x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For
the fiscal year ended December 31, 2008
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For
the Transition period from
to
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Maryland
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94-6181186
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer Identification No.)
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410
Park Avenue, 14th Floor, New York, NY
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10022
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(Address
of principal executive offices)
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(Zip
Code)
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Title of Each
Class
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Name
of Each Exchange
on
Which Registered
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class
A common stock,
$0.01
par value (“class A common stock”)
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New
York Stock Exchange
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Large
accelerated filer o
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Accelerated
filer x
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Non-accelerated
filer o
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Smaller
reporting company o
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1
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Item
1.
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1
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Item
1A.
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11
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Item
1B.
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31
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Item
2.
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31
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Item
3.
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31
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Item
4.
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31
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32
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Item
5.
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32
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Item
6.
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34
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Item
7.
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35
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Item
7A.
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63
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Item
8.
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65
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Item
9.
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65
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Item
9A.
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65
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Item
9B.
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65
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66
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Item
10.
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66
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Item
11.
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66
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Item
12.
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66
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Item
13.
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66
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Item
14.
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66
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67
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Item
15.
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67
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77
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F-1
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Item
1.
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Business
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·
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Maturity
dates were modified to one year from the March 16, 2009 effective date of
each respective agreement, which maturity date may be extended further for
two one-year periods. The first one-year extension option is exercisable
by us so long as the outstanding balance as of the first extension date is
less than or equal to a certain amount, which is a reduction of twenty
percent (20%), including the upfront payment described above, of the
outstanding principal amount from the date of the amendment, and no other
defaults or events of default have occurred and are continuing, or would
be caused by such extension. The second one-year extension option is
exercisable by each participating secured lender in its sole
discretion.
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·
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We
agreed to pay each participating secured lender periodic amortization as
follows: (i) mandatory payments, payable monthly in arrears, in an amount
equal to sixty-five (65%) (subject to adjustment in the second year) of
the net interest income generated by each such lender’s collateral pool,
and (ii) one hundred percent (100%) of the principal proceeds received
from the repayment of assets in each such lender’s collateral pool. In
addition, under the terms of the amendment with Citigroup, we agreed to
pay Citigroup an additional quarterly amortization payment equal to the
lesser of: (x) Citigroup’s then outstanding senior secured credit facility
balance or (y) the product of (i) the total cash paid (including both
principal and interest) during the period to our senior unsecured credit
facility in excess of an amount equivalent to LIBOR plus 1.75% based upon
a $100.0 million facility amount, and (ii) a fraction, the numerator of
which is Citigroup’s then outstanding senior secured credit facility
balance and the denominator is the total outstanding secured indebtedness
of the participating secured
lenders.
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·
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We
further agreed to amortize each participating secured lender’s secured
debt at the end of each calendar quarter on a pro rata basis until we have
repaid our secured, recourse credit facilities and thereafter our senior
unsecured credit facility in an amount equal to any unrestricted cash in
excess of the sum of (i) $25.0 million, and (ii) any unfunded loan and
co-investment commitments.
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·
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Each
participating secured lender was relieved of its obligation to make future
advances with respect to unfunded commitments arising under investments in
its collateral pool.
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·
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We
received the right to sell or refinance collateral assets as long as we
apply one hundred percent (100%) of the proceeds to pay down the related
secured credit facility balance subject to minimum release price
mechanics.
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·
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We
eliminated the cash margin call provisions and amended the mark-to-market
provisions so that future changes in collateral value will be determined
based upon changes in the performance of the underlying real estate
collateral in lieu of the previous provisions which were based on market
spreads. Beginning six months after the date of execution of the
agreements, each collateral pool will be valued monthly on this basis. If
the ratio of a participating secured lender’s total outstanding secured
credit facility balance to total collateral value exceeds 1.15x the ratio
calculated as of the effective date of the amended agreements, we will be
required to liquidate collateral in order to return to compliance with the
prescribed loan to collateral value ratio or post other collateral to
bring the ratio back into
compliance.
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·
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prohibit
new balance sheet investments except, subject to certain limitations,
co-investments in our investment management vehicles or protective
investments to defend existing collateral assets on our balance
sheet;
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·
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prohibit
the incurrence of any additional indebtedness except in limited
circumstances;
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·
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limit
the total cash compensation to all employees and, specifically with
respect to our chief executive officer, chief operating officer and chief
financial officer, freeze their base salaries at 2008 levels, and require
cash bonuses to any of them to be approved by a committee comprised of one
representative designated by the secured lenders, the administrative agent
under the senior unsecured credit facility and the chairman of our board
of directors;
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·
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prohibit
the payment of cash dividends to our common shareholders except to the
minimum extent necessary to maintain our REIT
status;
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·
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require
us to maintain a minimum amount of liquidity, as defined, of $7.0 million
in 2009 and $5.0 million
thereafter;
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·
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trigger
an event of default if both our chief executive officer and chief
operating officer cease their current employment with us during the term
of the agreement and we fail to hire a replacement acceptable to the
lenders; and
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·
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trigger
an event of default, if any event or condition occurs which causes any
obligation or liability of more than $1.0 million to become due prior to
its scheduled maturity or any monetary default under our restructured debt
obligations if the amount of such obligation is at least $1.0
million.
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·
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Extend
the maturity date of the senior unsecured credit agreement to be
co-terminus with the maturity date of the secured credit facilities with
the participating secured lenders (as they may be further extended until
March 16, 2012, as described
above);
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·
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Increase
the cash interest rate under the senior unsecured credit agreement to
LIBOR plus 3.0% per annum (from LIBOR plus 1.75%), plus an accrual rate of
7.20% per annum less the cash interest
rate;
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·
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Initiate
quarterly amortization equal to the greater of: (i) $5.0 million per annum
and (ii) 25% of the annual cash flow received from our currently
unencumbered collateralized debt obligation
interests;
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·
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Pledge
our unencumbered collateralized debt obligation interests and provide a
negative pledge with respect to certain other assets;
and
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·
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Replace
all existing financial covenants with substantially identical covenants
and default provisions to those described above in the participating
secured credit facilities.
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·
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New
investments in interest earning assets of $47.8 million, net of related
purchase discounts.
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·
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Total
fundings under existing loan commitments of $89.8 million, which resulted
in remaining unfunded loan commitments of $54.2 million as of year
end.
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·
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Total
principal payments received on interest earning assets, including receipts
from asset sales, of $420.4
million.
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·
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An
aggregate provision for possible credit losses of $57.6 million was taken
against five loans with a total principal balance of $82.1 million, and a
$10.0 million loan against which we previously recorded a $4.0 provision
was written-off as uncollectable. In addition, we foreclosed on one loan
with a book balance of $11.9 million and have taken a $2.0 million
impairment on that asset.
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·
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Ratings
activity on our CMBS portfolio included a total of 13 securities which
received ratings downgrades and 6 securities which received ratings
upgrades. We recorded a $900,000 other-than-temporary impairment on one
CMBS investment with a net book value of $3.5
million.
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·
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Maturity
dates were extended on 5 loans with an aggregate principal balance of
$61.8 million.
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·
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In
March 2008, we closed a public offering of 4,000,000 shares of class
A common stock, from which we received net proceeds of approximately
$112.6 million.
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·
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During
2008, we issued 488,563 shares of class A common stock under our dividend
reinvestment and direct stock purchase plans, from which we received net
proceeds of approximately $12.9
million.
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·
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In
March 2008, we exercised the term-out option under our senior unsecured
credit facility with WestLB, extending the maturity date of the $100
million principal balance outstanding for one year as a non-revolving term
loan.
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·
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In
May 2008, we entered into a new $18.0 million loan and security agreement
with Lehman Brothers.
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·
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In
June 2008, we amended our master repurchase agreements with the former
Bear Stearns entities by extending the termination date of each obligation
to October 2008.
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·
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In
July 2008, we extended the availability period under our $250.0 million
master repurchase agreement with Citigroup to July
2009.
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·
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In
July 2008, we extended the purchase period of our $300.0 million master
repurchase agreement with Morgan Stanley to July
2009.
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·
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In
October 2008, we combined the JP Morgan and Bear Stearns repurchase
facilities and extended the resultant $355 million facility for two
years.
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·
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CT
High Grade II held its initial closing in June 2008 with $667 million of
commitments from two institutional investors. The fund targets senior debt
opportunities in the commercial real estate debt sector and does not
employ leverage. We earn a 0.40% per
annum management fee on invested
capital.
|
|
·
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CTOPI
is a multi-investor private equity fund designed to invest in commercial
real estate debt and equity, specifically taking advantage of the current
dislocation in the commercial real estate capital markets. On July 14,
2008, CTOPI held its final closing completing its capital raise with $540
million of total equity commitments. We have committed to invest $25
million in the vehicle and entities controlled by our chairman have
committed to invest $20 million. The fund’s investment period expires in
December 2010, and we earn base management fees as the investment manager
to CTOPI (equal to 1.60% per annum of total equity commitments during the
investment period and of invested capital thereafter). In addition, we
earn gross incentive management fees of 20% of profits after a 9%
preferred return and a 100% return of
capital.
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|
·
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CT
High Grade MezzanineSM
closed in November 2006, with a single, related party investor
committing $250 million. This separate account targets lower risk
subordinate debt investments and does not utilize leverage and we earn
management fees of 0.25% per annum on invested assets. In July 2007, we
upsized the account by $100 million to $350 million and extended the
investment period to July 2008.
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·
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CT
Large Loan 2006, Inc. closed in May 2006 with total equity
commitments of $325 million from eight third party investors. The fund
employs leverage and we earn management fees of 0.75% per annum of
invested assets (capped at 1.5% on invested equity). The investment period
ended in May 2008.
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·
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CTX
Fund I, L.P., or CTX Fund, is a single investor fund designed to invest in
collateralized debt obligations, or CDOs, sponsored, but not issued, by
us. We do not earn fees on the CTX Fund, however, we earn CDO management
fees from the CDOs in which the CTX Fund invests. We sponsored one such
CDO in 2007, a $500 million CDO secured primarily by credit default swaps
referencing CMBS.
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·
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CT
Mezzanine Partners III, Inc., or Fund III, is a vehicle we co-sponsored
with a joint venture partner that had an investment period that ran from
2003 to 2005. The fund is currently liquidating in the ordinary course. We
have a co-investment in the fund, earn 100% of base management fees and we
split incentive management fees with our partner, who receives 37.5% of
Fund III’s incentive management
fees.
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·
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intense
credit underwriting;
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·
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creative
financial structuring;
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·
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efficient
capitalization; and
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·
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aggressive
asset management.
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·
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Mortgage
Loans—These are secured property loans evidenced by a first mortgage which
is senior to any mezzanine financing and the owner’s equity. These loans
may finance stabilized properties, may serve as bridge loans providing
required interim financing to property owners or may provide construction
and development financing. Our mortgage loans vary in duration and
typically require a balloon payment of principal at maturity. These
investments may include pari passu participations in mortgage loans. We
may also originate and fund first mortgage loans in which we intend to
sell the senior tranche, thereby creating what we refer to as a
subordinate mortgage interest.
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·
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Subordinate
Mortgage Interests—Sometimes known as B Notes, these are loans evidenced
by a junior participation in a first mortgage, with the senior
participation known as an A Note. Although sometimes evidenced by its own
promissory note, subordinate mortgage interests have the same borrower and
benefit from the same underlying obligation and collateral as the A Note
lender. The subordinate mortgage interest is subordinated to the A Note by
virtue of a contractual arrangement between the A Note lender and the
subordinate mortgage interest lender and in most instances is
contractually limited in rights and remedies in the case of default. In
some cases, there may be multiple senior and/or junior interests in a
single mortgage loan.
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·
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Mezzanine
Loans—These include both property and corporate mezzanine loans. Property
mezzanine loans are secured property loans that are subordinate to a first
mortgage loan, but senior to the owner’s equity. A mezzanine property loan
is evidenced by its own promissory note and is typically made to the owner
of the property-owning entity, which is typically the first mortgage
borrower. It is not secured by a mortgage on the property, but by a pledge
of the borrower’s ownership interest in the property-owning entity.
Subject to negotiated contractual restrictions, the mezzanine lender
generally has the right, following foreclosure, to become the owner of the
property, subject to the lien of the first mortgage. Corporate mezzanine
loans, on the other hand, are investments in or loans to real estate
related operating companies, including REITs. Such investments may take
the form of secured debt, preferred stock and other hybrid instruments
such as convertible debt. Corporate mezzanine loans may finance, among
other things, operations, mergers and acquisitions, management buy-outs,
recapitalizations, start-ups and stock buy-backs generally involving real
estate and real estate related
entities.
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·
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CMBS—These
are securities collateralized by pools of individual first mortgage loans.
Cash flows from the underlying mortgages are aggregated and allocated to
the different classes of securities in accordance with their seniority,
typically ranging from the AAA rated through the unrated, first loss
tranche. Administration and servicing of the pool is performed by a
trustee and servicers, who act on behalf of all security holders in
accordance with contractual agreements. Our investments generally
represent the subordinated tranches in these pools ranging from the BBB
rated through the unrated class. When practical, we are designated the
special servicer for the CMBS trusts in which we have appropriate
ownership interests, enabling us to control the resolution of matters
which require lender approval. We also include select investments in CDOs
in this category.
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Item
1A.
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Risk Factors
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·
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the
effects of the recent turmoil in the financial markets and general
economic recession upon our ability to invest and manage our
investments;
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·
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the
general political, economic and competitive conditions in the United
States and foreign jurisdictions where we
invest;
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·
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the
level and volatility of prevailing interest rates and credit spreads,
magnified by the current turmoil in the credit
markets;
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·
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adverse
changes in the real estate and real estate capital
markets;
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·
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difficulty
in obtaining financing or raising capital, especially in the current
constrained financial markets;
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·
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the
deterioration of performance and thereby credit quality of property
securing our investments, borrowers and, in general, the risks associated
with the ownership and operation of real estate that may cause cash flow
deterioration to us and potentially principal losses on our
investments;
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·
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a
compression of the yield on our investments and the cost of our
liabilities, as well as the level of leverage available to
us;
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·
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adverse
developments in the availability of desirable loan and investment
opportunities whether they are due to competition, regulation or
otherwise;
|
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·
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events,
contemplated or otherwise, such as natural disasters including hurricanes
and earthquakes, acts of war and/or terrorism (such as the events of
September 11, 2001) and others that may cause unanticipated and uninsured
performance declines and/or losses to us or the owners and operators of
the real estate securing our
investment;
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·
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the
cost of operating our platform, including, but not limited to, the cost of
operating a real estate investment platform and the cost of operating as a
publicly traded company;
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·
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authoritative
generally accepted accounting principles or policy changes from such
standard-setting bodies as the Financial Accounting Standards Board, the
Securities and Exchange Commission, Internal Revenue Service, the New York
Stock Exchange, and other authorities that we are subject to, as well as
their counterparts in any foreign jurisdictions where we might do
business; and
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·
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the
risk factors set forth below, including those related to the restructuring
of our debt obligations.
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·
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changes
in national economic conditions;
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|
·
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changes
in local real estate market conditions due to changes in national or local
economic conditions or changes in local property market
characteristics;
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·
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the
extent of the impact of the current turmoil in the financial markets,
including the lack of available debt financing for commercial real
estate;
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·
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tenant
bankruptcies;
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·
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competition
from other properties offering the same or similar
services;
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·
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changes
in interest rates and in the state of the debt and equity capital
markets;
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·
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the
ongoing need for capital improvements, particularly in older building
structures;
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·
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changes
in real estate tax rates and other operating
expenses;
|
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·
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adverse
changes in governmental rules and fiscal policies, civil unrest, acts of
God, including earthquakes, hurricanes and other natural disasters, and
acts of war or terrorism, which may decrease the availability of or
increase the cost of insurance or result in uninsured
losses;
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|
·
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adverse
changes in zoning laws;
|
|
·
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the
impact of present or future environmental legislation and compliance with
environmental laws;
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·
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the
impact of lawsuits which could cause us to incur significant legal
expenses and divert management’s time and attention from our day-to-day
operations; and
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·
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other
factors that are beyond our control and the control of the commercial
property owners.
|
|
·
|
limit
the total cash compensation to all employees and, specifically with
respect to our chief executive officer, chief operating officer and chief
financial officer, freeze their base salaries at 2008 levels, and require
cash bonuses to any of them to be approved by a committee comprised of one
representative designated by the secured lenders, the administrative agent
under the senior unsecured credit facility and the chairman of our board
of directors;
|
|
·
|
prohibit
the payment of cash dividends to our common shareholders except to the
minimum extent necessary to maintain our REIT
status;
|
|
·
|
require
us to maintain a minimum amount of liquidity, as defined, of $7.0 million
in 2009 and $5.0 million
thereafter;
|
|
·
|
trigger
an event of default if both our chief executive officer and chief
operating officer cease their current employment with us during the term
of the agreement and we fail to hire a replacement acceptable to the
lenders; and
|
|
·
|
trigger
an event of default, if any event or condition occurs which causes any
obligation or liability of more than $1.0 million to become due prior to
its scheduled maturity or any monetary default under our restructured debt
obligations if the amount of such obligation is at least $1.0
million.
|
|
·
|
acquire
investments subject to rights of senior classes and servicers under
inter-creditor or servicing
agreements;
|
|
·
|
acquire
only a participation in an underlying
investment;
|
|
·
|
co-invest
with third parties through partnerships, joint ventures or other entities,
thereby acquiring non-controlling interests;
or
|
|
·
|
rely
on independent third party management or strategic partners with respect
to the management of an asset.
|
|
·
|
exposure
to local economic conditions, local interest rates, foreign exchange
restrictions and restrictions on the withdrawal of foreign investment and
earnings, investment restrictions or requirements, expropriations of
property and changes in foreign taxation
structures;
|
|
·
|
potential
adverse changes in the diplomatic relations of foreign countries with the
United States and government policies against investments by
foreigners;
|
|
·
|
changes
in foreign regulations;
|
|
·
|
hostility
from local populations, potential instability of foreign governments and
risks of insurrections, terrorist attacks, war or other military
action;
|
|
·
|
fluctuations
in foreign currency exchange rates;
|
|
·
|
changes
in social, political, legal, taxation and other conditions affecting our
international investment;
|
|
·
|
logistical
barriers to our timely receiving the financial information relating to our
international investments that may need to be included in our periodic
reporting obligations as a public company;
and
|
|
·
|
lack
of uniform accounting standards (including availability of information in
accordance with U.S. generally accepted accounting
principles).
|
|
·
|
manage
our investment management vehicles successfully by investing their capital
in suitable investments that meet their respective investment
criteria;
|
|
·
|
actively
manage the assets in our portfolios in order to realize targeted
performance;
|
|
·
|
create
incentives for our management and professional staff to develop and
operate the investment management business;
and
|
|
·
|
structure,
sponsor and capitalize future investment management vehicles that provide
investors with attractive investment
opportunities.
|
|
·
|
80%
of the votes entitled to be cast by shareholders;
and
|
|
·
|
two-thirds
of the votes entitled to be cast by shareholders other than the interested
shareholder and affiliates and associates
thereof.
|
|
·
|
the
level of institutional interest in
us;
|
|
·
|
the
perception of REITs generally and REITs with portfolios similar to ours,
in particular, by market
professionals;
|
|
·
|
the
attractiveness of securities of REITs in comparison to other
companies;
|
|
·
|
the
market’s perception of our ability to successfully manage our portfolio
and our recent restructuring;
and;
|
|
·
|
the
general economic environment and the commercial real estate property and
capital markets.
|
|
·
|
we
would be taxed as a regular domestic corporation, which under current
laws, among other things, means being unable to deduct distributions to
shareholders in computing taxable income and being subject to federal
income tax on our taxable income at regular corporate
rates;
|
|
·
|
any
resulting tax liability could be substantial, could have a material
adverse effect on our book value and would reduce the amount of cash
available for distribution to
shareholders;
|
|
·
|
unless
we were entitled to relief under applicable statutory provisions, we would
be required to pay taxes, and thus, our cash available for distribution to
shareholders would be reduced for each of the years during which we did
not qualify as a REIT; and
|
|
·
|
we
generally would not be eligible to requalify as a REIT for four full
taxable years.
|
Item
2.
|
Properties
|
Item
3.
|
Legal
Proceedings
|
Item
4.
|
Submission
of Matters to a Vote of Security
Holders
|
Item
5.
|
Market
for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
High
|
Low
|
Dividend
|
||||||||||
2008
|
||||||||||||
Fourth
quarter
|
$13.17
|
$3.42
|
$0.00
|
|||||||||
Third
quarter
|
19.76
|
9.78
|
0.60
|
|||||||||
Second
quarter
|
29.98
|
18.71
|
0.80
|
|||||||||
First
quarter
|
30.38
|
24.30
|
0.80
|
|||||||||
2007
|
||||||||||||
Fourth
quarter
|
$38.17
|
$26.91
|
$2.70
|
(1)
|
||||||||
Third
quarter
|
37.37
|
30.65
|
0.80
|
|||||||||
Second
quarter
|
47.39
|
34.14
|
0.80
|
|||||||||
First
quarter
|
55.27
|
43.70
|
0.80
|
|||||||||
2006
|
||||||||||||
Fourth
quarter
|
$50.62
|
$39.70
|
$1.40
|
(2)
|
||||||||
Third
quarter
|
42.97
|
33.89
|
0.75
|
|||||||||
Second
quarter
|
35.62
|
29.69
|
0.70
|
|||||||||
First
quarter
|
34.32
|
29.60
|
0.60
|
|||||||||
(1) Comprised of a regular quarterly dividend of $0.80 per share and a special dividend of $1.90 per share. | ||||||||||||
(2) Comprised of a regular quarterly dividend of $0.75 per share and a special dividend of $0.65 per share. |
Period
|
(a)
Total
Number
of
Shares
Purchased(1)
|
(b)
Average Price
Paid
per Share
|
(c)
Total
Number
of
Shares
Purchased
as
Part
of
Publicly
Announced
Plans
or
Programs
|
(d)
Maximum
Number
(or
Approximate
Dollar
Value) of
Shares
that May
Yet
Be Purchased
Under
the Plans or
Programs
|
||||||||||||||
October
1-31, 2008
|
— | $— | — | — | ||||||||||||||
November
1-30, 2008
|
— | — | — | — | ||||||||||||||
December
1-31, 2008
|
6,240 | 3.60 | — | — | ||||||||||||||
Total
|
6,240 | $3.60 | — | — |
(1) |
All
purchases were made pursuant to elections by incentive plan participants
to satisfy tax withholding obligations through the surrender of shares
equal in value to the amount of the withholding obligation incurred upon
the vesting of restricted
stock.
|
Plan category
|
(a)
Number of securities to be
issued upon exercise of
outstanding options
|
(b)
Weighted average
exercise price of
outstanding options
|
(c)
Number of securities remaining available
for future issuance under equity
compensation plans (excluding securities
reflected in column (a))
|
||||||||||||
Equity
compensation plans approved by security holders(1)
|
170,477
|
|
$15.62
|
577,376
|
|||||||||||
Equity
compensation plans not approved by security holders (2)
|
—
|
—
|
—
|
||||||||||||
Total
|
170,477
|
|
$15.62
|
577,376
|
(1) |
The
number of securities remaining for future issuance consists of 577,376
shares issuable under our 2007 long-term incentive plan which was approved
by our shareholders. Awards under the plan may include restricted stock,
unrestricted stock, stock options, stock units, stock appreciation rights,
performance shares, performance units, deferred share units or other
equity-based awards, as the board of directors may determine.
|
||
(2) | All of our equity compensation plans have been approved by security holders. |
Item
6.
|
Selected Financial Data
|
Years ended December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
(in thousands, except for per share data)
|
||||||||||||||||||||
STATEMENT
OF OPERATIONS DATA:
|
||||||||||||||||||||
REVENUES:
|
||||||||||||||||||||
Interest
and related income
|
$ | 196,215 | $ | 254,505 | $ | 176,758 | $ | 86,753 | $ | 46,639 | ||||||||||
Management
fees
|
13,308 | 10,330 | 4,407 | 13,124 | 7,863 | |||||||||||||||
Total
revenues
|
209,523 | 264,835 | 181,165 | 99,877 | 54,502 | |||||||||||||||
OPERATING
EXPENSES:
|
||||||||||||||||||||
Interest
expense
|
129,665 | 162,377 | 104,607 | 37,229 | 20,141 | |||||||||||||||
General
and administrative expenses
|
24,957 | 29,956 | 23,075 | 21,939 | 15,229 | |||||||||||||||
Depreciation
and amortization
|
179 | 1,810 | 3,049 | 1,114 | 1,100 | |||||||||||||||
Impairments
|
2,917 | — | — | — | 5,886 | |||||||||||||||
Provision
for/(recapture of) possible credit losses
|
63,577 | — | — | — | (6,672 | ) | ||||||||||||||
Valuation
allowance on loans held-for-sale
|
48,259 | — | — | — | — | |||||||||||||||
Total
operating expenses
|
269,554 | 194,143 | 130,731 | 60,282 | 35,684 | |||||||||||||||
Gain
on sale of investments
|
374 | 15,077 | — | 4,951 | 300 | |||||||||||||||
Gain
on extinguishment of debt
|
6,000 | — | — | — | — | |||||||||||||||
(Loss)/income
from equity investments
|
(1,988 | ) | (2,109 | ) | 898 | (222 | ) | 2,407 | ||||||||||||
(Loss)/income
before income taxes
|
(55,645 | ) | 83,660 | 51,332 | 44,324 | 21,525 | ||||||||||||||
Provision/(benefit)
for income taxes
|
1,893 | (706 | ) | (2,735 | ) | 213 | (451 | ) | ||||||||||||
NET
(LOSS)/INCOME ALLOCABLE TO COMMON STOCK:
|
$ | (57,538 | ) | $ | 84,366 | $ | 54,067 | $ | 44,111 | $ | 21,976 | |||||||||
PER
SHARE INFORMATION:
|
||||||||||||||||||||
Net
(loss)/income per share of common stock:
|
||||||||||||||||||||
Basic
|
$ | (2.73 | ) | $ | 4.80 | $ | 3.43 | $ | 2.91 | $ | 2.17 | |||||||||
Diluted
|
$ | (2.73 | ) | $ | 4.77 | $ | 3.40 | $ | 2.88 | $ | 2.14 | |||||||||
Dividends
declared per share of common stock
|
$ | 2.20 | $ | 5.10 | $ | 3.45 | $ | 2.45 | $ | 1.85 | ||||||||||
Weighted
average shares of common stock outstanding:
|
||||||||||||||||||||
Basic
|
21,099 | 17,570 | 15,755 | 15,181 | 10,141 | |||||||||||||||
Diluted
|
21,099 | 17,690 | 15,923 | 15,336 | 10,277 |
Years ended December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
BALANCE
SHEET DATA:
|
||||||||||||||||||||
Total
assets
|
$ | 2,838,627 | $ | 3,211,482 | $ | 2,648,564 | $ | 1,557,642 | $ | 877,766 | ||||||||||
Total
liabilities
|
2,437,183 | 2,803,245 | 2,222,292 | 1,218,792 | 561,269 | |||||||||||||||
Shareholders’
equity
|
401,444 | 408,237 | 426,272 | 338,850 | 316,497 |
Item
7.
|
Management’s Discussion and Analysis of Financial Condition and
Results of Operation
|
|
·
|
Maturity
dates were modified to one year from the March 16, 2009 effective date of
each respective agreement, which maturity dates may be extended further
for two one-year periods. The first one-year extension option is
exercisable by us so long as the outstanding balance as of the first
extension date is less than or equal to a certain amount, which is a
reduction of twenty percent (20%), including the upfront payment described
above, of the outstanding principal amount from the date of the
amendments, and no other defaults or events of default have occurred and
are continuing, or would be caused by such extension. The second one-year
extension option is exercisable by each participating secured lender in
its sole discretion.
|
|
·
|
We
agreed to pay each participating secured lender periodic amortization as
follows: (i) mandatory payments, payable monthly in arrears, in an amount
equal to sixty-five (65%) (subject to adjustment in the second year) of
the net interest income generated by each such lender’s collateral pool,
and (ii) one hundred percent (100%) of the principal proceeds received
from the repayment of assets in each such lender’s collateral pool. In
addition, under the terms of the amendment with Citigroup, we agreed to
pay Citigroup an additional quarterly amortization payment equal to the
lesser of: (x) Citigroup’s then outstanding senior secured credit facility
balance or (y) the product of (i) the total cash paid (including both
principal and interest) during the period to our senior unsecured credit
facility in excess of an amount equivalent to LIBOR plus 1.75% based upon
a $100.0 million facility amount, and (ii) a fraction, the numerator of
which is Citigroup’s then outstanding senior secured credit facility
balance and the denominator is the total outstanding secured indebtedness
of the participating secured
lenders.
|
|
·
|
We
further agreed to amortize each participating secured lender’s secured
debt at the end of each calendar quarter on a pro rata basis until we have
repaid our secured, recourse credit facilities and thereafter our senior
unsecured credit facility in an amount equal to any unrestricted cash in
excess of the sum of (i) $25.0 million, and (ii) any unfunded loan and
co-investment commitments.
|
|
·
|
Each
participating secured lender was relieved of its obligation to make future
advances with respect to unfunded commitments arising under investments in
its collateral pool.
|
|
·
|
We
received the right to sell or refinance collateral assets as long as we
apply one hundred percent (100%) of the proceeds to pay down the related
secured credit facility balance subject to minimum release price
mechanics.
|
|
·
|
We
eliminated the cash margin call provisions and amended the mark-to-market
provisions so that future changes in collateral value will be determined
based upon changes in the performance of the underlying real estate
collateral in lieu of the previous provisions which were based on market
spreads. Beginning six months after the date of execution of the
agreements, each collateral pool will be valued monthly on this basis. If
the ratio of a participating secured lender’s total outstanding secured
credit facility balance to total collateral value exceeds 1.15x the ratio
calculated as of the effective date of the amended agreements, we will be
required to liquidate collateral in order to return to compliance with the
prescribed loan to collateral value ratio or post other collateral to
bring the ratio back into
compliance.
|
|
·
|
prohibit
new balance sheet investments except, subject to certain limitations,
co-investments in our investment management vehicles or protective
investments to defend existing collateral assets on our balance
sheet;
|
|
·
|
prohibit
the incurrence of any additional indebtedness except in limited
circumstances;
|
|
·
|
limit
the total cash compensation to all employees and, specifically with
respect to our chief executive officer, chief operating officer and chief
financial officer, freeze their base salaries at 2008 levels, and require
cash bonuses to any of them to be approved by a committee comprised of one
representative designated by the secured lenders, the administrative agent
under the senior unsecured credit facility and the chairman of our board
of directors;
|
|
·
|
prohibit
the payment of cash dividends to our common shareholders except to the
minimum extent necessary to maintain our REIT
status;
|
|
·
|
require
us to maintain a minimum amount of liquidity, as defined, of $7.0 million
in 2009 and $5.0 million
thereafter;
|
|
·
|
trigger
an event of default if both our chief executive officer and chief
operating officer cease their current employment with us during the term
of the agreement and we fail to hire a replacement acceptable to the
lenders; and
|
|
·
|
trigger
an event of default, if any event or condition occurs which causes any
obligation or liability of more than $1.0 million to become due prior to
its scheduled maturity or any monetary default under our restructured debt
obligations if the amount of such obligation is at least $1.0
million.
|
|
·
|
Extend
the maturity date of the senior unsecured credit agreement to be
co-terminus with the maturity date of the secured credit facilities with
the participating secured lenders (as they may be further extended until
March 16, 2012, as described
above);
|
|
·
|
Increase
the cash interest rate under the senior unsecured credit agreement to
LIBOR plus 3.0% per annum (from LIBOR plus 1.75%), plus an accrual rate of
7.20% per annum less the cash interest
rate;
|
|
·
|
Initiate
quarterly amortization equal to the greater of: (i) $5.0 million per annum
and (ii) 25% of the annual cash flow received from our currently
unencumbered collateralized debt obligation
interests;
|
|
·
|
Pledge
our unencumbered collateralized debt obligation interests and provide a
negative pledge with respect to certain other assets;
and
|
|
·
|
Replace
all existing financial covenants with substantially identical covenants
and default provisions to those described above in the participating
secured credit facilities.
|
Originations(1)
|
||||
(in
millions)
|
Year
ended
December
31, 2008
|
Year
ended
December
31, 2007
|
||
Balance
sheet(2)
|
$48
|
$1,454
|
||
Investment
management
|
426
|
1,011
|
||
Total
originations
|
$474
|
$2,465
|
(1) |
Includes
total commitments, both funded and unfunded, net of any related purchase
discounts.
|
||
(2) |
Includes $0 and $315
million of participations sold recorded on our balance sheet relating to
participations that we sold to
CT Large Loan 2006, Inc. for the years ended December 31, 2008 and
December 31, 2007,
respectively.
|
Balance
Sheet Originations
|
|||||||||||||
(in
millions)
|
Year
ended December 31, 2008
|
Year
ended December 31, 2007
|
|||||||||||
Originations(1)
|
Yield(2)
|
Rating
/
LTV(3)
|
Originations(1)
|
Yield(2)
|
Rating
/
LTV(3)
|
||||||||
CMBS
|
$1
|
41.39%
|
BB+
|
$111
|
8.92%
|
BB
|
|||||||
Loans(4)
|
47
|
9.16%
|
53.3%
|
1,343
|
7.67%
|
64.4%
|
|||||||
Total
/ Weighted Average
|
$48
|
9.70%
|
$1,454
|
7.77%
|
(1) |
Includes total commitments, both funded and
unfunded.
|
||
(2) |
Yield on floating
rate originations assumes LIBOR at December 31, 2008 and December 31,
2007, of 0.44% and 4.60%, respectively.
|
||
(3) |
Weighted average
ratings at origination are based on the lowest rating published by Fitch
Ratings, Standard & Poor’s or Moody’s Investors Service for each
security and exclude $36.4 million of unrated equity investments in
collateralized debt obligations originated in 2007. No unrated securities
were originated in 2008. Loan to Value (LTV) is based on third party
appraisals received by us when each loan was
originated.
|
||
(4) |
Includes $0 and $315
million of participations sold recorded on our balance sheet relating to
participations that we sold to CT Large Loan 2006, Inc. for the year ended
December 31, 2008 and the year ended December 31, 2007,
respectively.
|
Interest
Earning Assets
|
|||||||||
(in
millions)
|
December
31, 2008
|
December
31, 2007
|
|||||||
Book
Value
|
Yield(1)
|
Book
Value
|
Yield(1)
|
||||||
CMBS
|
$852
|
6.87%
|
$877
|
7.35%
|
|||||
Loans
|
1,791
|
4.09%
|
2,258
|
7.80%
|
|||||
Total
/ Weighted Average
|
$2,643
|
4.99%
|
$3,135
|
7.67%
|
(1) |
Yield on
floating rate assets assumes LIBOR at December 31, 2008 and December 31,
2007, of 0.44% and 4.60%, respectively. For $37.9 million face value
($37.5 million book value) of CMBS investments, calculations use an
effective rate based on cash
received.
|
Equity
Investments
|
|||||
(in
thousands)
|
December
31,
|
December
31,
|
|||
2008
|
2007
|
||||
Fund
III
|
$597
|
$923
|
|||
CTOPI
|
1,782
|
(60
|
)
|
||
Capitalized
costs/other
|
4
|
114
|
|||
Total
|
$2,383
|
$977
|
Portfolio
Performance(1)
|
||||||||
(in
millions, except for number of investments)
|
December 31, 2008
|
December 31, 2007
|
||||||
Interest
earning assets
|
$2,643 | $3,135 | ||||||
Losses
|
||||||||
Principal
balance
|
$10 | $— | ||||||
Percentage
of interest earning assets
|
0.4 | % | — | |||||
Non
performing loans
|
||||||||
Non-accrual
loans, net(2)
|
$24 | $6 | ||||||
Number
of investments
|
5 | 1 | ||||||
Percentage
of interest earning assets
|
0.9 | % | 0.2 | % | ||||
Real
estate owned, net(3)
|
$10 | $— | ||||||
Number
of investments
|
1 | — | ||||||
Percentage
of interest earning assets
|
0.4 | % | — | |||||
Watch
List Loans
|
||||||||
Principal
balance
|
$377 | N/A | ||||||
Percentage
of interest earning assets
|
14.3 | % | N/A |
(1) |
Portfolio statistics exclude loans classified as
held-for-sale.
|
||
(2) |
As of December 31,
2008, includes five loans with an aggregate principal balance of $82
million, against which we have recorded a $58 million reserve. As of
December 31, 2007, includes one loan with a principal balance of $10
million, against which we recorded a $4 million
reserve.
|
||
(3) |
As
of December 31, 2008, includes one loan which has been transferred to Real
estate held-for-sale with a gross asset balance of $12 million, against
which we have recorded a $2 million
impairment.
|
CMBS
Rating Activity(1)
|
|||
Year
ended
December
31, 2008
|
Year
ended
December
31, 2007
|
||
Securities
Upgraded
|
6
|
20
|
|
Securities
Downgraded
|
13
|
3
|
(1) |
Represents
activity from any of Fitch Ratings, Standard & Poor’s and/or Moody’s
Investors
Service.
|
Capital
Structure(1)
|
||||||
(in
millions)
|
December
31, 2008
|
December
31, 2007
|
||||
Repurchase
obligations and secured debt
|
$699
|
$912
|
||||
Collateralized
debt obligations
|
1,156
|
1,192
|
||||
Senior
unsecured credit facility
|
100
|
75
|
||||
Junior
subordinated debentures
|
129
|
129
|
||||
Total
interest bearing liabilities
|
$2,084
|
$2,308
|
||||
Weighted
average effective cost of debt(2)
|
3.48
|
% |
5.75
|
% | ||
Shareholders’
equity
|
$401
|
$408
|
||||
Ratio
of interest bearing liabilities to shareholders’ equity
|
5.2:1
|
5.7:1
|
(1) |
Excludes participations sold.
|
||
(2) |
Floating rate debt
obligations assume LIBOR at December 31, 2008 and December 31, 2007, of
0.44% and 4.60%, respectively. Includes the effective cost of interest
rate swaps of 1.01% and 0.09% as of December 31, 2008 and December 31,
2007, respectively.
|
Interest
Bearing Liabilities
|
||||
December
31, 2008
|
December
31, 2007
|
|||
Weighted
average life
|
4.2
yrs.
|
4.1
yrs.
|
||
%
Recourse
|
44.5%
|
48.1%
|
||
%
Subject to mark-to-market provisions
|
33.5%
|
39.5%
|
Collateralized
Debt Obligations
|
|||||||||||||||||||
(in
millions)
|
December
31, 2008
|
December
31, 2007
|
|||||||||||||||||
Issuance Date
|
Type
|
Book Value
|
All-in Cost(1)
|
Book Value
|
All-in Cost(1)
|
||||||||||||||
CDO
I(2)
|
7/20/04
|
Static
|
$252 | 1.52 | % | $253 | 5.67 | % | |||||||||||
CDO
II (2)
|
3/15/05
|
Reinvesting
|
299 | 1.18 | 299 | 5.32 | |||||||||||||
CDO
III
|
8/04/05
|
Static
|
257 | 5.27 | 261 | 5.37 | |||||||||||||
CDO
IV(2)
|
3/15/06
|
Static
|
348 | 1.15 | 379 | 5.11 | |||||||||||||
Total
|
$1,156 | 2.15 | % | $1,192 | 5.34 | % |
(1) |
Includes amortization of premiums/discounts and issuance
costs.
|
||
(2) |
Floating rate CDO
liabilities assume LIBOR at December 31, 2008 and December 31, 2007, of
0.44% and 4.60%,
respectively.
|
Repurchase
Agreements and Secured Debt
|
|||
($
in millions)
|
December
31, 2008
|
December
31, 2007
|
|
Repurchase
facility and secured debt amounts
|
$1,114
|
$1,600
|
|
Counterparties
|
6
|
7
|
|
Outstanding
repurchase borrowings and secured debt
|
$699
|
$912
|
|
All-in
cost
|
L +
1.66%
|
L
+ 1.20%
|
Shareholders’
Equity
|
||||
December
31, 2008
|
December
31, 2007
|
|||
Book
value (in millions)
|
$401
|
$408
|
||
Shares
|
||||
Class
A common stock
|
21,740,152
|
17,165,528
|
||
Restricted
stock
|
331,197
|
423,931
|
||
Stock
units
|
215,451
|
94,587
|
||
Options(1)
|
―
|
84,743
|
||
Total
|
22,286,800
|
17,768,789
|
||
Book
value per share
|
$18.01
|
$22.97
|
(1) |
Dilutive
shares issuable upon the exercise of outstanding options assuming a
December 31, 2008 and December 31, 2007 stock price, respectively, and the
treasury stock
method.
|
Interest
Rate Exposure
|
||||||||
(in
millions)
|
December
31, 2008
|
December
31, 2007
|
||||||
Value
exposure to interest rates(1)
|
||||||||
Fixed
rate assets
|
$880 | $948 | ||||||
Fixed
rate liabilities
|
(395 | ) | (403 | ) | ||||
Interest
rate swaps
|
(466 | ) | (513 | ) | ||||
Net
fixed rate exposure
|
$19 | $32 | ||||||
Weighted
average life (fixed rate assets)
|
4.9
yrs
|
5.6
yrs
|
||||||
Weighted
average coupon (fixed rate assets)
|
6.90 | % | 7.10 | % | ||||
Cash
flow exposure to interest rates(1)
|
||||||||
Floating
rate assets
|
$1,949 | $2,235 | ||||||
Floating
rate debt less cash
|
(1,931 | ) | (2,286 | ) | ||||
Interest
rate swaps
|
466 | 513 | ||||||
Net
floating rate exposure
|
$484 | $462 | ||||||
Weighted
average life (floating rate assets)
|
2.9
yrs
|
3.4
yrs
|
||||||
Weighted
average coupon (floating rate assets)
(2)
|
3.52 | % | 7.65 | % | ||||
Net
income impact from 100 bps change in LIBOR
|
$4.8 | $4.7 |
(1) |
All
values are in terms of face or notional amounts, and include loans
classified as held-for-sale.
|
||
(2) |
Weighted
average coupon assumes LIBOR at December 31, 2008 and December 31, 2007 of
0.44% and 4.60%, respectively. For $37.9 million face value ($37.5 million
book value) of CMBS investments, calculations use an effective rate based
on cash received.
|
|
·
|
CT
High Grade II, held its initial closing in June 2008 with $667 million of
commitments from two institutional investors. The fund targets senior debt
opportunities in the commercial real estate debt sector and does not
employ leverage. We earn a 0.40% per annum management fee on invested
capital.
|
|
·
|
CTOPI
is a multi-investor private equity fund designed to invest in commercial
real estate debt and equity, specifically taking advantage of the current
dislocation in the commercial real estate capital markets. On July 14,
2008, CTOPI held its final closing completing its capital raise with $540
million total equity commitments. We have committed to invest $25 million
in the vehicle and entities controlled by our chairman have committed to
invest $20 million. The fund’s investment period expires in December 2010,
and we earn base management fees as the investment manager to CTOPI (1.60%
per annum of total equity commitments during the investment period and of
invested capital thereafter). In addition, we earn gross incentive
management fees of 20% of profits after a 9% preferred return and a 100%
return of capital.
|
|
·
|
CT
High Grade closed in November 2006, with a single, related party
investor committing $250 million. This separate account targets lower
risk subordinate debt investments and does not utilize leverage and we
earn management fees of 0.25% per annum on invested assets. In July 2007,
we upsized the account by $100 million to $350 million and extended the
investment period to July 2008.
|
|
·
|
CT
Large Loan closed in May 2006 with total equity commitments of $325
million from eight third party investors. The fund employs leverage and we
earn management fees of 0.75% per annum of invested assets (capped at 1.5%
on invested equity). The investment period ended in May
2008.
|
|
·
|
CTX
Fund I, L.P., or CTX Fund, is a single investor fund designed to invest in
collateralized debt obligations, or CDOs, sponsored, but not issued, by
us. We do not earn fees on the CTX Fund, however, we earn CDO management
fees from the CDOs in which the CTX Fund invests. We sponsored one such
CDO in 2007, a $500 million CDO secured primarily by credit default swaps
referencing CMBS.
|
|
·
|
Fund
III is a vehicle we co-sponsored with a joint venture partner that had an
investment period that ran from 2003 to 2005. The fund is currently
liquidating in the ordinary course. We have a co-investment in the fund,
earn 100% of base management fees and we split incentive management fees
with our partner, who receives 37.5% of Fund III’s incentive management
fees.
|
Investment
Management Mandates, as of December 31, 2008
|
|||||||||||||||
(in
millions)
|
Incentive
Management Fee
|
||||||||||||||
Total
|
Total
Capital
|
Co-
|
Base
|
Company
|
Employee
|
||||||||||
Type
|
Investments(1)
|
Commitments
|
Investment
%
|
Management
Fee
|
%
|
%
|
|||||||||
Investing:
|
|||||||||||||||
CT
High Grade II
|
Fund
|
$148
|
$667
|
—
|
0.40%
(Assets)
|
N/A
|
N/A
|
||||||||
CTOPI
|
Fund
|
286
|
540
|
4.63%
|
(2)
|
1.60%
(Equity)
|
100%(3)
|
100%(4)
|
|||||||
Liquidating:
|
|||||||||||||||
CT
High Grade
|
Fund
|
344
|
350
|
—
|
0.25%
(Assets)
|
N/A
|
N/A
|
||||||||
CT
Large Loan
|
Fund
|
275
|
325
|
—
|
(5)
|
0.75% (Assets)(6)
|
N/A
|
N/A
|
|||||||
CTX
Fund
|
Fund
|
8
|
10(7)
|
—
|
(5)
|
0.75% (Assets)(8)
|
100%(8)
|
0%(8)
|
|||||||
Fund
III
|
Sep.
Acc.
|
44
|
425
|
4.71%
|
1.42%
(Equity)
|
57%(9)
|
43%(4)
|
(1) |
Represents total
investments, on a cash basis, as of period-end
|
|
(2)
|
We
have committed to invest $25 million in CTOPI.
|
|
(3) |
CTIMCO
earns gross incentive management fees of 20% of profits after a 9%
preferred return on capital and a 100% return of capital, subject to a
catch-up.
|
|
(4) |
Portions
of the Fund III incentive management fees received by us have been
allocated to our employees as long-term performance awards. We have not
allocated any of the CTOPI incentive management fee to employees as of
December 31, 2008.
|
|
(5) | We co-invest on a pari passu, asset by asset basis with CT Large Loan and CTX Fund. | |
(6) | Capped at 1.5% of equity. | |
(7) | In 2008, we reduced the total capital commitment in the CTX Fund to $10 million. | |
(8) |
CTIMCO
serves as collateral manager of the CDOs in which the CTX Fund invests and
CTIMCO earns base and incentive management fees as CDO collateral manager.
As of December 31, 2008 we manage one such $500 million CDO and earn base
management fees of 0.15% of assets and have the potential to earn
incentive management fees.
|
|
(9) |
CTIMCO
earns gross incentive management fees of 20% of profits after a 10%
preferred return on capital and a 100% return of capital, subject to a
catch-up.
|
GAAP
Net Income Detail
|
||
(in
thousands)
|
Year
Ended
December
31,
2008
|
|
REIT
GAAP net loss
|
($57,281)
|
|
TRS
GAAP net loss
|
(257)
|
|
Consolidated
GAAP net loss
|
($57,538)
|
REIT
GAAP to Tax Reconciliation
|
|||
(in
thousands)
|
Year
Ended
December
31,
2008
|
||
REIT
GAAP net loss
|
($57,281
|
)
|
|
GAAP
to tax differences:
|
|
||
Gains,
losses and reserves on investments(1)
|
64,379
|
||
Equity
investments(2)
|
1,949
|
||
General
and administrative(3)
|
553
|
||
Deferred
income
|
(3,576
|
)
|
|
Other
|
256
|
||
Subtotal
|
63,561
|
||
REIT
taxable income (pre-dividend)
|
$6,280
|
||
(1) |
Gains, losses and
reserves not recognized for tax in 2008.
|
|
(2)
|
GAAP
to tax differences relating to our investments in CTOPI and Fund
III.
|
|
(3) |
Primarily
differences associated with stock based compensation to our directors and
employees.
|
TRS
GAAP to Tax Reconciliation
|
|||
(in
thousands)
|
Year
Ended
December
31,
2008
|
||
TRS
GAAP net loss
|
($257
|
)
|
|
TRS
provision for income taxes
|
1,893
|
||
TRS
GAAP net income (pre GAAP tax provision)
|
1,636
|
||
GAAP
to tax differences:
|
|||
General
and administrative(1)
|
845
|
||
Intangible
assets
|
(2,212
|
)
|
|
Other
|
136
|
||
Subtotal
|
(1,231
|
)
|
|
TRS
taxable income (pre-NOL)
|
$405
|
(1) |
Primarily
differences associated with stock based compensation to our
employees.
|
Comparison
of Results of Operations: Year Ended December 31, 2008 vs. December 31,
2007
|
||||||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||
2008
|
2007
|
$
Change
|
%
Change
|
|||||||||||||
Income
from loans and other investments:
|
||||||||||||||||
Interest
and related income
|
$ | 194,649 | $ | 253,422 | $ | (58,773 | ) | (23.2 | %) | |||||||
Interest
and related expenses
|
129,665 | 162,377 | (32,712 | ) | (20.1 | ) | ||||||||||
Income
from loans and other investments, net
|
64,984 | 91,045 | (26,061 | ) | (28.6 | ) | ||||||||||
Other
revenues:
|
||||||||||||||||
Management
fees
|
12,941 | 3,499 | 9,442 | 269.8 | ||||||||||||
Incentive
management fees
|
— | 6,208 | (6,208 | ) | (100.0 | ) | ||||||||||
Servicing
fees
|
367 | 623 | (256 | ) | (41.1 | ) | ||||||||||
Other
interest income
|
1,566 | 1,083 | 483 | 44.6 | ||||||||||||
Total
other revenues
|
14,874 | 11,413 | 3,461 | 30.3 | ||||||||||||
Other
expenses:
|
||||||||||||||||
General
and administrative
|
24,957 | 29,956 | (4,999 | ) | (16.7 | ) | ||||||||||
Depreciation
and amortization
|
179 | 1,810 | (1,631 | ) | (90.1 | ) | ||||||||||
Total
other expenses
|
25,136 | 31,766 | (6,630 | ) | (20.9 | ) | ||||||||||
Gain
on extinguishment of debt
|
6,000 | — | 6,000 | N/A | ||||||||||||
Impairments
|
(2,917 | ) | — | (2,917 | ) | N/A | ||||||||||
Provision
for possible credit losses
|
(63,577 | ) | — | (63,577 | ) | N/A | ||||||||||
Valuation
allowance on loans held-for-sale
|
(48,259 | ) | — | (48,259 | ) | N/A | ||||||||||
Gain
on sale of investments
|
374 | 15,077 | (14,703 | ) | (97.5 | ) | ||||||||||
Loss
from equity investments
|
(1,988 | ) | (2,109 | ) | 121 | (5.7 | ) | |||||||||
Provision/(benefit)
for income taxes
|
1,893 | (706 | ) | 2,599 | (368.1 | ) | ||||||||||
Net
(loss)/income
|
$ | (57,538 | ) | $ | 84,366 | $ | (141,904 | ) | (168.2 | %) | ||||||
Net
(loss)/income per share - diluted
|
$ | (2.73 | ) | $ | 4.77 | $ | (7.50 | ) | (157.2 | %) | ||||||
Dividend
per share
|
$ | 2.20 | $ | 5.10 | $ | (2.90 | ) | (56.9 | %) | |||||||
Average
LIBOR
|
2.69 | % | 5.25 | % | (2.6 | %) | (48.8 | %) |
Comparison
of Results of Operations: Year Ended December 31, 2007 vs. December 31,
2006
|
||||||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||
2007
|
2006
|
$
Change
|
%
Change
|
|||||||||||||
Income
from loans and other investments:
|
||||||||||||||||
Interest
and related income
|
$ | 253,422 | $ | 175,404 | $ | 78,018 | 44.5 | % | ||||||||
Interest
and related expenses
|
162,377 | 104,607 | 57,770 | 55.2 | ||||||||||||
Income
from loans and other investments, net
|
91,045 | 70,797 | 20,248 | 28.6 | ||||||||||||
Other
revenues:
|
||||||||||||||||
Management
fees
|
3,499 | 2,650 | 849 | 32.0 | ||||||||||||
Incentive
management fees
|
6,208 | 1,652 | 4,556 | 275.8 | ||||||||||||
Servicing
fees
|
623 | 105 | 518 | 493.3 | ||||||||||||
Other
interest income
|
1,083 | 1,354 | (271 | ) | (20.0 | ) | ||||||||||
Total
other revenues
|
11,413 | 5,761 | 5,652 | 98.1 | ||||||||||||
Other
expenses:
|
||||||||||||||||
General
and administrative
|
29,956 | 23,075 | 6,881 | 29.8 | ||||||||||||
Depreciation
and amortization
|
1,810 | 3,049 | (1,239 | ) | (40.6 | ) | ||||||||||
Total
other expenses
|
31,766 | 26,124 | 5,642 | 21.6 | ||||||||||||
(Provision)/recovery
for possible credit losses
|
— | — | — | N/A | ||||||||||||
Gain
on sale of investments
|
15,077 | — | 15,077 | N/A | ||||||||||||
(Loss)/income
from equity investments
|
(2,109 | ) | 898 | (3,007 | ) | (334.9 | ) | |||||||||
Income
tax benefit
|
(706 | ) | (2,735 | ) | 2,029 | (74.2 | ) | |||||||||
Net
income
|
$ | 84,366 | $ | 54,067 | $ | 30,299 | 56.0 | % | ||||||||
Net
income per share - diluted
|
$ | 4.77 | $ | 3.40 | $ | 1.37 | 40.3 | % | ||||||||
Dividend
per share
|
$ | 5.10 | $ | 3.45 | $ | 1.65 | 47.8 | % | ||||||||
Average
LIBOR
|
5.25 | % | 5.10 | % | 0.15 | % | 2.9 | % |
Contractual
Obligations(1)(2)
|
||||||||||||||||||||
(in
millions)
|
||||||||||||||||||||
Payments
due by period
|
||||||||||||||||||||
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
||||||||||||||||
Long-term
debt obligations
|
||||||||||||||||||||
Repurchase
obligations and secured debt
|
$699 | $271 | $410 | $18 | $— | |||||||||||||||
Collateralized
debt obligations
|
1,155 | — | — | — | 1,155 | |||||||||||||||
Senior
unsecured credit facility
|
100 | 100 | — | — | — | |||||||||||||||
Junior
subordinated debentures
|
129 | — | — | — | 129 | |||||||||||||||
Total
long-term debt obligations
|
2,083 | 371 | 410 | 18 | 1,284 | |||||||||||||||
Unfunded
commitments
|
||||||||||||||||||||
Loans
|
54 | — | 15 | 39 | — | |||||||||||||||
Equity
investments
|
22 | — | 22 | — | — | |||||||||||||||
Total
unfunded commitments
|
76 | — | 37 | 39 | — | |||||||||||||||
Operating
lease obligations
|
14 | 1 | 3 | 3 | 7 | |||||||||||||||
Total
|
$2,173 | $372 | $450 | $60 | $1,291 |
(1) |
We
are also subject to interest rate swaps for which we cannot estimate
future payments due.
|
||
(2) |
Contractual
obligations detailed above are as of December 31, 2008, and do not give
effect to the subsequent events described in Note 22 to the consolidated
financial
statements.
|
Item
7A.
|
Quantitative and Qualitative Disclosures about Market
Risk
|
Expected
Maturity/Repayment Dates
|
||||||||||||||||
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
Total
|
Fair
Value
|
|||||||||
(in
thousands)
|
||||||||||||||||
Assets:
|
||||||||||||||||
CMBS
|
||||||||||||||||
Fixed
rate
|
$43,665
|
$17,803
|
$96,927
|
$106,555
|
$178,437
|
$262,552
|
$705,939
|
$493,283
|
||||||||
Interest
rate(1)
|
6.59%
|
7.28%
|
7.38%
|
7.03%
|
6.85%
|
6.13%
|
6.68%
|
|||||||||
Variable
rate
|
$9,054
|
$29,997
|
$18,023
|
$78,054
|
$29,873
|
$9,784
|
$174,785
|
$89,195
|
||||||||
Interest
rate(1)(2)
|
4.34%
|
2.29%
|
2.03%
|
3.78%
|
—
|
2.52%
|
2.65%
|
|||||||||
Loans
receivable
|
||||||||||||||||
Fixed
rate
|
$17,215
|
$1,283
|
$27,831
|
$1,160
|
$1,246
|
$121,626
|
$170,361
|
$162,103
|
||||||||
Interest
rate(1)
|
8.52%
|
8.05%
|
8.46%
|
7.79%
|
7.78%
|
7.59%
|
7.83%
|
|||||||||
Variable
rate
|
$51,990
|
$138,138
|
$847,565
|
$577,597
|
$847
|
$11,358
|
$1,627,495
|
$1,427,826
|
||||||||
Interest
rate(1)
|
4.27%
|
4.07%
|
3.18%
|
3.77%
|
2.40%
|
2.40%
|
3.49%
|
|||||||||
Loans
held-for-sale
|
||||||||||||||||
Variable
rate
|
$—
|
$—
|
$—
|
$140,719
|
$—
|
$—
|
$140,719
|
$92,175
|
||||||||
Interest
rate(1)
|
—
|
—
|
—
|
2.54%
|
—
|
—
|
2.54%
|
|||||||||
Debt
Obligations:
|
||||||||||||||||
Repurchase
obligations and secured debt
|
|
|||||||||||||||
Variable
rate
|
$210,671
|
$424,553
|
$—
|
$—
|
$63,830
|
$—
|
$699,054
|
$699,054
|
||||||||
Interest
rate(1)
|
2.26%
|
1.88%
|
—
|
—
|
1.78%
|
—
|
1.99%
|
|||||||||
CDOs
|
||||||||||||||||
Fixed
rate
|
$7,677
|
$5,136
|
$42,200
|
$57,804
|
$111,589
|
$45,100
|
$269,506
|
$121,328
|
||||||||
Interest
rate(1)
|
5.41%
|
5.49%
|
5.16%
|
5.16%
|
5.19%
|
5.95%
|
5.32%
|
|||||||||
Variable
rate
|
$48,775
|
$140,287
|
$238,758
|
$218,501
|
$50,646
|
$188,031
|
$884,998
|
$319,917
|
||||||||
Interest
rate(1)
|
0.79%
|
0.76%
|
0.84%
|
1.00%
|
0.89%
|
1.09%
|
0.92%
|
|||||||||
Senior
unsecured credit facility
|
|
|||||||||||||||
Fixed
rate
|
$100,000
|
$—
|
$—
|
$—
|
$—
|
$—
|
$100,000
|
$94,155
|
||||||||
Interest
rate(1)
|
2.19%
|
—
|
—
|
—
|
—
|
—
|
2.19%
|
|||||||||
Junior
subordinated debt
|
||||||||||||||||
Fixed
rate
|
$—
|
$—
|
$—
|
$—
|
$—
|
$128,875
|
$128,875
|
$80,099
|
||||||||
Interest
rate(1)
|
—
|
—
|
—
|
—
|
—
|
7.20%
|
7.20%
|
|||||||||
Participations
sold
|
||||||||||||||||
Variable
rate
|
$—
|
$—
|
$91,220
|
$201,515
|
$—
|
$—
|
$292,735
|
$258,416
|
||||||||
Interest
rate(1)
|
—
|
—
|
2.30%
|
4.34%
|
—
|
—
|
3.70%
|
|||||||||
Derivative Financial Instruments: |
|
|||||||||||||||
Interest
rate swaps
|
||||||||||||||||
Notional
amounts
|
$48,733
|
$13,383
|
$46,400
|
$81,887
|
$39,947
|
$235,529
|
$465,879
|
$(47,974)
|
||||||||
Fixed
pay rate(1)
|
4.77%
|
5.06%
|
4.65%
|
4.98%
|
4.97%
|
5.06%
|
4.97%
|
|||||||||
Variable
receive rate(1)
|
0.51%
|
0.52%
|
0.60%
|
0.51%
|
0.51%
|
0.57%
|
0.55%
|
(1) |
Represents weighted
average rates where applicable. Expected repayment dates and amounts are
as of December 31, 2008, and do not give effect to the subsequent events
described in Note 22.
|
|
(2)
|
For
$37.9 million face value ($37.5 million book value) of CMBS investments,
calculations use an effective rate based on cash
received.
|
Item
8.
|
Financial Statements and Supplementary
Data
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
Item
9A.
|
Controls
and Procedures
|
Item
9B.
|
Other
Information
|
Item
10.
|
Directors,
Executive Officers and Corporate
Governance
|
Item
11.
|
Executive
Compensation
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
Item
14.
|
Principal
Accounting Fees and Services
|
Item
15.
|
Exhibits,
Financial Statement Schedules
|
(a) (1)
|
Financial
Statements
|
See
the accompanying Index to Financial Statement Schedule on
page F-1.
|
|
(a) (2)
|
Consolidated Financial
Statement Schedules
|
See
the accompanying Index to Financial Statement Schedule on
page F-1.
|
|
(a) (3)
|
Exhibits
|
Exhibit
Number
|
Description
|
|
3.1.a
|
Charter
of the Capital Trust, Inc. (filed as Exhibit 3.1.a to Capital
Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788)
filed on April 2, 2003 and incorporated herein by
reference).
|
|
3.1.b
|
Certificate
of Notice (filed as Exhibit 3.1 to Capital Trust, Inc.’s Current
Report on Form 8-K (File No. 1-14788) filed on February 27,
2007 and incorporated herein by reference).
|
|
3.2.a
|
Amended
and Restated By-Laws of Capital Trust, Inc. (filed as
Exhibit 3.2 to Capital Trust, Inc.’s Current Report on
Form 8-K (File No. 1-14788) filed on January 29, 1999 and
incorporated herein by reference).
|
|
3.2.b
|
Second
Amended and Restated By-Laws of Capital Trust, Inc. (filed as
Exhibit 3.2 to Capital Trust, Inc.’s Current Report on
Form 8-K (File No. 1-4788) filed on February 27, 2007 and
incorporated herein by reference).
|
|
3.3
|
First
Amendment to Amended and Restated Bylaws of Capital Trust, Inc.
(filed as Exhibit 3.2 to Capital Trust, Inc.’s Quarterly Report
on Form 10-Q (File No. 1-14788) filed on August 16, 2004
and incorporated herein by reference).
|
|
+
10.1
|
Capital
Trust, Inc. Second Amended and Restated 1997 Long-Term Incentive
Stock Plan (the “1997 Plan”) (filed as Exhibit 10.1 to Capital
Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788)
filed on March 10, 2005 and incorporated herein by
reference).
|
|
+
10.2
|
Capital
Trust, Inc. Amended and Restated 1997 Non-Employee Director Stock
Plan (filed as Exhibit 10.2 to Capital Trust, Inc.’s Current
Report on Form 8-K (File No. 1-14788) filed on January 29,
1999 and incorporated herein by reference) (the “1997 Director
Plan”).
|
|
+
10.3
|
Capital
Trust, Inc. 1998 Employee Stock Purchase Plan (filed as
Exhibit 10.3 to Capital Trust, Inc.’s Current Report on
Form 8-K (File No. 1-14788) filed on January 29, 1999 and
incorporated herein by reference).
|
|
+
10.4
|
Capital
Trust, Inc. 1998 Non-Employee Stock Purchase Plan (filed as
Exhibit 10.4 to Capital Trust, Inc.’s Current Report on
Form 8-K (File No. 1-14788) filed on January 29, 1999 and
incorporated herein by reference).
|
|
+
10.5
|
Capital
Trust, Inc. Amended and Restated 2004 Long-Term Incentive Plan (the
“2004 Plan”) (filed as Exhibit 10.5 to Capital Trust, Inc.’s
Annual Report on Form 10-K (File No. 1-14788) filed on
March 10, 2005 and incorporated herein by
reference).
|
|
+
10.6
|
2007
Amendment to the 2004 Plan (filed as Exhibit 10.6 to Capital
Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788)
filed on March 5, 2008 and incorporated herein by
reference).
|
|
+
10.7
|
Form of
Award Agreement granting Restricted Shares and Performance Units under the
2004 Plan (filed as Exhibit 99.1 to Capital Trust, Inc.’s
Current Report on Form 8-K (File No. 1-14788) filed on
February 10, 2005 and incorporated herein by
reference).
|
|
+
10.8
|
Form of
Award Agreement granting Performance Units under the 2004 Plan (filed as
Exhibit 10.7 to Capital Trust, Inc.’s Annual Report on
Form 10-K (File No. 1-14788) filed on March 10, 2005 and
incorporated herein by reference).
|
|
+
10.9
|
Form of
Award Agreement granting Performance Units under the 2004 Plan (filed as
Exhibit 10.8 to Capital Trust, Inc.’s Annual Report on
Form 10-K (File No. 1-14788) filed on March 10, 2005 and
incorporated herein by
reference).
|
Exhibit
Number
|
Description
|
|
+
10.10
|
Form of
Award Agreement granting Performance Units under the 2004 Plan (filed as
Exhibit 10.9 to Capital Trust, Inc.’s Annual Report on
Form 10-K (File No. 1-14788) filed on March 10, 2005 and
incorporated herein by reference).
|
|
+
10.11
|
Form of
Stock Option Award Agreement under the 2004 Plan (filed as
Exhibit 10.10 to Capital Trust, Inc.’s Annual Report on
Form 10-K (File No. 1-14788) filed on March 10, 2005 and
incorporated herein by reference).
|
|
+
10.12
|
Form of
Restricted Share Award Agreement under the 2004 Plan (filed as
Exhibit 10.11 to Capital Trust, Inc.’s Annual Report on
Form 10-K (File No. 1-14788) filed on March 10, 2005 and
incorporated herein by reference).
|
|
+
10.13
|
Deferral
and Distribution Election Form for Restricted Share Award Agreement
under the 2004 Plan (filed as Exhibit 10.12 to Capital
Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788)
filed on March 10, 2005 and incorporated herein by
reference).
|
|
+
10.14
|
Form of
Restricted Share Unit Award Agreement under the 2004 Plan (filed as
Exhibit 10.13 to Capital Trust, Inc.’s Annual Report on
Form 10-K (File No. 1-14788) filed on March 10, 2005 and
incorporated herein by reference).
|
|
+
10.15
|
Deferral
and Distribution Election Form for Restricted Share Unit Award
Agreement under the 2004 Plan (filed as Exhibit 10.14 to Capital
Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788)
filed on March 10, 2005 and incorporated herein by
reference).
|
|
+
10.16
|
Deferred
Share Unit Program Election Forms under the 2004 Plan (filed as
Exhibit 10.15 to Capital Trust, Inc.’s Annual Report on
Form 10-K (File No. 1-14788) filed on March 10, 2005 and
incorporated herein by reference).
|
|
+
10.17
|
Director
Retainer Deferral Election Form for Stock Units under the 1997 Plan.
(filed as Exhibit 10.16 to Capital Trust, Inc.’s Annual Report
on Form 10-K (File No. 1-14788) filed on March 10, 2005 and
incorporated herein by reference).
|
|
+10.18
|
Form of
Award Agreement granting Performance Awards under the Company’s Amended
and Restated 2004 Long-Term Incentive Plan (filed as Exhibit 10.1 to
Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File
No. 1-14788) filed on May 4, 2005 and incorporated herein by
reference).
|
|
+10.19
|
Capital
Trust, Inc. 2007 Long-Term Incentive Plan (the “2007 Plan”) (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No.
1-14788) filed on June 12, 2007 and incorporated herein by
reference).
|
|
+10.20
|
2007
Amendment to the 2007 Plan (filed as Exhibit 10.20 to Capital Trust,
Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 5,
2008 and incorporated herein by reference).
|
|
+10.21
|
Form
of Award Agreement granting Restricted Shares and Performance Units under
the 2007 Plan (filed as Exhibit 10.3 to Capital Trust, Inc.’s Quarterly
Report on Form 10-Q (File No. 1-14788) filed on November 7, 2007 and
incorporated herein by
reference).
|
Exhibit
Number
|
Description
|
|
+10.22
|
Form
of Restricted Share Award Agreement under the 2007 Plan (filed as Exhibit
10.4 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No.
1-14788) filed on November 7, 2007 and incorporated herein by
reference).
|
|
+10.23
|
Form
of Performance Unit and Performance Share Award Agreement under the 2007
Plan (filed as Exhibit 10.5 to Capital Trust, Inc.’s Quarterly Report on
Form 10-Q (File No. 1-14788) filed on November 7, 2007 and incorporated
herein by reference).
|
|
+10.24
|
Form
of Stock Option Award Agreement under the 2007 Plan (filed as Exhibit 10.6
to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788)
filed on November 7, 2007 and incorporated herein by
reference).
|
|
+10.25
|
Form
of SAR Award Agreement under the 2007 Plan (filed as Exhibit 10.7 to
Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788)
filed on November 7, 2007 and incorporated herein by
reference).
|
|
+10.26
|
Form
of Restricted Share Unit Award Agreement under the 2007 Plan (filed as
Exhibit 10.8 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File
No. 1-14788) filed on November 7, 2007 and incorporated herein by
reference).
|
|
+10.27
|
Deferral
Election Agreement for Deferred Share Units under the 2007 Plan (filed as
Exhibit 10.9 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File
No. 1-14788) filed on November 7, 2007 and incorporated herein by
reference).
|
|
+10.28
|
Deferral
Election Agreement for Selected Plan Awards, dated as of December 24,
2007, by and between Capital Trust, Inc. and John R. Klopp (filed as
Exhibit 10.28 to Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on March 5, 2008 and incorporated herein by
reference).
|
|
+10.29
|
Deferral
Election Agreement for Selected Plan Awards, dated as of December 24,
2007, by and between Capital Trust, Inc. and Geoffrey G. Jervis (filed as
Exhibit 10.29 to Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on March 5, 2008 and incorporated herein by
reference).
|
|
+10.30
|
Deferral
Election Agreement for Selected Plan Awards, dated as of December 24,
2007, by and between Capital Trust, Inc. and Geoffrey G. Jervis (filed as
Exhibit 10.30 to Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on March 5, 2008 and incorporated herein by
reference).
|
|
+10.31
|
Deferral
Election Agreement for Selected Plan Awards, dated as of December 24,
2007, by and between Capital Trust, Inc. and Geoffrey G. Jervis (filed as
Exhibit 10.31 to Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on March 5, 2008 and incorporated herein by
reference).
|
|
+10.32
|
Deferral
Election Agreement for Selected Plan Awards, dated as of December 24,
2007, by and between Capital Trust, Inc. and Stephan D. Plavin (filed as
Exhibit 10.32 to Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on March 5, 2008 and incorporated herein by
reference).
|
Exhibit
Number
|
Description
|
|
+10.33
|
Deferral
Election Agreement for Selected Plan Awards, dated as of December 24,
2007, by and between Capital Trust, Inc. and Thomas C. Ruffing (filed as
Exhibit 10.33 to Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on March 5, 2008 and incorporated herein by
reference).
|
|
+10.34.a
|
Employment
Agreement, dated as of February 24, 2004, by and between Capital
Trust, Inc. and CT Investment Management Co., LLC and John R. Klopp
(filed as Exhibit 10.1 to Capital Trust, Inc.’s Quarterly Report
on Form 10-Q (File No. 1-14788) filed on May 12, 2004 and
incorporated herein by reference).
|
|
•+10.34.b
|
Letter
Agreement, dated as of December 31, 2008, by and among Capital Trust,
Inc., CT Investment Management Co., LLC and John R.
Klopp.
|
|
•+
10.35
|
Amended
and Restated Employment Agreement, dated as of January 1, 2009, by and
between Capital Trust, Inc. and Stephen D. Plavin.
|
|
+
10.36.a
|
Employment
Agreement, dated as of September 29, 2006, by and among Capital
Trust, Inc., CT Investment Management Co., LLC and Geoffrey G. Jervis
(filed as Exhibit 10.3 to Capital Trust, Inc.’s Quarterly Report
on Form 10-Q (File No. 1-14788) filed on October 30, 2006
and incorporated herein by reference).
|
|
•+
10.36.b
|
Letter
Agreement, dated as of December 31, 2008, by and among Capital Trust,
Inc., CT Investment Management Co., LLC and Geoffrey
Jervis.
|
|
+
10.37.a
|
Employment
Agreement, dated as of August 4, 2006, by and among Capital Trust,
Inc., CT Investment Management Co., LLC and Thomas C. Ruffing (filed as
Exhibit 10.2 to Capital Trust, Inc.’s Quarterly Report on
Form 10-Q (File No. 1-14788) filed on August 8, 2006 and
incorporated herein by reference).
|
|
•+
10.37.b
|
Letter
Agreement, dated as of December 31, 2008, by and among Capital Trust,
Inc., CT Investment Management Co., and Thomas Ruffing.
|
|
+10.38
|
Termination
Agreement, dated as of December 29, 2000, by and between Capital
Trust, Inc. and Craig M. Hatkoff (filed as Exhibit 10.9 to
Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on April 2, 2001 and incorporated herein by
reference).
|
|
+
10.39
|
Transition
Agreement dated May 26, 2005, by and between the Company and Brian H.
Oswald (filed as Exhibit 10.1 to the Company’s Current Report on
Form 8-K (File No. 1-14788) filed on May 27, 2005 and
incorporated herein by reference).
|
|
+
10.40
|
Consulting
Services Agreement, dated as of January 1, 2003, by and between CT
Investment Management Co., LLC and Craig M. Hatkoff. (filed as
Exhibit 10.1 to Capital Trust, Inc.’s Quarterly Report on
Form 10-Q (File No. 1-14788) filed on November 6, 2003 and
incorporated herein by
reference).
|
Exhibit
Number
|
Description
|
|
+10.41
|
Summary
of Non-Employee Director Compensation (filed as Exhibit 10.51 to Capital
Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on
February 28, 2007 and incorporated herein by
reference).
|
|
+10.42
|
Summary
of Non-Employee Director Compensation (filed as Exhibit 10.51 to the
Company’s Annual Report on Form 10-K (File No. 1-14788) filed on February
28, 2007 and incorporated herein by reference).
|
|
10.43
|
Agreement
of Lease dated as of May 3, 2000, between 410 Park Avenue Associates,
L.P., owner, and Capital Trust, Inc., tenant (filed as
Exhibit 10.11 to Capital Trust, Inc.’s Annual Report on
Form 10-K (File No. 1-14788) filed on April 2, 2001 and
incorporated herein by reference).
|
|
10.44
|
Additional
Space, Lease Extension and First Lease Modification Agreement, dated as of
May 23, 2007, by and between 410 Park Avenue Associates, L.P. and Capital
Trust, Inc. (filed as Exhibit 10.74 to Capital Trust, Inc.’s Annual Report
on Form 10-K (File No. 1-14788) filed on March 5, 2008 and incorporated
herein by reference).
|
|
10.45.a
|
Amended
and Restated Master Loan and Security Agreement, dated as of June 27,
2003, between Capital Trust, Inc., CT Mezzanine Partners I LLC and
Morgan Stanley Mortgage Capital Inc. (filed as Exhibit 10.4 to
Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File
No. 1-14788) filed on November 6, 2003 and incorporated herein
by reference).
|
|
10.45.b
|
Joinder
and Amendment, dated as of July 20, 2004, among Capital
Trust, Inc., CT Mezzanine Partners I LLC, CT RE CDO 2004-1 Sub, LLC
and Morgan Stanley Mortgage Capital Inc. (filed as Exhibit 10.21.b to
Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on March 10, 2005 and incorporated herein by
reference).
|
|
10.46.a
|
Master
Repurchase Agreement, dated as of July 29, 2005, by and among the
Company, CT RE CDO 2004-1 Sub, LLC, CT RE CDO 2005-1 Sub, LLC and Morgan
Stanley Bank (filed as Exhibit 10.2 to Capital Trust, Inc.’s
Quarterly Report on Form 10-Q (File No. 1-14788) filed on
November 1, 2005 and incorporated herein by
reference).
|
|
10.46.b
|
Amendment
No. 1 to the Master Repurchase Agreement, dated as of
November 4, 2005, by and among Capital Trust, Inc., CT RE CDO
2004-1 Sub, LLC, CT RE CDO 2005-1 Sub, LLC and Morgan Stanley Bank (filed
as Exhibit 10.1 to Capital Trust, Inc.’s Current Report on
Form 8-K (File No. 1-14788) filed on November 9, 2005 and
incorporated herein by reference).
|
|
*10.46.c
|
Amendment
No. 5 to Master Repurchase Agreement, dated as of February 14, 2007, by
and among Capital Trust, Inc., CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1
SUB, LLC and Morgan Stanley Bank (filed as Exhibit 10.4 to Capital Trust,
Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on May 1,
2007 and incorporated herein by
reference).
|
•10.46.d
|
Amendment
No. 10 to Master Repurchase Agreement, dated as of March 16, 2009, by and
among Capital Trust, Inc., CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1
SUB, LLC, CT XLC Holding, LLC and Morgan Stanley Bank,
N.A.
|
10.47.a
|
Amended
and Restated Master Repurchase Agreement, dated as of August 15, 2006, by
and between Goldman Sachs Mortgage Company and Capital Trust, Inc.
(filed as Exhibit 10.1.a to Capital Trust, Inc.’s Quarterly
Report on Form 10-Q (File No. 1-14788) filed on October 30,
2006 and incorporated herein by
reference).
|
Exhibit
Number
|
Description
|
|
10.47.b
|
Annex
I to Amended and Restated Master Repurchase Agreement, dated as of
August 15, 2006, by and between Goldman Sachs Mortgage Company and
Capital Trust, Inc. (filed as Exhibit 10.1.b to Capital
Trust, Inc.’s Quarterly Report on Form 10-Q (File
No. 1-14788) filed on October 30, 2006 and incorporated herein
by reference).
|
|
10.47.c
|
Letter,
dated as of August 15, 2006, by and between Goldman Sachs Mortgage
Company and Capital Trust, Inc. (filed as Exhibit 10.1.c to
Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File
No. 1-14788) filed on October 30, 2006 and incorporated herein
by reference).
|
10.47d
|
Amended
and Restated Annex I to Amended and Restated Master Repurchase Agreement,
dated as of October 30, 2007, by and between Goldman Sachs Mortgage
Company and Capital
Trust, Inc.
|
•10.47e
|
Agreement,
dated as of March 16, 2009, by Capital Trust, Inc. and Goldman Sachs
Mortgage Company.
|
•10.47f
|
Termination
of Master Repurchase Agreement, dated as of March 16, 2009, between
Capital Trust, Inc. and Goldman Sachs Mortgage
Company.
|
10.48
|
Master
Repurchase Agreement, dated as of March 4, 2005, by and among Capital
Trust, Inc., Bank of America, N.A. and Banc of America Securities
LLC. (filed as Exhibit 10.25 to Capital Trust, Inc.’s Annual
Report on Form 10-K (File No. 1-14788) filed on March 10,
2005 and incorporated herein by reference).
|
|
•10.49a
|
Master
Repurchase Agreement, dated as of October 24, 2008, by and among Capital
Trust, Inc., CT BSI Funding Corp. and JPMorgan Chase Bank, N.A.
(reflecting JPMorgan Chase Bank, N.A. as successor to Bear, Stearns
Funding, Inc. under the Amended and Restated Master Repurchase Agreement,
dated as of February 15, 2006, by and among Bear, Stearns Funding, Inc.,
Capital Trust, Inc. and CT BSI Funding Corp., as amended by that certain
Amendment No. 1, dated as of February 7, 2007, and as amended by that
certain Amendment No. 2, dated as of June 30,
2008).
|
•10.49b
|
Amendment
No. 1 to Master Repurchase Agreement, dated as of March 16, 2009, by and
among CT BSI Funding Corp., Capital Trust, Inc., and JPMorgan Chase Bank,
N.A.
|
•10.50a
|
Master
Repurchase Agreement, dated as of November 21, 2008, by and among Capital
Trust, Inc., CT BSI Funding Corp. and JPMorgan Chase Funding Inc.
(reflecting JPMorgan Chase Bank, N.A. as successor to Bear, Stearns
International Limited under the Amended and Restated Master Repurchase
Agreement, dated as of February 15, 2006, by and among Bear, Stearns
International Limited, Capital Trust, Inc. and CT BSI Funding Corp., as
amended by that certain Amendment No. 1, dated as of February 7, 2007, and
as amended by that certain Amendment No. 2, dated as of June 30,
2008).
|
•10.50b
|
Amendment
No. 1 to Master Repurchase Agreement, dated as of March 16, 2009, by and
among Capital Trust, Inc., CT BSI Funding Corp. and JP Morgan Chase
Funding Inc.
|
10.51
|
Limited
Liability Company Agreement of CT MP II LLC, by and among Travelers
General Real Estate Mezzanine Investments II, LLC and CT-F2-GP, LLC, dated
as of March 8, 2000 (filed as Exhibit 10.3 to the Company’s
Current Report on Form 8-K (File No. 1-14788) filed on
March 23, 2000 and incorporated herein by
reference).
|
|
10.52
|
Venture
Agreement amongst Travelers Limited Real Estate Mezzanine Investments I,
LLC, Travelers General Real Estate Mezzanine Investments II, LLC,
Travelers Limited Real Estate Mezzanine Investments II, LLC, CT-F1, LLC,
CT-F2-GP, LLC, CT-F2-LP, LLC, CT Investment Management Co., LLC and
Capital Trust, Inc., dated as of March 8, 2000 (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K (File
No. 1-14788) filed on March 23, 2000 and incorporated herein by
reference).
|
|
10.53
|
Guaranty
of Payment, by Capital Trust, Inc. in favor of Travelers Limited Real
Estate Mezzanine Investments I, LLC, Travelers General Real Estate
Mezzanine Investments II, LLC and Travelers Limited Real Estate Mezzanine
Investments II, LLC, dated as of March 8, 2000 (filed as
Exhibit 10.6 to the Company’s Current Report on Form 8-K (File
No. 1-14788) filed on March 23, 2000 and incorporated herein by
reference).
|
Exhibit
Number
|
Description
|
|
10.54
|
Guaranty
of Payment, by The Travelers Insurance Company in favor of Capital
Trust, Inc., CT-F1, LLC, CT-F2-GP, LLC, CT-F2-LP, LLC and CT
Investment Management Co., LLC, dated as of March 8, 2000 (filed as
Exhibit 10.8 to the Company’s Current Report on Form 8-K (File
No. 1-14788) filed on March 23, 2000 and incorporated herein by
reference).
|
|
10.55
|
Amended
and Restated Investment Management Agreement, dated as of April 9,
2001, by and among CT Investment Management Co. LLC, CT MP II LLC and CT
Mezzanine Partners II LP (filed as Exhibit 10.37 to Capital
Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788)
filed on March 10, 2006 and incorporated herein by
reference).
|
|
10.56
|
Registration
Rights Agreement, dated as of July 28, 1998, among Capital Trust,
Vornado Realty L.P., EOP Limited Partnership, Mellon Bank N.A., as trustee
for General Motors Hourly-Rate Employees Pension Trust, and Mellon Bank
N.A., as trustee for General Motors Salaried Employees Pension Trust
(filed as Exhibit 10.2 to Capital Trust’s Current Report on
Form 8-K (File No. 1-8063) filed on August 6, 1998 and
incorporated herein by reference).
|
|
10.57
|
Registration
Rights Agreement, dated as of February 7, 2003, by and between
Capital Trust, Inc. and Stichting Pensioenfonds ABP (filed as
Exhibit 10.24 to Capital Trust, Inc.’s Annual Report on
Form 10-K (File No. 1-14788) filed on March 28, 2003 and
incorporated herein by reference).
|
|
10.58
|
Registration
Rights Agreement, dated as of June 18, 2003, by and among Capital
Trust, Inc. and the parties named therein (filed as Exhibit 10.2
to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File
No. 1-14788) filed on May 12, 2004 and incorporated herein by
reference).
|
|
10.59
|
Securities
Purchase Agreement, dated as of May 11, 2004, by and among Capital
Trust, Inc. W. R. Berkley Corporation and certain shareholders of
Capital Trust, Inc. (filed as Exhibit 10.1 to Capital
Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788)
filed on May 11, 2004 and incorporated herein by
reference).
|
|
10.60
|
Registration
Rights Agreement dated as of May 11, 2004, by and among Capital
Trust, Inc. and W. R. Berkley Corporation (filed as Exhibit 10.2
to Capital Trust, Inc.’s Current Report on Form 8-K (File
No. 1-14788) filed on May 11, 2004 and incorporated herein by
reference).
|
•10.61
|
Junior
Subordinated Indenture, dated as of March 16, 2009, between Capital Trust,
Inc. and The Bank of New York Mellon Trust Company, National Association,
as Trustee.
|
10.62
|
Amended
and Restated Trust Agreement, dated February 10, 2006, by and among
Capital Trust, Inc., JP Morgan Chase Bank, N.A., Chase Bank USA, N.A.
and the Administrative Trustees named therein (filed as Exhibit 10.2
to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File
No. 1-14788) filed on May 4, 2006 and incorporated herein by
reference).
|
Exhibit
Number
|
Description
|
|
10.63
|
Investment
Management Agreement, dated as of November 9, 2006, by and between Berkley
Insurance Company and CT High Grade Mezzanine Manager, LLC (filed as
Exhibit 10.48 to Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on February 28, 2007 and incorporated herein by
reference).
|
|
10.64
|
Investment
Management Agreement, dated as of November 9, 2006, by and between Berkley
Regional Insurance Company and CT High Grade Mezzanine Manager, LLC (filed
as Exhibit 10.49 to Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on February 28, 2007 and incorporated herein by
reference).
|
|
10.65
|
Investment
Management Agreement, dated as of November 9, 2006, by and between Admiral
Insurance Company and CT High Grade Mezzanine Manager, LLC (filed as
Exhibit 10.50 to Capital Trust, Inc.’s Annual Report on Form 10-K (File
No. 1-14788) filed on February 28, 2007 and incorporated herein by
reference).
|
|
10.66
|
Junior
Subordinated Indenture, dated as of March 29, 2007, by and between Capital
Trust, Inc. and The Bank of New York Trust Company, National Association
(filed as Exhibit 10.1 to Capital Trust, Inc.’s Quarterly Report on Form
10-Q (File No. 1-14788) filed on May 1, 2007 and incorporated herein by
reference).
|
|
|
||
10.67
|
Amended
and Restated Trust Agreement, dated as of March 29, 2007, by and among
Capital Trust, Inc., The Bank of New York Trust Company, National
Association, The Bank of New York (Delaware) and the Administrative
Trustees named therein. (filed as Exhibit 10.2 to Capital Trust, Inc.’s
Quarterly Report on Form 10-Q (File No. 1-14788) filed on May 1, 2007 and
incorporated herein by reference).
|
10.68
|
Master
Repurchase Agreement, dated as of July 30, 2007, by and among Capital
Trust, Inc., Citigroup Global Markets, Inc. and Citigroup Financial
Products Inc. (filed as Exhibit 10.1 to Capital Trust, Inc.’s Quarterly
Report on Form 10-Q (File No. 1-14788) filed on November 7, 2007 and
incorporated herein by reference).
|
|
•10.69
|
Amendment
No. 3 to Master Repurchase Agreement, dated as of March 16, 2009, by and
between Capital Trust, Inc., and Citigroup Global Markets, Inc. and
Citigroup Financial Products Inc.
|
|
•10.70
|
Amended
and Restated Credit Agreement, dated as of March 16, 2009, among Capital
Trust, Inc., the lenders party thereto and WestLB AG, New York
Branch.
|
|
•10.71
|
Satisfaction,
Termination and Release Agreement, dated as of February 25, 2009, between
UBS Real Estate Securities Inc. and Capital Trust, Inc.
|
|
•10.72
|
Exchange
Agreement, dated as of March 16, 2009, by and among Capital Trust, Inc.,
Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VI, Ltd.,
Taberna Preferred Funding VIII, Ltd. and Taberna Preferred Funding IX,
Ltd.
|
|
•10.73
|
Pledge
and Security Agreement, dated as of March 16, 2009, by and between Capital
Trust, Inc., and WestLB AG, New York
Branch.
|
11.1
|
Statements
regarding Computation of Earnings per Share (Data required by Statement of
Financial Accounting Standard No. 128, Earnings per Share, is
provided in Note 12 to the consolidated financial statements contained in
this report).
|
|
14.1
|
Capital
Trust, Inc. Code of Business Conduct and Ethics (filed as Exhibit
14.1 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No.
1-14788) filed on February 28, 2007 and incorporated herein by
reference).
|
Exhibit
Number
|
Description
|
|
•
21.1
|
Subsidiaries
of Capital Trust, Inc.
|
|
•
23.1
|
Consent
of Ernst & Young LLP
|
|
•
31.1
|
Certification
of Chief Executive Officer, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
•
31.2
|
Certification
of Chief Financial Officer, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
•
32.1
|
Certification
of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
•
32.2
|
Certification
of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
+
|
Represents
a management contract or compensatory plan or
arrangement.
|
•
|
Filed
herewith.
|
*
|
Portions
of this exhibit has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a confidential treatment request under
Rule 24b-2 of the Securities and Exchange Act of 1934, as
amended.
|
March
16, 2009
|
/s/
John R. Klopp
|
||
Date
|
John
R. Klopp
|
||
Chief
Executive Officer
|
March
16, 2009
|
/s/
Samuel Zell
|
||||
Date
|
Samuel
Zell
|
||||
Chairman
of the Board of Directors
|
|||||
March
16, 2009
|
/s/
John R. Klopp
|
||||
Date
|
John
R. Klopp
|
||||
Chief
Executive Officer and Director
|
|||||
March
16, 2009
|
/s/
Geoffrey G. Jervis
|
||||
Date
|
Geoffrey
G. Jervis
|
||||
Chief
Financial Officer
|
|||||
March
16, 2009
|
/s/
Thomas E. Dobrowski
|
||||
Date
|
Thomas
E. Dobrowski, Director
|
||||
March
16, 2009
|
/s/
Martin L. Edelman
|
||||
Date
|
Martin
L. Edelman, Director
|
||||
March
16, 2009
|
/s/
Craig M. Hatkoff
|
||||
Date
|
Craig
M. Hatkoff, Director
|
||||
March
16, 2009
|
/s/
Edward S. Hyman
|
||||
Date
|
Edward
S. Hyman, Director
|
||||
March
16, 2009
|
/s/
Henry N. Nassau
|
||||
Date
|
Henry
N. Nassau, Director
|
||||
March
16, 2009
|
/s/
Joshua A. Polan
|
||||
Date
|
Joshua
A. Polan, Director
|
||||
March
16, 2009
|
/s/
Lynne B. Sagalyn
|
||||
Date
|
Lynne
B. Sagalyn, Director
|
||||
Report
of Independent Registered Public Accounting Firm
|
F-2
|
||
Management’s
Report of Internal Control over Financial Reporting
|
F-3
|
||
Management’s
Responsibility for Financial Statements
|
F-4
|
||
Report
of Independent Registered Public Accounting Firm
|
F-5
|
||
Audited
Financial Statements
|
|||
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
F-6
|
||
Consolidated
Statements of Operations for the years ended December 31, 2008,
2007 and 2006
|
F-7
|
||
Consolidated
Statements of Shareholders’ Equity for the years ended
December 31, 2008, 2007 and 2006
|
F-8
|
||
Consolidated
Statements of Cash Flows for the years ended December 31, 2008,
2007 and 2006
|
F-9
|
||
Notes
to Consolidated Financial Statements
|
F-10
|
||
Schedule IV—Mortgage
Loans on Real Estate
|
S-1
|
/s/
Ernst & Young LLP
|
||
New
York, NY
|
||
March
16, 2009
|
John
R. Klopp
|
Geoffrey
G. Jervis
|
Chief
Executive Officer
|
Chief
Financial Officer
|
John
R. Klopp
|
Geoffrey
G. Jervis
|
Chief
Executive Officer
|
Chief
Financial Officer
|
/s/
Ernst & Young LLP
|
|
New
York, New York
|
|
March
16, 2009
|
Capital
Trust, Inc. and Subsidiaries
|
||||||||
Consolidated
Balance Sheets
|
||||||||
December
31, 2008 and 2007
|
||||||||
(in
thousands except share data)
|
||||||||
Assets
|
2008
|
2007
|
||||||
Cash
and cash equivalents
|
$
|
45,382 |
$
|
25,829 | ||||
Restricted
cash
|
18,821 | 5,696 | ||||||
Commercial
mortgage backed securities
|
852,211 | 876,864 | ||||||
Loans
receivable, net
|
1,791,332 | 2,257,563 | ||||||
Loans
held-for-sale, net
|
92,175 | — | ||||||
Equity
investment in unconsolidated subsidiaries
|
2,383 | 977 | ||||||
Real
estate held-for-sale
|
9,897 | — | ||||||
Deposits
and other receivables
|
1,421 | 3,927 | ||||||
Accrued
interest receivable
|
6,351 | 15,091 | ||||||
Deferred
income taxes
|
1,706 | 3,659 | ||||||
Prepaid
expenses and other assets
|
16,948 | 21,876 | ||||||
Total
assets
|
$
|
2,838,627 |
$
|
3,211,482 | ||||
Liabilities
& Shareholders' Equity
|
||||||||
Liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$
|
10,918 |
$
|
65,682 | ||||
Repurchase
obligations
|
699,054 | 911,857 | ||||||
Collateralized
debt obligations
|
1,156,035 | 1,192,299 | ||||||
Senior
unsecured credit facility
|
100,000 | 75,000 | ||||||
Junior
subordinated debentures
|
128,875 | 128,875 | ||||||
Participations
sold
|
292,669 | 408,351 | ||||||
Interest
rate hedge liabilities
|
47,974 | 18,686 | ||||||
Deferred
origination fees and other revenue
|
1,658 | 2,495 | ||||||
Total
liabilities
|
2,437,183 | 2,803,245 | ||||||
Shareholders'
equity:
|
||||||||
Class
A common stock $0.01 par value 100,000 shares authorized, 21,740 and
17,166 shares issued and outstanding as of December 31, 2008 and December
31, 2007, respectively ("class A common stock")
|
217 | 172 | ||||||
Restricted
class A common stock $0.01 par value, 331 and 424 shares issued and
outstanding as of December 31, 2008 and December 31, 2007, respectively
("restricted class A common stock" and together with class A common stock,
"common stock")
|
3 | 4 | ||||||
Additional
paid-in capital
|
557,435 | 426,113 | ||||||
Accumulated
other comprehensive loss
|
(41,009 | ) | (8,684 | ) | ||||
Accumulated
deficit
|
(115,202 | ) | (9,368 | ) | ||||
Total
shareholders' equity
|
401,444 | 408,237 | ||||||
Total
liabilities and shareholders' equity
|
$
|
2,838,627 |
$
|
3,211,482 | ||||
See
accompanying notes to consolidated financial
statements.
|
Capital
Trust, Inc. and Subsidiaries
|
||||||||||||
Consolidated
Statements of Operations
|
||||||||||||
For
the Years Ended December 31, 2008, 2007 and 2006
|
||||||||||||
(in
thousands, except share and per share data)
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Income
from loans and other investments:
|
||||||||||||
Interest
and related income
|
$
|
194,649 |
$
|
253,422 |
$
|
175,404 | ||||||
Less:
Interest and related expenses
|
129,665 | 162,377 | 104,607 | |||||||||
Income
from loans and other investments, net
|
64,984 | 91,045 | 70,797 | |||||||||
Other
revenues:
|
||||||||||||
Management
fees
|
12,941 | 3,499 | 2,650 | |||||||||
Incentive
management fees
|
— | 6,208 | 1,652 | |||||||||
Servicing
fees
|
367 | 623 | 105 | |||||||||
Other
interest income
|
1,566 | 1,083 | 1,354 | |||||||||
Total
other revenues
|
14,874 | 11,413 | 5,761 | |||||||||
Other
expenses:
|
||||||||||||
General
and administrative
|
24,957 | 29,956 | 23,075 | |||||||||
Depreciation
and amortization
|
179 | 1,810 | 3,049 | |||||||||
Total
other expenses
|
25,136 | 31,766 | 26,124 | |||||||||
Gain
on extinguishment of debt
|
6,000 | — | — | |||||||||
Impairments
|
(2,917 | ) | — | — | ||||||||
Provision
for possible credit losses
|
(63,577 | ) | — | — | ||||||||
Valuation
allowance on loans held-for-sale
|
(48,259 | ) | — | — | ||||||||
Gain
on sale of investments
|
374 | 15,077 | — | |||||||||
(Loss)/income
from equity investments
|
(1,988 | ) | (2,109 | ) | 898 | |||||||
(Loss)/income
before income taxes
|
(55,645 | ) | 83,660 | 51,332 | ||||||||
Provision/(benefit)
for income taxes
|
1,893 | (706 | ) | (2,735 | ) | |||||||
Net
(loss)/income
|
$
|
(57,538 | ) |
$
|
84,366 |
$
|
54,067 | |||||
Per
share information:
|
||||||||||||
Net
(loss)/earnings per share of common stock:
|
||||||||||||
Basic
|
$
|
(2.73 | ) |
$
|
4.80 |
$
|
3.43 | |||||
Diluted
|
$
|
(2.73 | ) |
$
|
4.77 |
$
|
3.40 | |||||
Weighted
average shares of common stock outstanding:
|
||||||||||||
Basic
|
21,098,935 | 17,569,690 | 15,754,655 | |||||||||
Diluted
|
21,098,935 | 17,690,266 | 15,923,397 | |||||||||
Dividends
declared per share of common stock
|
$
|
2.20 |
$
|
5.10 |
$
|
3.45 | ||||||
See
accompanying notes to consolidated financial
statements.
|
Capital
Trust, Inc. and Subsidiaries
|
|||||||||||||||||||||||||||||
Consolidated
Statements of Changes in Shareholders' Equity
|
|||||||||||||||||||||||||||||
For
the Years Ended December 31, 2008, 2007 and 2006
|
|||||||||||||||||||||||||||||
(in
thousands)
|
|||||||||||||||||||||||||||||
Comprehensive
Income
|
|
Class
A
Common
Stock
|
|
Restricted
Class
A
Common
Stock
|
Additional
Paid-In
Capital
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
Accumulated
Deficit
|
Total
|
|||||||||||||||||||||
Balance
at December 31, 2005
|
$
|
149 |
$
|
4 |
$
|
326,299 |
$
|
14,879 |
$
|
(2,481 | ) |
$
|
338,850 | ||||||||||||||||
Net
income
|
$
|
54,067 | — | — | — | — | 54,067 | 54,067 | |||||||||||||||||||||
Unrealized
loss on derivative financial instruments
|
(1,401 | ) | — | — | — | (1,401 | ) | — | (1,401 | ) | |||||||||||||||||||
Unrealized
loss on available for sale security
|
(54 | ) | — | — | — | (54 | ) | — | (54 | ) | |||||||||||||||||||
Amortization
of unrealized gain on securities
|
(1,640 | ) | — | — | — | (1,640 | ) | — | (1,640 | ) | |||||||||||||||||||
Currency
translation adjustments
|
2 | — | — | — | 2 | — | 2 | ||||||||||||||||||||||
Deferred
gain on settlement of swap
|
1,186 | — | — | — | 1,186 | — | 1,186 | ||||||||||||||||||||||
Amortization
of deferred gain on settlement of swap
|
(255 | ) | — | — | — | (255 | ) | — | (255 | ) | |||||||||||||||||||
Shares
of class A common stock issued in public offering
|
— | 20 | — | 86,589 | — | — | 86,609 | ||||||||||||||||||||||
Sale
of shares of class A common stock under stock option
agreement
|
— | — | — | 662 | — | — | 662 | ||||||||||||||||||||||
Reimbursement
of offering expenses
|
— | — | — | 124 | — | — | 124 | ||||||||||||||||||||||
Restricted
class A common stock earned
|
— | — | — | 4,013 | — | — | 4,013 | ||||||||||||||||||||||
Restricted
class A common stock forfeited upon resignation of holder
|
— | — | — | (45 | ) | — | — | (45 | ) | ||||||||||||||||||||
Issuance
of restricted Class A common stock
|
— | — | 1 | (1 | ) | — | — | — | |||||||||||||||||||||
Dividends
declared on common stock
|
— | — | — | — | — | (55,846 | ) | (55,846 | ) | ||||||||||||||||||||
Balance
at December 31, 2006
|
$
|
51,905 | 169 | 5 | 417,641 | 12,717 | (4,260 | ) | 426,272 | ||||||||||||||||||||
Net
income
|
$
|
84,366 | — | — | — | — | 84,366 | 84,366 | |||||||||||||||||||||
Unrealized
loss on derivative financial instruments
|
(19,559 | ) | — | — | — | (19,559 | ) | — | (19,559 | ) | |||||||||||||||||||
Unrealized
gain on securities
|
259 | — | — | — | 259 | — | 259 | ||||||||||||||||||||||
Amortization
of unrealized
gain on securities
|
(1,684 | ) | — | — | — | (1,684 | ) | — | (1,684 | ) | |||||||||||||||||||
Deferred
loss on settlement of swaps
|
(153 | ) | — | — | — | (153 | ) | — | (153 | ) | |||||||||||||||||||
Amortization
of deferred gains and
losses on settlement of swaps
|
(262 | ) | — | — | — | (262 | ) | — | (262 | ) | |||||||||||||||||||
Currency
translation adjustment
|
2,451 | — | — | — | 2,451 | — | 2,451 | ||||||||||||||||||||||
Reclassification
to gain on sale of investments:
|
|||||||||||||||||||||||||||||
Currency
translation adjustment
|
(2,453 | ) | — | — | — | (2,453 | ) | (2,453 | ) | ||||||||||||||||||||
Issuance of stock
relating to business purchase
|
— | — | — | 707 | — | — | 707 | ||||||||||||||||||||||
Sale
of shares of class A common stock under stock option
agreement
|
— | — | — | 3,159 | — | — | 3,159 | ||||||||||||||||||||||
Restricted
class A common stock earned
|
— | 3 | (1 | ) | 4,606 | — | — | 4,608 | |||||||||||||||||||||
Dividends
declared on common stock
|
— | — | — | — | — | (89,474 | ) | (89,474 | ) | ||||||||||||||||||||
Balance
at December 31, 2007
|
$
|
62,965 | 172 | 4 | 426,113 | (8,684 | ) | (9,368 | ) | 408,237 | |||||||||||||||||||
Net
loss
|
$
|
(57,538 | ) | — | — | — | — | (57,538 | ) | (57,538 | ) | ||||||||||||||||||
Unrealized
loss on derivative financial instruments
|
(29,640 | ) | — | — | — | (29,640 | ) | — | (29,640 | ) | |||||||||||||||||||
Unrealized
loss on securities
|
(205 | ) | — | — | — | (205 | ) | — | (205 | ) | |||||||||||||||||||
Amortization
of unrealized gain on securities
|
(1,705 | ) | — | — | — | (1,705 | ) | — | (1,705 | ) | |||||||||||||||||||
Deferred
loss on settlement of swaps
|
(611 | ) | — | — | — | (611 | ) | — | (611 | ) | |||||||||||||||||||
Amortization
of deferred gains and losses on settlement of swaps
|
(164 | ) | — | — | — | (164 | ) | — | (164 | ) | |||||||||||||||||||
Shares of class A
common stock issued in public offering
|
— | 40 | — | 112,567 | — | — | 112,607 | ||||||||||||||||||||||
Sale
of class A common stock under dividend reinvestment plan and stock
purchase plan
|
— | 4 | — | 12,882 | — | — | 12,886 | ||||||||||||||||||||||
Sale
of shares of class A common stock under stock option
agreement
|
— | — | — | 180 | — | — | 180 | ||||||||||||||||||||||
Restricted
class A common stock earned, net of shares deferred
|
— | 1 | (1 | ) | 3,419 | — | — | 3,419 | |||||||||||||||||||||
Deferred
directors' compensation
|
— | — | — | 2,274 | — | — | 2,274 | ||||||||||||||||||||||
Dividends
declared on common stock
|
— | — | — | — | — | (48,296 | ) | (48,296 | ) | ||||||||||||||||||||
Balance
at December 31, 2008
|
$
|
(89,863 | ) |
$
|
217 |
$
|
3 |
$
|
557,435 |
$
|
(41,009 | ) |
$
|
(115,202 | ) |
$
|
401,444 |
See
accompanying notes to consolidated financial
statements.
|
Capital
Trust, Inc. and Subsidiaries
|
||||||||||||
Consolidated
Statement of Cash Flows
|
||||||||||||
For
the Years Ended December 31, 2008, 2007 and 2006
|
||||||||||||
(in
thousands)
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
(loss)/income
|
$
|
(57,538 | ) |
$
|
84,366 |
$
|
54,067 | |||||
Adjustments
to reconcile net (loss)/income to net cash provided by operating
activities:
|
||||||||||||
Depreciation
and amortization
|
179 | 1,810 | 3,048 | |||||||||
Gain
on extinguishment of debt
|
(6,000 | ) | — | — | ||||||||
Provision
for possible credit losses
|
63,577 | 4,000 | — | |||||||||
Valuation
allowance on loans held-for-sale
|
48,259 | — | — | |||||||||
Impairments
|
2,917 | — | — | |||||||||
Gain
on sale of investment
|
(374 | ) | (15,077 | ) | — | |||||||
Deferred
directors compensation
|
525 | 525 | 210 | |||||||||
Loss
from equity investments
|
1,988 | 2,109 | (898 | ) | ||||||||
Distributions
of income from unconsolidated subsidiaries
|
— | 56 | 1,373 | |||||||||
Employee
stock-based compensation
|
3,478 | 4,606 | 3,968 | |||||||||
Settlement
of interest rate hedges
|
(352 | ) | — | — | ||||||||
Amortization
of premiums and discounts on loans, CMBS, and debt,
net
|
(11,505 | ) | (2,685 | ) | (2,029 | ) | ||||||
Amortization
of deferred gains on interest rate hedges
|
(164 | ) | (262 | ) | (255 | ) | ||||||
Amortization
of deferred financing costs
|
5,168 | 5,247 | 3,504 | |||||||||
Changes
in assets and liabilities, net:
|
||||||||||||
Deposits
and other receivables
|
3,551 | 1,772 | 2,568 | |||||||||
Accrued
interest receivable
|
4,341 | (204 | ) | (5,451 | ) | |||||||
Deferred
income taxes
|
1,953 | (50 | ) | 370 | ||||||||
Prepaid
expenses and other assets
|
180 | (1,333 | ) | (784 | ) | |||||||
Deferred
origination fees and other revenue
|
(589 | ) | (2,129 | ) | 4,397 | |||||||
Accounts
payable and accrued expenses
|
(5,524 | ) | 3,983 |
|
736 | |||||||
Net
cash provided by operating activities
|
54,070 | 86,734 |
|
64,824 | ||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchases
of commercial mortgage-backed securities
|
(660 | ) | (110,550 | ) | (392,732 | ) | ||||||
Principal
collections on and proceeds from commercial mortgage-backed
securities
|
30,552 | 44,761 | 69,375 | |||||||||
Origination
and purchase of loans receivable
|
(129,471 | ) | (1,058,968 | ) | (1,423,917 | ) | ||||||
Principal
collections on loans receivable
|
270,802 | 749,145 | 582,519 | |||||||||
Contributions
to unconsolidated subsidiaries
|
(3,473 | ) | (24,122 | ) | (5,845 | ) | ||||||
Return
of capital distributions from unconsolidated subsidiaries
|
— | 2,314 | 5,240 | |||||||||
Proceeds
from sale of equity investment
|
— | 43,638 | — | |||||||||
Purchase
of total return swaps
|
— | — | (4,138 | ) | ||||||||
Proceeds
from total return swaps
|
— | 1,815 | 6,323 | |||||||||
Purchase
of equipment and leasehold improvements
|
(35 | ) | (342 | ) | — | |||||||
Payments
for business purchased
|
— | (1,853 | ) | — | ||||||||
Payment
of capitalized costs
|
— | (126 | ) | — | ||||||||
Increase
in restricted cash
|
(13,125 | ) | (3,989 | ) | (443 | ) | ||||||
Net
cash provided by/(used in) investing activities
|
154,590 |
|
(358,277 | ) | (1,163,618 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Borrowings
under repurchase obligations
|
185,133 | 1,503,568 | 1,508,970 | |||||||||
Repayments
under repurchase obligations
|
(391,936 | ) | (1,296,154 | ) | (1,174,277 | ) | ||||||
Borrowings
under credit facilities
|
25,000 | 150,000 | — | |||||||||
Repayments
under credit facilities
|
— | (75,000 | ) | — | ||||||||
Issuance
of junior subordinated debentures
|
— | 77,325 | 51,550 | |||||||||
Purchase
of common equity in CT Preferred Trust I & CT Preferred Trust
II
|
— | (2,325 | ) | (1,550 | ) | |||||||
Proceeds
from issuance of collateralized debt obligations
|
— | — | 429,398 | |||||||||
Repayment
of collateralized debt obligations
|
(35,945 | ) | (19,892 | ) | (40,643 | ) | ||||||
Proceeds
from participations sold
|
— | — | 287,102 | |||||||||
Settlement
of interest rate hedges
|
(611 | ) | (153 | ) | 1,186 | |||||||
Payment
of deferred financing costs
|
(577 | ) | (2,936 | ) | (5,483 | ) | ||||||
Sale
of class A common stock upon stock option exercise
|
121 | 3,251 | 662 | |||||||||
Dividends
paid on common stock
|
(95,786 | ) | (66,362 | ) | (43,686 | ) | ||||||
Proceeds
from sale of shares of class A common stock
|
112,608 | — | 86,609 | |||||||||
Proceeds
from dividend reinvestment plan and stock purchase plan
|
12,886 | — | — | |||||||||
(Payment)/reimbursement
of offering expenses
|
— | (92 | ) | 124 | ||||||||
Net
cash (used in)/provided by financing activities
|
(189,107 | ) | 271,230 | 1,099,962 | ||||||||
Net
increase/(decrease) in cash and cash equivalents
|
19,553 | (313 | ) | 1,168 | ||||||||
Cash
and cash equivalents at beginning of period
|
25,829 | 26,142 | 24,974 | |||||||||
Cash
and cash equivalents at end of period
|
$
|
45,382 |
$
|
25,829 |
$
|
26,142 | ||||||
See
accompanying notes to consolidated financial
statements.
|
Gross
Book
Value
|
Other-Than-Temporary
Impairment
|
Net
Book Value
|
||||||||||||
December
31, 2007
|
$
|
878,190 |
$
|
(1,326 | ) |
$
|
876,864 | |||||||
Originations
|
660 | — | 660 | |||||||||||
Principal
paydowns
|
(7,794 | ) | — | (7,794 | ) | |||||||||
Satisfactions
(1)
|
(22,920 | ) | — | (22,920 | ) | |||||||||
Discount/premium
amortization & other (2)
|
6,317 | — | 6,317 | |||||||||||
Other-than-temporary
impairments
|
— | (917 | ) | (917 | ) | |||||||||
December
31, 2008
|
$
|
854,453 |
$
|
(2,243 | ) |
$
|
852,210 | |||||||
(1) |
Includes
final maturities and full repayments, as well as one security which was
sold for $7.7 million at a gain of approximately
$374,000.
|
|||||||||||||
(2) |
Includes
market-to-market adjustments on any available for sale securities, the
impact of premium and discount amortization and losses, if
any.
|
December
31, 2008
|
December
31, 2007
|
||||
Number
of securities
|
77
|
79
|
|||
Number
of issues
|
55
|
56
|
|||
Rating
(1)
(2)
|
BB
|
BB+
|
|||
Coupon
(1)
(3)
|
6.23%
|
6.97%
|
|||
Yield (1)
(3)
|
6.87%
|
7.35%
|
|||
Maturity
(years) (1)
(4)
|
4.6
|
5.4
|
(1) |
Represents
a weighted average as of December 31, 2008 and December 31, 2007,
respectively.
|
||
(2) |
Weighted
average ratings are based on the lowest rating published by Fitch Ratings,
Standard & Poor’s or Moody’s Investors Service for each security and
exclude $37.9 million face value ($37.5 million book value) of unrated
equity investments in collateralized debt
obligations.
|
||
(3) |
Calculations
based on LIBOR of 0.44% and 4.60% as of December 31, 2008 and December 31,
2007, respectively. For $37.9 million face value ($37.5 million book
value) of CMBS investments, calculations use an effective rate based on
cash received.
|
||
(4) |
Weighted
average life is based on the timing and amount of future expected
principal payments through the maturity of each respective investment
assuming all extension options are
executed.
|
December
31, 2008
|
December
31, 2007
|
|||||||||||||||||
Ratings
|
Book
Value
|
Percentage
|
Book
Value
|
Percentage
|
||||||||||||||
AAA
|
$
|
163,263 | 19 | % |
$
|
106,732 | 12 | % | ||||||||||
AA
|
24,879 | 3 | 49,650 | 6 | ||||||||||||||
A | 157,705 | 19 | 194,455 | 22 | ||||||||||||||
BBB
|
205,991 | 23 | 238,768 | 27 | ||||||||||||||
BB
|
142,033 | 17 | 158,116 | 18 | ||||||||||||||
B | 62,860 | 7 | 62,154 | 7 | ||||||||||||||
CCC
|
4,488 | 1 | 6,790 | 1 | ||||||||||||||
CC
|
5,144 | 1 | — | — | ||||||||||||||
D | 48,376 | 6 | 23,842 | 3 | ||||||||||||||
NR
|
37,472 | 4 | 36,357 | 4 | ||||||||||||||
Total
|
$
|
852,211 | 100 | % |
$
|
876,864 | 100 | % | ||||||||||
Vintage
|
Book
Value
|
Percentage
|
Book
Value
|
Percentage
|
||||||||||||||
2007
|
$
|
110,421 | 13 | % |
$
|
109,619 | 13 | % | ||||||||||
2006
|
48,897 | 6 | 48,803 | 6 | ||||||||||||||
2005
|
62,012 | 7 | 61,627 | 7 | ||||||||||||||
2004
|
88,159 | 10 | 96,475 | 11 | ||||||||||||||
2003
|
29,725 | 3 | 29,367 | 3 | ||||||||||||||
2002
|
19,954 | 2 | 19,558 | 2 | ||||||||||||||
2001
|
19,105 | 2 | 18,984 | 2 | ||||||||||||||
2000
|
40,602 | 5 | 41,463 | 5 | ||||||||||||||
1999
|
30,320 | 4 | 30,231 | 3 | ||||||||||||||
1998
|
303,875 | 36 | 311,620 | 36 | ||||||||||||||
1997
|
73,356 | 9 | 75,650 | 8 | ||||||||||||||
1996
|
25,785 | 3 | 33,467 | 4 | ||||||||||||||
Total
|
$
|
852,211 | 100 | % |
$
|
876,864 | 100 | % | ||||||||||
Property
Type
|
Book
Value
|
Percentage
|
Book
Value
|
Percentage
|
||||||||||||||
Retail
|
$
|
271,067 | 32 | % |
$
|
244,788 | 28 | % | ||||||||||
Office
|
190,975 | 22 | 198,056 | 23 | ||||||||||||||
Hotel
|
137,062 | 16 | 170,914 | 19 | ||||||||||||||
Multifamily
|
95,448 | 11 | 124,067 | 14 | ||||||||||||||
Other
|
68,743 | 9 | 65,126 | 8 | ||||||||||||||
Healthcare
|
44,251 | 5 | 38,990 | 4 | ||||||||||||||
Industrial
|
44,665 | 5 | 34,923 | 4 | ||||||||||||||
Total
|
$
|
852,211 | 100 | % |
$
|
876,864 | 100 | % | ||||||||||
Geographic
Location
|
Book
Value
|
Percentage
|
Book
Value
|
Percentage
|
||||||||||||||
Southeast
|
$
|
232,391 | 27 | % |
$
|
224,774 | 26 | % | ||||||||||
Northeast
|
195,674 | 23 | 238,682 | 27 | ||||||||||||||
West
|
145,043 | 17 | 146,213 | 17 | ||||||||||||||
Southwest
|
128,389 | 15 | 118,311 | 13 | ||||||||||||||
Midwest
|
115,845 | 14 | 116,462 | 13 | ||||||||||||||
Northwest
|
19,410 | 2 | 22,329 | 3 | ||||||||||||||
Other
|
15,459 | 2 | 10,093 | 1 | ||||||||||||||
Total
|
$
|
852,211 | 100 | % |
$
|
876,864 | 100 | % |
Less
Than 12 Months
|
Greater
Than 12 Months
|
Total
|
||||||||||||||||||||||
Estimated
Fair
Value
|
Gross
Unrealized
Loss
|
Estimated
Fair
Value
|
Gross
Unrealized
Loss
|
Estimated
Fair
Value
|
Gross
Unrealized
Loss
|
|||||||||||||||||||
Floating
Rate
|
$
|
0.2 |
$
|
(0.6 | ) |
$
|
89.0 |
$
|
(82.0 | ) |
$
|
89.2 |
$
|
(82.6 | ) | |||||||||
Fixed
Rate
|
183.8 | (36.1 | ) | 268.4 | (156.4 | ) | 452.2 | (192.5 | ) | |||||||||||||||
Total
|
$
|
184.0 |
$
|
(36.7 | ) |
$
|
357.4 |
$
|
(238.4 | ) |
$
|
541.4 |
$
|
(275.1 | ) |
Gross
Book Value
|
|
Provision
for Possible Credit Losses
|
|
Net
Book Value
|
||
December
31, 2007
|
$2,261,563
|
($4,000)
|
$2,257,563
|
|||
Originations
|
47,128
|
—
|
47,128
|
|||
Additional
fundings
(1)
|
89,773
|
—
|
89,773
|
|||
Satisfactions
(2)
|
(178,043)
|
—
|
(178,043)
|
|||
Loans
sold
(3)
|
(134,444)
|
—
|
(134,444)
|
|||
Principal
paydowns
|
(77,233)
|
—
|
(77,233)
|
|||
Discount/premium
amortization & other(4)
|
(9,150)
|
—
|
(9,150)
|
|||
Provision
for possible credit losses
|
—
|
(63,577)
|
(63,577)
|
|||
Realized
loan losses
|
(10,000)
|
10,000
|
—
|
|||
Reclassification
to loans held-for-sale
|
(140,685)
|
—
|
(140,685)
|
|||
December
31, 2008
|
$1,848,909
|
($57,577)
|
$1,791,332
|
(1) |
Additional fundings
includes capitalized interest of $7.4 million for the year ended December
31, 2008.
|
|
(2)
|
Includes
final maturities and full repayments.
|
|
(3) | Includes loan participations sold to both related and unrelated parties. During the year ended December 31, 2008, two such participating interests were sold for an aggregate $134.4 million. Both loans were sold at cost with no gain or loss recognized. | |
(4) | Includes the impact of premium and discount amortization and losses, if any, as well as transfers to Real estate held-for-sale. |
December
31, 2008
|
December
31, 2007
|
||||
Number
of investments
|
73
|
81
|
|||
Coupon
(1)
(2)
|
3.90%
|
7.69%
|
|||
Yield (1)
(2)
|
4.09%
|
7.80%
|
|||
Maturity
(years) (1)
(3)
|
3.3
|
3.9
|
(1)
|
Represents
a weighted average as of December 31, 2008 and December 31, 2007,
respectively.
|
|
(2)
|
Calculations
based on LIBOR of 0.44% as of December 31, 2008 and LIBOR of 4.60% as of
December 31, 2007.
|
|
(3)
|
Represents
the maturity of the investment assuming all extension options are
executed.
|
December
31, 2008
|
December
31, 2007
|
|||||||||||||||
Property
Type
|
Book Value
|
Percentage
|
Book Value
|
Percentage
|
||||||||||||
Office
|
$
|
661,761 |
37%
|
$
|
963,558 |
42%
|
||||||||||
Hotel
|
688,332 |
38
|
712,145 |
31
|
||||||||||||
Healthcare
|
147,397 |
8
|
147,883 |
7
|
||||||||||||
Multifamily
|
123,492 |
7
|
174,490 |
8
|
||||||||||||
Retail
|
67,385 |
4
|
85,072 |
4
|
||||||||||||
Other
|
102,965 |
6
|
174,415 |
8
|
||||||||||||
Total
|
$
|
1,791,332 |
100%
|
$
|
2,257,563 |
100%
|
||||||||||
Geographic
Location
|
Book Value
|
Percentage
|
Book Value
|
Percentage
|
||||||||||||
Northeast
|
$
|
560,071 |
31%
|
$
|
993,069 |
44%
|
||||||||||
Southeast
|
387,500 |
22
|
318,463 |
14
|
||||||||||||
Southwest
|
295,490 |
16
|
394,359 |
17
|
||||||||||||
West
|
235,386 |
13
|
265,899 |
12
|
||||||||||||
Northwest
|
91,600 |
5
|
111,002 |
5
|
||||||||||||
Midwest
|
28,408 |
2
|
48,497 |
2
|
|
|||||||||||
International
|
122,387 |
7
|
67,205 |
3
|
||||||||||||
Diversified
|
70,490 |
4
|
59,069 |
3
|
||||||||||||
Total
|
$
|
1,791,332 |
100%
|
$
|
2,257,563 |
100%
|
December
31, 2008
|
December
31, 2007
|
|||
Number
of investments
|
4
|
―
|
||
Coupon
(1)
(2)
|
2.54%
|
N/A
|
||
Yield (1)
(2)
|
2.62%
|
N/A
|
||
Maturity
(years) (1)
(3)
|
3.2
|
N/A
|
||
(1) |
Represents a
weighted average as of December 31, 2008 based on gross carrying value,
before any valuation allowance.
|
|
(2)
|
Calculations
based on LIBOR of 0.44% as of December 31, 2008.
|
|
(3) | Represents the maturity of the investment assuming all extension options are executed. |
Weighted
Average
|
|||||||||||||||
Fair
Market Value
(Book
Value)
|
Cash
Collateral
|
Reference/Loan
Participation
|
Number
of
Investments
|
Yield
|
Maturity
(Years) |
||||||||||
December
31, 2007
|
—
|
—
|
$20,000
|
1
|
—
|
—
|
|||||||||
Originations
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||
Repayments
|
—
|
—
|
20,000
|
1
|
—
|
—
|
|||||||||
December
31, 2008
|
$
—
|
$
—
|
$
—
|
—
|
—
|
—
|
Fund
III
|
|
CTOPI
|
Other
|
Total
|
||||||||||||
Equity
Investment
|
||||||||||||||||
Beginning
balance
|
$
|
923 |
$
|
(60 | ) |
$
|
35 |
$
|
898 | |||||||
Contributions
|
— | 3,473 | — | 3,473 | ||||||||||||
Loss
from equity investments
|
(326 | ) | (1,631 | ) | (31 | ) | (1,988 | ) | ||||||||
Ending
balance
|
$
|
597 |
$
|
1,782 |
$
|
4 |
$
|
2,383 | ||||||||
Capitalized
Costs
|
||||||||||||||||
Beginning
balance
|
$
|
79 |
$
|
— |
$
|
— |
$
|
79 | ||||||||
Amortization
of capitalized costs
|
(79 | ) | — | — | (79 | ) | ||||||||||
Ending
balance
|
$
|
— |
$
|
— |
$
|
— |
$
|
— | ||||||||
Total
balance
|
$
|
597 |
$
|
1,782 |
$
|
4 |
$
|
2,383 |
Fund
II
|
Fund
III
|
Bracor
|
|
CTOPI
|
Other
|
Total
|
||||||||||||||||||
Equity
Investment
|
||||||||||||||||||||||||
Beginning
balance
|
$
|
635 |
$
|
2,929 |
$
|
5,675 | (1) |
$
|
— |
$
|
573 |
$
|
9,812 | |||||||||||
Contributions
|
— | — | 24,122 | — | — | 24,122 | ||||||||||||||||||
Loss
from equity investments
|
(152 | ) | (119 | ) | (1,237 | ) | (60 | ) | (538 | ) | (2,106 | ) | ||||||||||||
Sales
proceeds
|
— | — | (43,637 | ) | — | — | (43,637 | ) | ||||||||||||||||
Gain
on sales
|
— | — | 15,077 | — | — | 15,077 | ||||||||||||||||||
Distributions
|
(483 | ) | (1,887 | ) | — | — | — | (2,370 | ) | |||||||||||||||
Ending
balance
|
$
|
— |
$
|
923 |
$
|
— |
$
|
(60 | ) |
$
|
35 |
$
|
898 | |||||||||||
Capitalized
Costs
|
||||||||||||||||||||||||
Beginning
balance
|
$
|
1,264 |
$
|
368 |
$
|
41 |
$
|
— |
$
|
— |
$
|
1,673 | ||||||||||||
Capitalized
costs
|
— | — | (41 | ) | — | — | (41 | ) | ||||||||||||||||
Amortization
of capitalized costs
|
(1,264 | ) | (289 | ) | — | — | — | (1,553 | ) | |||||||||||||||
Ending
balance
|
$
|
— |
$
|
79 |
$
|
— |
$
|
— |
$
|
— |
$
|
79 | ||||||||||||
Total
balance
|
$
|
— |
$
|
1,002 |
$
|
— |
$
|
(60 | ) |
$
|
35 |
$
|
977 |
(1) |
Includes
$258,000 of additional basis that represents a difference between our
share of net assets at Bracor and our carrying
value.
|
December
31, 2008
|
December
31, 2007
|
|||||||
Deferred
financing costs, net
|
$
|
8,342 |
$
|
12,934 | ||||
Common
equity - CT Preferred Trust
|
3,875 | 3,875 | ||||||
Goodwill
|
2,235 | 2,235 | ||||||
Prepaid
rent/security deposit
|
928 | 925 | ||||||
Prepaid
expenses
|
1,044 | 1,355 | ||||||
Other
assets
|
524 | 552 | ||||||
$
|
16,948 |
$
|
21,876 |
Debt
Obligation
|
December
31, 2008 |
December
31,
2007
Book
Balance
|
Coupon(1)(2)
|
All-In
Cost(1)(2) |
Maturity
Date(2)(3) |
Facility
Amount(2) |
|||||||||||||||||||
Repurchase
obligations and secured debt
|
|||||||||||||||||||||||||
JPMorgan
|
$
|
336,271 |
$
|
582,664 | 1.93 | % | 1.99 | % |
October
23, 2010
|
$
|
336,271 | ||||||||||||||
Morgan Stanley(4)
|
182,937 | 142,495 | 2.33 | 2.35 |
August
6, 2009
|
300,000 | |||||||||||||||||||
Goldman
Sachs
|
88,282 | 92,796 | 1.66 | 2.13 |
June
29, 2009
|
200,000 | |||||||||||||||||||
Citigroup(5)
|
63,830 | 55,708 | 1.77 | 2.01 |
February
7, 2011
|
250,000 | |||||||||||||||||||
Lehman
Brothers
|
18,014 | 6,000 | 1.94 | 1.94 |
June
11, 2013
|
18,014 | |||||||||||||||||||
UBS
|
9,720 | 10,944 | 1.69 | 1.73 |
October
29, 2010
|
9,720 | |||||||||||||||||||
Bank
of America
|
— | 21,250 | — | — | N/A | — | |||||||||||||||||||
Total
repurchase obligations and secured debt
|
$
|
699,054 |
$
|
911,857 | 1.98 | % | 2.10 | % |
June
2, 2010
|
$
|
1,114,005 | ||||||||||||||
Collateralized
Debt Obligations (CDOs)
|
|||||||||||||||||||||||||
CDO
I
|
$
|
252,045 |
$
|
252,778 | 1.05 | % | 1.52 | % |
April
20, 2011
|
$
|
252,045 | ||||||||||||||
CDO
II
|
298,913 | 298,913 | 0.93 | 1.18 |
April
17, 2012
|
298,913 | |||||||||||||||||||
CDO
III
|
257,515 | 261,654 | 5.24 | 5.27 |
December
10, 2012
|
255,984 | |||||||||||||||||||
CDO
IV(6)
|
347,562 | 378,954 | 1.04 | 1.15 |
November
30, 2012
|
347,562 | |||||||||||||||||||
Total
CDO's
|
$
|
1,156,035 |
$
|
1,192,299 | 1.95 | % | 2.15 | % |
May
29, 2012
|
$
|
1,154,504 | ||||||||||||||
Senior
unsecured credit facility - WestLB
|
$
|
100,000 |
$
|
75,000 | 2.19 | % | 2.51 | % |
March
21, 2009
|
$
|
100,000 | ||||||||||||||
Junior subordinated
debentures(7)
|
$
|
128,875 |
$
|
128,875 | 7.20 | % | 7.35 | % |
December
5, 2036
|
$
|
128,875 | ||||||||||||||
Total/Weighted
Average
|
$
|
2,083,964 |
$
|
2,308,031 | 2.29 | % | 3.48 | %(8) |
February
7, 2013
|
$
|
2,497,384 |
(1)
|
Floating
rate debt obligations assume LIBOR at December 31, 2008 of
0.44%.
|
(2)
|
Information
is as of December 31, 2008 and does not give effect to the subsequent
events described in Note 22.
|
(3)
|
Maturity
dates for CDOs represent a weighted average of expected principal
repayments to the respective
bondholders.
|
(4)
|
Comprised
of $155 million in obligations maturing in July 2009 and $28 million in
obligations maturing in December
2009.
|
(5)
|
Comprised
of $36 million in obligations maturing in July 2010 and $28 million in
obligations maturing in October
2011.
|
(6)
|
Comprised
of $334 million of floating rate notes sold and $14 million of fixed rate
notes sold at December 31,
2008.
|
(7)
|
Comprised
of $77 million of trust preferred securities maturing in April 2037 and
$52 million of trust preferred securities maturing in April
2036.
|
(8)
|
Includes
the effective cost of interest rate swaps of 1.01% as of December 31,
2008.
|
Hedge
|
Type
|
Counterparty
|
Notional
Amount
|
Interest
Rate
|
Maturity
|
Fair
Value
|
||||||||||||
Swap
|
Cash
Flow Hedge
|
Swiss
RE Financial
|
$
|
279,681 | 5.10 | % |
2015
|
(
|
$29,383 | ) | ||||||||
Swap
|
Cash
Flow Hedge
|
Bank
of America
|
73,626 | 4.58 |
2014
|
(4,526 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
Morgan
Stanley
|
18,439 | 3.95 |
2011
|
(1,053 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
JP
Morgan Chase
|
18,091 | 5.14 |
2014
|
(2,867 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
JP Morgan
Chase
|
16,894 | 4.83 |
2014
|
(2,550 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
JP
Morgan Chase
|
16,377 | 5.52 |
2018
|
(3,827 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
JP
Morgan Chase
|
12,310 | 5.02 |
2009
|
(302 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
Bank
of America
|
11,365 | 5.05 |
2016
|
(1,366 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
JP
Morgan Chase
|
7,062 | 5.11 |
2016
|
(706 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
Bank
of America
|
5,104 | 4.12 |
2016
|
(430 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
JP
Morgan Chase
|
3,293 | 5.45 |
2015
|
(663 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
JP
Morgan Chase
|
2,856 | 5.08 |
2011
|
(241 | ) | |||||||||||
Swap
|
Cash
Flow Hedge
|
Morgan
Stanley
|
780 | 5.31 |
2011
|
(60 | ) | |||||||||||
Total/Weighted
Average
|
$
|
465,878 | 4.97 | % |
2015
|
(
|
$47,974 | ) |
Fair
Value Measurements at Reporting Date Using
|
||||||||||||||||
Quoted
Prices in
|
Significant
|
|||||||||||||||
Active
Markets for
|
Significant
Other
|
Unobservable
|
||||||||||||||
Fair
Value at
|
Identical
Assets
|
Observable
Inputs
|
Inputs
|
|||||||||||||
Description
|
December
31, 2008
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
||||||||||||
Interest
rate hedge liabilities
|
$
|
(47,974 | ) |
$
|
— |
$
|
(47,974 | ) |
$
|
— | ||||||
Total
|
$
|
(47,974 | ) |
$
|
— |
$
|
(47,974 | ) |
$
|
— |
Year ended
December 31, 2008 |
Year ended
December 31, 2007 |
|||||||||||||||||||||||
Net
Loss |
Shares
|
Per Share
Amount |
Net
Income |
Shares
|
Per Share
Amount |
|||||||||||||||||||
Basic
EPS:
|
||||||||||||||||||||||||
Net
(loss)/earnings allocable
to common stock |
$
|
(57,538 | ) | 21,098,935 |
$
|
(2.73 | ) |
$
|
84,366 | 17,569,690 |
$
|
4.80 | ||||||||||||
Effect
of Dilutive Securities:
|
||||||||||||||||||||||||
Options
outstanding for the
purchase of common stock |
— | — | — | 120,576 | ||||||||||||||||||||
Diluted
EPS:
|
||||||||||||||||||||||||
Net
(loss)/earnings per share of common
stock and assumed conversions |
$
|
(57,538 | ) | 21,098,935 |
$
|
(2.73 | ) |
$
|
84,366 | 17,690,266 |
$
|
4.77 |
Year ended December 31, 2006
|
|||||
Net Income
|
Shares
|
Per Share
Amount
|
|||
Basic
EPS:
|
|||||
Net
earnings allocable to common stock
|
$54,067
|
15,754,655
|
$3.43
|
||
Effect
of Dilutive Securities:
|
|||||
Options
outstanding for the purchase of common stock
|
—
|
168,742
|
|||
Diluted
EPS:
|
|||||
Net
earnings per share of common stock and assumed conversions
|
$54,067
|
15,923,397
|
$3.40
|
Years ended December 31,
|
||||||
2008
|
2007
|
2006
|
||||
Salaries
and benefits
|
$12,603
|
$14,480
|
$11,450
|
|||
Employee
stock based compensation
|
3,478
|
4,606
|
3,961
|
|||
Operating
and other costs
|
3,501
|
3,212
|
2,487
|
|||
Professional
services
|
5,297
|
5,094
|
4,779
|
|||
Employee
promote compensation
|
78
|
2,564
|
398
|
|||
Total
|
$24,957
|
$29,956
|
$23,075
|
Years ended
December 31,
|
||||||||
2008
|
2007
|
|||||||
NOL
carryforwards
|
$
|
2,431 |
$
|
1,722 | ||||
Stock-based
compensation expense
|
321 | 4,125 | ||||||
Intangible
assets
|
(1,025 | ) | — | |||||
Other
|
482 | 716 | ||||||
Deferred
tax asset
|
2,209 | 6,563 | ||||||
Valuation
allowance
|
(503 | ) | (2,904 | ) | ||||
Net
deferred tax asset
|
$
|
1,706 |
$
|
3,659 |
Benefit
Type
|
1997 Employee
Plan
|
1997 Director
Plan
|
2004
Plan
|
2007
Plan
|
Total
|
||||||||||
Options(1)
|
|||||||||||||||
Beginning
Balance
|
223,811
|
16,667
|
—
|
—
|
240,478
|
||||||||||
Expired
|
(53,334)
|
(16,667)
|
—
|
—
|
(70,001)
|
||||||||||
Ending
Balance
|
170,477
|
—
|
—
|
—
|
170,477
|
||||||||||
Restricted
Stock(2)
|
|||||||||||||||
Beginning
Balance
|
—
|
—
|
423,931
|
—
|
423,931
|
||||||||||
Granted
|
—
|
—
|
—
|
44,550
|
44,550
|
||||||||||
Vested
|
—
|
—
|
(133,384)
|
—
|
(133,384)
|
||||||||||
Forfeited
|
—
|
—
|
(910)
|
(2,990)
|
(3,900)
|
||||||||||
Ending
Balance
|
—
|
—
|
289,637
|
41,560
|
331,197
|
||||||||||
Stock
Units(3)
|
|||||||||||||||
Beginning
Balance
|
—
|
80,017
|
—
|
14,570
|
94,587
|
||||||||||
Granted/deferred
|
—
|
—
|
—
|
120,864
|
120,864
|
||||||||||
Ending
Balance
|
—
|
80,017
|
—
|
135,434
|
215,451
|
||||||||||
Total
Outstanding Shares
|
170,477
|
80,017
|
289,637
|
176,994
|
717,125
|
(1)
|
All
options are fully vested as of December 31,
2008.
|
(2)
|
Comprised
of both performance based awards that vest upon the attainment of certain
common equity return thresholds and time based awards that vest based upon
an employee’s continued employment on vesting
dates.
|
(3)
|
Stock
units are granted to certain members of our board of directors in lieu of
cash compensation for services and in lieu of dividends earned on
previously granted stock
units.
|
Exercise
Price per Share
|
Options
Outstanding
|
Weighted
Average Exercise Price per Share
|
Weighted
Average Remaining Life (in Years)
|
||||||||||||||||||||||
1997
Employee
|
1997
Director
|
1997
Employee
|
1997
Director
|
1997
Employee
|
1997
Director
|
||||||||||||||||||||
Plan
|
Plan
|
Plan
|
Plan
|
Plan
|
Plan
|
||||||||||||||||||||
$10.00
- $15.00
|
43,530
|
—
|
$
|
13.41
|
$
|
—
|
2.26
|
—
|
|||||||||||||||||
$15.00
- $20.00
|
126,947
|
—
|
16.38
|
—
|
2.77
|
—
|
|||||||||||||||||||
Total/Weighted
Average
|
170,477
|
—
|
$
|
15.62
|
$
|
—
|
2.64
|
—
|
Restricted
Shares
|
|||
Shares
|
Grant
Date Fair Value
|
||
Unvested
at January 1, 2008
|
423,931
|
$30.96
|
|
Granted
|
44,550
|
27.44
|
|
Vested
|
(133,384)
|
various
|
|
Forfeited
|
(3,900)
|
various
|
|
Unvested
at December 31, 2008
|
331,197
|
$30.61
|
Restricted
Shares
|
|||
Shares
|
Grant
Date Fair Value
|
||
Unvested
at January 1, 2007
|
480,967
|
$29.56
|
|
Granted
|
23,015
|
51.25
|
|
Vested
|
(80,051)
|
28.38
|
|
Forfeited
|
—
|
—
|
|
Unvested
at December 31, 2007
|
423,931
|
$30.96
|
December 31, 2008
|
December 31, 2007
|
|||||||||||||||||||||||
Carrying
Amount
|
Face
Value
|
Fair
Value
|
Carrying
Amount
|
Face
Value
|
Fair
Value
|
|||||||||||||||||||
Financial
assets:
|
||||||||||||||||||||||||
CMBS
|
$ | 852,211 | $ | 883,958 | $ | 582,478 | $ | 876,864 | $ | 916,410 | $ | 830,411 | ||||||||||||
Loans
receivable
|
1,791,332 | 1,855,432 | 1,589,929 | 2,257,563 | 2,266,184 | 2,226,445 | ||||||||||||||||||
Financial
liabilities:
|
||||||||||||||||||||||||
Repurchase
obligations
|
699,054 | 699,054 | 699,054 | 911,857 | 911,857 | 911,857 | ||||||||||||||||||
CDOs
|
1,156,035 | 1,154,504 | 441,245 | 1,192,299 | 1,190,448 | 1,067,513 | ||||||||||||||||||
Sr.
unsecured credit facility
|
100,000 | 100,000 | 94,155 | 75,000 | 75,000 | 75,000 | ||||||||||||||||||
Jr.
subordinated debentures
|
128,875 | 128,875 | 80,099 | 128,875 | 128,875 | 98,863 | ||||||||||||||||||
Participations
sold
|
292,669 | 292,734 | 258,416 | 408,351 | 408,434 | 396,900 |
Years ending December 31,
|
||
2009
|
$1,377
|
|
2010
|
1,377
|
|
2011
|
1,377
|
|
2012
|
1,377
|
|
2013
|
1,423
|
|
Thereafter
|
7,020
|
|
$13,951
|
Balance Sheet
|
Investment
|
Inter-Segment
|
||||||||||||||
Investment
|
|
Management
|
|
Activities
|
|
Total
|
||||||||||
Income
from loans and other
|
||||||||||||||||
investments:
|
||||||||||||||||
Interest
and related income
|
$
|
194,649 |
$
|
— |
$
|
— |
$
|
194,649 | ||||||||
Less:
Interest and related expenses
|
129,665 | — | — | 129,665 | ||||||||||||
Income
from loans and other investments, net
|
64,984 | — | — | 64,984 | ||||||||||||
Other
revenues:
|
||||||||||||||||
Management
fees
|
— | 20,045 | (7,104 | ) | 12,941 | |||||||||||
Servicing
fees
|
— | 367 | — | 367 | ||||||||||||
Other
interest income
|
1,646 | 28 | (108 | ) | 1,566 | |||||||||||
Total
other revenues
|
1,646 | 20,440 | (7,212 | ) | 14,874 | |||||||||||
Other
expenses
|
||||||||||||||||
General
and administrative
|
11,232 | 20,829 | (7,104 | ) | 24,957 | |||||||||||
Other
interest expense
|
— | 108 | (108 | ) | — | |||||||||||
Depreciation
and amortization
|
— | 179 | — | 179 | ||||||||||||
Total
other expenses
|
11,232 | 21,116 | (7,212 | ) | 25,136 | |||||||||||
Gain
on extinguishment of debt
|
6,000 | — | — | 6,000 | ||||||||||||
Impairments
|
(2,917 | ) | — | — | (2,917 | ) | ||||||||||
Provision
for possible credit losses
|
(63,577 | ) | — | — | (63,577 | ) | ||||||||||
Valuation
allowance on loans held-for-sale
|
(48,259 | ) | — | — | (48,259 | ) | ||||||||||
Gain
on sale of investments
|
374 | — | — | 374 | ||||||||||||
Loss
from equity investments
|
(1,924 | ) | (64 | ) | — | (1,988 | ) | |||||||||
Loss
before income taxes
|
(54,905 | ) | (740 | ) | — | (55,645 | ) | |||||||||
Provision
for income taxes
|
— | 1,893 | — | 1,893 | ||||||||||||
Net
loss
|
$
|
(54,905 | ) |
$
|
(2,633 | ) |
$
|
— |
$
|
(57,538 | ) | |||||
Total
assets
|
$
|
2,830,172 |
$
|
9,818 |
$
|
(1,363 | ) |
$
|
2,838,627 |
Balance
Sheet
|
Investment
|
Inter-Segment
|
||||||||||||||
Investment
|
Management
|
Activities
|
Total
|
|||||||||||||
Income
from loans and other
|
||||||||||||||||
investments:
|
||||||||||||||||
Interest
and related income
|
$
|
253,422 |
$
|
— |
$
|
— |
$
|
253,422 | ||||||||
Less:
Interest and related expenses
|
162,377 | — | — | 162,377 | ||||||||||||
Income
from loans and other investments, net
|
91,045 | — | — | 91,045 | ||||||||||||
Other
revenues:
|
||||||||||||||||
Management
fees
|
— | 16,282 | (12,783 | ) | 3,499 | |||||||||||
Incentive
management fees
|
— | 6,208 | — | 6,208 | ||||||||||||
Servicing
fees
|
— | 623 | — | 623 | ||||||||||||
Other
interest income
|
1,548 | 65 | (530 | ) | 1,083 | |||||||||||
Total
other revenues
|
1,548 | 23,178 | (13,313 | ) | 11,413 | |||||||||||
Other
expenses
|
||||||||||||||||
General
and administrative
|
17,058 | 25,681 | (12,783 | ) | 29,956 | |||||||||||
Other
interest expense
|
— | 530 | (530 | ) | — | |||||||||||
Depreciation
and amortization
|
1,430 | 380 | — | 1,810 | ||||||||||||
Total
other expenses
|
18,488 | 26,591 | (13,313 | ) | 31,766 | |||||||||||
Provision
for possible credit losses
|
— | — | — | — | ||||||||||||
Gain
on sale of investments
|
15,077 | — | — | 15,077 | ||||||||||||
Loss
from equity investments
|
(1,570 | ) | (539 | ) | — | (2,109 | ) | |||||||||
Income/(loss)
before income taxes
|
87,612 | (3,952 | ) | — | 83,660 | |||||||||||
Income
taxe benefit
|
(254 | ) | (452 | ) | — | (706 | ) | |||||||||
Net
income/(loss) common stock
|
$
|
87,866 |
$
|
(3,500 | ) |
$
|
— |
$
|
84,366 | |||||||
Total
assets
|
$
|
3,212,069 |
$
|
7,837 |
$
|
(8,424 | ) |
$
|
3,211,482 |
Balance
Sheet
|
Investment
|
Inter-Segment
|
||||||||||||||
Investment
|
Management
|
Activities
|
Total
|
|||||||||||||
Income
from loans and other
|
||||||||||||||||
investments:
|
||||||||||||||||
Interest
and related income
|
$
|
175,404 |
$
|
— |
$
|
— |
$
|
175,404 | ||||||||
Less:
Interest and related expenses
|
104,607 | — | — | 104,607 | ||||||||||||
Income
from loans and other investments, net
|
70,797 | — | — | 70,797 | ||||||||||||
Other
revenues:
|
||||||||||||||||
Management
fees
|
— | 10,387 | (7,737 | ) | 2,650 | |||||||||||
Incentive
management fees
|
— | 1,652 | — | 1,652 | ||||||||||||
Servicing
fees
|
40 | 65 | — | 105 | ||||||||||||
Other
interest income
|
1,426 | 43 | (115 | ) | 1,354 | |||||||||||
Total
other revenues
|
1,466 | 12,147 | (7,852 | ) | 5,761 | |||||||||||
Other
expenses
|
||||||||||||||||
General
and administrative
|
12,458 | 18,354 | (7,737 | ) | 23,075 | |||||||||||
Other
interest expense
|
— | 115 | (115 | ) | — | |||||||||||
Depreciation
and amortization
|
2,792 | 257 | — | 3,049 | ||||||||||||
Total
other expenses
|
15,250 | 18,726 | (7,852 | ) | 26,124 | |||||||||||
Income/(loss)
from equity investments
|
1,016 | (118 | ) | — | 898 | |||||||||||
Income
before income taxes
|
58,029 | (6,697 | ) | — | 51,332 | |||||||||||
Income
tax benefit
|
— | (2,735 | ) | — | (2,735 | ) | ||||||||||
Net
income
|
$
|
58,029 |
$
|
(3,962 | ) |
$
|
— |
$
|
54,067 | |||||||
Total
assets
|
$
|
2,649,866 |
$
|
4,720 |
$
|
(6,022 | ) |
$
|
2,648,564 | |||||||
March 31
|
June 30
|
September
30
|
December 31
|
|||||||||||||
2008
|
||||||||||||||||
Revenues
|
$
|
59,117 |
$
|
53,866 |
$
|
48,217 |
$
|
48,323 | ||||||||
Net
income
|
$
|
14,773 |
$
|
(34,818 | ) |
$
|
13,667 |
$
|
(51,160 | ) | ||||||
Net
income per share of common stock:
|
||||||||||||||||
Basic
|
$
|
0.82 |
$
|
(1.59 | ) |
$
|
0.61 |
$
|
(2.57 | ) | ||||||
Diluted
|
$
|
0.82 |
$
|
(1.59 | ) |
$
|
0.61 |
$
|
(2.57 | ) | ||||||
2007
|
||||||||||||||||
Revenues
|
$
|
59,538 |
$
|
69,696 |
$
|
66,173 |
$
|
69,428 | ||||||||
Net
income
|
$
|
14,849 |
$
|
25,382 |
$
|
15,497 |
$
|
28,638 | ||||||||
Net
income per share of common stock:
|
||||||||||||||||
Basic
|
$
|
0.85 |
$
|
1.45 |
$
|
0.88 |
$
|
1.63 | ||||||||
Diluted
|
$
|
0.84 |
$
|
1.43 |
$
|
0.87 |
$
|
1.62 | ||||||||
2006
|
||||||||||||||||
Revenues
|
$
|
32,600 |
$
|
47,050 |
$
|
47,199 |
$
|
54,316 | ||||||||
Net
income
|
$
|
10,949 |
$
|
14,192 |
$
|
13,437 |
$
|
15,489 | ||||||||
Net
income per share of common stock:
|
||||||||||||||||
Basic
|
$
|
0.72 |
$
|
0.93 |
$
|
0.88 |
$
|
0.92 | ||||||||
Diluted
|
$
|
0.71 |
$
|
0.91 |
$
|
0.86 |
$
|
0.91 |
|
·
|
Maturity
dates were modified to one year from the March 16, 2009 effective date of
each respective agreement, which maturity dates may be extended further
for two one-year periods. The first one-year extension option is
exercisable by us so long as the outstanding balance as of the first
extension date is less than or equal to a certain amount, which is a
reduction of twenty percent (20%), including the upfront payment described
above, of the outstanding principal amount from the date of the
amendments, and no other defaults or events of default have occurred and
are continuing, or would be caused by such extension. The second one-year
extension option is exercisable by each participating secured lender in
its sole discretion.
|
|
·
|
We
agreed to pay each participating secured lender periodic amortization as
follows: (i) mandatory payments, payable monthly in arrears, in an amount
equal to sixty-five (65%) (subject to adjustment in the second year) of
the net interest income generated by each such lender’s collateral pool,
and (ii) one hundred percent (100%) of the principal proceeds received
from the repayment of assets in each such lender’s collateral pool. In
addition, under the terms of the amendment with Citigroup, we agreed to
pay Citigroup an additional quarterly amortization payment equal to the
lesser of: (x) Citigroup’s then outstanding senior secured credit facility
balance or (y) the product of (i) the total cash paid (including both
principal and interest) during the period to our senior unsecured credit
facility in excess of an amount equivalent to LIBOR plus 1.75% based upon
a $100.0 million facility amount, and (ii) a fraction, the numerator of
which is Citigroup’s then outstanding senior secured credit facility
balance and the denominator is the total outstanding secured indebtedness
of the participating secured
lenders.
|
|
·
|
We
further agreed to amortize each participating secured lender’s secured
debt at the end of each calendar quarter on a pro rata basis until we have
repaid our secured, recourse credit facilities and thereafter our senior
unsecured credit facility in an amount equal to any unrestricted cash in
excess of the sum of (i) $25.0 million, and (ii) any unfunded loan and
co-investment commitments.
|
|
·
|
Each
participating secured lender was relieved of its obligation to make future
advances with respect to unfunded commitments arising under investments in
its collateral pool.
|
|
·
|
We
received the right to sell or refinance collateral assets as long as we
apply one hundred percent (100%) of the proceeds to pay down the related
secured credit facility balance subject to minimum release price
mechanics.
|
|
·
|
We
eliminated the cash margin call provisions and amended the mark-to-market
provisions so that future changes in collateral value will be determined
based upon changes in the performance of the underlying real estate
collateral in lieu of the previous provisions which were based on market
spreads. Beginning six months after the date of execution of the
agreements, each collateral pool will be valued monthly on this basis. If
the ratio of a participating secured lender’s total outstanding secured
credit facility balance to total collateral value exceeds 1.15x the ratio
calculated as of the effective date of the amended agreements, we will be
required to liquidate collateral in order to return to compliance with the
prescribed loan to collateral value ratio or post other collateral to
bring the ratio back into
compliance.
|
|
·
|
prohibit
new balance sheet investments except, subject to certain limitations,
co-investments in our investment management vehicles or protective
investments to defend existing collateral assets on our balance
sheet;
|
|
·
|
prohibit
the incurrence of any additional indebtedness except in limited
circumstances;
|
|
·
|
limit
the total cash compensation to all employees and, specifically with
respect to our chief executive officer, chief operating officer and chief
financial officer, freeze their base salaries at 2008 levels, and require
cash bonuses to any of them to be approved by a committee comprised of one
representative designated by the secured lenders, the administrative agent
under the senior unsecured credit facility and the chairman of our board
of directors;
|
|
·
|
prohibit
the payment of cash dividends to our common shareholders except to the
minimum extent necessary to maintain our REIT
status;
|
|
·
|
require
us to maintain a minimum amount of liquidity, as defined, of $7.0 million
in 2009 and $5.0 million
thereafter;
|
|
·
|
trigger
an event of default if both our chief executive officer and chief
operating officer cease their current employment with us during the term
of the agreement and we fail to hire a replacement acceptable to the
lenders; and
|
|
·
|
trigger
an event of default, if any event or condition occurs which causes any
obligation or liability of more than $1.0 million to become due prior to
its scheduled maturity or any monetary default under our restructured debt
obligations if the amount of such obligation is at least $1.0
million.
|
|
·
|
Extend
the maturity date of the senior unsecured credit agreement to be
co-terminus with the maturity date of the secured credit facilities with
the participating secured lenders (as they may be further extended until
March 16, 2012, as described
above);
|
|
·
|
Increase
the cash interest rate under the senior unsecured credit agreement to
LIBOR plus 3.0% per annum (from LIBOR plus 1.75%), plus an accrual rate of
7.20% per annum less the cash interest
rate;
|
|
·
|
Initiate
quarterly amortization equal to the greater of: (i) $5.0 million per annum
and (ii) 25% of the annual cash flow received from our currently
unencumbered collateralized debt obligation
interests;
|
|
·
|
Pledge
our unencumbered collateralized debt obligation interests and provide a
negative pledge with respect to certain other assets;
and
|
|
·
|
Replace
all existing financial covenants with substantially identical covenants
and default provisions to those described above in the participating
secured credit facilities.
|
Type of
Loan/Borrower(1)
|
Decription/
Location
|
|
Interest
Payment
Rates
|
|
Final
Maturity Date
|
|
Periodic Payment
Terms(2)
|
|
Prior Liens(3)
|
Face Amount of
Loans(4)
|
|
Carrying
Amount of Loans
|
||
Mortgage
Loans:
|
||||||||||||||
Borrower
A
|
Office/
Florida
|
LIBOR
+ 2.75%
|
1/21/2011
|
I/O
|
$—
|
$89,058
|
$89,058
|
|||||||
Borrower
B
|
Assisted
Living/
Florida
|
|
LIBOR
+ 4.50%
|
4/20/2012
|
I/O
|
—
|
61,542
|
61,449
|
||||||
All
other mortgage loans individually less than
3%
|
476,610
|
367,092
|
330,338
|
|||||||||||
Total
mortgage loans:
|
476,610
|
517,692
|
480,845
|
|||||||||||
Mezzanine
Loans:
|
||||||||||||||
Borrower
C
|
Healthcare/
Various
|
|
LIBOR
+ 12.65%
|
5/9/2011
|
I/O
|
1,275,430
|
85,948
|
85,948
|
||||||
Borrower
D
|
Hotel/
Various
|
LIBOR
+ 3.65%
|
5/9/2012
|
I/O
|
1,782,388
|
152,289
|
152,300
|
|||||||
Borrower
E
|
Hotel/
Various
|
LIBOR
+ 4.00%
|
5/9/2012
|
I/O
|
2,595,300
|
125,000
|
125,016
|
|||||||
All
other mezzanine loans individually less than 3%
|
12,415,964
|
539,416
|
473,717
|
|||||||||||
Total
mezzanine loans:
|
18,069,082
|
902,653
|
836,981
|
|||||||||||
Subordinate
Morgage Interests:
|
||||||||||||||
Borrower
F
|
Hotel/
Various
|
LIBOR
+ 1.60%
|
11/7/2011
|
I/O
|
220,000
|
65,000
|
65,000
|
|||||||
All
other subordinate mortgage interests individually less than
3%
|
3,522,898
|
510,774
|
500,681
|
|||||||||||
Total
subordinate morgage interests:
|
3,742,898
|
575,774
|
565,681
|
|||||||||||
Total
loans:
|
$22,288,590
|
$1,996,119
|
$1,883,507
|