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RAIT Financial Trust Announces Third Quarter 2014 Financial Results

From
cash loan – Yahoo News Search Results:

PHILADELPHIA–(BUSINESS WIRE)–

RAIT Financial Trust (“RAIT”) (RAS) today announced third quarter
2014 financial results.

Financial Performance

Total revenues grew 20.7% to $75.3 million for the quarter ended
September 30, 2014 from $62.4 million for the quarter ended September
30, 2013.

Cash Available for Distribution (“CAD”) per share was $0.00 for the
quarter ended September 30, 2014 as a result of the previously
announced SEC settlement charge pertaining to Taberna Capital
Management of $21.5 million or $0.26 per share.

Dividends

On September 15, 2014, RAIT declared a third quarter 2014 common
dividend of $0.18 per share, representing a 20% increase from the
third quarter 2013 common dividend of $0.15 per common share. The
third quarter common dividend record date was October 7, 2014 and will
be paid on October 31, 2014. RAIT’s board expects to declare a fourth
quarter dividend of at least $0.18 per common share.

CRE Loan Portfolio

Investments in mortgages and loans increased 22.0% to $1.37 billion at
September 30, 2014 from $1.12 billion at December 31, 2013.

RAIT originated $255.8 million of loans during the quarter ended
September 30, 2014 consisting of $102.1 million bridge loans and
$153.7 million conduit loans. RAIT originated $726.5 million of loans
for the nine-month period ended September 30, 2014.

RAIT sold $119.6 million of conduit loans during the quarter ended
September 30, 2014 which generated $3.5 million of fee income.

CRE Property Portfolio

Average effective rent per unit per month in RAIT’s multifamily
portfolio increased 6.6% to $811 for the quarter ended September 30,
2014 from $761 for the quarter ended September 30, 2013.

As of September 30, 2014, RAIT’s investments in real estate increased
39% to $1.4 billion from $1.0 billion at December 31, 2013.

Rental income increased 43% to $41.8 million during the quarter ended
September 30, 2014 from $29.2 million for the quarter ended September
30, 2013 driven largely by the acquisition of 20 properties subsequent
to September 30, 2013 which generated $11.0 million of rental income
during the quarter ended September 30, 2014.

Assets Under Management

Assets under management increased 52% to $5.4 billion at September 30,
2014 from $3.6 billion at December 31, 2013 due primarily to inclusion
of third party retail properties managed by RAIT’s retail-focused
property manager beginning in 2014.

Liquidity

In August 2014, RAIT issued $71.9 million aggregate principal amount
of its 7.125% Senior Notes due 2019 (RFTA) in an underwritten
public offering. RAIT received approximately $69.2 million of net
proceeds.

Scott Schaeffer, RAIT’s Chairman and CEO, said, “We continue executing
on our multi-strategy approach to investing in commercial real-estate.
During the third quarter, gross loan originations increased 53% to
$255.8 million when compared to the third quarter of 2013. Our property
portfolio grew through acquisitions and increasing rents which led to a
43% increase in rental income and a 53% increase in net operating income
since September 30, 2013. As previously announced, we are undertaking to
exit the legacy Taberna business with a goal of completing the process
by December 31, 2014.”

Financial Results

RAIT reported CAD, a non-GAAP financial measure, for the three-month
period ended September 30, 2014 of $(0.4) million, or $0.00 per share –
diluted based on 82.0 million weighted-average shares outstanding –
diluted, as compared to CAD for the three-month period ended September
30, 2013 of $15.9 million, or $0.23 per share – diluted based on 70.2
million weighted-average shares outstanding – diluted. RAIT reported a
net loss allocable to common shares for the three-month period ended
September 30, 2014 of $23.3 million, or $0.28 total loss per share –
diluted based on 82.0 million weighted-average shares outstanding –
diluted, as compared to net loss allocable to common shares for the
three-month period ended September 30, 2013 of $17.1 million, or $0.24
total loss per share – diluted based on 70.2 million weighted-average
shares outstanding – diluted. The third quarter 2014 net loss includes
$10.2 million of unrealized losses relating primarily to non-cash
mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the
associated hedges and the $21.5 million SEC settlement charge pertaining
to Taberna Capital Management. Non-cash mark-to-market gains and losses
are excluded from CAD.

RAIT reported CAD for the nine-month period ended September 30, 2014 of
$36.6 million, or $0.45 per share – diluted based on 81.1 million
weighted-average shares outstanding – diluted, as compared to CAD for
the nine-month period ended September 30, 2013 of $38.7 million, or
$0.58 per share – diluted based on 66.8 million weighted-average shares
outstanding – diluted. RAIT reported a net loss allocable to common
shares for the nine-month period ended September 30, 2014 of $63.5
million, or $0.78 total loss per share – diluted based on 81.1 million
weighted-average shares outstanding – diluted, as compared to net loss
allocable to common shares for the nine-month period ended September 30,
2013 of $173.5 million, or $2.60 total loss per share – diluted based on
66.8 million weighted-average shares outstanding – diluted. The
nine-month period ended September 30, 2014 net loss includes $59.4
million of unrealized losses relating primarily to non-cash
mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the
associated hedges. Non-cash mark-to-market gains and losses are excluded
from CAD.

A reconciliation of RAIT’s reported net income (loss) allocable to
common shares to its CAD is included as Schedule I to this release. A
reconciliation of RAIT’s total shareholders’ equity to its adjusted book
value, a non-GAAP financial measure, is included as Schedule II to this
release. A reconciliation of RAIT’s net income (loss) allocable to
common shares to its funds from operations (“FFO)”, a non-GAAP financial
measure, and adjusted funds from operations (“AFFO”), a non-GAAP
financial measure, is included as Schedule III to this release. These
Schedules also include management’s respective rationales for the
usefulness of each of these non-GAAP financial measures.

 

 

 

 

 

Key Statistics

(Unaudited and dollars in thousands, except per share information)

 

As of or For the Three-Month Periods Ended

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

June 30, 2014

 

March 31, 2014

 

December 31, 2013

 

September 30, 2013

Financial Statistics:

 

Total revenue

$75,293

$73,256

$67,308

$67,607

$62,395

Earnings (loss) per share – diluted

$(0.28)

$(0.31)

$(0.18)

$(1.90)

$(0.24)

CAD per share, diluted

$0.00(5)

$0.24

$0.22

$0.27

$0.23

Common dividend declared per share

$0.18

$0.18

$0.17

$0.16

$0.15

Assets under management

$5,417,579

$5,266,296

$5,119,805

$3,595,530

$3,567,675

FFO per share, diluted

$(0.17)

$(0.20)

$(0.07)

$(1.74)

$(0.12)

 

Commercial Real Estate (“CRE”) Loan Portfolio:

CRE loans– unpaid principal

$1,369,138

$1,325,748

$1,228,452

$1,115,949

$1,103,272

Non-accrual loans — unpaid principal

$40,741

$30,269

$28,019

$37,073

$45,337

Non-accrual loans as a % of reported loans

3.0%

2.3%

2.3%

3.3%

4.1%

Reserve for losses

$15,662

$15,336

$14,279

$22,955

$23,317

Reserves as a % of non-accrual loans

38.4%

50.7%

51.0%

61.9%

51.4%

Provision for losses

$1,500

$1,000

$1,000

$1,500

$500

 

CRE Property Portfolio:

Reported investments in real estate(1)

$1,400,715

$1,268,769

$1,205,995

$1,004,186

$986,296

Net operating income(1)

$20,932

$19,524

$17,093

$13,919

$13,712

Number of properties owned(1)

80

74

71

62

61

Multifamily units owned(1)

13,516

12,388

12,014

9,372

8,940

Office square feet owned

2,286,284

2,248,321

2,097,022

2,009,852

2,015,524

Retail square feet owned

1,790,969

1,420,909

1,420,909

1,421,059

1,421,059

Land (acres owned)

21.92

21.92

21.92

21.92

21.92

 

Average occupancy data:

Multifamily(1)

92.7%

92.8%

93.3%

92.2%

92.5%

Office

75.0%

74.3%

74.8%

75.6%

74.1%

Retail

73.3%

67.5%

66.6%

69.0%

68.9%

 

Average Effective Rent per Unit/Square Foot (2):

Multifamily (1)(3)

$811

$799

$767

$763

$761

Office (4)

$19.64

$20.10

$18.70

$18.40

$19.45

Retail (4)

$12.68

$12.50

$12.44

$12.11

$12.05

 

(1)

Includes 22 apartment properties owned by RAIT’s consolidated
subsidiary, Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT),
with 6,470 units and a book value of $423.2 million as of September
30, 2014. At September 30, 2014, RAIT owned 28% of IRT’s outstanding
common stock.

(2)

Based on properties owned as of September 30, 2014.

(3)

Average effective rent is rent per unit per month.

(4)

Average effective rent is rent per square foot per year.

(5)

Includes $0.26 SEC settlement charge pertaining to Taberna Capital
Management. Excluding this one-time item CAD per share would have
been $0.26 per common share.

 

Conference Call

All interested parties can listen to the live conference call webcast at
9:00 AM ET on Thursday, October 30, 2014 from the home page of the RAIT
Financial Trust website at www.rait.com
or by dialing 877.703.6109, access code 80662508. For those who are not
available to listen to the live call, the replay will be available
shortly following the live call on RAIT’s website and telephonically
until Thursday, November 6, 2014, by dialing 888.286.8010, access code
88214660.

About RAIT Financial Trust

RAIT Financial Trust is an internally-managed real estate investment
trust that provides debt financing options to owners of commercial real
estate and invests directly into commercial real estate properties
located throughout the United States. In addition, RAIT is an asset and
property manager of real estate-related assets. For more information,
please visit www.rait.com
or call Investor Relations at 215.243.9000.

Forward-Looking Statements

This press release may contain certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements can generally be identified by our use of
forward-looking terminology such as “may,” “trend”, “will,” “continue,”
“expect,” “intend,” “anticipate,” “estimate,” “believe,” “look forward”
or other similar words or terms. Because such statements include risks,
uncertainties and contingencies, actual results may differ materially
from the expectations, intentions, beliefs, plans or predictions of the
future expressed or implied by such forward-looking statements. These
risks, uncertainties and contingencies include, but are not limited to,
the current uncertainty in the global financial markets and the global
economy; the risk that the settlement with the SEC will not be finalized
and/or approved or that any final settlement will have different or
additional material terms, the risk that RAIT will not be able to commit
to or complete exiting the Taberna business, whether RAIT’s actual
business performance, developments and ability to access the capital
markets and economic conditions affecting commercial real estate will
affect RAIT’s ability to realize its ability to pay the fourth quarter
2014 dividend and those disclosed in RAIT’s filings with the Securities
and Exchange Commission. RAIT undertakes no obligation to update these
forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events, except
as may be required by law.

 

 

 

RAIT Financial Trust

Consolidated Statements of Operations

(Dollars in thousands, except share and per share information)

(unaudited)

 

For the Three-Month

For the Nine-Month

Periods Ended

Periods Ended

September 30,

September 30,

Revenues:

2014

 

2013

2014

 

2013

Net interest margin:

 

 

Investment Interest income

$

33,273

$

32,730

$

102,882

$

95,266

Investment Interest expense

 

(7,636)

 

 

(8,235)

 

(22,342)

 

 

(22,996)

Net interest margin

25,637

24,495

80,540

72,270

Rental income

41,814

29,233

116,204

84,260

Fee and other income

 

7,842

 

 

8,667

 

19,113

 

 

22,738

Total revenue

75,293

62,395

215,857

179,268

Expenses:

Interest expense

13,910

10,052

38,756

29,696

Real estate operating expense

20,882

15,521

58,655

44,842

Compensation expense

7,187

6,565

23,118

19,849

General and administrative expense

4,756

3,046

13,239

10,384

Acquisition expense

816

199

1,408

199

Provision for losses

1,500

500

3,500

1,500

Depreciation and amortization expense

 

13,236

 

 

8,784

 

38,719

 

 

25,972

Total expenses

 

62,287

 

 

44,667

 

177,395

 

 

132,442

Operating income

13,006

17,728

38,462

46,826

Other income (expense)

(21,464)

(3,849)

(21,449)

(3,704)

Gains (losses) on assets

25

(191)

(5,350)

30

Gains (losses) on extinguishment of debt

2,421

Change in fair value of financial instruments

 

(10,223)

 

 

(24,659)

 

(59,433)

 

 

(200,436)

Income (loss) before taxes and discontinued operations

(18,656)

(10,971)

(45,349)

(157,284)

Income tax benefit (provision)

 

2,194

 

 

(164)

 

2,454

 

 

470

Net income (loss)

(16,462)

(11,135)

(42,895)

(156,814)

(Income) loss allocated to preferred shares

(7,407)

(6,024)

(20,628)

(16,831)

(Income) loss allocated to noncontrolling interests

 

603

 

 

53

 

20

 

 

130

Net income (loss) allocable to common shares

$

(23,266)

 

$

(17,106)

$

(63,503)

 

$

(173,515)

Earnings (loss) per share—Basic:

Total earnings (loss) per share—Basic

$

(0.28)

 

$

(0.24)

$

(0.78)

 

$

(2.60)

Weighted-average shares outstanding—Basic

 

81,967,806

 

 

70,192,918

 

81,111,796

 

 

66,807,299

Earnings (loss) per share—Diluted:

Total earnings (loss) per share—Diluted

$

(0.28)

 

$

(0.24)

$

(0.78)

 

$

(2.60)

Weighted-average shares outstanding—Diluted

 

81,967,806

 

 

70,192,918

 

81,111,796

 

 

66,807,299

 

 

RAIT Financial Trust

Consolidated Balance Sheets

(Dollars in thousands, except share and per share information)

(unaudited)

 

As of

As of

September 30,

December 31,

2014

 

2013

Assets

Investments in mortgages and loans, at amortized cost:

Commercial mortgages, mezzanine loans, other loans and preferred
equity interests

$

1,369,782

$

1,122,377

Allowance for losses

 

(15,662)

 

 

(22,955)

Total investments in mortgages and loans

1,354,120

1,099,422

Investments in real estate, net of accumulated depreciation of
$155,815 and $127,745, respectively

1,400,715

1,004,186

Investments in securities and security-related receivables, at fair
value

568,279

567,302

Cash and cash equivalents

116,767

88,847

Restricted cash

133,374

121,589

Accrued interest receivable

54,929

48,324

Other assets

78,948

57,081

Deferred financing costs, net of accumulated amortization of $23,830
and $17,768, respectively

25,141

18,932

Intangible assets, net of accumulated amortization of $10,940 and
$4,564, respectively

 

23,944

 

 

21,554

Total assets

$

3,756,217

 

$

3,027,237

 

Liabilities and Equity

Indebtedness:

Recourse indebtedness

$

501,273

$

235,011

Non-recourse indebtedness

 

2,112,044

 

 

1,851,390

Total indebtedness

2,613,317

2,086,401

Accrued interest payable

34,164

26,936

Accounts payable and accrued expenses

58,579

32,447

Derivative liabilities

81,998

113,331

Deferred taxes, borrowers’ escrows and other liabilities

 

132,200

 

 

79,462

Total liabilities

2,920,258

2,338,577

 

Series D Preferred Shares, 4,000,000 shares authorized,
4,000,000 and 2,600,000 shares issued and outstanding

76,176

52,970

Equity:

Preferred shares, $0.01 par value per share, 25,000,000 shares
authorized:

7.75% Series A cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 8,069,288 and 4,760,000 shares
authorized, 4,075,569 and 4,069,288 shares issued and outstanding

41

41

8.375% Series B cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 4,300,000 shares authorized, 2,288,465
shares issued and outstanding

23

23

8.875% Series C cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 3,600,000 shares authorized, 1,640,100
shares issued and outstanding

17

17

Series E cumulative redeemable preferred shares, liquidation
preference $25.00 per share, 4,000,000 shares authorized

Common shares, $0.03 par value per share, 200,000,000 shares
authorized, 82,509,635 and 71,447,437 issued and outstanding,
including 541,575 and 369,500 unvested restricted common share awards

2,474

2,143

Additional paid in capital

2,008,814

1,920,455

Accumulated other comprehensive income (loss)

(43,039)

(63,810)

Retained earnings (deficit)

 

(1,364,168)

 

 

(1,257,306)

Total shareholders’ equity

604,162

601,563

Noncontrolling interests

 

155,621

 

 

34,127

Total equity

 

759,783

 

 

635,690

Total liabilities and equity

$

3,756,217

 

$

3,027,237

 

 

 

 

 

Schedule I

RAIT Financial Trust

Reconciliation of Net income (loss) Allocable to Common Shares and

Cash Available for Distribution (1)

(Dollars in thousands, except share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

For the Three-Month Period
Ended September 30,

 

 

 

For the Nine-Month Period Ended
September 30,

 

 

2014

 

 

 

2013

 

 

 

2014

 

 

 

2013

 

 

Amount

Per Share (2)

Amount

Per Share (3)

Amount

 

Per Share (2)

 

Amount

 

Per Share (3)

Cash Available for Distribution:

Net income (loss) allocable to common shares

$(23,266)

$ (0.28)

$(17,106)

$(0.24)

$(63,503)

$ (0.77)

$(173,515)

$(2.60)

Adjustments:

Depreciation and amortization expense

13,236

0.16

8,784

0.13

38,719

0.47

25,972

0.39

Change in fair value of financial instruments

10,223

0.13

24,659

0.35

59,433

0.73

200,436

3.00

(Gains) losses on assets

(25)

0.00

191

0.00

5,350

0.07

(30)

0.00

(Gains) losses on extinguishment of debt

(2,421)

(0.03)

Taberna VIII and Taberna IX securitizations, net effect

(6,975)

(0.09)

(8,176)

(0.12)

(21,063)

(0.26)

(26,178)

(0.39)

Straight-line rental adjustments

(238)

0.00

(428)

(0.01)

(329)

0.00

(1,394)

(0.02)

Share-based compensation

1,148

0.01

1,096

0.02

3,777

0.05

2,562

0.04

Origination fees and other deferred items

5,718

0.07

6,807

0.10

15,450

0.18

9,785

0.15

Provision for losses

1,500

0.02

500

0.01

3,500

0.04

1,500

0.02

Noncontrolling interest effect from certain adjustments

(1,716)

 

(0.02)

 

(405)

 

(0.01)

 

(2,351)

 

(0.03)

 

(414)

 

(0.01)

Cash Available for Distribution

$(395)

 

$0.00

 

$15,922

 

$0.23

 

$36,562

 

$0.45

 

$38,724

 

$0.58

 

(1)

Cash available for distribution, or CAD, is a non-GAAP financial
measure. We believe that CAD provides investors and management with
a meaningful indicator of operating performance. Management also
uses CAD, among other measures, to evaluate profitability and our
board of trustees considers CAD in determining our quarterly cash
dividends. We also believe that CAD is useful because it adjusts for
a variety of noncash items (such as depreciation and amortization,
equity-based compensation, realized gain (loss) on assets, provision
for loan losses and non-cash interest income and expense items).
Furthermore, CAD removes the effect from our consolidation of the
legacy Taberna securitizations.

 

We calculate CAD by subtracting from or adding to net income (loss)
attributable to common shareholders the following items:
depreciation and amortization items including, depreciation and
amortization, straight-line rental income or expense, amortization
of in place leases, amortization of deferred financing costs,
amortization of discount on financings and equity-based
compensation; changes in the fair value of our financial
instruments, including such changes reflected in our consolidated
Taberna securitizations; net interest income from consolidated
Taberna securitizations; realized gain (loss) on assets and other;
provision for loan losses; impairment on depreciable property;
acquisition gains or losses and transaction costs; certain fee
income eliminated in consolidation that is attributable to third
parties and one-time events pursuant to changes in U.S. GAAP and
certain other non-recurring items.

 

CAD should not be considered as an alternative to net income (loss),
determined in accordance with U.S. GAAP, as an indicator of
operating performance. In addition, our methodology for calculating
CAD may differ from the methodologies used by other comparable
companies, including other REITs, when calculating the same or
similar supplemental financial measures and may not be comparable
with these companies. In these Schedules, references to “we”, “us”,
and “our” refer to RAIT Financial Trust and its subsidiaries.

 

(2)

Based on 81,967,806 and 81,111,796 weighted-average shares
outstanding-diluted for the three-month period and nine-month period
ended September 30, 2014.

 

(3)

Based on 70,192,918 and 66,807,299 weighted-average shares
outstanding-diluted for the three-month period and nine-month period
ended September 30, 2013.

 

Schedule II

RAIT Financial Trust

Reconciliation of Shareholders’ Equity to Adjusted Book Value (1)

(Dollars in thousands, except share and per share amounts)

(unaudited)

 

As of September 30, 2014

Amount

 

Per Share (2)

 

Total shareholders’ equity

$ 604,162

$ 7.32

Liquidation value of preferred shares characterized as equity(3)

(200,103)

(2.42)

Book value

404,059

4.90

Adjustments:

Taberna VIII and Taberna IX securitizations, net effect

(214,101)

(2.59)

RAIT I and RAIT II derivative liabilities

25,127

0.30

Change in fair value for warrants and investor SARs

6,766

0.08

Accumulated depreciation and amortization

198,901

2.41

Valuation of recurring collateral, property management fees and
other items (4)

88,827

1.08

Total adjustments

$ 105,520

$ 1.28

Adjusted book value

$ 509,579

$ 6.18

 

(1)

Management views adjusted book value as a useful and appropriate
supplement to shareholders’ equity and book value per share. The
measure serves as an additional measure of our value because it
facilitates evaluation of us without the effects of various items
that we are required to record in accordance with GAAP but which
have limited economic impact on our business. Those adjustments
primarily reflect the effect of consolidated securitizations where
we do not currently receive cash flows on our retained interests,
accumulated depreciation and amortization, the valuation of
long-term derivative instruments and a valuation of our recurring
collateral and property management fees. Adjusted book value is a
non-GAAP financial measurement, and does not purport to be an
alternative to reported shareholders’ equity, determined in
accordance with GAAP, as a measure of book value. Adjusted book
value should be reviewed in connection with shareholders’ equity as
set forth in our consolidated balance sheets, to help analyze our
value to investors. Adjusted book value may be defined in various
ways throughout the REIT industry. Investors should consider these
differences when comparing our adjusted book value to that of other
REITs.

 

(2)

Based on 82,509,635 common shares outstanding as of September 30,
2014.

 

(3)

Based on 4,075,569 Series A preferred shares, 2,288,465 Series B
preferred shares, and 1,640,100 Series C preferred shares
outstanding as of September 30, 2014, all of which have a
liquidation preference of $25.00 per share.

 

(4)

Includes the estimated value of the (1) property management and
collateral management fees to be received by RAIT as of September
30, 2014 from RAIT Residential and Urban Retail, and the Taberna I,
Taberna VIII, Taberna IX, RAIT I and RAIT II securitizations and (2)
advisory fees to be received by RAIT from IRT as of September 30,
2014 assuming the full deployment of IRT’s July 2014 common stock
offering. The other item included is the incremental market value of
RAIT’s ownership of 7.3 million shares of IRT common stock over
RAIT’s book value for these shares at September 30, 2014.

 

 

 

 

Schedule III

RAIT Financial Trust

Reconciliation of Net income (loss) Allocable to Common Shares and

Funds From Operations (“FFO”) and

Adjusted Funds From Operations (“AFFO”) (1)

(Dollars in thousands, except share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

For the Three-Month Period
Ended September 30,

 

 

 

For the Nine-Month Period Ended
September 30,

 

 

2014

 

 

 

2013

 

 

 

2014

 

 

 

2013

 

 

Amount

 

Per Share (2)

 

Amount

 

Per Share (3)

 

Amount

 

Per Share (2)

 

Amount

 

Per Share (3)

Funds From Operations:

 

 

 

 

Net income (loss) allocable to common shares

$(23,266)

$ (0.28)

$(17,106)

$ (0.24)

$(63,503)

$ (0.78)

$(173,515)

$ (2.60)

Adjustments:

Real estate depreciation and amortization

9,116

0.11

8,517

0.12

27,250

0.34

24,540

0.37

(Gains) losses on the sale of real estate

(2)

 

0.00

 

191

 

0.00

 

319

 

0.00

 

1,517

 

0.02

Funds From Operations

$(14,152)

 

$(0.17)

 

$(8,398)

 

$(0.12)

 

$(35,934)

 

$(0.44)

 

$(147,458)

 

$(2.21)

 

Adjusted Funds From Operations:

Funds From Operations

$(14,152)

$(0.17)

$(8,398)

$(0.12)

$(35,934)

$(0.44)

$(147,458)

$(2.21)

Adjustments:

Change in fair value of financial instruments

10,223

0.12

24,659

0.35

59,433

0.73

200,436

3.00

(Gains) losses on debt extinguishment

(2,421)

(0.03)

Capital expenditures, net of direct financing

(1,754)

(0.02)

(889)

(0.01)

(3,696)

(0.05)

(1,858)

(0.03)

Straight-line rental adjustments

(238)

0.00

(428)

(0.01)

(329)

0.00

(1,394)

(0.02)

Amortization of deferred items and intangible assets

7,394

0.09

6,912

0.10

21,225

0.26

11,312

0.17

Share-based compensation

1,148

 

0.01

 

1,096

 

0.02

 

3,777

 

0.05

 

2,562

 

0.04

Adjusted Funds From Operations

$2,621

 

$0.03

 

$22,952

 

$0.33

 

$42,055

 

$0.52

 

$63,600

 

$0.95

 

(1)

We believe that funds from operations, or FFO, and adjusted funds
from operations, or AFFO, each of which are non-GAAP measures, are
additional appropriate measures of the operating performance of a
REIT and us in particular.

 

We compute FFO in accordance with the standards established by the
National Association of Real Estate Investment Trusts, or NAREIT, as
net income or loss allocated to common shares (computed in
accordance with GAAP), excluding real estate-related depreciation
and amortization expense, gains or losses on sales of real estate
and the cumulative effect of changes in accounting principles.

 

AFFO is a computation made by analysts and investors to measure a
real estate company’s cash flow generated by operations. We
calculate AFFO by adding to or subtracting from FFO: change in fair
value of financial instruments; gains or losses on debt
extinguishment; capital expenditures, net of any direct financing
associated with those capital expenditures; straight-line rental
effects; amortization of various deferred items and intangible
assets; and share-based compensation.

 

Our calculation of AFFO differs from the methodology used for
calculating AFFO by certain other REITs and, accordingly, our AFFO
may not be comparable to AFFO reported by other REITs. Our
management utilizes FFO and AFFO as measures of our operating
performance, and believes they are also useful to investors, because
they facilitate an understanding of our operating performance after
adjustment for certain non-cash items, such as real estate
depreciation, share-based compensation and various other items
required by GAAP that may not necessarily be indicative of current
operating performance and that may not accurately compare our
operating performance between periods. Furthermore, although FFO,
AFFO and other supplemental performance measures are defined in
various ways throughout the REIT industry, we also believe that FFO
and AFFO may provide us and our investors with an additional useful
measure to compare our financial performance to certain other REITs.

 

Neither FFO nor AFFO is equivalent to net income or cash generated
from operating activities determined in accordance with U.S. GAAP.
Furthermore, FFO and AFFO do not represent amounts available for
management’s discretionary use because of needed capital replacement
or expansion, debt service obligations or other commitments or
uncertainties. Neither FFO nor AFFO should be considered as an
alternative to net income as an indicator of our operating
performance or as an alternative to cash flow from operating
activities as a measure of our liquidity.

 

(2)

Based on 81,967,806 and 81,111,796 weighted-average shares
outstanding-diluted for the three-month period and nine-month period
ended September 30, 2014.

 

(3)

Based on 70,192,918 and 66,807,299 weighted-average shares
outstanding-diluted for the three-month period and nine-month period
ended September 30, 2013.

FinanceInvestment & Company Information
Contact:
RAIT Financial Trust

Andres Viroslav, 215-243-9000

aviroslav@rait.com

Read more:
RAIT Financial Trust Announces Third Quarter 2014 Financial Results

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