CreXus Investment Corp. CXS, today reported GAAP net income for the quarter ended December 31, 2012 of $17.9 million or $0.23 per average share, as compared to $41.8 million or $0.55 per average share for the quarter ended December 31, 2011, and $22.6 million or $0.30 per average share for the quarter ended September 30, 2012.
GAAP net income for the year ended December 31, 2012 was $71.0 million or $0.93 per average share as compared to GAAP net income of $108.4 million or $1.73 per average share for the year ended December 31, 2011.
Common dividends declared for the quarters ended December 31, 2012, December 31, 2011, and September 30, 2012, were $0.32, $0.35 and $0.32 per common share, respectively. The Company distributes dividends based on its current estimate of taxable earnings per common share, not GAAP earnings. Taxable and GAAP earnings will typically differ due to items such as differences in premium amortization and discount accretion, non-taxable unrealized and realized gains and losses, provision for loan losses, and non-deductible general and administrative expenses. The annualized dividend yield on the Company's common stock for the quarter ended December 31, 2012, based on the December 31, 2012 closing price of $12.25, was 10.45%.
On a GAAP basis the Company provided a return on average equity of 7.86%, 18.12%, and 9.83%, for the quarters ended December 31, 2012, December 31, 2011, and September 30, 2012, respectively. On a GAAP basis, the Company provided a return on average equity of 7.76%, and 12.03% for the years ended December 31, 2012, and 2011, respectively.
The weighted average yield on commercial real estate loans and preferred equity was 10.56%, 29.86% and 10.29% at December 31, 2012, December 31, 2011 and September 30, 2012, respectively.
The following table summarizes segmented investment portfolio information for the Company:
|
December 31, |
December 31, |
September 30, |
||||||||||
|
2012 |
2011 |
2012 |
||||||||||
| Commercial Real Estate Debt and Preferred Equity Portfolio | (dollars in thousands) | |||||||||||
| Commercial real estate loans | $ | 729,822 | $ | 752,801 | $ | 731,815 | ||||||
| Preferred equity | 39,769 | - | 39,769 | |||||||||
| Fixed-rate investments as percentage of portfolio | 71 | % | 38 | % | 65 | % | ||||||
| Adjustable-rate investments as percentage of portfolio | 29 | % | 62 | % | 35 | % | ||||||
| Fixed-rate investments | ||||||||||||
| Commercial mortgage loans as percentage of fixed-rate assets | 93 | % | 100 | % | 92 | % | ||||||
| Preferred equity as percentage of fixed-rate assets | 7 | % | - | 8 | % | |||||||
| Adjustable-rate investments | ||||||||||||
| Commercial mortgage loans as percentage of adjustable-rate assets | 100 | % | 100 | % | 100 | % | ||||||
|
Weighted average yield on commercial real estate loans and preferred equity |
10.56 | % | 29.86 | % | 10.29 | % | ||||||
| Real Estate Properties Portfolio including Real Estate Held for Sale | ||||||||||||
| Real estate investment at period-end (1) | 70,354 | 33,196 | 78,703 | |||||||||
| Annualized yield on real estate investment portfolio at period end (2) | 9.55 | % | 7.67 | % | 9.44 | % | ||||||
| Mortgages payable on real estate | 19,150 | 16,600 | 19,150 | |||||||||
| Net equity in investments in real estate | 51,204 | 16,596 | 59,553 | |||||||||
| Annualized yield on net equity in investments in real estate (2) | 11.28 | % |
7.96 |
% | 11.28 | % | ||||||
| Weighted average cost of funds on real estate investment financing (3) | 3.49 | % | 3.50 | % | 3.49 | % | ||||||
|
(1) |
Includes $33.5 million and $41.5 million in real estate held for sale at December 31, 2012 and September 30, 2012, respectively. |
|
|
Also includes related net intangible assets in excess of liabilities associated with purchase price allocation. |
||
|
(2) |
Based on average assets for the calendar year 2012. Impairment charge and gain on sale related to real estate held for sale were not annualized for purposes of determining the yield. |
|
|
(3) |
Interest expense includes net payments related to the interest rate swap and excludes changes in the market value of the interest rate swap. |
|
The following table summarizes characteristics for each asset class:
| December 31, 2012 | December 31, 2011 | September 30, 2012 | |||||||||||||||||||||||||||||
|
Commercial |
Preferred |
Real |
Commercial |
Real |
Commercial |
Preferred |
Real |
||||||||||||||||||||||||
|
Loans |
Equity |
Estate |
Loans |
Estate |
Loans |
Equity |
Estate |
||||||||||||||||||||||||
| Weighted average amortized cost basis | $ | 99.0 | $ | 100.0 | - | $ | 90.0 | - | $ | 98.9 | $ | 100.0 | - | ||||||||||||||||||
| Weighted average coupon | 9.87 | % | 11.00 | % | - | 5.94 | % | - | 9.63 | % | 11.00 | % | - | ||||||||||||||||||
| Fixed-rate percentage of asset class | 70 | % | 100 | % | - | 38 | % | - | 64 | % | 100 | % | - | ||||||||||||||||||
| Adjustable-rate percentage of asset class | 30 | % | - | - | 62 | % | - | 36 | % | - | - | ||||||||||||||||||||
| Weighted average yield on assets at period-end | 10.52 | % | 11.35 | % | 9.55 | % | 29.86 | % | 7.67 | % | 10.24 | % | 11.35 | % | 9.44 | % | |||||||||||||||
| Weighted average cost of funds at period-end | - | - | 3.49 | % |
(1) |
- | 3.50 | % | - | - | 3.49 | % |
(1) |
||||||||||||||||||
| (1) Interest expense includes net payments related to the interest rate swap and excludes changes in the market value of the interest rate swap. | |||||||||||||||||||||||||||||||
At December 31, 2012 and September 30, 2012, the Company's commercial real estate loan portfolio included one loan on non-accrual status. At December 31, 2011 the Company had two loans relating to one group of underlying properties that were 30 days or more delinquent. During the quarters ended December 31, 2012, December 31, 2011 and September 30, 2012, the Company did not record an additional provision for loan losses.
The accretion of discount on the Company's loan and preferred equity portfolio, which is recorded as a component of interest income, for the quarters ended December 31, 2012, December 31, 2011 and September 30, 2012, was $499 thousand, $28.8 million and $8.0 million, respectively. The total net discount remaining at December 31, 2012 was $7.4 million as compared to $83.8 million at December 31, 2011, which includes an estimated $45.2 million of unaccretable discount. The accretable net discount at September 30, 2012 was $7.9 million.
The Company's discontinued operations generated net income of $2.4 million for the quarter ended December 31, 2012, which relates to the net operating results of collateral acquired during the quarter ended March 30, 2012 via a deed in lieu of foreclosure that are recorded as real estate held for sale in the Consolidated Statements of Financial Condition. Net income from discontinued operations for the quarter ended December 31, 2012 is recorded net of a combined tax credit of approximately $1.6 million, composed of a tax credit of $987 thousand and a deferred tax asset of $571 thousand.
Annualized general and administrative expenses, including the management fee, as a percentage of average total equity were 2.14%, 2.09% and 2.07% for the quarters ended December 31, 2012, December 31, 2011, September 30, 2012, respectively. At December 31, 2012, the Company had a common stock book value per share of $11.85 as compared to $12.10 and $11.93 at December 31, 2011 and September 30, 2012, respectively.
CreXus acquires, manages and finances, directly or through its subsidiaries, commercial mortgage loans and other commercial real estate debt, commercial mortgage-backed securities and other commercial and residential real estate-related assets. The Company's principal business objective is to generate net income for distribution to investors from the spread between the yields on its investments and the cost of borrowing to finance their acquisition and secondarily to provide capital appreciation. The Company, a Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”), is externally managed by Fixed Income Discount Advisory Company.
The Company will hold the fourth quarter 2012 earnings conference call on Wednesday, February 20, 2013, at 9:00 a.m. ET. The number to call is 1-888-317-6016 for domestic calls and 1-412-317-6016 for international calls. There is no pass code, please reference CreXus Investment Corp fourth quarter earnings. The replay number is 1-877-344-7529 for domestic calls and 1-412-317-0088 for international calls and the conference number is 10002481. The replay will be available at 11:00 a.m. EDT through February 22, 2013 at 1:00 p.m. ET. There will be a web cast of the call on www.crexusinvestment.com. If you would like to be added to the e-mail distribution list, please visit www.crexusinvestment.com, click on Investor Relations, then E-Mail Alerts, enter your e-mail address where indicated and click the Submit button.
This news release and our public documents to which we refer contain or incorporate by reference certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements which are based on various assumptions (some of which are beyond our control) may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may,” “would,” “will” or similar expressions, or variations on those terms or the negative of those terms. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, our business and strategy; our ability to consummate the transaction contemplated by the agreement and plan of merger with Annaly Capital Management Inc. and its subsidiary CXS Acquisition Corporation; our projected financial and operating results; our ability to obtain and maintain financing arrangements and the terms of such arrangements; general volatility of the markets in which we acquire assets; the implementation, timing and impact of, and changes to, various government programs; our expected assets; changes in the value of our assets; interest rate mismatches between our assets and our borrowings used to fund such purchases; changes in interest rates and mortgage prepayment rates; effects of interest rate caps on our adjustable-rate assets; rates of default or decreased recovery rates on our assets; prepayments of the mortgage and other loans underlying our mortgage-backed or other asset-backed securities; the degree to which our hedging strategies may or may not protect us from interest rate volatility; changes in governmental regulations, tax law and rates, accounting guidance, and similar matters; availability of opportunities in real estate-related and other securities; availability of qualified personnel; estimates relating to our ability to make distributions to our stockholders in the future; our understanding of our competition; market trends in our industry, interest rates, the debt securities markets or the general economy; our ability to integrate and manage newly acquired assets into our portfolio; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended; and our ability to maintain our qualification as a REIT for federal income tax purposes. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our most recent annual report on Form 10-K, and any subsequent Quarterly Reports on Form 10-Q. We do not undertake, and specifically disclaim all obligations, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
| CREXUS INVESTMENT CORP. | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||||||||||||||
| (dollars in thousands, except share and per share data) | ||||||||||||||||||||
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
||||||||||||||||
|
2012 |
2012 |
2012 |
2012 |
2011 |
||||||||||||||||
| Assets: | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (1) | |||||||||||||||
| Cash and cash equivalents | $ | 123,543 | $ | 105,575 | $ | 189,128 | $ | 257,490 | $ | 202,814 | ||||||||||
|
Commercial real estate loans net of allowance for loan losses ($0, $0, $0, $0 and $369, respectively) |
||||||||||||||||||||
| Senior | 100,343 | 146,437 | 123,845 | 200,878 | 374,348 | |||||||||||||||
| Subordinate | 38,954 | 38,837 | 38,720 | 38,527 | 71,517 | |||||||||||||||
| Mezzanine | 590,525 | 546,541 | 513,913 | 390,682 | 306,936 | |||||||||||||||
|
Preferred equity, net allowance for loan losses ($0, $0, $0, $0, and $0, respectively) |
39,769 | 39,769 | - | - | - | |||||||||||||||
| Real estate held for sale | 33,511 | 41,514 | 44,071 | 52,800 | - | |||||||||||||||
| Investment in real estate, net | 33,655 | 33,926 | 34,196 | 34,466 | 33,196 | |||||||||||||||
| Intangible assets, net | 5,095 | 5,201 | 5,306 | 5,412 | - | |||||||||||||||
| Rents receivable | 268 | 221 | 154 | 87 | 32 | |||||||||||||||
| Accrued interest receivable | 4,957 | 5,116 | 4,140 | 3,509 | 2,608 | |||||||||||||||
| Principal receivable from servicer | - | - | 11,429 | - | - | |||||||||||||||
| Other assets | 3,379 | 5,275 | 2,527 | 3,540 | 1,420 | |||||||||||||||
| Total assets | $ | 973,999 | $ | 968,412 | $ | 967,429 | $ | 987,391 | $ | 992,871 | ||||||||||
| Liabilities: | ||||||||||||||||||||
| Mortgages payable | $ | 19,150 | $ | 19,150 | $ | 19,150 | $ | 19,150 | $ | 16,600 | ||||||||||
| Participation sold (non-recourse) | 13,759 | - | - | 14,898 | 14,755 | |||||||||||||||
| Accrued interest payable | - | - | - | 48 | 6 | |||||||||||||||
| Accounts payable and other liabilities | 3,363 | 4,864 | 5,809 | 4,537 | 4,048 | |||||||||||||||
| Dividends payable | 24,522 | 24,523 | 20,692 | 20,688 | 26,817 | |||||||||||||||
| Intangible liabilities, net | 1,907 | 1,938 | 1,969 | 2,014 | - | |||||||||||||||
| Investment management fees payable to affiliate | 3,425 | 3,450 | 3,426 | 3,470 | 3,488 | |||||||||||||||
| Total liabilities | 66,126 | 53,925 | 51,046 | 64,805 | 65,714 | |||||||||||||||
| Stockholders' Equity: | ||||||||||||||||||||
|
Common stock, par value $0.01 per share, 1,000,000,000 authorized, 76,630,528, 76,630,528, 76,630,528, 76,620,112, and, 76,620,112 shares issued and outstanding, respectively |
766 | 766 | 766 | 766 | 766 | |||||||||||||||
| Additional paid-in-capital | 890,862 | 890,862 | 890,862 | 890,757 | 890,757 | |||||||||||||||
| Retained earnings | 16,245 | 22,859 | 24,755 | 31,063 | 35,634 | |||||||||||||||
| Total stockholders' equity | 907,873 | 914,487 | 916,383 | 922,586 | 927,157 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 973,999 | $ | 968,412 | $ | 967,429 | $ | 987,391 | $ | 992,871 | ||||||||||
| (1) Derived from the audited consolidated statements of financial condition at December 31, 2011. | ||||||||||||||||||||
| CREXUS INVESTMENT CORP. | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||||||
| (dollars in thousands, except share and per share data) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| For the Quarter ended | ||||||||||||||||||||
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
||||||||||||||||
|
2012 |
2012 |
2012 |
2012 |
2011 |
||||||||||||||||
| Net interest income: | ||||||||||||||||||||
| Interest income | $ | 20,397 | $ | 26,967 | $ | 17,805 | $ | 23,392 | $ | 41,726 | ||||||||||
| Interest expense | (281 | ) | (187 | ) | (310 | ) | (360 | ) | (75 | ) | ||||||||||
| Servicing fee | (152 | ) | (149 | ) | (114 | ) | (115 | ) | (142 | ) | ||||||||||
| Net interest income | 19,964 | 26,631 | 17,381 | 22,917 | 41,509 | |||||||||||||||
| Other income: | ||||||||||||||||||||
| Realized loss on sale of loan | - | - | (525 | ) | - | - | ||||||||||||||
| Realized gains on sales of investments | - | - | - | - | 4,556 | |||||||||||||||
| Miscellaneous fee income | (1 | ) | - | - | 349 | 353 | ||||||||||||||
| Rental income | 821 | 809 | 811 | 712 | 238 | |||||||||||||||
| Total other income | 820 | 809 | 286 | 1,061 | 5,147 | |||||||||||||||
| Other expenses: | ||||||||||||||||||||
| Provision for loan losses | - | - | - | 2,803 | - | |||||||||||||||
| Management fees to affiliate | 3,432 | 3,446 | 3,426 | 3,471 | 3,560 | |||||||||||||||
| General and administrative expenses | 1,443 | 1,327 | 1,180 | 2,710 | 1,269 | |||||||||||||||
| Amortization Expense | 106 | 105 | 106 | 123 | - | |||||||||||||||
| Depreciation expense | 270 | 271 | 270 | 275 | 54 | |||||||||||||||
| Total other expenses | 5,251 | 5,149 | 4,982 | 9,382 | 4,883 | |||||||||||||||
| Net income before income tax | 15,533 | 22,291 | 12,685 | 14,596 | 41,773 | |||||||||||||||
| Income tax | - | 6 | 32 | 1 | (1 | ) | ||||||||||||||
| Net income from continuing operations | 15,533 | 22,285 | 12,653 | 14,595 | 41,774 | |||||||||||||||
|
Net income (loss) from discontinued operations (net of tax (credit) expense of $(1,558), $425, $1,564, $295 and $0, respectively) |
2,373 | 2,903 | (46 | ) | 1,522 | - | ||||||||||||||
| Gain on sale from discontinued operations | - | - | 1,774 | - | - | |||||||||||||||
| Impairment charges | - | (2,560 | ) | - | - | - | ||||||||||||||
| Total income from discontinued operations | 2,373 | 343 | 1,728 | 1,522 | - | |||||||||||||||
| Net Income | $ | 17,906 | $ | 22,628 | $ | 14,381 | $ | 16,117 | $ | 41,774 | ||||||||||
| Net income per share-basic and diluted, continuing operations | $ | 0.20 | $ | 0.29 | $ | 0.17 | $ | 0.19 | $ | 0.55 | ||||||||||
| Total income per share-basic and diluted, discontinued operations | 0.03 | 0.01 | 0.02 | 0.02 | - | |||||||||||||||
| Net income per share-basic and diluted | $ | 0.23 | $ | 0.30 | $ | 0.19 | $ | 0.21 | $ | 0.55 | ||||||||||
| Dividend declared per share of common stock | $ | 0.32 | $ | 0.32 | $ | 0.27 | $ | 0.27 | $ | 0.35 | ||||||||||
| Weighted average number of shares outstanding-basic and diluted | 76,630,528 | 76,630,528 | 76,624,462 | 76,620,112 | 76,620,112 | |||||||||||||||
| Comprehensive income: | ||||||||||||||||||||
| Net income | $ | 17,906 | $ | 22,628 | $ | 14,381 | $ | 16,117 | $ | 41,774 | ||||||||||
| Other comprehensive income (loss): | ||||||||||||||||||||
| Unrealized gains on securities available-for-sale | - | - | - | - | 159 | |||||||||||||||
| Reclassification adjustment for realized gains included in net income | - | - | - | - | (4,556 | ) | ||||||||||||||
| Total other comprehensive (loss) income | - | - | - | - | (4,397 | ) | ||||||||||||||
| Comprehensive income | $ | 17,906 | $ | 22,628 | $ | 14,381 | $ | 16,117 | $ | 37,377 | ||||||||||
| CREXUS INVESTMENT CORP. | ||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||
| (dollars in thousands, except share and per share data) | ||||||||
| For the Years Ended | ||||||||
|
December 31, |
||||||||
|
2012 |
December 31, |
|||||||
|
(unaudited) |
2011 |
|||||||
| Net interest income: | ||||||||
| Interest income | $ | 88,561 | $ | 106,483 | ||||
| Interest expense | (1,138 | ) | (2,370 | ) | ||||
| Servicing fees | (530 | ) | (572 | ) | ||||
| Net interest income | 86,893 | 103,541 | ||||||
| Other income: | ||||||||
| Realized loss on sale of loan | (525 | ) | - | |||||
| Realized gains on sales of investments | - | 18,481 | ||||||
| Miscellaneous fee income | 348 | 486 | ||||||
| Rental income | 3,153 | 238 | ||||||
| Total other income | 2,976 | 19,205 | ||||||
| Other expenses: | ||||||||
| Provision for loan losses, net | 2,803 | 127 | ||||||
| Management fees to affiliate | 13,775 | 10,958 | ||||||
| General and administrative expenses | 6,660 | 3,211 | ||||||
| Amortization expense | 440 | - | ||||||
| Depreciation expense | 1,086 | 54 | ||||||
| Total other expenses | 24,764 | 14,350 | ||||||
| Net income before income tax | 65,105 | 108,396 | ||||||
| Income tax | 39 | - | ||||||
| Net income from continuing operations | 65,066 | 108,396 | ||||||
|
Net income from discontinued operations
(net of tax expense of $726 and $0, respectively) |
6,752 | - | ||||||
| Gain on sale from discontinued operations | 1,774 | - | ||||||
| Impairment changes | (2,560 | ) | - | |||||
| Total income from discontinued operations | 5,966 | - | ||||||
| Net Income | $ | 71,032 | $ | 108,396 | ||||
| Net income per share-basic and diluted, continuing operations | $ | 0.85 | $ | 1.73 | ||||
| Total income per share-basic and diluted, discontinued operations | 0.08 | - | ||||||
| Net income per share-basic and diluted | $ | 0.93 | $ | 1.73 | ||||
| Dividend declared per share of common stock | $ | 1.18 | $ | 1.13 | ||||
| Weighted average number of shares outstanding-basic and diluted | 76,626,430 | 62,609,153 | ||||||
| Comprehensive income: | ||||||||
| Net income | $ | 71,032 | $ | 108,396 | ||||
| Other comprehensive income: | ||||||||
| Unrealized gains on securities available-for-sale | - | - | ||||||
| Reclassification adjustment for realized gains included in net income | - | (10,475 | ) | |||||
| Total other comprehensive income (loss) | - | (10,475 | ) | |||||
| Comprehensive income | $ | 71,032 | $ | 97,921 | ||||
CreXus Investment Corp.
Investor Relations
1-877-291-3453
www.crexusinvestment.com
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