 Investor Presentation
August 2014
Cira Centre, 2929 Arch Street, 17 Floor, Philadelphia, PA 19104 |
215.243.9000 | rait.com Exhibit 99.1
th |
 Forward Looking Statements, Non-
GAAP Financial
Measures & Securities Offering Disclaimers
2
This document and the related presentation may contain forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements include, but are not limited to, statements about RAIT Financial Trust’s (“RAIT”) plans,
objectives, expectations and intentions with respect to future operations,
projected dividends, projected cash available for distribution (“CAD”),
projected net income and other statements that are not historical facts.
Forward-looking statements are sometimes identified by the words
“may”, “will”, “should”, “potential”,
“predict”, “continue”, “project”, “guide”, or other similar words or expressions. These forward-looking
statements are based upon the current beliefs and expectations of RAIT's management
and are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are difficult to predict and generally not within RAIT’s control. In
addition, these forward-looking statements are subject to assumptions with
respect to future business strategies and decisions that are subject to
change. RAIT does not guarantee that the assumptions underlying such forward looking statements are free from errors. Actual results may
differ materially from the anticipated results discussed in these
forward-looking statements. The following factors, among others, could
cause actual results to differ materially from the anticipated results or other expectations expressed
in the forward-looking statements: our ability to realize the projections
related to our future CAD and net income and the underlying assumptions and
the risk factors and other disclosure contained in filings by RAIT with the Securities and Exchange Commission (“SEC”), including, without
limitation,
RAIT’s
most
recent
annual
and
quarterly
reports
filed
with
SEC.
RAIT’s
SEC
filings
are
available
on
RAIT’s
website
at
www.rait.com.
You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this presentation. All
subsequent written and oral forward-looking statements attributable to RAIT or
any person acting on its behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this document and the related presentation. Except to the extent required by
applicable law or regulation, RAIT undertakes no obligation to update these
forward-looking statements to reflect events or circumstances after the
date of this presentation or to reflect the occurrence of unanticipated events.
This document and the related presentation may contain non-U.S. generally
accepted accounting principles (“GAAP”) financial measures. A
reconciliation of these non-GAAP financial measures to the most directly
comparable GAAP financial measure is included in this document and/or
RAIT’s most recent annual and quarterly reports. This
presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of
RAIT or Independence Realty Trust, Inc. (“IRT”) , a RAIT consolidated and
managed multifamily equity REIT. |
 About RAIT
3
RAIT Financial Trust (“RAIT”) (NYSE: RAS), is a multi-strategy
commercial real estate company with a vertically integrated platform
focused on lending, owning and managing commercial real estate related assets nationwide.
RAIT is organized as an internally-managed REIT with $5.3 billion of assets
under management RAIT’s
IPO
-
January
1998
Focus on delivering strong-risk adjusted returns
Scalable, “in-house”, commercial real estate platform with
approximately 700 employees (includes property management)
Offices -
Philadelphia, New York, Chicago, Charlotte
RAIT originated $470.8 million of loans during the six-months ended June 30,
2014 consisting of $288.4 million bridge loans, $165.6 million conduit
loans and $16.8 million mezzanine loans No corporate, unsecured, recourse
debt maturities until April 2016 Increased
quarterly
common
dividend
to
$0.18
for
the
second
quarter
2014
in
June
2014
-
a
38%
increase
over
the second quarter 2013
Seasoned executive team with strong real estate equity and debt experience
|
 Multi-Strategy Business Approach
4
COMMERCIAL REAL ESTATE
OWNER & OPERATOR
COMMERCIAL REAL ESTATE
LENDER
ASSET & PROPERTY MANAGER
Commercial
Real Estate Platform
$5.3 Billion
Assets Under Management
As of June 30, 2014
Maximize value over time
Opportunistic acquisitions
Hedges against inflation
Adds stability to the asset mix
One-source financing option to middle
market: originate, underwrite, close &
service commercial real estate loans
Full service property manager
Asset Manager: S&P & Morningstar
rated primary and special loan
servicer
External advisor to Independence
Realty Trust, Inc. (NYSE MKT: IRT) |
 Commercial Real Estate Lender
5
The lending opportunity
Improved
lending
environment
-
economy,
liquid
market,
stronger
borrowers
Over $1.5 trillion of CRE debt is expected to mature through 2019
(1)
Equity gap drives bridge and mezzanine lending opportunities
RAIT’s goal
Capitalize on lending opportunity utilizing existing, scalable platform and
internal expertise to originate and underwrite bridge, mezzanine and
conduit loans of $5 million to $30 million on multi-family, office,
retail and light industrial properties RAIT’s competitive advantage:
uniquely positioned to deliver a one-source financing
option
to
our
borrowers
-
short
term,
floating
rate
financing
for
properties
in transition to long term, fixed rate financing for stabilized properties
Active credit and risk management
(1)
Trepp , LLC |
 Commercial Real Estate Lender
6
Loan Types
Bridge loans
-
balance sheet loans: transitional properties, 3 to 5 year, floating rate over
LIBOR, origination
&
exit
fee,
approximate
floor
rates
4.75%
-
7.0%
Conduit loans
-
for sale loans: stable properties, 5 to 10 year, fixed rate, approximate coupon
range 4.50% -
5.50%
Mezzanine loans
-
balance sheet loans: stable properties, floating rate, origination fees,
approximate coupon: 10.00% -12.00%
Funding Sources
Warehouse providers
Bridge loans: Citibank, Column Financial (Credit Suisse AG affiliate), UBS Real
Estate Securities, Inc.
Conduit
loans:
Barclays,
Citibank
-
sell
loans
into
third-party
securitizations
RAIT’s balance sheet
Securitizations
-
RAIT
2013-FL1
-
$135
million
floating
rate
securitization;
RAIT
2014-FL2
-
$196 million floating rate securitization
Capital markets |
 Commercial Real Estate Lender
7
Growth in loan originations
Loan repayments and sales
Average quarterly commercial loan (bridge and mezzanine) repayments of $42.8
million for the six-months ended June 30, 2014
Average quarterly conduit loan sales of $59.7 million for the six-months ended
June 30, 2014
As of June 30, 2014
$471
$376
$603
$55
6/30/2014
FY 2013
FY 2012
FY 2011
$700
$600
$500
$400
$300
$200
$100
$0
($ in millions)
Conduit Loans
Bridge Loans
Mezzanine Loans |
 CRE Loan Portfolio Statistics
8
Loan Portfolio Statistics
As of June 30, 2014 unless otherwise Indicated ($ in 000s)
(1) Based on book value at 6/30/2014.
Office
41%
Multi-family
18%
Retail
29%
Other
13%
Central
38%
Mid Atlantic
28%
Southeast
19%
West
10%
Northeast
5%
Book Value
Average
Coupon
Range of Maturities
Number of
Loans
Key Statistics
Q2
2014
Q4
2013
Commercial Real Estate (CRE) Loans
CRE Non-accrual loans
$30,269
$37,073
Commercial mortgages
$1,003,051
6.0%
Aug.
2014
to Jul. 2044
85
% change
(18)%
Mezzanine loans
260,320
9.5
%
Sep. 2014
to Jan. 2029
80
Reserve for losses
15,336
22,955
Preferred equity interests
41,
721
7.7
%
May 2015
to Aug. 2025
10
% change
Total CRE Loans
$1,305,092
6.8
%
175
Provision for losses
1,000
1,500
Other loans
20,204
2.8
%
Oct. 2016
1
% change
Total investments in loans
$1,325,296
6.7
%
176
By Geographic Region
(1)
(33)%
(33)%
Weighted -
By Property Type
(1) |
 Commercial Real Estate Owner
9
(1)
Includes
nineteen
apartment
buildings
totaling
$343.5
million
owned
by
IRT
as
of
June
30,
2014.
At
July
21,
2014,
RAIT
owned
28.2%
of
IRT’s
outstanding
common
stock.
.
1
Directly owned real estate portfolio
Strategy to maximize value over time through professional management, increasing
occupancy and higher rental rates
Opportunistic acquisitions
Provides stability to asset mix and hedges against inflation
$1.3 billion of CRE properties at June 30, 2014
Portfolio is internally managed
Acquire well located apartment buildings in secondary markets via Independence
Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT)
IRT owned 19 properties totaling $343.5 million at June 30, 2014
Consolidated by RAIT and externally managed by RAIT subsidiary
RAIT owns approximately 7.3 million shares of IRT common stock (approximately
28.2% of the outstanding common stock)
IRT utilizes RAIT’s relationships, broker-network & relationships;
off-market transactions |
 Directly Owned Commercial Real Estate Portfolio
Statistics
10
Investments in Real Estate Property Types
(a)
Investments in Real Estate Geographic U.S. Regions
(a)
(a)
Based on book value of properties owned as of June 30, 2014.
.
Retail
6%
Other
4%
Office
21%
Multi-family
69%
Southeast
23%
Mid-Atlantic
5%
West
26%
Central
46% |
 Directly Owned Commercial Real Estate Portfolio
Statistics
11
Net Real Estate Operating Income
(a)
(b)
(c)
(d)
Improved Occupancy and Net Operating Income
As of June 30, 2014 unless otherwise Indicated ($ in 000s)
Average
Effective
Rent
(b)
Investments
in Real
Estate
Quantity
Number of
Properties
Average Physical Occupancy
6/30/2014
6/30/2013
Multi-family real estate properties
(a)
$957,858
12,388 units
47
92.8%
92.6%
Office real estate properties
322,477
2,248,321 sq. ft.
13
74.3%
74.3%
Retail real estate properties
84,088
1,420,909 sq. ft.
4
67.5%
68.7%
Parcels of land
50,097
21.9 acres
10
Total
$1,414,520
74
Property Type
Q2 2014
Q2 2013
% Increase
Multi-family
(c)
$799
$743
8%
Office
(d)
20.10
18.77
7%
Retail
(d)
12.5
11.78
6%
Average effective rent is rent per square foot per year.
Average effective rent is rent per unit per month.
Average monthly effective rent represents the average monthly rent collected for
all occupied units after giving effect to tenant concessions. We do not report average effective rent per unit in the month of acquisition
as it is not representative of a full month of operations. Based on
properties owned as of June 30, 2014. Includes nineteen apartment buildings
owned by IRT with 5,342 units and a book value of $343.5 million as of June 30, 2014. At August 5, 2014, RAIT owned 28.2% of IRT’s outstanding common stock.
Q2 2014
Q2 2013
Rental income
$39,214
$27,858
Real estate operating expenses
19,690
14,911
Net Real Estate Operating Income
$19,524
$12,947
NOI growth
51% |
 Asset and Property Manager
12
Asset & Property Management
$5.3 billion of AUM
Management fees
Manage approximately $2.6 billion of commercial real estate assets, $1.5 billion
of U.S. real estate debt securities and property manage $1.2 billion of
commercial real estate for third parties
S&P & Morningstar rated primary and special CRE loan servicer
Multi-family focused
Office focused
Retail focused
54 properties -
12,683 units
17 states
3.0 million square feet
13 states
63 properties –
18.2 million square feet
25 states
Property
management
fees
-
RAIT,
IRT
and
3
rd
party
opportunities |
 RAS Dividend History –
Since 2011
13
Stable and steady dividend
(a)
Compound Annual Growth Rate |
 2014 Projected Cash Available for Distribution
(1)
14
Reconciliation of RAIT Annualized Projected Cash Available for Distribution
("CAD") (dollars in millions, except per share data)
2014 Annualized Projected CAD
(2)
Net Income (loss) allocable to common shares
(3)
22.1
$
-
28.1
$
Adjustments:
Depreciation, amortization expense and other items
78.6
-
78.6
Taberna VIII and Taberna IX securitizations, net effect
(28.2)
-
(28.2)
Loan origination fees
5.6
-
7.6
CAD
78.1
$
-
86.1
$
CAD per share
(4)
0.97
$
-
1.07
$
(1)
Please see slide 17 for CAD definition.
(2)
Constitutes forward-looking information. Actual full 2014 projected net income, cash available for
distribution and each individual line item presented herein could vary significantly from the
projections presented. Net income, CAD and each such item may fluctuate based upon a variety of
factors, including, but not limited to, the timing and amount of investments, repayments and
asset sales, capital raised, use of leverage, changes in the expected yield of investments and the
overall conditions in commercial real estate and the economy generally. CAD per share does not
take into account any potential dilution from our outstanding convertible senior notes or warrants or equity compensation. The above projections assume for 2014: gross loan originations of
$900 million to $1.25 billion; Investment portfolios do not experience significant loan repayments;
RAIT’s property portfolio performs at historical levels; and RAIT continues to receive its securitization collateral management and property management fees. (3)
Represents projected net income (loss) allocable to common shares for 2014 excluding the changes in
fair value of financial instruments. For the six-months ended June 30, 2014, changes in
fair value of financial instruments was a loss of $63.5 million and net income allocable to common
shares was a loss of $40.2 million.
(4)
Based on 80,636,895 weighted-average shares outstanding-diluted for the six-month period
ended June 30, 2014. |
 RAIT Highlights & Goals
15
Growth & stability through a multi-strategy approach
Utilizing RAIT’s core, integrated, real estate platform and management
expertise to generate appropriate risk-adjusted returns by originating,
underwriting and managing commercial real estate loans
Growing revenue through accretive capital deployment
Focus on bridge and conduit loans
Creating value in RAIT’s portfolio of owned real estate through increasing
rental and occupancy rates while managing operating costs through
RAIT’s property managers Growing IRT’s portfolio of apartment
properties Expanding and maintaining our sources of liquidity
Maintaining a strong pipeline of investment opportunities
Delivering stable and growing dividends |
 16
Appendix |
 Cash Available for Distribution
(1)
17 |
 Unsecured Recourse Debt Summary
18
No corporate, unsecured, recourse debt maturities until April 2016
As of June 30, 2014
(1)
Excludes $76.9 million of secured debt outstanding under RAIT’s CMBS and commercial
mortgage facilities with contractual maturities in 2015 & 2016.
(2)
Assumes full exercise of holders’ 7.0% & 4.0% convertible senior notes redemption
right in April 2016 and October 2018, respectively, and excludes $12.1 million outstanding under secured credit facilities with
contractual maturities in 2016 related to Independence Realty Trust, Inc. (3) Includes $70.0 million of senior unsecured notes issued in August
2014. Excludes $82.0 million of outstanding senior secured notes issued by us which are eliminated in consolidation with contractual maturities
ranging from 2017 to 2019. (4) Includes $60.0 million of senior unsecured notes issued in April
2014.
|
 19
(All $ in 000s except per share numbers)
(a)
CRE Loan Portfolio includes commercial mortgages, mezzanine loans, and preferred equity
interests only and does not include other loans. (b)
Includes 19 apartment properties owned by IRT with 5,342 units and a book value of $343.5
million as of June 30, 2014. (c)
Based on properties owned as of June 30, 2014.
(d)
Average effective rent is rent per unit per month.
(e)
Average effective rent is rent per square foot per year.
Key Statistics –
6.30.2014 |
 RAIT Income Statement
20 |
 RAIT Balance Sheet
21 |
 Management
views adjusted book value as a useful and appropriate supplement to shareholders’ equity and book value per share. The measure serves as an additional measure of our
value because it facilitates evaluation of us without the effects of various items that we are
required to record in accordance with GAAP but which have limited economic impact on our
business. Those adjustments primarily reflect the effect of consolidated securitizations
where we do not currently receive cash flows on our retained interests, accumulated depreciation
and amortization, the valuation of long-term derivative instruments and a valuation of our
recurring collateral and property management fees. Adjusted book value is a non-GAAP financial
measurement, and does not purport to be an alternative to reported shareholders’ equity,
determined in accordance with GAAP, as a measure of book value. Adjusted book value should be
reviewed in connection with shareholders’ equity as set forth in our consolidated balance
sheets, to help analyze our value to investors. Adjusted book value may be defined in various ways
throughout the REIT industry. Investors should consider these differences when comparing our
adjusted book value to that of other REITs. Based on 82,507,410 common shares outstanding as of June 30, 2014.
Based on 4,069,288 Series A preferred shares, 2,288,465 Series B preferred shares, and
1,640,100 Series C preferred shares outstanding as of June 30, 2014, all of which have a liquidation
preference of $25.00 per share.
Adjusted Book Value
(1)
22
(1)
(2)
(3)
(All $ in 000s except per share numbers)
As of June 30, 2014
Amount Per Share (2)
Total shareholders’ equity ................................................
$
633,736
$
7.68
Liquidation value of preferred shares characterized as equity(2)
(199,946)
(2.42)
Book value ........................................................................
433,790
5.26
Adjustments:
Taberna VIII and Taberna IX securitizations, net effect
(187,864)
(2.29)
RAIT I and RAIT II derivative liabilities .....................
31,102
0.38
Change in fair value for warrants and investor SARs
18,820
0.23
Accumulated depreciation and amortization .........
183,932
2.23
Valuation of recurring collateral and property management fees
57,479
0.70
Total adjustments .............................................................
103,469
1.25
Adjusted book value .........................................................
$
537,259
$
6.51
|