Capital Trust reports 1Q net income of 8 cents per share

Real Estate Weekly, June 5, 2002

Capital Trust, Inc. recently reported first quarter 2002 net income of 8 cents per share (diluted), representing an increase of 2 cents per share (diluted) over the same period in the prior year. In addition, the company announced that it had increased the number of shares authorized under its existing open market stock repurchase plan to four million shares.

For the quarter ended March 31, the company reported total revenues of 513.9 million and net income of 8 cents per share (based on 19.6 million weighted average diluted shares outstanding) compared to total revenues of $19.2 million and net income of 6 cents per share (based on 22.3 million weighted average diluted shares outstanding) in the same period of 2001.

Total assets declined from $678.8 million at year-end to $620.5 million on March 31, 2002. During the quarter, the company experienced two significant loan repayments and other loan amortization payments totaling $84.4 million that, were partially offset by the purchase of a $40 million guaranteed whole loan mortgage pool issued by the Federal Home Loan Mortgage Corporation ("Freddie Mac"). As a result of the loan repayments, and after evaluating the credit characteristics of the remaining loan portfolio, the company reduced its reserve for possible credit losses by $3 million, from $13.7 million at year-end to $10.7 million on March 31, which recapture was reflected under "Other expenses" in the company's income statement. While the absolute amount of reserves has decreased, loan reserves expressed as a percentage of total loans has increased to 6.1% at March 31 from 5.2% at year-end.

Also during the quarter, the company reported a $2.7 million loss from equity investments in funds as a result of recognizing its pro-rata share of a $13 million specific reserve taken against the $26 million non-performing Vantas/HQ loan held at CT Mezzanine Partners I ("Fund I"); the company is a 25% investor in Fund I. The pro-rata loss of $3.25 million was offset by $556,000 of other income from Fund I and Fund II during the quarter. Other than the Vantas/HQ loan, all of the loans and investments in Fund I and Fund II are performing in accordance with their terms.

As the investment management business continues to grow, the company's existing portfolio of balance sheet investments is maturing and being repaid. To date, the proceeds of these repayments have been principally used to fund the company's equity contributions to Fund II, repay outstanding debt, buy back stock and invest in Freddie Mac mortgage pools.

The company estimates that its book value per common share equivalent was $5.61 on March 31 after giving effect to the dilutive impact of in-the-money options based on the closing price of the company's stock at that date.

Pursuant to its existing open market share repurchase program, on May 1, 2002 the company purchased 536,370 shares of common stock at a price of $4.86 per share. On May 9, the board of directors of Capital Trust increased the authorized number of shares available for repurchase in the company's program to four million shares. Since inception of the program in May of 2000, the company has repurchased a total of 3.1 million shares at an average price of $4.28 per share.