Crexus Investment (CXS) Q2 2012 Earnings Call August 02, 2012 11:00 am ET Executives Kevin Riordan - Chairman, Chief Executive Officer and President Daniel Wickey - Chief Financial Officer, Principal Accounting Officer and Secretary Robert M. Karner - Global Head of Debt Investments Rose-Marie Lyght - Executive Vice President and Co-Head of Portfolio Management Robert Restrick - Chief Operating Officer and Executive Vice President Analysts Jason Arnold - RBC Capital Markets, LLC, Research Division Jade J. Rahmani - Keefe, Bruyette, & Woods, Inc., Research Division Douglas Harter - Crédit Suisse AG, Research Division Steven C. Delaney - JMP Securities LLC, Research Division Gabriel J. Poggi - FBR Capital Markets & Co., Research Division Presentation Operator
I will now turn the conference over to Mr. Kevin Riordan, President and Chief Executive Officer. Please proceed, sir.Kevin Riordan Thank you, operator. Good morning, and welcome to the earnings call for CreXus Investment Corp. for the second quarter 2012. I'm Kevin Riordan, President and CEO of CreXus. In addition to our CFO, Dan Wickey, joining me on the call today are the senior members of CreXus management team. I want to begin the call with a few comments on the quarter and the markets in general, and Dan will run through our results. After which, our team will be happy to discuss anything in our release or quarterly supplement. This quarter, we continue to make new investments and optimize our portfolio. We closed approximately $150 million of subordinate debt investments near the end of the quarter. We sold 2 hotels for approximately $10.5 million for a total gain of approximately $1.8 million. We also continue to implement our strategy to originate whole loans and sell the senior component of the loan while retaining the higher yielding junior piece. Specifically, we sold a $50 million senior position and retained a $30 million subordinate note with a coupon of 11.6%. As can be seen in our quarterly supplement, our investing activity has enabled us to push out the maturity profile while increasing their return over the last 6 months. This takes some time, but you can see that we have increased the coupon by over 300 basis points while maturities are extended by more than a year. So now looking at the portfolio at quarter end, we have an unlevered debt book of approximately $700 million yielding north of 11%, with a weighted average LTV of 70%. We also have real estate investments of approximately $70 million yielding 10% utilizing a modest amount of nonrecourse leverage. In light of the options available to investors, we think CreXus provides a very compelling investment opportunity.
Since quarter end, we have closed $125 million of new investments. We closed 2 subordinate debt investments totaling $60 million that will earn north of 11%, with a weighted maturity of 6.5 years. We also closed 2 senior mortgages totaling $65 million with a coupon of approximately 6.5%. We are obviously pleased with the risk return profile of the sub debt positions.Read the rest of this transcript for free on seekingalpha.com