Crystal River Reports Second Quarter 2008 Financial Results
Market Wire, August, 2008
Condensed Consolidated Balance Sheets
----------------------------------------------------------------------------
June 30, March 31, December 31,
($ in thousands, except share and 2008 2008 2007
per share data) (unaudited) (unaudited)
----------------------------------------------------------------------------
ASSETS
Available for sale securities, at
fair value $ 295,836 $ 355,528 $ 1,815,246
Real estate loans 24,370 50,768 170,780
Real estate loans held for sale 47,504 107,345 -
Commercial real estate, net 231,511 233,137 234,763
Other investments 1,550 1,550 37,761
Intangible assets 78,357 79,765 81,174
Cash and cash equivalents 7,754 8,664 27,521
Restricted cash 27,646 27,455 68,706
Receivables 22,119 32,490 31,637
Due from broker - 393,566 -
Prepaid expenses and other assets 1,763 2,177 540
Deferred financing costs, net 1,707 2,152 10,750
Derivative assets 28 10 560
-----------------------------------------
Total Assets $ 740,145 $ 1,294,607 $ 2,479,438
-----------------------------------------
-----------------------------------------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities
Accounts payable, accrued
expenses and other $ 2,610 $ 728 $ 1,817
Due to manager 360 693 678
Due to affiliate - 439 -
Dividends payable 7,454 16,835 16,828
Intangible liabilities 75,005 76,375 77,745
Repurchase agreements 22,117 408,677 1,276,121
Collateralized debt
obligations(1) 204,769 182,769 486,608
Junior subordinated notes 51,550 51,550 51,550
Mortgage payable 219,380 219,380 219,380
Senior mortgage-backed notes,
related party 24,087 99,143 99,815
Secured revolving credit
facility, related party 38,420 48,220 67,319
Interest payable 2,454 3,610 9,256
Derivative liabilities 31,037 53,545 61,729
-----------------------------------------
Total Liabilities 679,243 1,161,964 2,368,846
-----------------------------------------
-----------------------------------------
Commitments and contingencies
Stockholders' Equity
Preferred stock, par value $0.001
per share, 100,000,000 shares
authorized, no shares issued
and outstanding - - -
Common stock, $0.001 par value,
500,000,000 shares
authorized, 24,775,283;
24,704,945; and
24,704,945 shares issued and
outstanding, respectively 25 25 25
Additional paid-in capital 563,900 563,064 562,930
Accumulated other comprehensive
loss (9,724) (20,135) (15,481)
Declared dividends in excess of
operations (493,299) (410,311) (436,882)
-----------------------------------------
Total Stockholders' Equity 60,902 132,643 110,592
-----------------------------------------
Total Liabilities and
Stockholders' Equity $ 740,145 $ 1,294,607 $ 2,479,438
-----------------------------------------
-----------------------------------------
(1) Fair value at June 30, 2008, and March 31, 2008 and cost at December 31,
2007.
Condensed Consolidated Statements of Operations (Unaudited)
----------------------------------------------------------------------------
($ in
thousands,
except share Three months ended Six months ended
and per June 30, March 31, June 30, June 30, June 30,
share data) 2008 2008 2007 2008 2007
----------------------------------------------------------------------------
Revenues
Interest
income -
available
for sale
securities $ 24,355 $ 39,937 $ 50,823 $ 64,292 $ 101,027
Interest
income -
real
estate
loans 2,207 2,612 4,404 4,819 8,729
Other
interest
and
dividend
income 218 669 2,276 887 4,976
---------------------------------------------------------------
Total
interest
and
dividend
income 26,780 43,218 57,503 69,998 114,732
Rental
income, net 5,550 5,662 5,110 11,212 5,658
---------------------------------------------------------------
Total
revenues 32,330 48,880 62,613 81,210 120,390
---------------------------------------------------------------
Expenses
Interest
expense 10,732 24,268 43,179 35,000 83,298
Management
fees,
related
party 418 667 1,828 1,085 4,181
Professional
fees 585 668 1,204 1,253 1,986
Depreciation
and
amortization 3,022 3,022 2,798 6,044 3,109
Incentive
fees - - - - 124
Insurance
expense 480 330 325 810 407
Directors'
fees 127 153 178 280 340
Public
company
expense 302 111 161 413 232
Commercial
real
estate
expenses 420 417 334 837 344
Provision
for loss
on real
estate
loans 7,386 9,063 - 16,449 -
Other
expenses 521 129 208 896 296
---------------------------------------------------------------
Total
expenses 23,993 38,828 50,215 63,067 94,317
---------------------------------------------------------------
Other
revenues
(expenses)
Realized
net gain
(loss) on
sale of
securities
available
for sale,
real
estate
loans, and
other
investments (1,263) (3,785) (440) (5,048) 1,180
Realized
and
unrealized
gain (loss)
on
derivatives 5,351 (43,382) (3,598) (38,031) (12,207)
Impairments
on available
for sale
securities (18,310) (67,154) (22,058) (85,464) (22,693)
Net change
in assets
and
liabilities
valued
under fair
value
option (69,355) (32,848) - (102,203) -
Foreign
currency
exchange
gain - - 4,249 - 4,751
Income
(loss) from
equity
investments - (40) 589 (40) 1,438
Other (295) (529) (214) (578) (72)
---------------------------------------------------------------
Total
other
expenses (83,872) (147,738) (21,472) (231,364) (27,603)
---------------------------------------------------------------
Net loss $ (75,535) $ (137,686) $ (9,074) $ (213,221) $ (1,530)
---------------------------------------------------------------
---------------------------------------------------------------
Net loss
per share
- basic
and
diluted $ (3.04) $ (5.56) $ (0.36) $ (8.60) $ (0.06)
---------------------------------------------------------------
---------------------------------------------------------------
Weighted
average
shares of
common
stock
outstanding:
Basic and
diluted 24,807,529 24,750,048 25,029,782 24,778,788 25,036,870
---------------------------------------------------------------
---------------------------------------------------------------
Dividends
declared
per share
of common
stock $ 0.30 $ 0.68 $ 0.68 $ 0.98 $ 1.36
---------------------------------------------------------------
---------------------------------------------------------------
Net Investment Income (Unaudited)
----------------------------------------------------------------------------
($ in
thousands,
except share Three months ended Six months ended
and per June 30, March 31, June 30, June 30, June 30,
share data) 2008 2008 2007 2008 2007
---------------------------------------------------------------
Total
interest
and
dividend
income $ 26,780 $ 43,218 $ 57,503 $ 69,998 $ 114,732
Rental
income, net 5,550 5,662 5,110 11,212 5,658
Income
(loss)
from
equity
investments - (40) 589 (40) 1,438
Interest
expense (10,732) (24,268) (43,179) (35,000) (83,298)
---------------------------------------------------------------
Net
Investment
Income $ 21,598 $ 24,572 $ 20,023 $ 46,170 $ 38,530
---------------------------------------------------------------
---------------------------------------------------------------
Net
Investment
Income per
share $ 0.87 $ 0.99 $ 0.80 $ 1.86 $ 1.54
---------------------------------------------------------------
---------------------------------------------------------------
Weighted
average
shares of
common
stock
outstanding:
Basic and
diluted 24,807,529 24,750,048 25,029,782 24,778,788 25,036,870
---------------------------------------------------------------
---------------------------------------------------------------
----------------------------------------------------------------------------
Reconciliation of Net Loss to Operating Earnings (Unaudited)
----------------------------------------------------------------------------
($ in
thousands,
except share Three months ended Six months ended
and per June 30, March 31, June 30, June 30, June 30,
share data) 2008 2008 2007 2008 2007
----------------------------------------------------------------------------
Net loss $ (75,535) $ (137,686) $ (9,074) $ (213,221) $ (1,530)
Realized
net (gain)
loss on
sale of
securities
available
for sale,
real
estate
loans, and
other
investments 1,263 3,785 440 5,048 (1,180)
Realized
and
unrealized
(gain) loss
on
derivatives (5,351) 43,382 3,598 38,031 12,207
Impairments
on
available
for sale
securities 18,310 67,154 22,058 85,464 22,693
Net change
in assets
and
liabilities
valued
under fair
value option 69,355 32,848 - 102,203 -
Provision
for loss on
real estate
loans 7,386 9,063 - 16,449 -
Foreign
currency
exchange
gain - - (4,249) - (4,751)
Depreciation
and
amortization 3,022 3,022 2,798 6,044 3,109
Cash
settlements
on economic
hedges that
did not
qualify for
hedge
accounting
treatment (1,818) (2,044) 1,186 (3,862) 1,179
---------------------------------------------------------------
Operating
Earnings $ 16,632 $ 19,524 $ 16,757 $ 36,156 $ 31,727
---------------------------------------------------------------
---------------------------------------------------------------
Operating
Earnings
per share $ 0.67 $ 0.79 $ 0.67 $ 1.46 $ 1.27
---------------------------------------------------------------
---------------------------------------------------------------
Weighted
average
number of
shares
outstanding:
Basic and
diluted 24,807,529 24,750,048 25,029,782 24,778,788 25,036,870
---------------------------------------------------------------
---------------------------------------------------------------
----------------------------------------------------------------------------
Comprehensive Loss (Unaudited)
----------------------------------------------------------------------------
Three months ended Six months ended
($ in June 30, March 31, June 30, June 30, June 30,
thousands) 2008 2008 2007 2008 2007
----------------------------------------------------------------------------
Net loss $ (75,535) $ (137,686) $ (9,074) $ (213,221) $ (1,530)
Changes in
OCI -
securities
available
for sale(1) 1,784 (7,983) (29,361) (6,199) (50,474)
Unrealized
loss on
effective
cash flow
hedges 8,327 (4,128) 18,815 4,199 16,699
Realized and
unrealized
(gain) loss
on cash flow
hedges - 8,982 281 8,982 (2,457)
Amortization
of net
(gain)
loss on
cash flow
hedges into
interest
expense 300 145 (432) 445 (822)
----------------------------------------------------------------------------
Comprehensive
loss $ (65,124) $ (140,670) $ (19,771) $ (205,794) $ (38,584)
----------------------------------------------------------------------------
(1) Represents reclassification from OCI ("Other Comprehensive Income") to
impairments on available for sale securities.
Reconciliation of Net Loss to Estimated REIT Taxable Income (Loss)
(Unaudited)
----------------------------------------------------------------------------
Three months Six months
($ in thousands, ended ended
except share and per share data) June 30, 2008 June 30, 2008
----------------------------------------------------------------------------
GAAP net loss $ (75,535) $ (213,221)
-----------------------------
Adjustments to GAAP net loss:
Net loss of taxable REIT subsidiary - 495
Share-based compensation 89 (94)
Net tax adjustments related to interest
income (2,751) (5,655)
Tax derivative loss in excess of book loss (28,953) (16,078)
Capital-loss limitation 1,532 35,849
Impairment losses not deductible for tax
purposes 18,310 85,464
Net change in assets and liabilities valued
under fair value option 69,355 102,203
Loan loss allowance not deductible for tax
purposes 7,386 16,449
GAAP-to-tax difference on rent escalation and
lease amortization (393) (774)
Other (23) (46)
-----------------------------
Net adjustments from GAAP net loss to
estimated REIT taxable income 64,552 217,813
-----------------------------
Estimated REIT taxable income (loss) (10,983) 4,592
-----------------------------
Estimated REIT taxable income (loss) per share $ (0.44) $ 0.19
-----------------------------
-----------------------------
Weighted average number of shares
outstanding:
Basic and diluted 24,807,529 24,778,788
-----------------------------
-----------------------------
----------------------------------------------------------------------------
III. SUPPLEMENTAL INFORMATION
Total Investment Portfolio at June 30, 2008
The following table summarizes the Company's investment portfolio at June
30, 2008, March 31, 2008, and June 30, 2007:
----------------------------------------------------------------------------
June 30, 2008 March 31, 2008 June 30, 2007
Carrying Carrying Carrying
($ in millions) Value % Total Value % Total Value % Total
----------------------------------------------------------------------------
Available for sale
securities
Agency MBS $ - - $ - - $ 2,369.2 63.3%
CMBS 241.7 40.2% 271.1 36.2% 510.9 13.6%
Prime RMBS 37.8 6.3% 56.3 7.5% 168.0 4.5%
Subprime RMBS 16.3 2.7% 28.0 3.7% 113.4 3.0%
ABS(1) - - - - 42.0 1.1%
Preferred
stock(2) 0.0 0.0% 0.1 0.0% 3.4 0.1%
Direct real estate
loans
Construction loans 16.0 2.7% 16.4 2.2% 20.5 0.5%
Mezzanine
loans(3) 26.3 4.4% 31.9 4.3% 31.9 0.9%
Whole loans(4) 29.6 4.9% 109.8 14.7% 213.5 5.7%
Real estate finance
fund - - - - 35.3 1.0%
Commercial real
estate-owned 231.5 38.5% 233.1 31.2% 212.2 5.7%
Other 1.6 0.3% 1.6 0.2% 23.4 0.6%
----------------------------------------------------------------------------
Total $ 600.8 100.0% $ 748.3 100.0% $ 3,743.7 100.0%
----------------------------------------------------------------------------
(1) Asset-backed securities ("ABS").
(2) Exact balance at June 30, 2008 of $24,250.
(3) Includes two loans in the amount of $20.4 million as held for sale.
(4) Includes two loans in the amount of $27.1 million as held for sale,
which were sold subsequent to the end of the second quarter.
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