RAIT Financial Trust Q1 2010 Earnings Call Transcript

RAIT Financial Trust Q1 2010 Earnings Call Transcript
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RAIT Financial Trust (RAS)

Q1 2010 Earnings Call

April 29, 2010 10:00 AM ET

Executives

Andres Viroslav – Vice President, Director, Corporate Communications

Scott Schaeffer – Chief Executive Officer

Jack Salmon – Chief Financial Officer.

Analysts

Gabe Poggi – FBR Capital Markets

Presentation

Operator

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Good day, ladies and gentlemen. And welcome to the First Quarter 2010 RAIT Financial Trust Earnings Conference Call. My name is Christie, and I’ll be your coordinator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions).

As a reminder, this conference is being recorded for replay purposes. I would now like to hand the call over to your host for today, Mr. Andres Viroslav, Vice President, Director of Corporate Communications. Sir, please proceed.

Andres Viroslav

Thank you, Christie, and good morning to everyone. Thank you for joining us today to review RAIT Financial Trust’s first quarter 2010 financial results. On the call with me today are Scott Schaeffer, Chief Executive Officer; and Jack Salmon, RAIT’s Chief Financial Officer.

This morning’s call is being webcast on our website at www.raitft.com. There will be a replay of the call available via webcast on our website and telephonically beginning at approximately 1 PM Eastern Time today. The dial-in for the replay is 888-286-8010 with a confirmation code of 93479995.

Before I turn the call over to Scott, I would like to remind everyone that there may be forward-looking statements made in this call. These forward-looking statements reflect RAIT’s current views with respect to future events and financial performance.

Actual results could differ substantially and materially from what RAIT has projected. Such statements are made in good faith pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to RAIT’s press release and filings with the SEC for factors that could affect the accuracy of our expectations or cause our future results to differ materially from those expectations.

Participants may discuss non-GAAP financial measures in this call. A copy of RAIT’s press release containing financial information, other statistical information and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is attached to RAIT’s most recent current report on Form 8-K, available at RAIT’s website www.raitft.com, under Investor Relations. RAIT’s other SEC filings are also available through this link.

RAIT does not undertake to update forward-looking statements in this call or with respect to matters described herein except as may be required by law.

Now, I’d like to turn the call over to RAIT’s Chief Executive Officer, Scott Schaeffer. Scott?

Scott Schaeffer

Thank you very much, Andres. And thank all of you for joining us this morning as we present RAIT’s first quarter 2010 results. RAIT generated $0.41 per share in GAAP earnings for the quarter, our second consecutive quarter of positive earnings. Jack will detail the financial results for our quarter shortly.

RAIT’s progress continues as we further adapt our business to the current market environment while taking the necessary steps to return to our core competency, commercial real estate lending. The success of this strategy for us as for others is in our ability to access capital for lending. We’re currently pursuing joint ventures and other strategies to enable this business to go forward.

On a corporate level, I’m pleased with the progress we’ve made since the beginning of the year. During the first quarter, we continued the deleveraging process by exchanging $55 million of senior convertible notes at a discount for a combination of cash, equity and new senior secured notes.

These exchange transactions, which decreased recourse indebtedness, reduced interest costs and extended maturities are a long-term positive for our shareholders. When analyzed together the transactions were accretive to book value. We expect to continue the deleveraging process throughout 2010.

Subsequent to quarter end, we announced the sale of our collateral management rights on eight unconsolidated Taberna securitizations to an affiliate of Fortress Investment Group for approximately $16.5 million.

In addition, RAIT will realize ongoing cost savings resulting from a reduction in associated expenses. We continue to manage approximately $4.1 billion of assets after this transaction.

During the quarter, we took back six properties, which served as collateral for our loan. As a reminder, we chose this strategy because of our experience and capabilities to effectively manage the transition of these assets in order to create value for RAIT overtime. We actively manage these properties through our in-house asset and property management team, which provides RAIT with flexibility as we continue various value creating strategies.

Our portfolio of directly held commercial real estate assets totaled $796 million at March 31, 2010. Before I turn the call over to Jack, I’d like to make some brief comments on our capabilities in the market.

Today, RAIT has a commercial real estate lending platform capable of sourcing, underwriting, closing, asset managing and servicing loans for our account and for others. RAIT has committed revolving low-cost capital in its two commercial real estate securitizations, which provide capital for RAIT to re-lend as repayments occur. RAIT is also actively pursuing new third-party sources of capital for investing. We continue to see opportunities to originate loans into the strengthening commercial real estate market at wider spreads and lower leverage.

With this, I’d like to turn the call over to Jack to go through our financial results. Jack?

Jack Salmon

Thanks, Scott. The financial results and highlights for the quarter ended March 31st include the following. The $55 million reduction on our convertible debt outstanding, compared to year end 2009.

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