EX-99 3 ex99-1.txt EX. 99.1: PRESS RELEASE Exhibit 99.1 [CAPITAL TRUST LOGO] Contact: Rubenstein Associates Robert Solomon: (212) 843-8050 Capital Trust Reports Third Quarter 2003 Results ------------------------------------------------ NEW YORK, NY - November 6, 2003 - Capital Trust, Inc. (NYSE: CT) today reported third quarter 2003 net income of 66 cents per share (diluted), representing an increase of 41 cents per share (diluted) over the same period in the prior year. For the nine months ended September 30, 2003, net income totaled $1.67 per share (diluted) compared to 68 cents (diluted) over the same period in the prior year. "Our third quarter results demonstrate continuing success in executing our business plan," said John Klopp, Capital Trust's CEO. "We originated $43 million of new balance sheet investments and finished the capital raise for CT Mezzanine Partners III, our latest investment fund. These accomplishments, coupled with collection of a substantial prepayment penalty on one of our balance sheet loans, all contributed to the increase in CT's net income over the prior quarter." Outlined below are selected financial highlights for the quarter and year to date: Balance Sheet ------------- Total assets were $392.8 million at September 30, 2003, reflecting a slight increase from $385.0 million at December 31, 2002. Available-for-sale securities, consisting of investments in Federal Home Loan Mortgage Corporation Gold 6.5% securities, continued to repay as expected. Total repayments on the available-for-sale securities during the nine months ended September 30, 2003 was $39.9 million. With respect to loans and CMBS, on January 31, 2003, the Company purchased from affiliates of Citigroup their 75% interest in CT Mezzanine Partners I for a price of $38.4 million (including assumption of liabilities), adding $48.3 million of loans receivable, which along with new loan originations and CMBS purchases of $79.4 million, more than offset the $73.6 million of loan repayments during the first nine months of 2003. 1 At quarter-end, liabilities totaled $206.0 million including total debt of $192.0 million. This represented a decrease of $8.1 million from the $200.1 million of debt at December 31, 2002. The Company utilized the net proceeds from equity events discussed below to reduce its debt levels, resulting in a debt-to-equity ratio of 1.0-to-1 at September 30, 2003 compared to 1.2-to-1 at December 31, 2002 (treating the convertible trust preferred securities as equity). Stockholders' equity totaled $97.4 million at September 30, 2003, a $13.3 million increase from the $84.1 million total at December 31, 2003. The primary driver of the increase was completion in June 2003 of a private placement of 1,075,000 shares of class A common stock, which generated net proceeds of $17.1 million. Offsetting this equity increase was the Company's purchase of warrants, from affiliates of Citigroup, exercisable for 2,842,822 shares of class A common stock for a total price of $2.1 million and the repurchase of 66,427 shares of class A common stock under the open market share repurchase program for $947,000. Investment Management Business ------------------------------ During the quarter, the investment management business reached a significant milestone by effecting the final closing of its third fund, CT Mezzanine Partners III, Inc. ("Fund III"), with $425 million of equity commitments. Over its term, Fund III will generate base management fees, investment income, and potentially incentive management fees for the Company. Fund III commenced its investment period in June of 2003 and during the quarter the Company contributed $2.0 million (10%) of its total $20 million commitment to fund its share of Fund III's investment activities. The Company will earn $6.0 million per annum during the investment period, after which base management fees will transition from a calculation based on committed capital to one based on invested capital. CT Mezzanine Partners II, LP ("Fund II") ended its investment period in April 2003 and began its ordinary course liquidation. The Company earns base management fees (calculated on invested capital), investment income and potentially incentive management fees from Fund II. During the nine months ended September 30, 2003, Fund II made capital distributions to the Company totaling $6.7 million, reducing the Company's investment in Fund II to $15.2 million as of September 30, 2003. Operating Results ----------------- For the quarter ended September 30, 2003, the Company reported total revenues of $14.5 million and net income of $4.8 million, representing basic earnings per share of 74 cents and diluted earnings per share of 66 cents. The calculation of basic earnings per share is based on 6.5 million weighted average shares outstanding, while diluted earnings per share is based on 10.9 million weighted average shares outstanding, reflecting the potential dilution from in-the-money stock options and the Company's convertible trust preferred securities ("CTP"). For the same period in 2002, the Company reported total revenues of $16.8 million and net income of $1.6 million (25 cents per share based on 6.1 million weighted average diluted shares outstanding). 2 For the nine months ended September 30, 2003, the Company reported total revenues of $36.3 million and net income of $9.9 million, representing basic earnings per share of $1.69 and diluted earnings per share of $1.67. The calculation of basic earnings per share is based on 5.9 million weighted average shares outstanding, while diluted earnings per share is based on 10.2 million weighted average shares outstanding. For the same period in 2002, the Company reported total revenues of $49.0 million and net income of $4.2 million (68 cents per share based on 6.2 million weighted average diluted shares outstanding). The increase in net income and earnings per share in 2003 versus 2002 was primarily due to a reduction in income taxes resulting from the Company's decision to elect to be taxed as a REIT in 2003 and the replacement of the $60.3 million non-convertible portion of the CTP, which bore interest at a rate of 13%, with less expensive debt financing. The impact of these expense reductions was partially offset by income generated in 2002 from completion of the Company's final advisory assignment and reversal of a portion of the reserve for possible credit losses. Interest income for the nine months ended September 30, 2003 declined from the same period in the prior year as a result of lower levels of interest earning assets (average interest earning assets were $358.3 million for the 2003 period versus $505.0 million for 2002). This decrease was more than offset by a $2.4 million pre-payment penalty the Company received in the third quarter for satisfaction of a fixed rate loan. After adjustment for prepayment penalties occurring in both 2003 and 2002, the yield on interest earning assets remained consistent from year to year averaging 9.9% for the nine months ended September 30, 2003 and 9.7% for the same period in 2002. The corresponding decrease in interest bearing liabilities and a general reduction in the rate paid on those liabilities resulted in significant decreases in interest and related expenses. The decrease in average interest rates was due to the replacement in December 2002 of the then-existing swaps with new swaps at reduced notional amounts and lower fixed pay rates of interest, and the use of lower cost debt. Dividends --------- On September 22, 2003, the Company's Board of Directors declared a third quarter 2003 cash dividend of 45 cents per share of class A common stock. The cash dividend was paid on October 15, 2003 to stockholders of record on September 30, 2003. Reverse Stock Split ------------------- On April 2, 2003, the Company's effected a one (1) for three (3) reverse stock split of the Company's class A common stock. All per share information concerning the computation of earnings per share, dividends per share, and authorized stock reported in the accompanying Consolidated Balance Sheets and Consolidated Statements of Income and herein have been adjusted as if the reverse stock split was in effect for all fiscal periods and as of all balance sheet dates presented. 3 Management Conference Call -------------------------- The Company will conduct a management conference call at 10:00 AM Eastern Time on November 7 to discuss results for the third quarter of 2003. Interested parties can access the call toll free by dialing (800) 362-0574. The conference ID is "CAPITAL." A recorded replay of the conference call will be available from 12:00 p.m. on November 7 through midnight on November 21. The replay call number is (800) 839-3613. Forward-Looking Statements -------------------------- The forward-looking statements contained in this news release are subject to certain risks and uncertainties including, but not limited to, new origination volume, continued performance, asset/liability mix, effectiveness of the Company's hedging strategy and rate of repayment of the Company's portfolio assets, as well as other risks indicated from time to time in the Company's Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Capital Trust, Inc. is a finance and investment management company focused on the commercial real estate industry and headquartered in New York. To date Capital Trust, for its own account or for funds under management, has originated $3.2 billion of commercial real estate mezzanine investments in 107 separate transactions. Tables to follow 4 Capital Trust, Inc. and Subsidiaries Consolidated Balance Sheets September 30, 2003 and December 31, 2002 (in thousands)
September 30, December 31, ---------------- ---------------- 2003 2002 ---------------- ---------------- (Unaudited) (Audited) Assets Cash and cash equivalents $ 10,179 $ 10,186 Available-for-sale securities, at fair value 23,633 65,233 Commercial mortgage-backed securities available-for-sale, at fair value 160,937 155,780 Loans receivable, net of $6,672 and $4,982 reserve for possible credit losses at September 30, 2003 and December 31, 2002, respectively 164,292 116,347 Equity investment in CT Mezzanine Partners I LLC ("Fund I"), CT Mezzanine Partners II LP ("Fund II"), CT MP II LLC ("Fund II GP") and CT Mezzanine Partners III, Inc. ("Fund III") (together "Funds") 23,997 28,974 Deposits and other receivables 383 431 Accrued interest receivable 3,291 4,422 Deferred income taxes 2,240 1,585 Prepaid and other assets 3,814 2,018 ---------------- ---------------- Total assets $ 392,766 $ 384,976 ================ ================ Liabilities and Stockholders' Equity Liabilities: Accounts payable and accrued expenses $ 11,347 $ 9,067 Credit facility 33,000 40,000 Term redeemable securities contract 12,089 -- Repurchase obligations 146,922 160,056 Deferred origination fees and other revenue 1,817 987 Interest rate hedge liabilities 838 1,822 ---------------- ---------------- Total liabilities 206,013 211,932 ---------------- ---------------- Company-obligated, mandatory redeemable, convertible trust preferred securities of CT Convertible Trust I, holding $89,742 of convertible 10.0% junior subordinated debentures at September 30, 2003 and December 31, 2002 ("Convertible Trust Preferred Securities") 89,346 88,988 ---------------- ---------------- Stockholders' equity: Class A common stock, $0.01 par value, 100,000 shares authorized, 6,492 and 5,405 shares issued and outstanding at September 30, 2003 and December 31, 2002, respectively ("Class A Common Stock") 65 54 Restricted Class A Common Stock, $0.01 par value, 17 and 100 shares issued and outstanding at September 30, 2003 and December 31, 2002, respectively ("Restricted Class A Common Stock" and together with Class A Common Stock, "Common Stock") -- 1 Additional paid-in capital 140,917 126,919 Unearned compensation (25) (320) Accumulated other comprehensive loss (31,561) (28,988) Accumulated deficit (11,989) (13,610) ---------------- ---------------- Total stockholders' equity 97,407 84,056 ---------------- ---------------- Total liabilities and stockholders' equity $ 392,766 $ 384,976 ================ ================
5 Capital Trust, Inc. and Subsidiaries Consolidated Statements of Income Three and Nine Months Ended September 30, 2003 and 2002 (in thousands, except per share data) (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------- ------------------------------- 2003 2002 2003 2002 -------------- -------------- -------------- -------------- Income from loans and other investments: Interest and related income $ 11,757 $ 11,036 $ 29,384 $ 37,991 Less: Interest and related expenses 2,616 3,757 7,369 14,020 -------------- -------------- -------------- -------------- Income from loans and other investments, net 9,141 7,279 22,015 23,971 -------------- -------------- -------------- -------------- Other revenues: Management and advisory fees from Funds 2,385 2,548 5,793 7,624 Income/(loss) from equity investments in Funds 367 1,156 1,085 (618) Advisory and investment banking fees -- 2,057 -- 2,207 Net gain on sales of investments and reduced maturity of fair value hedge -- -- -- 1,651 Other interest income 8 46 46 104 -------------- -------------- -------------- -------------- Total other revenues 2,760 5,807 6,924 10,968 -------------- -------------- -------------- -------------- Other expenses: General and administrative 3,804 3,982 10,497 11,390 Other interest expense -- -- -- 23 Depreciation and amortization 293 248 781 744 Net unrealized (gain)/loss on derivative securities and corresponding hedged risk on CMBS securities -- 180 -- 2,776 Recapture of allowance for possible credit losses -- -- -- (2,963) -------------- -------------- -------------- -------------- Total other expenses 4,097 4,410 11,278 11,970 -------------- -------------- -------------- -------------- Income before income taxes and distributions and amortization on Convertible Trust Preferred Securities 7,804 8,676 17,661 22,969 Provision for income taxes 655 4,454 655 11,540 -------------- -------------- -------------- -------------- Income before distributions and amortization on Convertible Trust Preferred Securities 7,149 4,222 17,006 11,429 Distributions and amortization on Convertible Trust Preferred Securities, net of income tax benefit of $2,301 and $6,195 for the three and nine months ended September 30, 2002, respectively 2,363 2,669 7,089 7,186 -------------- -------------- -------------- -------------- Net income allocable to Common Stock $ 4,786 $ 1,553 $ 9,917 $ 4,243 ============== ============== ============== ============== Per share information: Net earnings per share of Common Stock: Basic $ 0.74 $ 0.26 $ 1.69 $ 0.69 ============== ============== ============== ============== Diluted $ 0.66 $ 0.25 $ 1.67 $ 0.68 ============== ============== ============== ============== Weighted average shares of Common Stock outstanding: Basic 6,502,075 6,090,408 5,858,659 6,174,327 ============== ============== ============== ============== Diluted 10,861,674 6,107,825 10,182,850 6,242,770 ============== ============== ============== ==============
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