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Starwood Financial Announces 24% Increase In Third Quarter Earnings Per Share
Starwood Financial Announces 24% Increase in Third Quarter Earnings Per Share
-- Third quarter 1999 earnings per share increased 23.7% to $0.49 from $0.40 for third quarter 1998. -- Net investment income grew 40.0% over third quarter 1998 to $36.1 million. -- Financing volume since beginning of third quarter 1999 totaled $84.5 million. -- Tangible book equity capital surpassed $1.0 billion.
NEW YORK, Nov. 12 /PRNewswire/ -- Starwood Financial Inc. (NYSE: SFI - news), the leading publicly traded finance company focused on the commercial real estate industry, reported that net income for the quarter ended September 30, 1999 increased 49.4% to $31.3 million from $20.9 million for the quarter ended September 30, 1998. Net income allocable to common shareholders for the third quarter (after preferred dividends) grew to $26.0 million, or $0.49 and $0.47 per basic and diluted Class A share, respectively, compared with $20.9 million, or $0.40 and $0.38 per basic and diluted share, in the 1998 period.
Funds from operations allocable to common shareholders for the quarter ended September 30, 1999 grew 23.3% to $0.52 and $0.50 per basic and diluted Class A share, respectively, from $0.42 and $0.41 per basic and diluted share for the 1998 period. Third quarter 1999 funds from operations allocable to common shareholders and revenue increased to $27.5 million and $60.6 million, respectively, from $22.3 million and $42.1 million for the third quarter of 1998.
Net income allocable to common shareholders for the nine months ended September 30, 1999, was $73.4 million, or $1.39 and $1.31 per basic and diluted Class A share, respectively, compared with $36.9 million, or $0.96 and $0.94 per basic and diluted Class A share, for the same period in 1998. Funds from operations allocable to common shareholders were $78.1 million, or $1.47 and $1.39 per basic and diluted Class A share, respectively, for the first nine months of 1999, compared with $39.9 million, or $1.04 and $1.01 per basic and diluted Class A share, for the first nine months of 1998. Revenue for the 1999 nine-month period totaled $175.3 million, versus $79.7 million in the nine-month period of 1998. The company's 1998 results reflect a partial period from the recapitalization transactions completed on March 18, 1998 through September 30, 1998.
Starwood Financial announced that during and subsequent to the third quarter, three new financing commitments totaling $52.9 million have been closed or are in escrow. Of the $52.9 million committed, $22.9 million has been funded to date. In addition, the company funded $31.6 million under seven pre-existing commitments and received $149.4 million in principal repayments. Starwood Financial's recent transactions continue to reflect the company's core business strategy of originating and acquiring large balance, structured financing transactions secured by high-quality commercial real estate assets in major metropolitan markets across the United States.
Jay Sugarman, Starwood Financial's chief executive officer, commented, ''This quarter, we continued to deliver strong, double-digit earnings growth while maintaining excess liquidity to take advantage of attractive lending opportunities we anticipate in the fourth quarter as the year comes to a close.''
Mr. Sugarman continued, ''Much of our focus this quarter was on the
completion of the TriNet merger, which represented the successful $1.6 billion
expansion of our existing credit tenant leasing business, a market niche in
which we have already achieved some of our best risk-adjusted returns.
transaction, which closed on November 4, 1999, represents a significant step
forward in our continuing drive to be the leading provider of flexible
mortgage, mezzanine and lease financing to real estate owners and corporate
Selected Operating Results (Amounts in thousands, except per share data)(unaudited)
Three months ended Three months ended
Sept. 30, 1999 Sept. 30, 1998
Net investment income $36,088 $25,770 Other income 3,448 1,329 Non-interest expense (8,265) (6,164) Net income $31,271 $20,935 Preferred dividends (5,308) -- Net income allocable to common shareholders $25,963 $20,935 Net income allocable to Class A shares $25,703 $20,726 Per basic share $0.49 $0.40 Per diluted share $0.47 $0.38 Funds from operations allocable to Class A shares $27,223 $22,086 Per basic share $0.52 $0.42 Per diluted share $0.50 $0.41 Dividends $0.44 $0.38 Weighted average Class A shares outstanding*: Basic 52,471 52,390 Diluted 55,327 54,654 * 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 Sept. 30, 1999 Dec. 31, 1998 (unaudited) Real estate loans and related investments, net $2,056,330 $2,013,703 Total assets 2,108,378 2,059,616 Debt obligations 1,095,388 1,055,719 Total liabilities 1,103,016 1,088,888 Total shareholders' equity 1,005,362 970,728
Since the beginning of the third quarter of 1999, Starwood Financial generated $52.9 million in new financing commitments, $22.9 million of which have been funded, in three separate transactions. The company's transactions included a mix of mortgage and mezzanine loans primarily backed by hotel, residential and office properties. The Company also funded an additional $31.6 million under seven pre-existing financing commitments.
During the third quarter of 1999, Starwood Financial funded its origination and acquisition activities with cash on hand and borrowings under its revolving credit facilities. At quarter end, $646.4 million was outstanding under $1.2 billion of committed credit facilities.
Starwood Financial's ratio of consolidated debt obligations to book shareholders' equity was 1.1x as of September 30, 1999, based on debt obligations of $1.1 billion and shareholders' equity of $1.0 billion.
On November 3, 1999, Starwood Financial and TriNet Corporate Realty Trust, Inc. each held a special shareholders meeting to approve their proposed merger announced on June 16, 1999. After receiving shareholder approval and satisfying the other conditions to closing, Starwood Financial and TriNet closed the merger on November 4, 1999. Future quarterly financial results will reflect the combined performance of Starwood Financial and TriNet.
On October 1, 1999, Starwood Financial announced an increase in its regular quarterly cash dividend to $0.44 per Class A share for the quarter ended September 30, 1999. The dividend, which was paid on October 29, 1999 to holders of record as of October 15, 1999, represented approximately 85% of funds from operations for the third quarter.
Starwood Financial is the leading publicly traded finance company focused 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.
For more information about Starwood Financial, please call 800-PRO-INFO and enter ticker symbol SFI.
Financial Tables Follow Starwood Financial Inc. Consolidated Statements of Operations (Amounts in thousands, except per share data) (unaudited) Three months ended Sept. 30, 1999 Sept. 30, 1998 Revenue: Interest income $52,911 $36,398 Operating lease income 4,276 4,350 Other income 3,448 1,329 Total revenue 60,635 42,077 Costs and expenses: Interest expense 21,099 14,978 Operating lease depreciation 1,365 1,374 Corporate and other 5,650 3,790 Provision for possible credit losses 1,250 1,000 Total costs and expenses 29,364 21,142 Net income $31,271 $20,935 Preferred dividends (5,308) -- Net income allocable to common shareholders $25,963 $20,935 Net income - Class A shares $25,703 $20,726 Net income per Class A share: Basic $0.49 $0.40 Diluted $0.47 $0.38 Weighted average Class A shares outstanding(A): Basic 52,471 52,390 Diluted 55,327 54,654 (A) As adjusted for a one-for-six reverse stock split effective June 19, 1998. Starwood Financial Inc. Consolidated Statements of Operations (Amounts in thousands, except per share data) (unaudited) Nine months ended Sept. 30, 1999 Sept. 30, 1998 Revenue: Interest income $154,837 $68,910 Operating lease income 11,726 8,624 Other income 8,751 2,213 Total revenue 175,314 79,747 Costs and expenses: Interest expense 61,348 25,472 Operating lease depreciation 4,095 2,943 Corporate and other 17,000 6,594 Provision for possible credit losses 3,500 1,750 Stock option compensation expense -- 5,985 Total costs and expenses 85,943 42,744 Net income before minority interest 89,371 37,003 Minority interest -- (54) Net income $89,371 $36,949 Preferred dividends (15,923) -- Net income allocable to common shareholders $73,448 $36,949 Net income - Class A shares $72,714 $36,580 Net income per Class A share: Basic $1.39 $0.96 Diluted $1.31 $0.94 Weighted average Class A shares outstanding(A) Basic 52,463 37,968 Diluted 56,206 39,459 (A) As adjusted for a one-for-six reverse stock split effective June 19, 1998. Starwood Financial Inc. Balance Sheet Data (Amounts in thousands) As of As of Sept. 30, 1999 Dec. 31, 1998 (unaudited) ASSETS Loans and other investments, net $1,870,485 $1,823,761 Real estate subject to operating leases, net 185,845 189,942 Investment in corporations 457 522 Cash and cash equivalents 13,907 10,110 Restricted cash 3,498 5,699 Marketable securities 4,597 5,406 Accrued interest and rent receivable 14,006 13,122 Other assets 15,583 11,054 Total assets $2,108,378 $2,059,616 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable, accrued expenses and other liabilities $7,628 $10,536 Dividends payable -- 22,633 Debt obligations Revolving credit facilities 646,384 640,945 Term loans 409,605 368,683 Other debt obligations 39,399 46,091 Total liabilities 1,103,016 1,088,888 Minority interest -- -- Shareholders' equity 1,005,362 970,728 Total liabilities and shareholders' equity $2,108,378 $2,059,616
SOURCE: Starwood Financial Inc.
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