of securities. | |
(2) |
Watch List Assets exclude Loans against which we have recorded a provision for loan losses or valuation allowances, and Securities which have been other-than-temporarily impaired.
|
Rating Activity
(1)
|
|||
Six months ended
June 30, 2012
|
Year ended
December 31, 2011
|
||
Securities Upgraded
|
1
|
5
|
|
Securities Downgraded
|
7
|
22
|
(1)
|
Represents activity from any of Fitch Ratings, Standard & Poor’s or Moody’s Investors Service. |
(1)
|
Excludes loan participations sold. | |
(2) |
As further described in Note 6 to our consolidated financial statements, we deconsolidated CT Legacy Assets, a wholly-owned subsidiary of CT Legacy REIT, in the first quarter of 2012. As a result, its debt obligations are no longer included in our consolidated financial statements.
|
|
(3) | Floating rate debt obligations assume LIBOR of 0.25% and 0.30% at June 30, 2012 and December 31, 2011, respectively. | |
(4) |
Including the impact of interest rate hedges with an aggregate notional balance of $60.8 million as of December 31, 2011, the effective all-in cost of CT Legacy REIT’s debt obligations would be 13.46% per annum.
|
|
(5)
|
Including the impact of interest rate hedges with an aggregate notional balance of $282.0 and $296.6 million as of June 30, 2012 and December 31, 2011, respectively, the effective all-in cost of our consolidated securitization vehicles’ debt obligations would be 4.07% and 3.98% per annum, respectively. |
Non-Recourse Securitized Debt Obligations
|
||||||||||||||||
June 30, 2012
|
December 31, 2011
|
|||||||||||||||
Book Value
|
All-in Cost
(1)
|
Book Value
|
All-in Cost
(1)
|
|||||||||||||
CT CDOs
|
||||||||||||||||
CT CDO I
|
$95 | 1.3 | % | $121 | 1.2 | % | ||||||||||
CT CDO II
|
161 | 1.2 | 200 | 1.2 | ||||||||||||
CT CDO III
|
— | — | 200 | 5.2 | ||||||||||||
CT CDO IV
|
212 | 1.2 | 222 | 1.2 | ||||||||||||
Total CT CDOs
|
$468 | 1.2 | % | $743 | 2.3 | % | ||||||||||
Other securitization vehicles | ||||||||||||||||
GSMS 2006-FL8A
|
$50 | 1.1 | % | $51 | 1.4 | % | ||||||||||
JPMCC 2004-FL1A | — | — | — | — | ||||||||||||
GMACC 1997-C1
|
— | — | 84 | 7.1 | ||||||||||||
GECMC 00-1 H
|
— | — | 25 | 5.5 | ||||||||||||
MSC 2007-XLCA
|
— | — | 310 | 2.4 | ||||||||||||
Total other securitization vehicles
|
$50 | 1.1 | % | $470 | 3.3 | % | ||||||||||
Total non-recourse debt obligations
|
$518 | 1.2 | % | $1,213 | 2.7 | % |
(1)
|
Includes amortization of premiums and issuance costs of CT CDOs. Floating rate debt obligations assume LIBOR of 0.25% and 0.30% at June 30, 2012 and December 31, 2011, respectively. |
Shareholders' Equity
|
||||||||
June 30, 2012
|
December 31, 2011
|
|||||||
Shareholders equity
|
($34,384,947 | ) | ($110,423,805 | ) | ||||
Shares:
|
||||||||
Class A common stock
|
21,978,571 | 21,966,684 | ||||||
Restricted common stock
|
536,536 | 244,424 | ||||||
Stock units
|
658,119 | 562,335 | ||||||
Dilutive Warrants
|
— | — | ||||||
Total
|
23,173,226 | 22,773,443 | ||||||
Book value per share
|
($1.48 | ) | ($4.85 | ) |
Interest Rate Exposure
|
||||||||
(in millions)
|
June 30, 2012
|
December 31, 2011
|
||||||
Value exposure to interest rates
(1)
|
||||||||
Fixed rate assets
|
$289 | $844 | ||||||
Fixed rate debt
|
(22 | ) | (394 | ) | ||||
Interest rate swaps
|
(282 | ) | (357 | ) | ||||
Net fixed rate exposure
|
($15 | ) | $93 | |||||
Weighted average coupon (fixed rate assets)
|
6.27 | % | 7.29 | % | ||||
Cash flow exposure to interest rates
(1)
|
||||||||
Floating rate assets
|
$299 | $863 | ||||||
Floating rate debt
|
(504 | ) | (901 | ) | ||||
Interest rate swaps
|
282 | 357 | ||||||
Net floating rate exposure
|
$77 | $319 | ||||||
Weighted average coupon (floating rate assets)
(2)
|
3.81 | % | 3.59 | % | ||||
Net income impact from 100 bps change in LIBOR
|
$0.8 | $3.2 |
(1)
|
All values are in terms of face or notional amounts, and include loans classified as held-for-sale. | |
(2) |
Weighted average coupon assumes LIBOR of 0.25% and 0.30% at June 30, 2012 and December 31, 2011, respectively.
|
Comparison of Results of Operations: Three Months Ended June 30, 2012 vs. June 30, 2011
|
||||||||||||||||
(in thousands, except per share data)
|
||||||||||||||||
2012
|
2011
|
Change
|
% Change
|
|||||||||||||
Income from loans and other investments:
|
||||||||||||||||
Interest and related income
|
$6,763 | $32,554 | ($25,791 | ) | (79.2 | %) | ||||||||||
Less: Interest and related expenses
|
5,413 | 32,296 | (26,883 | ) | (83.2 | %) | ||||||||||
Income from loans and other investments, net
|
1,350 | 258 | 1,092 | 423.3 | % | |||||||||||
Other revenues:
|
||||||||||||||||
Management fees from affiliates
|
1,610 | 1,595 | 15 | 0.9 | % | |||||||||||
Servicing fees
|
1,365 | 438 | 927 | 211.6 | % | |||||||||||
Total other revenues
|
2,975 | 2,033 | 942 | 46.3 | % | |||||||||||
Other expenses:
|
||||||||||||||||
General and administrative
|
4,740 | 4,649 | 91 | 2.0 | % | |||||||||||
Total other expenses
|
4,740 | 4,649 | 91 | 2.0 | % | |||||||||||
Total other-than-temporary impairments of securities
|
— | — | — | — | ||||||||||||
Portion of other-than-temporary impairments of securities
recognized in other comprehensive income
|
— | — | — | — | ||||||||||||
Net impairments recognized in earnings
|
— | — | — | — | ||||||||||||
Recovery of provision for loan losses
|
— | 8,088 | (8,088 | ) | N/A | |||||||||||
Valuation allowance on loans held-for-sale
|
— | (224 | ) | 224 | N/A | |||||||||||
Gain on extinguishment of debt
|
— | 937 | (937 | ) | N/A | |||||||||||
Fair value adjustment on investment in CT Legacy Assets
|
3,704 | — | 3,704 | N/A | ||||||||||||
Income from equity investments
|
205 | 842 | (637 | ) | (75.7 | %) | ||||||||||
Income before income taxes
|
3,494 | 7,285 | (3,791 | ) | (52.0 | %) | ||||||||||
Income tax provision
|
143 | 1,061 | (918 | ) | (86.5 | %) | ||||||||||
Net income
|
$3,351 | $6,224 | ($2,873 | ) | (46.2 | %) | ||||||||||
Less: Net income attributable to noncontrolling interests
|
(1,068 | ) | (8,069 | ) | 7,001 | (86.8 | %) | |||||||||
Net income (loss) attributable to Capital Trust, Inc.
|
$2,283 | ($1,845 | ) | $4,128 | N/A | |||||||||||
Net income (loss) per share - diluted
|
$0.09 | ($0.08 | ) | $0.17 | N/A | |||||||||||
Dividend per share
|
$0.00 | $0.00 | $0.00 | N/A | ||||||||||||
Average LIBOR
|
0.24 | % | 0.20 | % | 0.04 | % | 19.7 | % |
Contractual Obligations
(1)
|
||||||||||||||||||||
Payments due by period
|
||||||||||||||||||||
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
||||||||||||||||
Parent Level
|
||||||||||||||||||||
Secured notes
(2)
|
$11 | $— | $— | $11 | $— | |||||||||||||||
Equity investments
(3)(4)
|
15 | 14 | — | — | 1 | |||||||||||||||
Operating lease obligations
|
7 | 1 | 2 | 2 | 2 | |||||||||||||||
Subtotal
|
33 | 15 | 2 | 13 | 3 | |||||||||||||||
Consolidated Securitization Vehicles
|
||||||||||||||||||||
CT CDOs
|
468 | — | — | — | 468 | |||||||||||||||
Other securitization vehicles
|
51 | — | — | — | 51 | |||||||||||||||
Subtotal
|
519 | — | — | — | 519 | |||||||||||||||
Total contractual obligations
|
$552 | $15 | $2 | $13 | $522 |
(1)
|
We are also subject to interest rate swaps for which we cannot estimate future payments due. | |
(2) |
The secured notes matured on March 31, 2016. As of June 30, 2012, $8.2 million of principal is outstanding, however we will ultimately pay $11.1 million at maturity.
|
|
(3) | CTOPI’s investment period expires in September 2012, at which point our obligation to fund capital calls will be limited. It is possible that our unfunded capital commitment will not be entirely called, and the timing and amount of such required contributions is not estimable. Our entire unfunded commitment is assumed to be funded by September 2012 for purposes of the above table. | |
(4) |
During April 2012 we purchased a 0.44% interest in CT High Grade II from an existing investor, representing our initial co-investment in CT High Grade II. Our co-investment represents a $2.9 million total capital commitment to CT High Grade II, of which our unfunded commitment is $480,000 as of June 30, 2012. As CT High Grade II’s investment period has expired, our entire unfunded commitment is assumed funded in more than five years for purposes of the above table.
|
(1)
|
All securitization vehicles have been deconsolidated and reported at our cash investment amount, adjusted for current losses relative to our equity investment in each vehicle. Due to the non-recourse nature of these entities, our investment cannot be less than zero on a cash basis. See note 7 to our consolidated financial statements for discussion of consolidated securitization vehicles. | |
(2) |
Loan participations which have been sold to third-parties, and did not qualify for sale accounting, have been eliminated. See Note 3 to our consolidated financial statements for discussion of loan participations sold.
|
|
(3) | Incentive allocations to CTIMCO from our investment management vehicles have been excluded from our adjusted balance sheet. These incentive allocations will only be paid to CTIMCO in the future contingent on the ultimate performance of such vehicles. | |
(4) |
Liabilities under our secured notes and the management incentive awards, the payments of which are linked to our gross recovery from CT Legacy REIT, have been adjusted to reflect what would be paid in a liquidation of CT Legacy REIT based on its adjusted balance sheet as of June 30, 2012.
|
Comparison of adjusted balance sheet of Capital Trust, Inc: As of June 30, 2012 vs. March 31, 2012
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
June 30, 2012
|
March 31, 2012
|
Change
|
% Change
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash and cash equivalents
|
$34,604 | $37,198 | ($2,594 | ) | (7.0 | %) | ||||||||||
Equity investments in unconsolidated subsidiaries
|
14,318 | 10,681 | 3,637 | 34.1 | % | |||||||||||
Investment in CT Legacy REIT
|
48,883 | 48,122 | 761 | 0.9 | % | |||||||||||
Deferred income taxes
|
2,727 | 2,691 | 36 | 1.3 | % | |||||||||||
Prepaid expenses and other assets
|
2,832 | 2,541 | 291 | 11.5 | % | |||||||||||
Total adjusted assets
|
$103,364 | $101,233 | $2,131 | 2.1 | % | |||||||||||
Liabilities and Shareholders' Equity
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Accounts payable, accrued expenses and other liabilities
|
$12,545 | $11,899 | $646 | 5.43 | % | |||||||||||
Secured notes
|
11,059 | 11,059 | — | ― | % | |||||||||||
Total adjusted liabilities
|
23,604 | 22,958 | 646 | 2.81 | % | |||||||||||
Total Adjusted Shareholders' Equity
|
79,760 | 78,275 | 1,485 | 1.9 | % | |||||||||||
Total adjusted liabilities and shareholders' equity
|
$103,364 | $101,233 | $2,131 | 2.1 | % |
Quantitative and Qualitative Disclosures about Market Risk
|
(1)
|
Represents weighted average rates where applicable. Floating rates are based on LIBOR of 0.25%, which is the rate as of June 30, 2012. |
Controls and Procedures
|
ITEM 1:
|
Legal Proceedings
|
ITEM 1A:
|
Risk Factors
|
ITEM 2:
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
ITEM 3:
|
Defaults Upon Senior Securities
|
ITEM 4:
|
Mine Safety Disclosures
|
ITEM 5:
|
Other Information
|
Exhibits
|
|
________________________
|
|
·
|
Filed herewith
|
|
#
|
Represents a management contract or compensatory plan or arrangement.
|
|
+
|
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
|
|
++
|
Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2 of the Exchange Act.
|
|
*
|
Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following materials, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at June 30, 2012 and December 31, 2011; (ii) the Consolidated Statements of Operations for the three and six months ended June 30, 2012 and 2011; (iii) the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2012 and 2011; (iv) the Consolidated Statements of Changes in Equity (Deficit) for the six months ended June 30, 2012 and 2011; (v) the Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011; and (vi) Notes to Consolidated Financial Statements.
|
|
Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act, is deemed not “filed” for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.
|
CAPITAL TRUST, INC.
|
|||
August 1, 2012
|
By:
|
/s/ Stephen D. Plavin | |
Date
|
Stephen D. Plavin | ||
Chief Executive Officer
(Principal executive officer)
|
|||
|
August 1, 2012
|
By:
|
/s/ Geoffrey G. Jervis | |
Date
|
Geoffrey G. Jervis | ||
Chief Financial Officer
(Principal financial officer and
Principal accounting officer)
|
Minimum Bonus Amount
|
Target Bonus Amount
|
Maximum Bonus Amount
|
||
Level of Performance
|
||||||||
Performance Measure
|
Threshold
|
Target
|
Maximum
|
Weight
|
||||
Total Shareholder Return
|
[***]
|
[***]
|
[***]
|
[***]
|
||||
Total Gross Originations
|
[***]
|
[***]
|
[***]
|
[***]
|
||||
Incremental CTIMCO Revenue
|
[***]
|
[***]
|
[***]
|
[***]
|
|
·
|
If actual performance of the Performance Measure is below Threshold, the Weight multiplied by the Minimum Bonus Amount.
|
|
·
|
If actual performance of the Performance Measure is at or above Threshold, but below Target, the sum of (a) the Weight multiplied by the Minimum Bonus Amount and (b) the amount obtained by multiplying the Weight by the product obtained by multiplying (y) , by (z) the quotient obtained by dividing (i) the amount by which actual performance exceeds Threshold performance by (ii) the amount by which Target performance exceeds Threshold performance.
|
|
·
|
If actual performance of the Performance Measure is at or above Target, but below Maximum, the sum of (a) the Weight multiplied by Target Bonus Amount and (b) the amount obtained by multiplying the Weight by the product obtained by multiplying (y) by (z) the quotient obtained by dividing (i) the amount by which actual performance exceeds Target performance by (ii) the amount by which Maximum performance exceeds Target performance.
|
|
·
|
If actual performance of Performance Measure is at or above Maximum, the Weight multiplied by Maximum Bonus Amount.
|
|
(i)
|
the amount of the Performance Bonus shall be determined, without pro ration, with respect to each Performance Measure based on the higher of “Target” or actual performance;
|
|
(ii)
|
actual results with respect to Total Gross Originations and Incremental CTIMCO Revenue shall be annualized for the purposes of calculating each of those Performance Measures; and
|
|
(iii)
|
Total Shareholder Return (
i.e.,
per share appreciation measured from the start of the performance period) shall be based on a valuation of the Company as of the date of consummation of the Strategic Transaction as conducted by the Special Committee and management, in good faith and without discount, and after taking into account any consideration paid or payable in connection with such Strategic Transaction.
|
[***]
|
Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
|
|
(a)
|
if to the Participant, at the last address that the Company had for the Participant on its records;
|
|
(b)
|
if to the Company, to Capital Trust, Inc., 410 Park Avenue, 14th Floor, New York, NY 10022, attention: Chief Financial Officer.
|
CAPITAL TRUST, INC.
|
|||
By: _________________________________
|
|||
Name: | |||
Title: | |||
PARTICIPANT
|
|||
Signature: | ___________________________ | ||
Printed Name of Participant:
|
|
EXHIBIT A
|
Name of Beneficiary: | ________________________________________ |
Address: | ________________________________________ |
________________________________________ | |
________________________________________ | |
Social Security No.: | ________________________________________ |
Date: _______________________________ | |
By: ________________________________ | |
Name of Participant
|
1.
|
Specific Terms
. Your Restricted Shares have the following terms:
|
Name of Participant
|
|
Number of Restricted Shares Being Awarded
|
|
Purchase Price per Share (if applicable)
|
Not applicable.
|
Grant Date
|
|
Vesting
|
Your Award will vest with respect to one hundred percent (100%) of the number of Restricted Shares designated above upon the consummation of a recapitalization or sale of the Company and/or sale of components of the Company’s business as contemplated in the Company’s ongoing strategic alternatives process overseen by the special committee of the board of directors of the Company (a “
Strategic Transaction
”);
provided
,
however
, that, definitive agreements governing the Strategic Transaction shall have been entered into by the Company and the other parties thereto on or prior to December 31, 2012; and
provided
,
further
, that you (i) remain employed by the Company and/or its affiliates through the completion of such Strategic Transaction or (ii) shall have experienced a Qualifying Termination (as defined below) on or prior to the completion of such Strategic Transaction.
A “Qualifying Termination” means the termination of your employment (a) by the Company without Cause, (b) as a result of your death or becoming “Disabled” (as defined in the Plan), or (c) by you following (i) a material reduction in the your authority, duties and responsibilities, provided that a mere change in title alone shall not constitute a material reduction in job responsibilities; (ii) an involuntary relocation of your place of employment to a facility or location more than 50 miles from the your then-principal work site; or (iii) a material reduction in your base salary and annual bonus other than as part of a reduction consistent with a general reduction of pay for similarly-situated participants in the Company’s compensation and incentive programs (each of clauses (c)(i), (c)(ii) and (c)(iii) shall constitute “
Good Reason
”). Notwithstanding the foregoing, an event that would otherwise constitute Good Reason shall fail to constitute Good Reason if (I) the Participant does not provide the Company with written notice, of both the Participant’s intent to terminate employment and a description of the event the Participant believes to constitute Good Reason, within 30 days after the event occurs; (II) the Company reverses the action or cures the default that constitutes Good Reason within 30 days after the Participant provides the notice described in clause (I) hereof (the “
Cure Period
”); or (III) the Participant does not actually terminate his employment within the ninety (90) day period immediately following the event constituting Good Reason.
|
Deferral Elections
|
Not Permitted.
|
Recapture and Recoupment
|
þ
Section 14 of the Plan (other than paragraph (e) of Section 14) regarding Termination, Rescission, and Recapture shall apply to this Award.
þ
Section 15 of the Plan regarding Recoupment shall apply to this Award.
|
|
(i)
|
by instrument to your Immediate Family;
|
|
(ii)
|
by instrument to an inter vivos or testamentary trust (or other entity) in which the Award is to be passed to the Participant’s designated Beneficiaries; and
|
|
(iii)
|
by gift to charitable institutions.
|
|
(a)
|
if to you, at the last address that the Company had for you on its records;
|
|
(b)
|
if to the Company, to Capital Trust, Inc., 410 Park Avenue, 14th Floor, New York, NY 10022, attention: Chief Financial Officer.
|
CAPITAL TRUST, INC.
|
|||
By: _________________________________
|
|||
Name: | |||
Title: | |||
PARTICIPANT
|
|||
Signature: | ___________________________ | ||
Printed Name of Participant:
|
Name of Beneficiary: | ________________________________________ |
Address: | ________________________________________ |
________________________________________ | |
________________________________________ | |
Social Security No.: | ________________________________________ |
Date: _______________________________ | |
By: ________________________________ | |
Name of Participant
|
|
(a)
|
if to the Participant, at the last address that the Company had for the Participant on its records;
|
|
(b)
|
if to the Company, to Capital Trust, Inc., 410 Park Avenue, 14th Floor, New York, NY 10022, attention: Chief Financial Officer.
|
CAPITAL TRUST, INC.
|
|||
By: _________________________________
|
|||
Name: | |||
Title: | |||
PARTICIPANT
|
|||
Signature: | ___________________________ | ||
Printed Name of Participant:
|
|
EXHIBIT A
|
Name of Beneficiary: | ________________________________________ |
Address: | ________________________________________ |
________________________________________ | |
________________________________________ | |
Social Security No.: | ________________________________________ |
Date: _______________________________ | |
By: ________________________________ | |
Name of Participant
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Capital Trust, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Capital Trust, Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
·
|
changes in national economic conditions;
|
|
·
|
changes in local real estate market conditions due to changes in national or local economic conditions or changes in local property market characteristics;
|
|
·
|
the extent of the impact of the recent turmoil in the financial markets, including the lack of available debt financing for commercial real estate;
|
|
·
|
tenant bankruptcies;
|
|
·
|
competition from other properties offering the same or similar services;
|
|
·
|
changes in interest rates and in the state of the debt and equity capital markets;
|
|
·
|
the ongoing need for capital improvements, particularly in older building structures;
|
|
·
|
changes in real estate tax rates and other operating expenses;
|
|
·
|
adverse changes in governmental rules and fiscal policies, civil unrest, acts of God, including earthquakes, hurricanes and other natural disasters, and acts of war or terrorism, which may decrease the availability of or increase the cost of insurance or result in uninsured losses;
|
|
·
|
adverse changes in zoning laws;
|
|
·
|
the impact of present or future environmental legislation and compliance with environmental laws;
|
|
·
|
the impact of lawsuits which could cause us to incur significant legal expenses and divert management’s time and attention from our day-to-day operations; and
|
|
·
|
other factors that are beyond our control and the control of the commercial property owners.
|
|
·
|
acquire investments subject to rights of senior classes and servicers under inter-creditor or servicing agreements;
|
|
·
|
acquire only a minority and/or a non-controlling participation in an underlying investment;
|
|
·
|
co-invest with third-parties through partnerships, joint ventures or other entities, thereby acquiring non-controlling interests; or
|
|
·
|
rely on independent third-party management or strategic partners with respect to the management of an asset.
|
|
·
|
manage our investment management vehicles successfully by investing their capital in suitable investments that meet their respective investment criteria;
|
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actively manage the assets in our portfolios in order to realize targeted performance;
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create incentives for our management and professional staff to develop and operate the investment management business; and
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structure, sponsor and capitalize future investment management vehicles that provide investors with attractive investment opportunities.
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80% of the votes entitled to be cast by shareholders; and
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two-thirds of the votes entitled to be cast by shareholders other than the interested shareholder and affiliates and associates thereof.
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the level of institutional interest in us;
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the perception of REITs generally and REITs with portfolios similar to ours, in particular, by market professionals;
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the attractiveness of securities of REITs in comparison to other companies;
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the market’s perception of our ability to successfully manage our portfolio; and
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the general economic environment and the commercial real estate property and capital markets.
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reducing the trading liquidity and market price of our class A common stock;
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reducing the number of investors willing to hold or acquire our class A common stock, thereby further restricting our ability to obtain equity financing; and
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reducing our ability to retain, attract and motivate directors, officers and employees.
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we would be taxed as a regular domestic corporation, which under current laws, among other things, means being unable to deduct distributions to shareholders in computing taxable income and being subject to federal income tax on our taxable income at regular corporate income tax rates;
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any resulting tax liability could be substantial and could have a material adverse effect on our book value;
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unless we were entitled to relief under applicable statutory provisions, we would be required to pay taxes, and thus, our cash available for distribution to shareholders would be reduced for each of the years during which we did not qualify as a REIT; and
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we generally would not be eligible to requalify as a REIT for four full taxable years.
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