EX-99.1 2 anthracite99-1.htm PRESS RELEASE anthracite99-1.htm
 
 
Contact:
Brian Beades
 
212-810-5596
 
ahr-info@blackrock.com
 
 
Anthracite Capital Reports Third Quarter
Operating Earnings of $0.32 Per Share
 
New York – November 8, 2007– Anthracite Capital, Inc. (NYSE:AHR) (the “Company” or “Anthracite”) today reported net income available to common stockholders for the third quarter of 2007 of $0.19 per share, compared to $0.22 per share for the same three-month period in 2006. For the nine months ended September 30, 2007, net income available to common stockholders was $0.94 per share, compared to net income available to common stockholders of $0.83 per share for the nine months ended September 30, 2006. (All currency amounts discussed herein are in thousands, except share and per share amounts. All per share information is presented on a diluted basis.)
 
Operating Earnings (defined below) for the third quarters of 2007 and 2006 were $0.32 and $0.21 per share, respectively. Operating Earnings were $1.00 per share for the nine months ended September 30, 2007, compared to $0.84 per share for the nine months ended September 30, 2006. Dividends paid for the nine months ended September 30, 2007 were $0.89 per share.
 
Based on the $0.30 per share dividend paid on October 31, 2007, and the November 7, 2007 closing price of $7.37, Anthracite’s annualized dividend yield is 16.3%. Table 1, provided below, reconciles Operating Earnings per share to diluted net income available to common stockholders per share.
 
Chris Milner, Chief Executive Officer of the Company, stated, “We are pleased with the Company's third quarter performance, especially when taking into account the continuing turmoil in the broad credit markets. We have maintained an intense focus on liquidity and increased our available cash position to over $140,000. The Company took advantage of select opportunities in the commercial real estate debt markets by acquiring over $350,000 in attractively priced assets in Canada, Japan, Europe and the United States. The resulting Operating Earnings once again exceed our current dividend of $0.30 per share and include another strong performance by our real estate equity investments.”
 
Mr. Milner continued, “Our primary focus over the last ninety days clearly has been risk management and liquidity preservation. During the quarter, the Company raised over $180,000 in capital by redeeming its interest in BlackRock Diamond and issuing convertible senior notes. While the cost of the notes was higher than prior issuances, increased credit spreads in the current market environment presented accretive investment opportunities. As expected, we fully redeemed our investment in BlackRock Diamond and received $104,476 in October 2007. Over the life of this investment, the Company invested $100,000 of capital and earned cumulative profits of $34,853, an annualized return of 20.8%. This turned out to be a superior investment to taking credit risk during that period and we are now able to deploy these proceeds into commercial real estate debt at more attractive spreads.”
 

1

 
 
Liquidity
 
The current weaknesses in the sub-prime mortgage sector and in the broader mortgage market have resulted in reduced liquidity for mortgage-backed securities. Although this reduction in liquidity has been directly linked to sub-prime residential assets, to which the Company continues to have no direct exposure, there has been an overall reduction in liquidity across the credit spectrum of commercial and residential mortgage products. Significant price declines may cause lenders to call in all or a portion of their loans to reflect the reduced value of the assets securing those loans. The Company’s strategy is to match-fund assets when economical and to maintain adequate cash to meet any margin calls on the remaining portfolio assets. At September 30, 2007, only 14% of the Company’s commercial mortgage-backed securities (“CMBS”) were not match-funded and approximately 40% of the Company’s recourse borrowings are unsecured term debt which does not permit lenders to call any portion of their loans.
 
In the event of a further reduction in market liquidity, the Company’s short-term capital needs will be met primarily with $122,185 of unrestricted cash and cash equivalents held as of September 30, 2007. In addition, subsequent to September 30, 2007, the Company received $104,476 from the redemption of its remaining investment in BlackRock Diamond Property Fund, Inc. (“BlackRock Diamond”). The Company used $50,000 of the proceeds to repay a borrowing secured by its interest in BlackRock Diamond, thus increasing the Company’s cash position since quarter end by approximately $54,000.
 
Commercial Real Estate Investment Activity
 
During the third quarter of 2007, the Company purchased a total of $356,722 of commercial real estate assets, which included $125,994 of non-U.S. dollar denominated assets. Commercial real estate assets purchased consisted of $226,778 of CMBS and $129,946 of commercial real estate loans.
 
The Company redeemed its remaining investment in BlackRock Diamond based on the September 30, 2007 net asset value of $104,476. The proceeds from this redemption were received in October 2007.
 
As previously reported, the Company sold the majority of its high credit quality, liquid securities during the third quarter of 2007. As a result of higher Treasury rates since the time of purchase, these sales generated a loss of $13,352. Simultaneous with the sales, the Company removed or redesignated several interest rate swaps resulting in a gain of $11,489 for the third quarter of 2007. In addition, the Company incurred a charge of $1,247 related to the mark to market of its remaining high credit quality securities that were not sold during the third quarter. This mark to market was recognized because of the sale of similar securities during the third quarter at a loss.
 
Capital Markets Activity
Convertible Securities and Equity Issuances:
On August 29, 2007 and September 10, 2007, the Company completed an offering of a total of $80,000 aggregate principal amount of convertible senior notes due in 2027. The notes bear interest at a rate of 11.75% per annum and are convertible only under certain conditions, including a 20-day period of trading above $14.02 per share, as adjusted. The initial conversion rate of 92.7085 shares of common stock per $1,000 principal amount of notes (equal to an initial conversion price of approximately $10.79 per share) represented a premium of 17.5% to the last reported sale price of Anthracite's common stock on August 23, 2007 of $9.18.
 
 
2


 
 
The Company utilized $12,000 of the net proceeds from the convertible senior notes offering to repurchase 1,307,189 shares of common stock.
 
During the third quarter of 2007, the Company issued 209,690 shares of common stock under its Dividend Reinvestment and Stock Purchase Plan. Net proceeds to the Company were approximately $2,002.
 
Short and Long-Term Liabilities:
On July 20, 2007, the Company entered into a $200,000 committed U.S. dollar credit facility with Bank of America, N.A. which matures in January 2009. During the fourth quarter of 2007, this facility was increased to $275,000. All other terms of the facility remained substantially unchanged. Outstanding borrowings under this credit facility bear interest at a LIBOR based variable rate.
 
On August 27, 2007, the Company borrowed $50,000 from KeyBank National Association. The loan was secured by a pledge of all of the Company’s ownership interest in the redemption proceeds of BlackRock Diamond and was repaid in full in October 2007.
 
Richard Shea, President and Chief Operating Officer of the Company, stated, “Throughout the third quarter and into the fourth quarter, we have focused on bolstering and maintaining liquidity to navigate challenging credit markets. The price of credit sensitive investments has dropped significantly without distinguishing among the actual credit performance of different sectors. We continue to experience good credit performance with only 0.32% delinquencies on our Controlling Class CMBS at September 30, 2007. Also, over 80% of our liabilities do not reset when valuations change, which represents significant value to the Company, as long-dated liabilities decrease in value when credit spreads widen. The strong credit performance and stable liability structure provide greater stability for the Company’s investment platform.”
 
Third Quarter Financial Summary
Operating Earnings for the third quarters of 2007 and 2006 were $0.32 and $0.21 per share, respectively. Operating Earnings for the nine months ended September 30, 2007 and 2006 were $1.00 and $0.84 per share, respectively.
   
Income from commercial real estate assets increased by $18,757, or 26.5%, from the quarter ended September 30, 2006, primarily because of continued portfolio growth.
   
Income from the Company’s investment in BlackRock Diamond was $4,390 and $18,790, respectively, for the three and nine months ended September 30, 2007. The Company fully redeemed its investment in BlackRock Diamond as of September 30, 2007.
   
During the quarter, the Company increased its unrestricted cash by $14,469 to $122,185 while concurrently reducing its short-term borrowings by $343,012. This reduction in short-term borrowings represented a 33% decline of liabilities that are subject to mark-to-market risk.
   
Weighted average cost of funds of 6.0% at September 30, 2007 declined from 6.1% for the same period in 2006.
   
 
 
 
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Exposure to a 50 basis point move in short-term interest rates was $0.01 per share at September 30, 2007. This was an increase from less than $0.01 per share at June 30, 2007.
 
Commercial Real Estate Securities
During the third quarter of 2007, the Company purchased $226,778 of commercial real estate securities, including $53,859 of non-U.S. dollar denominated securities.
 
CMBS with an adjusted purchase price of $22,264 are held as collateral for collateralized debt obligations and classified as held-for-trading. For the three months ended September 30, 2007, the decline in value of $2,559 related to these assets is included on the consolidated statement of operations.
 
Commercial Real Estate Credit
The Company considers CMBS where it maintains the right to control the foreclosure/workout process on the underlying loans as controlling class CMBS ("Controlling Class CMBS"). The Company owns Controlling Class CMBS issued in 1998, 1999, and 2001 through 2007. The Company’s recent vintage Controlling Class CMBS experienced significant spread widening in the current market environment. This was also true, but to a lesser extent, for the Company’s seasoned vintages. A summary of the percentage change in value of the Company’s Controlling Class CMBS by vintage year for the quarter ended September 30, 2007 is as follows:
 
Vintage
Average Rating
Fair Market Value
% Change in Fair Market Value
1998
BBB-
$285,695
(1.24)%
1999
BBB-
38,540
0.66%
2000
A-
53,761
(4.34)%
2001
BBB-
185,769
(2.07)%
2002
BB+
58,180
(5.43)%
2003
BBB-
270,739
(2.30)%
2004
BB+
94,401
(10.12)%
2005
BB
138,969
(13.56)%
2006
BB-
346,687
(14.33)%
2007
BB
441,914
(14.72)%
 
BB+
$1,914,654
(8.46)%
 
The Company acquired three U.S. dollar denominated Controlling Class CMBS during the quarter ended September 30, 2007. At September 30, 2007, the Company owned 37 Controlling Class CMBS trusts with an aggregate underlying principal balance of $58,615,416. Delinquencies of 30 days or more on these loans as a percent of current loan balances were 0.32% at September 30, 2007, compared with 0.39% at December 31, 2006.
 
At September 30, 2007, because of changes in timing of assumed credit losses and prepayments, four CMBS required an impairment charge totaling $1,688. During the quarter ended September 30, 2007, 14 of the Company’s other agency-backed commercial real estate securities required a charge of $1,247 because of the sale of similar securities during the third quarter at a loss. During the quarter ended September 30, 2007, 65 of the Company’s Controlling Class CMBS with an aggregate adjusted purchase price of $356,646 experienced a weighted average yield increase of 40 basis points, and 17 Controlling Class CMBS with an aggregate adjusted purchase price of $117,093 experienced a weighted average yield decrease of one basis point.
 
 
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During the three months ended September 30, 2007, one of the Company’s Controlling Class CMBS was upgraded by at least one rating agency and none were downgraded. Additionally, at least one rating agency upgraded eight of the Company’s other commercial real estate securities and four were downgraded during the three months ended September 30, 2007.
 
Commercial Real Estate Loans
During the third quarter of 2007, the Company purchased $129,946 of commercial real estate loans, including $72,134 of non-U.S. dollar denominated loans. During the quarter ended September 30, 2007, the Company received repayments of commercial real estate loans in the aggregate amount of $119,954.
 
Also included in commercial real estate loans are the Company's investments in Carbon Capital, Inc. (“Carbon I”) and Carbon Capital II, Inc. (“Carbon II”, and collectively with Carbon I, the “Carbon Capital Funds”). For the quarters ended September 30, 2007 and 2006, the Company recorded income from the Carbon Capital Funds of $2,222 and $2,325, respectively. Carbon II increased its investment in U.S. commercial real estate loans by originating four loans for a total investment of $178,660 during the third quarter of 2007. Paydowns in the Carbon Capital Funds during the quarter totaled $83,806. As loans are repaid or sold, Carbon II has redeployed capital into acquisitions of additional loans for the portfolio. The Carbon I investment period has expired and no new portfolio additions will occur.
 
The Company's investments in the Carbon Capital Funds were as follows:
 
 
September 30, 2007
December 31, 2006
Carbon I
$2,554
$3,144
Carbon II
98,252
69,259
 
$100,806
$72,403
 
At September 30, 2007, all commercial real estate loans owned directly by the Company are performing in line with expectations. Three loans held in the Carbon Capital Funds are in various stages of resolution and the Carbon Capital Funds have established loan loss reserves as necessary. All other commercial real estate loans held through the Company’s investment in the Carbon Capital Funds are performing as expected.
 
Commercial Real Estate
For the quarter ended September 30, 2007, the Company recorded $4,390 of income related to its investment in BlackRock Diamond. The Company fully redeemed its investment in BlackRock Diamond as of September 30, 2007.
 
BlackRock Diamond is managed by a subsidiary of BlackRock Financial Management, Inc., Anthracite’s manager, and the Carbon Capital Funds are managed by BlackRock Financial Management, Inc. All financial information utilized in this press release with respect to BlackRock Diamond and the Carbon Capital Funds was reported to the Company by BlackRock Diamond and the Carbon Capital Funds, as the case may be.
 
 
5

 
 
Summary of Commercial Real Estate Assets
A summary of the Company’s commercial real estate assets with estimated fair values in local currencies and U.S. dollars at September 30, 2007 is as follows:
 
 
Commercial Real Estate Securities
Commercial Real Estate Loans
Commercial Real Estate
Equity
Commercial Mortgage Loan Pools
Total Commercial Real Estate Assets
Total Commercial Real Estate Assets (USD)
 
USD
$1,882,867
$419,603
$-
$1,246,494
$3,548,964
$3,548,964
 
GBP
£36,977
£46,997
-
-
£83,974
171,085
 
EURO
€139,004
€331,514
-
-
€470,518
669,147
 
Canadian Dollars
C$104,157
C$6,250
-
-
C$110,407
111,107
 
Japanese Yen
¥4,514,357
-
-
-
¥4,514,357
39,250
 
Swiss Francs
-
CHF 23,804
-
-
CHF23,804
20,377
 
Indian Rupees
-
-
Rs240,488
-
Rs240,488
6,050
 
Total USD Equivalent
$2,299,955
$1,013,481
$6,050
$1,246,494
$4,565,980
$4,565,980
                 
 
For the three months ended September 30, 2007, the Company’s non-U.S. dollar denominated commercial real estate securities generated $18,518, or 20.2%, of total income. For the nine months ended September 30, 2007, the Company’s non-U.S. dollar denominated commercial real estate securities generated $43,071, or 16.0%, of total income.
 
The Company has an investment in a commercial real estate development fund investing in India. At September 30, 2007, total capital committed was $11,000, of which $6,050 had been drawn. The entity conducts its operations in the local currency, Indian Rupees.
 
The Company has foreign currency exposure related to its non-U.S. dollar denominated net assets. The Company’s primary currency exposures are to the Euro, British Pound Sterling and Canadian Dollars. Changes in currency rates can adversely impact the estimated fair value and earnings of the Company’s non-U.S. holdings. The Company mitigates this impact by utilizing local currency-denominated financing for its non-U.S. investments and foreign currency forward commitments and currency swaps to hedge its net foreign currency exposure. For the three and nine months ended September 30, 2007, the Company recorded net foreign currency gains of $775 and $3,631, respectively. For the three and nine months ended September 30, 2006, the Company recorded net foreign currency gains of $682, and $997, respectively.
 
Book Value
Net book value per share at September 30, 2007 was $7.13. The Company’s recent vintage CMBS experienced significant spread widening in the current market environment which did not occur in the Company’s seasoned vintages. As of September 30, 2007, less than 14% of the Company’s CMBS assets are not match-funded.
 
The current credit market dislocation also caused reductions in the value of the Company’s liabilities. The Company’s consolidated statement of financial condition carries these liabilities at adjusted purchase price. Reductions in their value would increase the value
 
 
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of the Company’s equity. If the Company marked all assets and liabilities at fair value, the Company’s net asset value per share would be approximately $11.44 at September 30, 2007.
 
The Company calculates book value per share based on a liquidation value calculation. Below is a comparison of book value and net asset value per share at September 30, 2007 and 2006, as well as at June 30, 2007 and December 31, 2006.
 
 
9/30/2007
6/30/2007
12/31/2006
9/30/2006
Total Stockholders' Equity
$593,460
$794,742
$656,109
$652,166
Less:
       
Series C Preferred Stock
Liquidation Value
(57,500)
(57,500)
(57,500)
(57,500)
Series D Preferred Stock
Liquidation Value
(86,250)
(86,250)
-
-
Common Equity
$449,710
$650,992
$598,609
$594,666
Common Shares Outstanding
63,097,248
64,194,747
57,830,964
57,638,033
Book Value per Share
$7.13
$10.14
$10.35
$10.32
Net Asset Value per Share
$11.44
$10.91
$10.70
$10.42
 
The Company's Operating Earnings for the nine months ended September 30, 2007 represented an annualized return on average common stockholders’ equity of 13.0%, compared to 11.3% for the nine months ended September 30, 2006.
 
Reconciliation of Operating Earnings to Diluted Net Income Available to Common Stockholders Per Share (Table 1)
The table below reconciles diluted Operating Earnings per common share with diluted net income available to common stockholders per common share:
 
   
Three Months Ended
Nine Months Ended
   
   
September 30,
September 30, 
   
   
2007
2006
2007
 2006
 
Operating earnings per common share
$0.32
$0.21
$1.00
 $0.84
 
 
Net realized and unrealized gain (loss)
(0.09)
0.01
0.02
 0.05
 
 
Incentive fee attributable to other income (loss)
 -
-
(0.02)
 -
   
Net foreign currency gain and hedge
0.01
0.01
0.06
 0.02
 
 
    Ineffectiveness
   
 
     
Loss on impairment of assets
(0.05)
(0.01)
(0.12)
(0.10)
 
 
Income from discontinued operations
-
-
-
0.02
 
 
Diluted net income available to common
    stockholders per common share
 
$0.19
 
$0.22
 
$0.94
 
$0.83
 
 

 
 
 
The Company considers its Operating Earnings to be net income after operating expenses and preferred dividends but before realized and unrealized gains (loss), incentive fees attributable to other income (loss), net foreign currency gain (loss), hedge ineffectiveness and loss on impairment of assets. The Company believes Operating Earnings to be an effective indicator of the Company’s profitability and financial performance over time.
 
 
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Operating Earnings can and will fluctuate based on changes in asset levels, funding rates, available reinvestment rates and expected losses on credit sensitive positions.
 
This press release, including the reconciliation of Operating Earnings per common share with diluted net income available to common stockholders per share, is also available on the News section of the Company’s website at www.anthracitecapital.com.
 
Dividend Reinvestment and Stock PurchasePlan
 
As previously reported, if you are a participant in the Company's Dividend Reinvestment and Stock Purchase Plan (the "Plan"), please note that the dividend reinvestment portion of the Plan has been reinstated for all dividend payments made after September 8, 2006, and for all future dividend payment dates, with a discount of 2%. The optional cash purchase portion of the Plan also has been reinstated for all investment periods commencing after October 1, 2006, with a discount of 1%.
 
During the three months ended September 30, 2007, the Company issued 209,690 shares under the Plan at a collective weighted average issuance price of $9.55 per share. The optional cash portion of the Plan allowed participants to invest up to $20 per month at a 1% discount. The optional cash portion of the Plan represents 14,754 of the shares that were issued during the quarter under the Plan. The remaining 194,936 shares issued under the Plan during the quarter are attributable to the dividend reinvestment portion of the Plan.
 
To request a prospectus and receive enrollment materials or to ask questions about the Plan, interested investors and stockholders may contact the Company's transfer agent, American Stock Transfer & Trust Company, at 1-877-248-6416, or Investor Relations, Anthracite Capital, Inc., at 212-810-3333. The Company's website address is www.anthracitecapital.com.
 
Earnings Conference Call
 
The Company will host a conference call on November 8, 2007 at 9:00 a.m. (Eastern Time). The conference call will be available live via telephone. Members of the public who are interested in participating should dial, from the U.S., (800) 374-0176, or from outside the U.S., (706) 679-4634, shortly before 9:00 a.m. and reference the Anthracite Teleconference Call (number 23274084). Please note that the teleconference call will be available for replay beginning at 1:00 p.m. on Thursday, November 8, 2007, and ending at midnight on Thursday, November 15, 2007. To access the replay, callers from the U.S. should dial (800) 642-1687 and callers from outside the U.S. should dial (706) 645-9291 and enter conference identification number 23274084.
 
About Anthracite
 
Anthracite Capital, Inc. is a specialty finance company focused on investments in high yield commercial real estate loans and related securities. Anthracite is externally managed by BlackRock Financial Management, Inc., which is a subsidiary of BlackRock, Inc. (“BlackRock”) (NYSE:BLK), one of the largest publicly traded investment management firms in the United States with approximately $1.3 trillion in global assets under management at September 30, 2007. BlackRock Realty Advisors, Inc., another subsidiary of BlackRock, provides real estate equity and other real estate-related products and services in a variety of strategies to meet the needs of institutional investors.
 
Forward-Looking Statements
 
This press release, and other statements that Anthracite may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, with respect to Anthracite’s future financial or business performance, strategies or
 
 
8

 
 
expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions.
 
Anthracite cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and Anthracite assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
 
In addition to factors previously disclosed in Anthracite’s SEC reports and those identified elsewhere in this release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in the value of Anthracite’s assets; (3) the relative and absolute investment performance and operations of BlackRock Financial Management, Inc. (“BlackRock”), Anthracite’s Manager; (4) the impact of increased competition; (5) the impact of future acquisitions or divestitures; (6) the unfavorable resolution of legal proceedings; (7) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to Anthracite or BlackRock; (8) terrorist activities and international hostilities, which may adversely affect the general economy, domestic and global financial and capital markets, specific industries, and Anthracite; (9) the ability of BlackRock to attract and retain highly talented professionals; (10) fluctuations in foreign currency exchange rates; and (11) the impact of changes to tax legislation and, generally, the tax position of the Company.
 
Anthracite’s Annual Report on Form 10-K for the year ended December 31, 2006 and Anthracite’s subsequent filings with the SEC, accessible on the SEC's website at www.sec.gov, identify additional factors that can affect forward-looking statements.
 
To learn more about Anthracite, visit our website at www.anthracitecapital.com. The information contained on the Company’s website is not a part of this release.
 
 
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Anthracite Capital, Inc. and Subsidiaries
Consolidated Statements of Financial Condition (Unaudited)
(dollar amounts in thousands)
 
       
 
September 30, 2007
 December 31, 2006
       
ASSETS
         
Cash and cash equivalents
 
$122,185
   
$66,762
Restricted cash equivalents
 
30,547
   
59,427
Residential mortgage-backed securities (“RMBS”)
 
10,997
   
276,343
Commercial mortgage loan pools
$1,246,494
   
$1,271,014
 
Commercial real estate securities
2,299,955
   
2,494,100
 
Commercial real estate loans, net
1,013,481
   
554,148
 
Commercial real estate
6,050
   
109,744
 
    Total commercial real estate
 
4,565,980
   
4,429,006
Derivative instruments, at fair value
 
592,712
   
317,574
Receivable for investments sold
 
104,476
   
-
Other assets
 
89,064
   
69,151
    Total Assets
 
$5,515,961
   
$5,218,263
           
LIABILITIES AND STOCKHOLDERS' EQUITY
         
Liabilities:
         
Short-term borrowings:
         
    Secured by pledge of RMBS
$9,569
   
$266,731
 
    Secured by pledge of commercial real estate securities
454,507
   
575,420
 
    Secured by pledge of commercial mortgage loan pools
5,166
   
6,395
 
    Secured by pledge of receivable for investment sold
50,000
       
    Secured by pledge of commercial real estate loans
215,033
   
26,570
 
    Total short term borrowings
 
$734,275
   
$875,116
Long-term borrowings:
         
    Collateralized debt obligations
1,814,231
   
1,812,574
 
    Secured by pledge of commercial mortgage loan pools
1,225,085
   
1,250,503
 
    Senior unsecured notes
162,500
   
75,000
 
    Junior unsecured notes
71,107
   
-
 
    Junior subordinated notes to subsidiary trust issuing
        preferred securities
180,477
   
180,477
 
    Convertible senior notes
80,000
   
-
 
    Total long term borrowings
 
3,533,400
   
3,318,554
Total borrowings
 
4,267,675
   
4,193,670
Payable for investments purchased
 
-
   
23,796
Distributions payable
 
21,014
   
17,669
Derivative instruments, at fair value
 
605,174
   
304,987
Other liabilities
 
28,638
   
22,032
    Total Liabilities
 
4,922,501
   
4,562,154
           
           
Stockholders' Equity:
         
 Common Stock, par value $0.001 per share; 400,000,000 shares authorized;          
 63,097,248 shares issued and outstanding in 2007; and  
 63
   
58
 57,830,964 shares issued and outstanding in 2006          
 9.375% Series C Preferred Stock, liquidation preference $57,500  
 55,435
   
 55,435
 8.25% Series D Preferred Stock, liquidation preference $86,250  
   83,267
   
 -
 Additional paid-in capital  
 689,654
   
 629,785
 Distributions in excess of earnings  
 (119,297)
   
 (120,976)
 Accumulated other comprehensive income (loss)  
 (115,662)
 
 
 91,807
 Total Stockholders’ Equity  
 593,460
   
 656,109
 Total Liabilities and Stockholders' Equity  
 $5,515,961
   
 $5,218,263
           
 
 
10

 
 
 
 
Anthracite Capital, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
 
       
 
For the Three Months Ended
September 30,
 
For the Nine Months Ended
September 30,
 
2007
2006
 
2007
2006
Operating Portfolio
         
Income:
         
    Commercial real estate securities
$49,431
$43,497
 
$143,325
$123,135
    Commercial mortgage loan pools
12,985
13,230
 
39,119
39,743
    Commercial real estate loans
22,716
13,378
 
60,134
37,686
    Commercial real estate
4,390
660
 
18,790
12,357
    RMBS
128
2,960
 
3,870
9,070
    Cash and cash equivalents
1,784
828
 
3,648
1,746
        Total Income
91,434
74,553
 
268,886
223,737
           
Expenses:
         
    Interest expense:
         
        Short-term borrowings
13,601
16,959
 
40,292
49,765
        Collateralized debt obligations
27,855
22,889
 
81,280
57,603
        Commercial mortgage loan pools
12,353
12,594
 
37,233
37,872
        Senior unsecured notes
3,226
-
 
6,433
-
        Convertible senior notes
794
-
 
794
 
        Junior unsecured notes
1,195
-
 
2,142
-
        Junior subordinated notes
3,396
3,444
 
10,115
9,103
    General and administrative expense
1,624
1,144
 
4,448
3,382
    Management fee
3,473
3,179
 
10,862
9,339
    Incentive fee
-
-
 
4,150
2,708
    Incentive fee – stock based
497
997
 
2,145
1,853
        Total Expenses
68,014
61,206
 
199,894
171,625
Income from the Operating Portfolio
23,420
13,347
 
68,992
52,112
           
Other income (loss):
         
Net realized and unrealized gain (loss)
(5,766)
428
 
1,513
2,683
Incentive fee attributable to other income (loss)
-
-
 
(1,495)
-
Foreign currency gain
775
682
 
3,631
997
Hedge ineffectiveness
(107)
(174)
 
(163)
401
Loss on impairment of assets
(2,936)
(361)
 
(7,034)
(5,795)
    Total other income (loss)
(8,034)
575
 
(3,548)
(1,714)
Income from Continuing Operations
15,386
13,922
 
65,444
50,398
           
Income from Discontinued Operations
-
-
 
-
1,366
           
Net Income
15,386
13,922
 
65,444
51,764
Dividends on preferred stock
(3,127)
(1,348)
 
(8,530)
(4,044)
Net Income available to Common Stockholders
$12,259
$12,574
 
$56,914
$47,720
           
Operating Earnings:
         
    Income from the operating portfolio
$23,420
$13,347
 
$68,992
$52,112
    Dividends on preferred stock
(3,127)
(1,348)
 
(8,530)
(4,044)
    Net Operating Earnings
$20,293
$11,999
 
$60,462
$48,068
         
Operating Earnings available to Common Stockholders per share:
       
    Basic
$0.32
$0.21
 
$1.00
$0.84
    Diluted
$0.32
$0.21
 
$1.00
$0.84
           
Net Income available to Common Stockholders per share:
     
    Basic
$0.19
$0.22
 
$0.94
$0.84
    Diluted
$0.19
$0.22
 
$0.94
$0.83
           
 
 
11

 
 
 
 
Income from continuing operations per share of common stock, after preferred dividends
 
Basic
$0.19
$0.22
 
$0.94
$0.82
Diluted
$0.19
$0.22
 
$0.94
$0.81
           
Income from discontinued operations per share of common stock
Basic
-
-
 
-
$0.02
Diluted
-
-
 
-
$0.02
           
Weighted average number of shares outstanding:
         
Basic
63,862
57,167
 
60,450
56,970
Diluted
64,179
57,458
 
60,662
57,164
           
Dividend declared per share of Common Stock
$0.30
$0.29
 
$0.89
$0.86
 
###
 
 
 12