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Starwood Financial Announces Increased First Quarter Earnings And $150 Million Of Financing Transactions
| Starwood Financial Announces Increased First Quarter Earnings And $150 Million Of Financing Transactions
-- First quarter 1999 earnings per share increased 54% to $0.43 from $0.28 for the first quarter of 1998 (pro forma). -- Net investment income grew 75% over first quarter 1998 (pro forma) to $33.9 million. -- Financing volume in the first quarter of 1999 totaled $150.2 million.
NEW YORK, May 11 /PRNewswire/ -- Starwood Financial Trust (Amex: APT) today reported that net income for the quarter ended March 31, 1999 increased 93% to $28.2 million from $14.6 million for the quarter ended March 31, 1998 (pro forma). Net income allocable to common shareholders for the first quarter (after preferred dividends) grew to $22.7 million, or $0.43 and $0.41 per basic and diluted Class A share, respectively, compared to $14.5 million, or $0.28 and $0.27 per share, in the 1998 pro forma period. Results for the first quarter of 1998 have been presented on a pro forma basis for comparative purposes as a result of the Company's recapitalization in March 1998.
Funds from operations allocable to common shareholders for the quarter ended March 31, 1999 grew 53% to $0.46 and $0.43 per basic and diluted Class A share, respectively, from $0.30 per basic and diluted share for the prior year. First quarter 1999 funds from operations allocable to common shareholders and revenue increased to $24.4 million and $55.4 million, respectively, from $15.9 million and $26.8 million for the first quarter 1998. "I am pleased with our substantial income growth, the quality of our investment portfolio and the significant pipeline of transactions under review as the competitive landscape in real estate financing continues to evolve favorably," said Barry S. Sternlicht, Starwood Financial's chairman.
Starwood Financial announced that it closed $102.2 million in net new financing transactions in the first quarter, reflecting gross financing commitments of $150.2 million less $48.0 million in loan repayments. Starwood Financial's first quarter transactions continue to reflect the Company's core business strategy of originating and acquiring higher-yielding, large balance structured loans secured by high-quality commercial real estate assets in major metropolitan markets across the United States.
Jay Sugarman, president and chief executive officer of Starwood Financial, said, "On the heels of our Lazard Freres acquisition last quarter, we focused our efforts this quarter on continuing to build our pipeline of structured financing transactions. Although some parts of the real estate credit markets have recovered from last summer's liquidity crunch, the environment for large balance, structured financing remains extremely favorable from our perspective."
"As a number of less experienced, undercapitalized lenders have exited the market, many borrowers who initially waited for loan pricing to recover have concluded that they should secure financing now," Mr. Sugarman said. "As the long-time leader in this market, Starwood Financial is uniquely positioned to provide such financing."
Selected Operating Results (Amounts in thousands, except per share data)(unaudited) Three months ended Three months ended March 31, 1999 March 31, 1998 (pro forma) Net investment income $33,953 $19,456 Other income 1,778 425 Non-interest expense (7,514) (5,233) Net income $28,217 $14,648 Preferred dividends (5,308) -- Net income allocable to common shareholders $22,909 $14,648 Net income allocable to Class A shares $22,680 $14,501 Per basic share $0.43 $0.28 Per diluted share $0.41 $0.27 Funds from operations allocable to Class A shares $24,199 $15,862 Per basic share $0.46 $0.30 Per diluted share $0.43 $0.30 Dividends $0.42 -- Weighted average Class A shares outstanding (a): Basic 52,447 52,390 Diluted 56,546 54,178 (a) As adjusted for a one-for-six reverse stock split effective June 19, 1998. Selected Balance Sheet Data (Amounts in thousands) As of As of March 31, 1999 December 31, 1998 (unaudited) Real estate loans and related investments, net $2,123,102 $2,013,703 Total assets 2,178,776 2,059,616 Debt obligations 1,172,131 1,055,719 Total liabilities 1,178,960 1,088,888 Total shareholders' equity 999,816 970,728Transaction Volume
During the first quarter, Starwood Financial generated $143.1 million in new financing commitments (all of which have been funded) in three transactions. The Company's transactions included a mix of mortgage and mezzanine loans backed by commercial and residential collateral in major markets nationwide. The Company also funded an additional $7.1 million under five pre-existing financing commitments during the quarter.
During the first quarter 1999, Starwood Financial funded its origination and acquisition activities with cash on hand and borrowings under both of its revolving credit facilities. At quarter end, $728 million was outstanding under $1.2 billion of committed credit facilities. In addition, the Company completed a 10-year, fixed-rate financing secured by certain of its long-term assets. The new financing, which replaced a term loan maturing in March 1999, provided Starwood Financial with approximately $30 million of excess proceeds and better match-funded the Company's assets and liabilities.
Starwood Financial's ratio of consolidated debt obligations to book shareholders' equity was 1.2x as of March 31, 1999, based on debt obligations of $1.2 billion and shareholders' equity of $1.0 billion.
On April 1, 1999, Starwood Financial announced an increase in its regular quarterly cash dividend to $0.42 per Class A share for the quarter ended March 31, 1999. The dividend, which was paid on April 29 to holders of record as of April 15, represented approximately 91% of funds from operations for the first quarter.
Starwood Financial is the leading publicly-traded finance company focused exclusively on the commercial real estate industry. The Company, which is taxed as a real estate investment trust, provides structured mortgage, mezzanine and lease financing through its proprietary origination, acquisition and servicing platform. The Company's mission is to maximize risk-adjusted returns on equity by providing innovative and value-added financing solutions to the real estate industry.
(Note: Statements in this press release which are not historical fact may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Starwood Financial Trust believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Starwood Financial Trust's expectations include completion of pending investments, continued availability to originate new investments, the availability and cost of capital for future investments, competition within the real estate industry, real estate and economic conditions, and other risks detailed from time to time in Starwood Financial Trust's SEC reports.)
Starwood Financial Trust Consolidated Statements of Operations (Amounts in thousands, except per share data) (unaudited) Three months ended Three months ended March 31, 1999 March 31, 1998 (pro forma) Revenue: Interest income $49,919 $22,663 Operating lease income 3,727 3,750 Other income 1,778 425 Total revenue 55,424 26,838 Costs and expenses: Interest expense 19,693 6,957 Operating lease depreciation 1,365 1,374 Corporate and other 5,149 3,859 Provision for possible credit losses 1,000 -- Total costs and expenses 27,207 12,190 Net income before minority interest 28,217 14,648 Minority interest -- -- Net income $28,217 $14,648 Preferred dividends (5,308) -- Net income allocable to common shareholders $22,909 $14,648 Net income - Class A shares $22,680 $14,501 Net income per Class A share: Basic $0.43 $0.28 Diluted $0.41 $0.27 Weighted average Class A shares outstanding(A): Basic 52,447 52,390 Diluted 56,546 54,178 (A) As adjusted for a one-for-six reverse stock split effective June 19, 1998. Starwood Financial Trust Balance Sheet Data (Amounts in thousands) As of As of March 31, 1999 December 31, 1998 (unaudited) ASSETS Loans and other investments, net $2,123,102 $2,013,703 Investment in corporations 417 522 Cash and cash equivalents 17,537 10,110 Restricted cash 4,146 5,699 Marketable securities 5,645 5,406 Accrued interest and rent receivable 12,966 13,122 Other assets 14,963 11,054 Total assets $2,178,776 $2,059,616 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable, accrued expenses and other liabilities $6,829 $10,536 Dividends payable -- 22,633 Debt obligations Revolving credit facilities 728,092 640,945 Term loans 398,402 368,683 Other debt obligations 45,637 46,091 Total liabilities 1,178,960 1,088,888 Minority interest -- -- Shareholders' equity 999,816 970,728 Total liabilities and shareholders' equity $2,178,776 $2,059,616 SOURCE Starwood Financial Trust
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