Exantas Capital Corp. Reports Results For Three Months And Year Ended December 31, 2019

NEW YORK, March 3, 2020 /PRNewswire/ -- Exantas Capital Corp. XAN ("XAN" or the "Company") reports results for the three months and year ended December 31, 2019.

Significant Items and Highlights

• GAAP net income allocable to common shares was $0.12 per share-diluted for the three months ended December 31, 2019, including $(0.10) per share-diluted of negative fair value adjustments discussed below.
   
• Core Earnings were $0.23 per common share-diluted for the three months ended December 31, 2019 (see Schedule I).
   
• Management anticipates the Company will declare a cash dividend of $0.275 per share on its common stock for the first quarter of 2020, which would be a 37.5% increase over the first quarter of 2019 dividend of $0.20 per share.
   
• XAN originated or acquired $203.0 million and $942.0 million of new commercial real estate ("CRE") loans during the three months and year ended December 31, 2019, respectively (see Schedule III).
   
• On February 24, 2020, XAN announced the expansion of its CRE debt platform to include fixed-rate CRE loans through its integration of C-III Commercial Mortgage LLC into its Manager.
   
• GAAP book value was $14.00 per common share at December 31, 2019 as compared to $14.02 per common share at December 31, 2018.
   
• Economic book value, which adjusts for the face redemption amounts of the Company's outstanding preferred stock and convertible senior notes, was $13.61 per common share at December 31, 2019, up from $13.54 per common share at December 31, 2018 (see Schedule IV).
   
• XAN priced a CRE debt securitization on March 2, 2020 that will finance CRE loans of $522.6 million at a weighted average cost of the one-month London Interbank Offered Rate ("LIBOR") plus 1.43%. The Company intends to purchase $26.1 million and $16.3 million of the Class D notes and Class E notes, respectively, upon close.

Three Months and Year Ended December 31, 2019 Results

• GAAP net income allocable to common shares was $3.8 million, or $0.12 per share-diluted, and $25.6 million, or $0.81 per share-diluted, for the three months and year ended December 31, 2019, respectively, as compared to GAAP net income allocable to common shares of $7.4 million, or $0.23 per share-diluted, and $7.0 million, or $0.22 per share-diluted, for the three months and year ended December 31, 2018, respectively.
   
• GAAP net income allocable to common shares for the three months ended December 31, 2019 includes approximately $(3.2) million, or $(0.10) per share-diluted, of fair value adjustments on the Company's remaining CRE asset held for sale.
   
• Core Earnings were $7.3 million, or $0.23 per common share-diluted, and $34.0 million, or $1.07 per common share-diluted, for the three months and year ended December 31, 2019, respectively, as compared to Core Earnings, adjusted of $7.5 million, or $0.24 per common share-diluted, and $22.3 million, or $0.71 per common share-diluted, for the three months and year ended December 31, 2018, respectively (see Schedule I).
   
• Common stock cash dividends of $0.275 and $0.95 per share were declared and paid for the three months and year ended December 31, 2019, respectively.

Additional Items

Commercial Real Estate

• Substantially all of XAN's $1.8 billion CRE loan portfolio comprised floating-rate senior whole loans at December 31, 2019.
   
• XAN's CRE floating-rate whole loan portfolio had a weighted average spread of 3.49% over the one-month LIBOR of 1.76% at December 31, 2019.

The following table summarizes XAN's CRE loan activities and fundings of previous commitments for the three months and years ended December 31, 2019 and 2018 (in millions, except percentages and amounts in footnotes):

Commercial Mortgage-Backed Securities

XAN's $582.1 million commercial mortgage-backed securities ("CMBS") portfolio, at par, had a carrying value of $520.7 million (due substantially to net purchase discounts) and a weighted average coupon of 4.30% at December 31, 2019.

The following table summarizes XAN's CMBS activities, at face value, for the three months and years ended December 31, 2019 and 2018 (in millions, except percentages):

Commercial Real Estate Securitizations

• XAN priced a CRE debt securitization on March 2, 2020 that will finance CRE loans of $522.6 million and issue $435.7 million of non-recourse, floating-rate notes, of which $393.3 million will be sold to third parties at a weighted average cost of one-month LIBOR plus 1.30%. The Company intends to purchase $26.1 million and $16.3 million of the Class D notes and Class E notes, respectively, rated BBB(high)(sf) and BBB(low)(sf), respectively, upon close.

Liquidity

• At February 28, 2020, XAN had available liquidity of $138.7 million from two primary sources:
   
  
• unrestricted cash and cash equivalents of $70.2 million; and
   
• approximately $68.5 million from available financing of unlevered CRE loans and CMBS.
   
• In January 2020, the 8.00% convertible senior notes due 2020 were paid off upon maturity.

Common Stock Book Value, Economic Book Value and Total Stockholders' Equity

The following table rolls forward XAN's common stock book value from September 30, 2019 to December 31, 2019 and reconciles common stock book value to economic book value (a non-GAAP measure) at December 31, 2019 (see Schedule IV) (in thousands, except per share data and amounts in footnotes):

The following table presents the economic book value per common share at the dates presented:

Investment Portfolio

The following table summarizes the amortized cost and net carrying amount of XAN's investment portfolio at December 31, 2019, classified by asset type (in thousands, except percentages and amounts in footnotes):

Strategic Plan Update

In November 2016, XAN's board of directors approved the strategic plan (the "Plan"). The Plan contemplated disposing of certain loans underwritten prior to 2010, exiting non-core businesses and investments and maintaining a dividend policy based on sustainable earnings. XAN has substantially completed the execution of the Plan.

In November 2019, XAN foreclosed on the remaining legacy CRE loan held for sale. The property is being marketed for sale and is classified as an asset held for sale on the consolidated balance sheet at December 31, 2019. At December 31, 2019, XAN had approximately $28.0 million remaining of the $480.1 million of identified Plan assets.

Supplemental Information

The following schedules of reconciliations and supplemental information at December 31, 2019 are included at the end of this release:

• Schedule I - Reconciliation of GAAP Net Income (Loss) to Core Earnings;
• Schedule II - Summary of Securitization Performance Statistics;
• Schedule III - CRE Loan Activities;
• Schedule IV - Economic Book Value Per Share; and
• Schedule V - Supplemental Information.

About Exantas Capital Corp.

Exantas Capital Corp. is a real estate investment trust that is primarily focused on originating, holding and managing commercial real estate mortgage loans and other commercial real estate-related debt investments.

The Company is externally managed by Exantas Capital Manager Inc. (the "Manager"), which is an indirect wholly-owned subsidiary of C-III Capital Partners LLC, a leading commercial real estate investment management and services company engaged in a broad range of activities.

For more information, please visit XAN's website at www.exantas.com or contact investor relations at IR@exantas.com.

Safe Harbor Statement

Statements made in this release may include forward-looking statements, which involve substantial risks and uncertainties. XAN's actual results, performance or achievements could differ materially from those expressed or implied in this release. The risks and uncertainties associated with forward-looking statements contained in this release include those related to:

• fluctuations in interest rates and related hedging activities;
• the availability of debt and equity capital to acquire and finance investments;
• defaults or bankruptcies by borrowers on XAN's loans or on loans underlying its investments;
• adverse market trends that have affected and may continue to affect the value of real estate and other assets underlying XAN's investments;
• increases in financing or administrative costs; and
• general business and economic conditions that have in the past impaired and may in the future impair the credit quality of borrowers and XAN's ability to originate loans.

For further information concerning these and other risks pertaining to the forward-looking statements contained in this release, and to the general risks to which XAN is subject, see Item 1A, "Risk Factors," included in its most recent Annual Report on Form 10-K and the risks expressed in its other public filings with the Securities and Exchange Commission (the "SEC").

XAN cautions you not to place undue reliance on any forward-looking statements contained in this release, which speak only as of the date of this release. All subsequent written and oral forward-looking statements attributable to XAN or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this release. Except to the extent required by applicable law or regulation, XAN undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Furthermore, certain non-GAAP financial measures are discussed in this release. XAN's presentation of this information is not intended to be considered in isolation of or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP are set forth in Schedule I and Schedule IV of this release and can be accessed through XAN's filings with the SEC at www.sec.gov.

The remainder of this release contains XAN's unaudited (2019) and audited (2018) consolidated balance sheets, unaudited (fourth quarter ended 2019 and 2018 and year ended 2019) and audited (year ended 2018) consolidated statements of operations, a reconciliation of GAAP net income (loss) to Core Earnings, a summary of securitization performance statistics, a summary of XAN's CRE loan activities, a reconciliation of XAN's common stock book value to its economic book value and supplemental information regarding XAN's CRE loan portfolio.

SCHEDULE I

EXANTAS CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME (LOSS) TO CORE EARNINGS
(unaudited)

Core Earnings is a non-GAAP financial measure that XAN uses to evaluate its operating performance.

Core Earnings exclude the effects of certain transactions and GAAP adjustments that XAN believes are not indicative of its current CRE loan portfolio and other CRE-related investments and operations. Core Earnings exclude income (loss) from all non-core assets, such as commercial finance, middle market lending, residential mortgage lending, certain legacy CRE assets and other non-CRE assets designated as assets held for sale at the initial measurement date of December 31, 2016.

Core Earnings, for reporting purposes, is defined as GAAP net income (loss) allocable to common shares, excluding (i) non-cash equity compensation expense, (ii) unrealized gains and losses, (iii) non-cash provisions for loan losses, (iv) non-cash impairments on securities, (v) non-cash amortization of discounts or premiums associated with borrowings, (vi) net income or loss from a limited partnership interest owned at the initial measurement date, (vii) net income or loss from non-core assets,⁽¹⁾⁽²⁾ (viii) real estate depreciation and amortization, (ix) foreign currency gains or losses and (x) income or loss from discontinued operations. Core Earnings may also be adjusted periodically to exclude certain one-time events pursuant to changes in GAAP and certain non-cash items.

Although pursuant to the Third Amended and Restated Management Agreement XAN calculates incentive compensation using Core Earnings that exclude incentive compensation payable to the Manager, XAN includes incentive compensation payable to the Manager in calculating Core Earnings for reporting purposes.

Core Earnings allocable to common shares, adjusted ("Core Earnings Adjusted") is a non-GAAP financial measure used to evaluate XAN's operating performance. Core Earnings Adjusted exclude certain non-recurring items and the results of certain transactions that are not indicative of XAN's ongoing operating performance.

Core Earnings and Core Earnings Adjusted do not represent net income or cash generated from operating activities and should not be considered as an alternative to GAAP net income or as measures of liquidity under GAAP. XAN's methodology for calculating Core Earnings and Core Earnings Adjusted may differ from methodologies used by other companies to calculate similar supplemental performance measures, and, accordingly, its reported Core Earnings and Core Earnings Adjusted may not be comparable to similar performance measures used by other companies.

The following table provides a reconciliation from GAAP net income allocable to common shares to Core Earnings allocable to common shares and Core Earnings allocable to common shares, adjusted for the periods presented (in thousands, except per share data and the amounts in the footnotes):