UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 10, 2006 (May 10, 2006)
Anthracite Capital, Inc.
(Exact name of registrant as specified in its charter)
Maryland 001-13937 13-397-8906
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
40 East 52nd Street, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 810-3333
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N/A
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
1
Item 2.02. Results of Operations and Financial Condition.
On May 10, 2006, Anthracite Capital, Inc. issued a press release announcing its
earnings for the fiscal quarter ended March 31, 2006, which it is furnishing
under this Item 2.02 as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits.
99.1 Press Release issued by Anthracite Capital, Inc., dated May 10, 2006.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ANTHRACITE CAPITAL, INC.
By:/s/ James J. Lillis
-----------------------
Name: James J. Lillis
Title: Chief Financial Officer
Dated: May 10, 2006
3
ANTHRACITE CAPITAL, INC.
CURRENT REPORT ON FORM 8-K
Report dated May 10, 2006 (May 10, 2006)
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release issued by Anthracite Capital, Inc., dated
May 10, 2006.
4
Exhibit 99.1
[GRAPHIC OMITTED]
Contact: Brian Beades
212-810-5596
ahr-info@blackrock.com
----------------------
Anthracite Capital Reports GAAP Earnings of $0.33 Per Share and
Operating Earnings of $0.32 Per Share for the First Quarter 2006.
GAAP Book Value Rises $0.29 to $9.88 Per Share as of March 31, 2006.
New York - May 10, 2006 - Anthracite Capital, Inc. (NYSE:AHR) (the "Company" or
"Anthracite") today reported diluted net income available to common stockholders
for the first quarter of 2006 of $0.33 per share versus $0.27 per share for the
same three-month period in 2005.
Operating Earnings (defined below) for the first quarters of 2006 and 2005 were
$0.32 and $0.30 per share, respectively.
Chris Milner, Chief Executive Officer of the Company, stated, "This quarter,
each of the components of our commercial real estate strategy came together,
resulting in strong earnings growth over the previous quarter. Our high-yield
debt platform continued to provide a foundation for consistent earnings and our
value-added real estate equity investments turned in a strong performance in our
first full quarter in the sector. We are also pleased that our European
investment activities continue to build momentum with a 33% increase in the
portfolio since the end of the year. We remain focused on the commercial real
estate sector and continue to grow our platform. As a result, the overall value
of the Company has grown significantly in the last two years."
Based on the $0.28 per share dividend declared on February 24, 2006, and the May
9, 2006 closing price of $10.66, Anthracite's annualized dividend yield is
10.5%. Table 1, provided below, reconciles Operating Earnings per share with
diluted net income available to common stockholders per share. All currency
amounts discussed herein are in thousands, except share and per share amounts.
Investment Activity
In the first quarter of 2006, the Company purchased a total of $313,142 of
commercial real estate assets. Included in this amount is $40,316 of non-dollar
denominated assets as the Company continues to expand its global investment
activities. Commercial real estate assets purchased were comprised of $128,032
of commercial mortgage-backed securities ("CMBS"), $105,092 of multifamily
agency securities, $48,637 of commercial real estate loans and $31,381 of real
estate equity. In addition, the Company purchased $98,225 of investment grade
residential mortgage-backed securities during the quarter.
First Quarter Financial Highlights
As a result of the continued portfolio growth, income from commercial real
estate assets increased $13,954, or 25.6%, from the quarter ended March 31, 2005
and $4,450, or 7.0%, from the quarter ended December 31, 2005.
As previously announced, the Company invests in BlackRock Diamond Property Fund
("BlackRock Diamond"). BlackRock Diamond is an open-end fund that applies
value-added strategies to a portfolio of commercial real estate properties. For
the quarter ended March 31, 2006, the Company recorded $5,542 of income
consisting of $370 of current income and
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$5,172 of unrealized gains on the underlying portfolio assets. To date, the
Company has invested an aggregate of $80,574 and its remaining capital
commitments total $19,426. The Company's investment represents a 34.6% interest
in a portfolio of fifteen assets with a total market value of approximately
$367,000. The BlackRock Diamond fund is managed by a subsidiary of Anthracite's
Manager and all financial information was reported by BlackRock Diamond.
The Company's weighted average cost of funds increased to 6.1% at March 31, 2006
from 5.2% at March 31, 2005. The increase in the Company's cost of funds is
attributable to the issuance of $175,000 of trust preferred securities at an
average cost of funds of 7.6% and increases in short-term interest rates which
were offset partly by the Company's interest rate hedging program. The Company's
estimated exposure at March 31, 2006 to a 50 basis point move in short-term
interest rates remained at $0.01 per share annually.
The Company's Operating Earnings for the first quarter of 2006 represent an
annualized return on the quarter's average common stockholders' equity of 13.0%,
as compared to 13.8% for the first quarter of 2005 and 11.6% for the fourth
quarter of 2005. The net interest margin for the first quarter of 2006 was 2.5%
before the effect of the Company's trust preferred security issuances and 2.2%
including the cost of the trust preferred security issuances. This is a decrease
from 3.2% for the first quarter of 2005 and a decrease from 2.9% for the fourth
quarter of 2005. The net interest margin calculation does not include income
from Carbon Capital, Inc. ("Carbon Capital I") and Carbon Capital II, Inc.
(collectively with Carbon Capital I, the "Carbon Capital Funds") or BlackRock
Diamond.
The Company's debt to capital ratio increased to 6.2:1 as of March 31, 2006 from
5.9:1 at December 31, 2005, and the recourse debt to capital ratio increased to
2.4 from 2.0:1 over the same period. The increase in the Company's debt to
capital ratios is primarily attributable to the acquisition of assets in
anticipation of the Company's sixth collateralized debt obligation ("CDO")
issuance as well as the issuance of $100,000 of trust preferred securities
during the first quarter of 2006 (discussed below).
Other Income/Loss
The Company had two CMBS that required an impairment of $781 at March 31, 2006.
The decline in the updated yield that caused the first quarter 2006 impairment
is not related to an increase in losses but rather changes in the timing of
credit losses and prepayments. Changes in the timing of credit losses and
prepayments caused updated yields on these securities to decline by a weighted
average of 16 basis points from their original yields.
Capital Markets Activity
On May 2, 2006, the Company announced the pricing of its sixth CDO issuance
("CDO HY3") resulting in the issuance of $417,000 of non-recourse debt. The debt
will be secured by a portfolio of CMBS and subordinated commercial real estate
loans. This debt, rated AAA through BBB-, will be privately placed, and the
Company will receive additional CDO debt rated BB and 100% of the preferred
shares issued by the CDO. The transaction is expected to close on May 23, 2006.
The terms of the offering permit the Company to contribute to the CDO up to
$50,000 of additional CMBS during a ramp-up period. These CMBS assets will be
contributed at face value. The debt issuance is intended to match fund existing
Company assets to be contributed to the CDO at closing, and the assets to be
purchased during the ramp-up period, with long-term liabilities. The Company
intends to account for this transaction on its balance sheet as a financing. All
debt placed will have a weighted average life of 8.1 years, and including
interest rate hedges will create a current cost of funds of approximately 6.3%
after issuance expenses. The Company will use the net proceeds of the offering
to pay down existing debt on the CDO collateral. Since the CDO collateral was
not fully levered, the Company expects excess cash of $93,000 after the pay down
of existing debt in addition to the $50,000 ramp facility. Following
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the closing of CDO HY3, approximately 93% of the Company's subordinated CMBS
will be match funded in CDOs.
On March 16, 2006, the Company issued $50,000 of trust preferred securities. The
trust preferred securities have a thirty-year term at a fixed rate of 7.77% for
the first ten years and at a floating rate of three-month LIBOR plus 2.7%
thereafter. The trust preferred securities can be redeemed at par beginning in
March 2011.
On January 31, 2006, the Company issued $50,000 of trust preferred securities.
The trust preferred securities have a thirty-year term at a fixed rate of 7.73%
for the first ten years and at a floating rate of three-month LIBOR plus 2.7%
thereafter. The trust preferred securities can be redeemed at par beginning in
April 2011.
The net proceeds from the aforementioned financing transactions will be used by
the Company to continue to execute its commercial real estate strategies
including investments in commercial real estate equity and subordinated CMBS.
Richard Shea, President and Chief Operating Officer of the Company, stated, "The
Company continues to take advantage of financing opportunities across a broad
spectrum of the capital markets. In the past two years we have raised over
$565,000 of capital in the secured debt and trust preferred markets. Our capital
markets strategy and disciplined hedging program has strengthened our balance
sheet at a relatively low cost and provided a strong base for the continued
growth in the value of our Company. This is the eleventh consecutive quarter of
book value growth notwithstanding higher levels of long and short term interest
rates. Another highlight comes from credit performance as 31 securities
experienced credit upgrades with no credit downgrades during the quarter. We
believe our strong liability platform, book value and credit performance will
continue to provide opportunities for growth."
Commercial Real Estate Credit
The Company considers CMBS securities where it maintains the right to control
the foreclosure/workout process on the underlying loans as controlling class
CMBS ("Controlling Class CMBS"). The Company acquired two Controlling Class CMBS
transactions during the first quarter of 2006 and owned 24 Controlling Class
CMBS transactions at March 31, 2006. Portions of the non-rated tranches of 17 of
the 24 transactions are included in CDO HY1 and CDO HY2 which reduces the
Company's exposure to the credit risk in these transactions.
The current principal balance of the loans underlying the Company's 24
Controlling Class CMBS is $33,598,059. Delinquencies of 30 days or more on these
loans as a percent of current loan balances were 0.51% at the end of the first
quarter of 2006, compared with 0.64% at the end of the fourth quarter of 2005.
Commercial Real Estate Securities
During the first quarter of 2006, the Company purchased $233,124 of commercial
real estate securities. Included in the amount is $27,279 of non-dollar
denominated assets as the Company continues to expand its non-US investment
activity. Commercial real estate securities purchased were comprised of $128,032
of CMBS and $105,092 of investment grade multifamily agency securities. The
average yields on the Company's commercial real estate securities for the
quarters ended March 31, 2006 and 2005 were as follows:
For the quarters ended
March 31,
2006 2005
----------------------------
Investment grade commercial real estate securities 5.6% 6.7%
Non-investment grade CMBS securities 10.0% 10.6%
All commercial real estate securities 7.7% 8.7%
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The average cost of financing the commercial real estate securities portfolio
during the first quarter of 2006 was 5.6%, compared to 5.3% for the first
quarter of 2005.
Net interest income and net realized and unrealized gain from the commercial
real estate securities portfolio for the quarters ended March 31, 2006 and 2005
were as follows:
For the quarters ended
March 31,
2006 2005
--------------------------------------
Interest income $37,791 $32,631
Interest expense* (24,211) (18,333)
--------------------------------------
Net interest income 13,580 14,298
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Net realized and unrealized gain - 50
Loss on impairment of assets (781) (159)
--------------------------------------
Net interest income and gain from commercial real estate $12,799 $14,189
securities
======================================
*Including hedges in the Company's CDOs.
Commercial Real Estate Loans
During the quarter ended March 31, 2006, the Company purchased $35,600 U.S.
dollar denominated commercial real estate loans with a total principal balance
of $40,000 and a British Pound denominated commercial real estate loan with a
cost of (pound)7,474 ($13,283) and a principal balance of (pound)7,500. During
the quarter ended March 31, 2006, the Company experienced repayments in the
aggregate amount of $53,228. This activity brings total commercial real estate
loans exclusive of the Company's investments in the Carbon Capital Funds to
$361,723 as of March 31, 2006, down from $365,807 at December 31, 2005. The
carrying value and average yields on the Company's commercial real estate loans
at March 31, 2006 were as follows:
Carrying Carrying Average Average Average
Value Spread to Spread to Spread to
(Local Average 1-month 3-month 3-month
Value Currency) Yield USD LIBOR GBP LIBOR EURIBOR
---------------------------------------------------------------------------------
Fixed Rate $177,346 8.88%
Floating Rate 48,905 5.85%
Floating Rate 69,189 (pound)39,777 4.34%
Floating Rate 66,283 (euro) 54,588 3.45%
==============
$361,723
==============
The Company has four committed warehouse lines with an aggregate borrowing
capacity of $575,000, which can be used to finance commercial loan assets. Three
of the warehouse lines allow for borrowings in multiple currencies. For the
three months ended March 31, 2006 and 2005, the total cost of borrowings secured
by loan assets was 5.3% and 3.7%, respectively.
Also included in commercial real estate loans are the Company's investments in
the Carbon Capital Funds. The Company's investments in the Carbon Capital Funds
are as follows:
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March 31, 2006 December 31, 2005
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Carbon Capital I $6,634 $18,458
Carbon Capital II 60,364 41,185
-------------------- -------------------------
$66,998 $59,643
==================== =========================
The annualized yield on the Carbon Capital Funds was 24.7% for the quarter ended
March 31, 2006 as compared with 17.5% for the quarter ended March 31, 2005. The
increase in the annualized yield is attributable to prepayment penalties
received on underlying assets. For the quarter ended March 31, 2006, Carbon
Capital I received repayments of $102,290 while no new loans were acquired. As
loans are repaid, Carbon Capital I returns invested capital to investors. For
the quarter ended March 31, 2006, Carbon Capital II acquired $111,760 of
commercial mortgage loans and received repayments of $101,076. Subsequent to
March 31, 2006, Carbon Capital II has acquired an additional $129,119 of
commercial mortgage loans. As loans are repaid, Carbon Capital II has redeployed
capital into acquisitions of additional loans for the portfolio.
9
Net interest income from the commercial real estate loan portfolio for the
quarters ended March 31, 2006 and 2005 is as follows:
For the quarters ended
March 31,
2006 2005
--------------------------------
Interest income $11,816 $8,239
Interest expense (2,964) (1,335)
--------------------------------
Net interest income from commercial real estate $8,852 $6,904
loans
================================
Commercial Real Estate, Held for Sale
During the quarter, the Company purchased a defaulted loan from a Controlling
Class CMBS trust. The loan was secured by a first mortgage on a multi-family
property in Texas. Subsequent to the loan purchase, the property was acquired by
the Company at foreclosure. The Company's plan is to enhance leasing activity
and increase occupancy rates. Subsequently, the performance of the asset has
improved and the Company has entered into a contract to sell the property for an
amount in excess of the Company's basis. The sale is contingent on due diligence
and other closing matters.
Book Value
Net book value per share at March 31, 2006 was $9.88. This is an increase of
3.0% from $9.59 at December 31, 2005, and an increase of 14.4% from $8.64 at
March 31, 2005. This represents a total return including dividends paid of 5.6%
and 26.1%, respectively, for the three and twelve months ended March 31, 2006.
The increase in book value is a result of credit upgrades and tighter credit
spreads offset by higher interest rates.
The Company calculates book value per share based on a liquidation value
calculation. Below is a calculation of book value per share for the quarters
ended March, 31, 2006, December 31, 2005 and March 31, 2005.
3/31/06 12/31/2005 3/31/05
------------- --------------- --------------
Total Stockholders' Equity $621,012 $598,018 $517,964
Less: Series C Preferred Stock Liquidation Value (57,500) (57,500) (57,500)
------------- --------------- --------------
Common Equity $563,512 $540,518 $460,464
Shares Outstanding 57,053 56,339 53,297
Book Value Per Share $9.88 $9.59 $8.64
============= =============== ==============
Reconciliation of Operating Earnings to Diluted Net Income Available to Common
Stockholders (Table 1)
The Company considers its Operating Earnings to be net interest income after
operating expenses and preferred dividends but before realized and unrealized
gains and losses, hedge ineffectiveness, foreign currency exchange impact and
loss on impairment of assets. The Company believes Operating Earnings to be an
effective indicator of the Company's profitability and financial performance
over time. Operating Earnings can and will fluctuate over time based on changes
in asset levels, funding rates, available reinvestment rates, and expected
losses on credit sensitive positions. The table below reconciles Operating
Earnings per common share with diluted net income available to common
stockholders per common share:
10
Quarters Ended
March 31,
---------------------------
2006 2005
---------------------------
Operating earnings per share $0.32 $0.30
Net realized and unrealized gain (loss) 0.01 (0.03)
Net foreign currency gain (loss) and hedge
ineffectiveness 0.01 -
Loss on impairment of assets (0.01) -
---------------------------
Diluted net income available to common $0.33 $0.27
stockholders per share
===========================
Dividend Reinvestment Plan
As previously announced, if you are a participant in Anthracite Capital, Inc.'s
Dividend Reinvestment and Stock Purchase Plan (the "Plan"), please note that the
Plan has been suspended for all investments after February 24, 2006,and for all
future investment dates. The Plan will remain in place and may be resumed by the
Company at any time.
During the quarter ended March 31, 2006, the Company issued 590,216 shares under
the Plan at a collective weighted-average issuance price of $10.62 per share.
The optional cash portion of the Plan allowed participants to invest up to
$20,000 per month at a 2% discount. The optional cash portion of the plan
represents 575,312 of the shares that were issued during the quarter under the
Plan. The remaining 14,904 shares issued under the Plan during the quarter are
attributable to the dividend reinvestment portion of the Plan.
To request a prospectus and receive enrollment materials or to ask questions
about the Plan, interested investors and stockholders may contact the Company's
transfer agent, American Stock Transfer & Trust Company, at 1-877-248-6416, or
Investor Relations, Anthracite Capital, Inc., at 212-810-3333. The Company's
website address is www.anthracitecapital.com.
About Anthracite
Anthracite Capital, Inc. is a specialty finance company focused on investments
in high yield commercial real estate loans and related securities. Anthracite is
externally managed by BlackRock Financial Management, Inc., which is a
subsidiary of BlackRock, Inc. ("BlackRock") (NYSE:BLK), one of the largest
publicly traded investment management firms in the United States with
approximately $463.1 billion in global assets under management as of March 31,
2006. BlackRock Realty Advisors, Inc., another subsidiary of BlackRock, provides
real estate equity and other real estate-related products and services in a
variety of strategies to meet the needs of institutional investors. BlackRock is
a member of The PNC Financial Services Group, Inc. ("PNC") (NYSE:PNC), a
diversified financial services organization. Through its affiliates, PNC
originates commercial, multifamily and residential real estate loans, and
services $163.1 billion in commercial mortgage loans for third parties through
its Midland Loan Services, Inc. subsidiary as of March 31, 2006.
Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act with respect to future financial or
business performance, strategies or expectations. Forward-looking statements are
typically identified by words or phrases such as "trend," "potential,"
"opportunity," "pipeline," "believe," "comfortable," "expect," "anticipate,"
"current," "intention," "estimate," "position," "assume," "outlook," "continue,"
"remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or
future or conditional verbs such as "will," "would," "should," "could," "may" or
similar expressions. Anthracite cautions that forward-looking statements are
subject to numerous assumptions, risks and uncertainties, which change over
time. Forward-looking statements speak only as of the date they are made, and
Anthracite assumes no duty to and does not
11
undertake to update forward-looking statements. Actual results could differ
materially from those anticipated in forward-looking statements and future
results could differ materially from historical performance.
In addition to factors previously disclosed in Anthracite's Securities and
Exchange Commission (the "SEC") reports and those identified elsewhere in this
press release, the following factors, among others, could cause actual results
to differ materially from forward-looking statements or historical performance:
(1) the introduction, withdrawal, success and timing of business initiatives and
strategies; (2) changes in political, economic or industry conditions, the
interest rate environment or financial and capital markets, which could result
in changes in the value of Anthracite's assets; (3) the relative and absolute
investment performance and operations of Anthracite's manager; (4) the impact of
increased competition; (5) the impact of capital improvement projects; (6) the
impact of future acquisitions and divestitures; (7) the unfavorable resolution
of legal proceedings; (8) the extent and timing of any share repurchases; (9)
the impact, extent and timing of technological changes and the adequacy of
intellectual property protection; (10) the impact of legislative and regulatory
actions and reforms and regulatory, supervisory or enforcement actions of
government agencies relating to Anthracite, BlackRock or PNC; (11) terrorist
activities, which may adversely affect the general economy, real estate,
financial and capital markets, specific industries, and Anthracite and
BlackRock; (12) the ability of Anthracite's manager to attract and retain highly
talented professionals; (13) fluctuations in foreign currency exchange rates;
and (14) the impact of changes to tax legislation and, generally, the tax
position of the Company.
Anthracite's Annual Report on Form 10-K for the year ended December 31, 2005 and
Anthracite's subsequent reports filed with the SEC, accessible on the SEC's
website at www.sec.gov, identify additional factors that can affect
forward-looking statements.
To learn more about Anthracite, visit our website at www.anthracitecapital.com.
The information contained on the Company's website is not
a part of this press release.
12
Anthracite Capital, Inc. and Subsidiaries
Consolidated Statements of Financial Condition (Unaudited)
(in thousands, except per share data)
---------------------------------------------------------------------------------------------------------------------------------
March 31, 2006 December 31, 2005
ASSETS
Cash and cash equivalents $27,590 $40,556
Restricted cash equivalents 1,069 1,246
Residential mortgage-backed securities ("RMBS") 342,810 259,026
--------------- --------------
Cash and RMBS 371,469 300,828
Commercial mortgage loan pools 1,287,277 1,292,407
Commercial real estate securities 2,215,620 2,005,383
Commercial real estate loans 428,720 425,453
Commercial real estate 88,065 51,003
Commercial real estate, held for sale 5,435 -
-------------- -------------
Total commercial real estate 4,025,117 3,774,246
Other assets 117,595 91,107
--------------
Total Assets $4,514,181 $4,166,181
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Short term borrowings:
Secured by pledge of RMBS $304,586 $249,122
Secured by pledge of commercial real estate securities 802,227 617,194
Secured by pledge of commercial mortgage loan pools 6,185 5,977
Secured by pledge of commercial real estate loans 201,347 230,945
--------------- --------------
Total short term borrowings 1,314,345 1,103,238
Long term borrowings:
Collateralized debt obligations 1,066,574 1,066,930
Secured by pledge of commercial mortgage loan pools 1,267,611 1,272,931
Junior subordinated notes to subsidiary trust issuing
preferred securities 180,477 77,380
--------------- --------------
Total long term borrowings 2,514,662 2,417,241
-------------- -------------
Total borrowings 3,829,007 3,520,479
Payable for investments purchased 20,660 -
Distributions payable 16,873 16,673
Other liabilities 26,629 31,011
-------------- -------------
Total Liabilities 3,893,169 3,568,163
-------------- -------------
Stockholders' Equity:
Common Stock, par value $0.001 per share; 400,000 shares authorized;
57,053 shares issued and outstanding in 2006; and 57 56
56,339 shares issued and outstanding in 2005
9.375% Series C Preferred Stock, liquidation preference $57,500 55,435 55,435
Additional paid-in capital 619,984 612,368
Distributions in excess of earnings (127,219) (130,038)
Accumulated other comprehensive income 72,755 60,197
-------------- -------------
Total Stockholders' Equity 621,012 598,018
-------------- -------------
Total Liabilities and Stockholders' Equity $4,514,181 $4,166,181
============== =============
Anthracite Capital, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
-----------------------------------------------------------------------------------------------------------------------------------
For the Three Months Ended March 31,
--------------------------------------------------------------
2006 2005
--------------------------------------------------------------
Operating Portfolio
Income:
Commercial real estate securities $37,791 $32,631
Commercial mortgage loan pools 13,227 13,552
Commercial real estate loans 11,816 8,239
Commercial real estate 5,542 -
RMBS 3,030 2,880
Cash and cash equivalents 337 236
--------------------------------------------------------------
Total Income 71,743 57,538
--------------------------------------------------------------
Expenses:
Interest expense:
Short-term borrowings 16,120 8,350
Collateralized debt obligations 16,134 15,747
Commercial mortgage loan pools 12,666 12,780
Junior subordinated notes 2,220 -
General and administrative expense 1,104 820
Management fee 3,050 2,579
Incentive fee 1,169 -
--------------------------------------------------------------
Total Expenses 52,463 40,276
--------------------------------------------------------------
Income from the operating portfolio 19,280 17,262
--------------------------------------------------------------
Other income (loss):
Net realized and unrealized gain (loss) 984 (1,480)
Foreign currency gain (loss) 44 (168)
Hedge ineffectiveness 615 261
Loss on impairment of assets (781) (159)
--------------------------------------------------------------
Total other income (loss) 862 (1,546)
--------------------------------------------------------------
Net Income 20,142 15,716
--------------------------------------------------------------
Dividends on preferred stock 1,348 1,348
--------------------------------------------------------------
Net Income available to Common Stockholders $18,794 $14,368
==============================================================
Operating Earnings:
Income from the operating portfolio $19,280 $17,262
Dividends on preferred stock (1,348) (1,348)
--------------------------------------------------------------
Net Operating Earnings $17,932 $15,914
==============================================================
Operating Earnings available to Common Stockholders per share:
Basic $0.32 $0.30
Diluted $0.32 $0.30
Net Income available to Common Stockholders per share, basic $0.33 $0.27
Net Income available to Common Stockholders per share, diluted $0.33 $0.27
Weighted average number of shares outstanding:
Basic 56,672 53,294
Diluted 56,678 53,303