NEW YORK, Aug. 01, 2018 (GLOBE NEWSWIRE) — Exantas Capital Corp. (NYSE: XAN) (“XAN” or the “Company”) (formerly known as Resource Capital Corp.) reports results for the three and six months ended June 30, 2018.
Significant Items and Highlights
- GAAP net income allocable to common shares and Core Earnings of $0.20 per common share-diluted for the three months ended June 30, 2018 (see Schedule I).
- Management anticipates the Company will declare a cash dividend of $0.15 per share on its common stock for the third quarter of 2018, which would be a 50% increase over the second quarter dividend of $0.10 per share and a 200% increase over the first quarter dividend of $0.05 per share.
- XAN closed a $514.2 million commercial real estate (“CRE”) debt securitization on June 26, 2018 at a weighted average cost of the one-month London Interbank Offered Rate (“LIBOR”) plus 1.12%.
- XAN has monetized $418.2 million of the investments that were included in management’s previously communicated strategic plan (the “Plan”) (see Schedule III). This includes $38.1 million and $52.0 million of assets liquidated during the three and six months ended June 30, 2018, respectively, and $2.1 million of assets liquidated in July 2018.
- XAN originated $195.3 million and $341.6 million of new CRE loans during the three and six months ended June 30, 2018, respectively (see Schedule IV).
- XAN originated and acquired $1.0 billion of new CRE loans and commercial mortgage-backed securities (“CMBS”) during the twelve months ended June 30, 2018.
- Book value of $14.09 per common share at June 30, 2018, as compared to $13.92 per common share at March 31, 2018.
Three and Six Months Ended June 30, 2018 Results
- GAAP net income allocable to common shares of $6.2 million, or $0.20 per share-diluted, and GAAP net loss allocable to common shares of $6.4 million, or $(0.21) per share-diluted, for the three and six months ended June 30, 2018, respectively, as compared to GAAP net income allocable to common shares of $2.5 million, or $0.08 per share-diluted, and $5.2 million, or $0.17 per share-diluted, for the three and six months ended June 30, 2017, respectively.
- Core Earnings were $6.3 million, or $0.20 per common share-diluted, for the three months ended June 30, 2018. Core Earnings were $(2.3) million, or $(0.08) per common share-diluted, for the six months ended June 30, 2018 and were $7.3 million, or $0.23 per common share-diluted, after adjustments for the non-recurring charges related to the redemption of the Company’s 8.25% Series B Cumulative Redeemable Preferred Stock (“Series B Preferred Stock”) and the pending settlement of a securities litigation.
Additional Items
Commercial Real Estate
- Substantially all of XAN’s $1.4 billion CRE loan portfolio comprised floating rate senior whole loans at June 30, 2018.
- XAN’s CRE floating rate whole loan portfolio had a weighted average spread of 4.39% over one-month LIBOR of 2.09% at June 30, 2018.
The following table summarizes XAN’s CRE loan activities and fundings of previous commitments, at par, for the three, six and twelve months ended June 30, 2018 (in millions, except percentages and amounts in footnotes):
| Three Months Ended June 30, 2018 |
Six Months Ended June 30, 2018 |
Twelve Months Ended June 30, 2018 |
|||||||||
| New CRE loan commitments | $ | 195.3 | $ | 322.4 | $ | 709.1 | |||||
| New CRE preferred equity investment | — | 19.2 | 19.2 | ||||||||
| Total CRE loan commitments and investments | 195.3 | 341.6 | 728.3 | ||||||||
| Payoffs and paydowns (1)(2) | (149.8 | ) | (201.3 | ) | (516.5 | ) | |||||
| Previous commitments funded | 12.1 | 22.6 | 34.6 | ||||||||
| New unfunded loan commitments | (16.3 | ) | (29.9 | ) | (77.5 | ) | |||||
| Net CRE loans funded | $ | 41.3 | $ | 133.0 | $ | 168.9 | |||||
| Weighted average one-month LIBOR floor on new originations (3) | 1.72 | % | 1.59 | % | 1.35 | % | |||||
| Weighted average spread above one-month LIBOR (3) | 3.45 | % | 3.64 | % | 3.96 | % | |||||
| Weighted average unlevered yield, including amortization of origination fees | 5.87 | % | 5.91 | % | 5.88 | % | |||||
| (1) CRE loan payoffs and extensions resulted in $870,000, $1.2 million and $1.8 million of exit and extension fees during the three, six and twelve months ended June 30, 2018, respectively. | |||||||||||
| (2) Activity does not include legacy CRE loans classified as assets held for sale. | |||||||||||
| (3) Applicable to new CRE whole loans funded, excluding one CRE mezzanine loan with a 10.00% fixed interest rate originated in June 2018 and one CRE whole loan with an 8.00% fixed interest rate originated in March 2018. | |||||||||||
Commercial Mortgage-Backed Securities
- XAN’s CMBS portfolio had a carrying value of $318.4 million and a weighted average coupon of 4.44% at June 30, 2018.
The following table summarizes XAN’s CMBS activities, at face value, for the three, six and twelve months ended June 30, 2018 (in millions, except percentages):
| Three Months Ended June 30, 2018 |
Six Months Ended June 30, 2018 |
Twelve Months Ended June 30, 2018 |
|||||||||
| CMBS acquisitions | $ | 77.1 | $ | 121.4 | $ | 314.1 | |||||
| Sales | — | — | (7.4 | ) | |||||||
| Principal paydowns | (5.1 | ) | (8.5 | ) | (47.3 | ) | |||||
| CMBS acquisitions, net | $ | 72.0 | $ | 112.9 | $ | 259.4 | |||||
| Weighted average coupon at June 30, 2018 | 4.15 | % | 4.14 | % | 4.47 | % | |||||
Commercial Real Estate Securitizations
- XAN closed a $514.2 million debt securitization on June 26, 2018 and issued approximately $405.0 million of notes at a weighted average cost of one-month LIBOR plus 1.12%.
Discontinued Operations
- In July 2018 substantially all of the assets of the borrower on XAN’s one remaining directly originated middle market loan were sold, resulting in a $2.1 million repayment. At June 30, 2018, the loan had a carrying value of $2.0 million.
Liquidity
- At July 31, 2018, XAN’s available liquidity consisted of two primary sources:
- unrestricted cash and cash equivalents of $50.0 million; and
- approximately $152.0 million of available liquidity from the financing of unlevered CRE loans and CMBS.
Common Stock Book Value and Total Stockholders’ Equity
The following table reconciles XAN’s common stock book value from March 31, 2018 to June 30, 2018 (in thousands, except per share data and amounts in footnotes):
| Total Amount | Per Share Amount | |||||||
| Common stock book value at March 31, 2018 (1) | $ | 434,224 | $ | 13.92 | ||||
| Net income allocable to common shares | 6,152 | 0.20 | ||||||
| Change in other comprehensive income: | ||||||||
| Available-for-sale securities | 1,607 | 0.05 | ||||||
| Derivatives | 455 | 0.02 | ||||||
| Common stock dividends | (3,122 | ) | (0.10 | ) | ||||
| Common stock dividends on unvested shares | (43 | ) | — | |||||
| Accretion (dilution) from additional shares outstanding at June 30, 2018 (2) | 659 | — | ||||||
| Total net increase | 5,708 | 0.17 | ||||||
| Common stock book value at June 30, 2018 (1)(3) | $ | 439,932 | $ | 14.09 | ||||
| (1) Per share calculations exclude unvested restricted stock, as disclosed on the consolidated balance sheets, of 427,591 and 465,808 shares at June 30, 2018 and March 31, 2018, respectively. The denominators for the | ||||||||
| calculations are 31,229,829 and 31,184,609 at June 30, 2018 and March 31, 2018, respectively. | ||||||||
| (2) Per share amount calculation includes the impact of 45,220 additional shares. | ||||||||
| (3) Common stock book value is calculated as total stockholders’ equity of $555.9 million less preferred stock equity of $116.0 million at June 30, 2018. | ||||||||
Common stock book value includes $12.6 million of unamortized discount resulting from the value of the conversion option on XAN’s convertible senior notes. The convertible senior notes’ discounts will be amortized into interest expense over the remaining life of each note issuance. At June 30, 2018, common stock book value excluding this item would have been $427.4 million, or $13.68 per common share.
Total stockholders’ equity at June 30, 2018, which measures equity before accounting for non-controlling interests, was $555.9 million, of which $116.0 million was attributable to preferred stock. Total stockholders’ equity at December 31, 2017 was $671.5 million, of which $223.8 million was attributable to preferred stock.
Investment Portfolio
The following table summarizes the amortized cost and net carrying amount of XAN’s investment portfolio at June 30, 2018, classified by asset type (in thousands, except percentages and amounts in footnotes):
| At June 30, 2018 | Amortized Cost |
Net Carrying Amount |
Percent of Portfolio |
Weighted Average Coupon | |||||||
| Core Assets: | |||||||||||
| CRE whole loans (1)(2) | $ | 1,398,315 | $ | 1,393,786 | 78.10 | % | 6.43% | ||||
| CRE mezzanine loan and preferred equity investment (2) | 23,891 | 23,891 | 1.34 | % | 11.21% | ||||||
| CMBS (3) | 317,414 | 318,424 | 17.84 | % | 4.44% | ||||||
| Total Core Assets | 1,739,620 | 1,736,101 | 97.28 | % | |||||||
| Non-Core Assets: | |||||||||||
| Structured notes (4) | 1,000 | — | — | % | N/A (11) | ||||||
| Investments in unconsolidated entities (5) | 234 | 234 | 0.01 | % | N/A (11) | ||||||
| Direct financing leases (6) | 801 | 66 | — | % | 5.66% | ||||||
| Legacy CRE loans (7)(8) | 52,955 | 46,341 | 2.60 | % | 2.32% | ||||||
| Middle market loan held for sale (9)(10) | 13,837 | 1,978 | 0.11 | % | N/A (11) | ||||||
| Total Non-Core Assets | 68,827 | 48,619 | 2.72 | % | |||||||
| Total investment portfolio | $ | 1,808,447 | $ | 1,784,720 | 100.00 | % | |||||
| (1) Net carrying amount includes an allowance for loan losses of $4.5 million at June 30, 2018. | |||||||||||
| (2) Classified as CRE loans on the consolidated balance sheets. | |||||||||||
| (3) Classified as investment securities available-for-sale on the consolidated balance sheets. | |||||||||||
| (4) Classified as investment securities, trading on the consolidated balance sheets. | |||||||||||
| (5) Classified as investments in unconsolidated entities on the consolidated balance sheets. | |||||||||||
| (6) Net carrying amount includes an allowance for lease losses of $735,000 at June 30, 2018. | |||||||||||
| (7) A legacy CRE loan with an amortized cost of $24.6 million and a net carrying amount of $18.0 million is classified in assets held for sale on the consolidated balance sheets. At June 30, 2018, two legacy | |||||||||||
| CRE loans with total amortized costs and net carrying amounts of $28.3 million were reclassified to CRE loans on the consolidated balance sheets as it is now XAN’s intent to hold these loans to maturity. | |||||||||||
| (8) Net carrying amount includes a lower of cost or market value adjustment of $6.6 million at June 30, 2018. | |||||||||||
| (9) Classified as assets held for sale on the consolidated balance sheets. | |||||||||||
| (10) Net carrying amount includes a lower of cost or market value adjustment of $11.9 million at June 30, 2018. | |||||||||||
| (11) There are no stated rates associated with these investments. | |||||||||||
Supplemental Information
The following schedules of reconciliations and supplemental information at June 30, 2018 are included at the end of this release:
- Schedule I – Reconciliation of GAAP Net Income (Loss) to Core Earnings;
- Schedule II – Summary of Securitization Performance Statistics;
- Schedule III – Strategic Plan Update;
- Schedule IV – CRE Loan Activities; and
- Schedule V – Supplemental Information.
About Exantas Capital Corp.
Exantas Capital Corp. is a real estate investment trust that is primarily focused on originating, holding and managing commercial mortgage loans and commercial real estate-related debt investments.
The Company is externally managed by Exantas Capital Manager Inc. (the “Manager”) (formerly known as Resource Capital Manager, Inc.), which is an indirect wholly-owned subsidiary of C-III Capital Partners LLC, a leading commercial real estate investment management and services company engaged in a broad range of activities.
For more information, please visit XAN’s website at www.exantas.com or contact investor relations at IR@exantas.com.
Safe Harbor Statement
Statements made in this release may include forward-looking statements, which involve substantial risks and uncertainties. XAN’s actual results, performance or achievements could differ materially from those expressed or implied in this release. The risks and uncertainties associated with forward-looking statements contained in this release include those related to:
- fluctuations in interest rates and related hedging activities;
- the availability of debt and equity capital to acquire and finance investments;
- defaults or bankruptcies by borrowers on XAN’s loans or on loans underlying its investments;
- adverse market trends that have affected and may continue to affect the value of real estate and other assets underlying XAN’s investments;
- increases in financing or administrative costs; and
- general business and economic conditions that have impaired and may continue to impair the credit quality of borrowers and XAN’s ability to originate loans.
For further information concerning these and other risks pertaining to the forward-looking statements contained in this release, and to the general risks to which XAN is subject, see Item 1A, “Risk Factors,” included in its Annual Report on Form 10-K for the year ended December 31, 2017 and the risks expressed in its other public filings with the Securities and Exchange Commission.
XAN cautions you not to place undue reliance on any forward-looking statements contained in this release, which speak only as of the date of this release. All subsequent written and oral forward-looking statements attributable to XAN or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this release. Except to the extent required by applicable law or regulation, XAN undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.
Furthermore, certain non-GAAP financial measures are discussed in this release. XAN’s presentation of this information is not intended to be considered in isolation of or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP are set forth in Schedule I of this release and can be accessed through XAN’s filings with the SEC at www.sec.gov.
The remainder of this release contains XAN’s unaudited (2018) and audited (2017) consolidated balance sheets, unaudited consolidated statements of operations, a reconciliation of GAAP net income (loss) to Core Earnings, a summary of securitization performance statistics, an update on XAN’s strategic plan, a summary of XAN’s CRE loan activities and supplemental information regarding XAN’s CRE loan portfolio and loans held for sale.
EXANTAS CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| June 30, 2018 |
December 31, 2017 |
||||||||||
| (unaudited) | |||||||||||
| ASSETS (1) | |||||||||||
| Cash and cash equivalents | $ | 80,191 | $ | 181,490 | |||||||
| Restricted cash | 10,070 | 22,874 | |||||||||
| Accrued interest receivable | 7,157 | 6,859 | |||||||||
| CRE loans, net of allowances of $4,529 and $5,328 | 1,446,018 | 1,284,822 | |||||||||
| Investment securities available-for-sale | 318,424 | 211,737 | |||||||||
| Investment securities, trading | — | 178 | |||||||||
| Loans held for sale | — | 13 | |||||||||
| Principal paydowns receivable | — | 76,129 | |||||||||
| Investments in unconsolidated entities | 1,782 | 12,051 | |||||||||
| Derivatives, at fair value | 2,273 | 602 | |||||||||
| Direct financing leases, net of allowances of $735 | 66 | 151 | |||||||||
| Other assets | 5,225 | 7,451 | |||||||||
| Assets held for sale (amounts include $18,000 and $61,841 of legacy CRE loans held for sale in continuing operations) | 20,956 | 107,718 | |||||||||
| Total assets | $ | 1,892,162 | $ | 1,912,075 | |||||||
| LIABILITIES (2) | |||||||||||
| Accounts payable and other liabilities | $ | 3,335 | $ | 5,153 | |||||||
| Management fee payable | 938 | 1,035 | |||||||||
| Accrued interest payable | 4,736 | 4,387 | |||||||||
| Borrowings | 1,319,646 | 1,163,485 | |||||||||
| Distributions payable | 4,891 | 5,581 | |||||||||
| Preferred stock redemption liability | — | 50,000 | |||||||||
| Derivatives, at fair value | 67 | 76 | |||||||||
| Accrued tax liability | 241 | 540 | |||||||||
| Liabilities held for sale | 2,421 | 10,342 | |||||||||
| Total liabilities | 1,336,275 | 1,240,599 | |||||||||
| STOCKHOLDERS’ EQUITY | |||||||||||