On a GAAP basis the Company provided a return on average equity of 18.12%, 6.60%, and 17.61%, for the quarters ended December 31, 2011, December 31, 2010, and September 30, 2011, respectively. On a GAAP basis, the Company provided a return on average equity of 12.03% and 4.53% for the years ended December 31, 2011, and 2010, respectively.

Kevin Riordan, Chief Executive Officer and President of CreXus, commented on the quarter’s results. “The fourth quarter of 2011 continued to demonstrate the breadth of our origination platform. During the quarter we made several new investments, continued to transform low yielding financings into accretive long-term investments, consummated new originations, and expanded our pipeline of opportunities. We closed over $143 million in new investments during the quarter, with several notable transactions: CreXus acquired its first two net lease facilities, two warehouse/distribution centers located in Phoenix, Arizona, for $33 million. We also funded a $29 million senior and mezzanine loan secured by two retail facilities in Indiana, a $20 million mezzanine loan secured by a portfolio of office buildings in Southern California, and a $12 million first mortgage secured by a condominium development in New Jersey.”

Mr. Riordan continued: “A significant wall of commercial real estate debt is slated to mature over the next several years, and institutions here and in Europe are looking to de-lever their balance sheets to adapt to new risk thresholds and capital ratios. Moreover, volatility in the capital markets continues to present attractive, risk-adjusted debt and equity investments. In this environment, I believe CreXus is well-positioned to take advantage of these opportunities.”

With the expansion of our portfolio to incorporate investment properties, we have adopted segment accounting to differentiate the returns between debt and equity investments. The following table summarizes segmented investment portfolio information for the Company:
     

Quarter ended

December 31, 2011
   

Quarter ended

December 31, 2010
   

Quarter ended

September 30, 2011
Debt Securities Portfolio (dollars in thousands)
Debt investment portfolio at period-end $ 752,801     $ 412,981     $ 894,926
Interest bearing liabilities at period-end - 172,837 -
Secured financing leverage at period-end (Debt:Equity) (1) - 0.6:1 -
Fixed-rate investments as percentage of portfolio 38% 94% 50%
Adjustable-rate investments as percentage of portfolio 62% 6% 50%
Fixed-rate investments

Agency mortgage-backed securities as percentage of fixed-rate assets
- - 38%

Commercial mortgage-backed securities as percentage of fixed-rate assets
- 55% -
Commercial mortgage loans as percentage of fixed-rate assets 100% 40% 58%
Commercial preferred equity as percentage of fixed-rate assets - 5% 4%
Adjustable-rate investments
Commercial mortgage loans as percentage of adjustable-rate assets 100% 100% 100%
Weighted average yield on interest earning debt assets at period-end 29.86% 7.75% 16.80%
Weighted average cost of funds for debt portfolio at period-end(1) - 3.60% -
Real Estate Properties Portfolio including Net Lease Operations
Real estate investment at period-end 33,196 - -
Weighted average yield on real estate investment portfolio at period end 7.67% - -
Financing on real estate 16,600 - -
Weighted average cost of funds on real estate investment financing 3.50% - -
 
(1) Excludes commercial mortgage financing, this is a consolidated non-retained liability.
 

The following table summarizes characteristics for each asset class:
                 
Quarter ended Quarter ended Quarter ended
December 31, 2011 December 31, 2010 September 30, 2011

 

Commercial

Loans
 

Preferred

Equity
 

Agency

MBS
 

Real

Estate

Commercial

Loans
 

Preferred

Equity
  CMBS  

Real

Estate

Commercial

Loans
 

Preferred

Equity
 

Agency

MBS
 

Real

Estate
Weighted average amortized cost basis $ 90.0   -   -   - $ 95.5   $ 93.4   $ 101.3   - $ 85.6   $ 93.8   $ 104.7   -
Weighted average coupon 5.94% - - - 8.80% 10.09% 5.37% - 5.40% 10.09% 4.77% -
Fixed-rate percentage of asset class 38% - - - 100% 100% 100% - 37% 100% 100% -
Adjustable-rate percentage of asset class 62% - - - - - - - 63% - - -
Weighted average yield on assets at period-end 29.86% - - 7.67% 10.30% 12.37% 5.12% - 19.97% 17.28% 3.39% -
Weighted average cost of funds at period-end - - - 3.50% - - 3.60% - - - - -
 

At December 31, 2011, the Company’s commercial mortgage loan portfolio had two loans relating to one group of underlying properties that were 30 days or more delinquent. At December 31, 2010, the Company’s CMBS portfolio was composed of AAA-rated securities and its commercial mortgage loan portfolio had no loans 30 days or more delinquent. At September 30, 2011, the Company’s commercial mortgage loan and preferred equity portfolio had two loans relating to one group of underlying properties that were 30 days or more delinquent. During the quarters ended December 31, 2011 and September 30, 2011, the Company did not record any additional general loan loss provision as compared to loan loss provisions of $127,000 for the quarter ended December 31, 2010.

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