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Newcastle Announces Fourth Quarter & Full Year 2012 Results

During the quarter, this portfolio generated total cash flow of $47 million and increased in value by $21 million. During the quarter, the weighted average carrying value of the real estate debt portfolio changed from a price of 83.9% to 84.7% of par.

Newcastle CDO financings

As of December 31, 2012, Newcastle’s four CDOs consisted of $1.8 billion face amount of collateral (value of 80.3% of par) financed with $1.1 billion of non-recourse debt. During the quarter, the CDOs generated $35 million of total cash flow, which included:
  • $14 million of CDO cash receipts consisting of $10 million of excess interest, $3 million of interest on retained and repurchased CDO debt, and $1 million of senior collateral management fees
  • $21 million of principal repayments on repurchased CDO debt

The following table summarizes the cash receipts in the quarter from the Company’s consolidated CDO financings and the results of their related coverage tests ($ in thousands):
Primary % Excess

Over-Collateralization Excess (Deficiency) (2)(3)
Collateral Cash Feb 27, February 27, 2013 December 31, 2012 September 30, 2012
Type Receipts (1) 2013 ((2)) % $ % $ % $
CDO IV Securities $ 348 35.2 % -3.7 % (5,586 ) -3.7 % (5,586 ) 0.1 % 213
CDO VI Securities 140 -206.9 % -70.5 % (171,187 ) -70.4 % (171,434 ) -64.8 % (176,780 )
CDO VIII Loans 5,883 369.2 % 11.3 % 78,506 10.6 % 74,593 9.8 % 70,553
CDO IX Loans   7,622 689.9 % 24.7 % 139,312 23.4 % 134,675 20.6 % 127,199
Total $ 13,993

  Cash receipts exclude $21 million of principal repayments from repurchased bonds. Cash receipts for the quarter ended December 31, 2012 may not be indicative of cash receipts for subsequent periods. See Forward-Looking Statements below for risks and uncertainties that could cause cash receipts for subsequent periods to differ materially from these amounts.

Represents the excess or deficiency under the applicable interest coverage or over-collateralization test to the first threshold at which cash flow would be redirected. The Company generally does not receive material interest cash flow from a CDO until a deficiency is corrected. The information regarding coverage tests is based on data from the most recent remittance date on or before February 27, 2013, December 31, 2012 or September 30, 2012, as applicable. The CDO IV test is conducted only on a quarterly basis (December, March, June and September).

As of the February 2013 remittance, the face amount of assets on negative watch for possible downgrade by at least one rating agency (Moody’s, S&P, or Fitch) for CDOs VIII and IX was zero.

Other Real Estate Related Investments

As of December 31, 2012, other real estate related investments consisted of $1.3 billion face amount of assets (value of 91.1% of par) financed with $1.0 billion of debt. During the quarter, these investments generated $9 million of total cash flow which included:
  • $8 million of excess interest and interest on retained debt
  • $1 million of principal repayments

Senior Living Property Investments

As of December 31, 2012, the Company owned 12 senior living properties consisting of $188 million of assets financed with $121 million of debt.

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