<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>ex99-1.txt
<DESCRIPTION>EX. 99.1: PRESS RELEASE
<TEXT>
Exhibit 99.1
[CAPITAL TRUST LOGO]
Contact: Rick Matthews
Rubenstein Associates
(212) 843-8267
Capital Trust Reports Year End 2005 Results
-------------------------------------------
NEW YORK, NY - March 9, 2006 - Capital Trust, Inc. (NYSE: CT) today reported
fourth quarter 2005 net income of $1.06 per share (diluted), an increase of 68%
compared to 63 cents per share for the comparable period of the prior year. For
the year ended December 31, 2005, net income totaled $2.88 per share (diluted)
compared to $2.14 in 2004, an increase of 35%. The 2005 results include a
one-time gain of $5 million (approximately 30 cents per share diluted) from the
sale of a corporate investment that closed in the fourth quarter.
"We are pleased to report another good quarter, capping a year of solid results
and accomplishments," said John Klopp, Capital Trust's CEO. "CT's franchise is
stronger than ever, and our team is ready to meet the challenges of 2006."
Highlights from 2005 included:
o Originated and closed a record $1.5 billion of new investments for the
balance sheet ($1.1 billion) and for managed funds ($400 million);
o Issued two more CDOs, increasing securitized debt to $824 million or
69% of total interest bearing liabilities;
o Collected over $8 million of fund incentive management fees;
o Increased total assets by over 75% to $1.6 billion;
o Doubled net income and increased earnings per share by 35%; and
o Increased full year regular dividends from $1.85 to $2.25 per share
(+22%) and declared a special dividend of 20 cents per share.
The Company will conduct a conference call at 10:00 a.m. Eastern Time on March
10, 2006 to discuss fourth quarter and year end 2005 results. Interested parties
can access the call toll free by dialing (800) 540-0559. The conference ID is
"CAPITAL." A recorded replay will be available from 12:00 p.m. on March 10, 2006
through midnight on March 24, 2006. The replay call number is (800) 688-4915.
<PAGE>
Capital Trust
Page 2
Selected financial highlights are outlined below:
Balance Sheet
-------------
Total assets were $1.6 billion at December 31, 2005, reflecting a $225 million
(17%) increase from September 30, 2005 and a $680 million (77%) increase from
$878 million at December 31, 2004. At year end, the Company's interest earning
assets ($1.5 billion) were comprised of 45 CMBS investments ($488 million), 77
loans ($990 million) and one total return swap ($4 million). The primary drivers
of balance sheet asset growth were new originations of loans and commercial
mortgage backed securities, ("CMBS") that totaled $286 million for the quarter
and over $1 billion for the year. For the three months ended December 31, 2005,
the Company originated 13 new loans totaling $246 million and 9 new CMBS
investments totaling $40 million. For the year ended December 31, 2005, the
Company originated 45 new loans totaling $791 million and 27 new CMBS
investments totaling $245 million. Net of repayments, loans receivable jumped to
$990 million as of December 31, 2005, a $175 million (21%) increase from
September 30, 2005 and a $434 million (78%) increase from December 31, 2004.
Similarly, CMBS investments rose to $488 million, a $34 million (7%) increase
from September 30, 2005 and a $240 million (97%) increase from December 31,
2004.
Equity investment in funds as of December 31, 2005 was $14 million, reflecting
the Company's co-investment in its managed funds and capitalized costs related
to its investment management business. The Company currently acts as investment
manager for two private equity funds, CT Mezzanine Partners II LP ("Fund II")
and CT Mezzanine Partners III, Inc. ("Fund III"), which collectively made $2.4
billion of investments during their respective investment periods. At December
31, 2005, Fund II and Fund III had $60 million and $460 million of remaining
loans and investments, respectively, all of which were performing.
Total liabilities as of December 31, 2005 were $1.2 billion, comprised primarily
of collateralized debt obligations ("CDOs") and repurchase obligations. In
March, the Company issued its second CDO ("CDO 2"), selling $299 million (face
value) of investment grade rated floating rate notes collateralized by a $338
million pool of loans, subordinate CMBS and cash. The cost of the debt is LIBOR
plus 0.49% on a cash basis and LIBOR plus 0.71% on an all in effective basis. In
August, the Company issued its third CDO ("CDO 3"), selling $270 million (face
value) of investment grade rated fixed rate notes collateralized by a pool of
$341 million (face value) of fixed rate CMBS. The cost of the debt is 5.17% on a
cash basis and 5.25% on an all in effective basis. CDO 3 was structured as a
static pool financing without a reinvestment period while CDO 2 was structured
with a five-year reinvestment period. Capital Trust's wholly owned asset
management subsidiary, CTIMCO, is the collateral manager for all of its CDOs. At
year end, $824 million (69%) of the Company's interest bearing liabilities were
in the form of CDOs, which provide non-recourse, non-mark-to-market, index
matched financing for the Company's assets.
<PAGE>
Capital Trust
Page 3
At year end, the Company's debt-to-equity ratio was 3.5-to-1 compared to
1.7-to-1 at December 31, 2004. At December 31, 2005, the Company had $26 million
of cash and restricted cash, $89 million of available borrowings and $454
million of additional capacity under its repurchase agreements.
Based on GAAP shareholders' equity, book value per share was $21.91 at December
31, 2005, compared to $20.79 at December 31, 2004. Included in these
calculations are 128,844 and 173,549 shares representing the dilutive impact for
the assumed conversion of in-the-money options at December 31, 2005 and December
31, 2004, respectively, in addition to the shares outstanding.
Operating Results
-----------------
For the quarter ended December 31, 2005, the Company reported total revenues of
$36 million and net income of $16 million, representing basic earnings per share
of $1.07 and diluted earnings per share of $1.06. As compared to the prior
quarter, total revenues increased by $11 million (43%), net income by $7 million
(66%) and earnings per share by 42 cents (66%) on a diluted basis. For the same
period in 2004, the Company reported total revenues of $19 million and net
income of $10 million.
For the year ended December 31, 2005, the Company reported total revenues of
$105 million and net income of $44 million, representing basic earnings per
share of $2.92 and diluted earnings per share of $2.88. When compared to the
prior year, total revenues increased by $47 million (83%), net income by $22
million (101%) and diluted earnings per share by 74 cents (35%).
Interest and related income from loans and other investments totaled $29 million
and $86 million for the quarter and the year ended December 31, 2005,
respectively, an increase of $13 million (87%) and $40 million (85%) from the
$15 million and $47 million for the respective same periods in 2004. Average
interest-earning assets increased from $553 million for the year ended December
31, 2004 to $1.1 billion for the year ended December 31, 2005. The average
interest rate earned on these assets decreased from 8.40% for the year ended
December 31, 2004 to 8.08% for the year ended December 31, 2005. The decrease in
rates was due primarily to a change in the mix of assets in the Company's
investment portfolio to include a greater proportion of lower risk assets in
2005 and a general decrease in market credit spreads on newly originated
investments, partially offset by a higher average LIBOR rate, which increased
from 1.50% for the twelve months ended December 31, 2004 to 3.39% for the twelve
months ended December 31, 2005. During the year ended December 31, 2005, the
Company also recognized $4 million in additional income on the early repayment
of loans and the applicable acceleration of net premium amortization.
Interest and related expenses on secured debt amounted to $14 million and $37
million for the three months and year ended December 31, 2005, respectively, an
increase from $5 million and $14 million for the respective same periods in
2004. Higher expenses were due to an increase in the average amount of
interest-bearing liabilities outstanding from approximately $334 million for the
year ended December 31, 2004 to
<PAGE>
Capital Trust
Page 4
approximately $781 million for the year ended December 31, 2005 and an increase
in the average rate paid on interest-bearing liabilities from 4.10% to 4.70% for
the same periods. The increase in the average rate is substantially due to
increases in the average LIBOR rate, partially offset by lower borrowing spreads
resulting from the use of CDOs and more favorable terms under the Company's
repurchase facilities.
Other revenues increased $4 million from $3 million for the three months ended
December 31, 2004 to $7 million for the three months ended December 31, 2005.
For the year ended December 31, 2005, other revenues increased $8 million to $18
million from $11 million for the twelve months ended December 31, 2004. These
increases were primarily due to the sale of a corporate equity investment in the
fourth quarter which resulted in a $5 million gain, and the receipt of $8
million in incentive management fees from Fund II during the year. These were
partially offset by a decrease in base management fees and co-investment income
from Fund II and Fund III as their portfolios repaid in the normal course.
Furthermore, in connection with the receipt of the incentive management fees,
the Company expensed $1 million of previously capitalized costs related to the
creation of Fund II.
General and administrative expenses increased $500,000 to $6 million for the
three months ended December 31, 2005 from $5 million for the three months ended
December 31, 2004. For the year ended December 31, 2005 general and
administrative expenses increased by $7 million to $22 million from $15 million
for the twelve months ended December 31, 2004. The year-over-year increase in
general and administrative expenses was primarily due to the allocation of a
portion of Fund II incentive management fees to employees (representing 25% of
the total received, or $2 million), increases in employee compensation expense
from the issuance of additional restricted stock and the annual bonus accrual,
and the write-off of over $750,000 of pursuit costs related to unconsummated
investments.
Dividends
---------
On December 15, 2005, the Company's Board of Directors declared a fourth quarter
2005 cash dividend of 60 cents per share and a special cash dividend of 20 cents
per share of class A common stock. Both cash dividends were paid on January 13,
2006 to stockholders of record on December 31, 2005.
Subsequent Events
-----------------
On February 10, 2006, the Company privately placed $50 million of Trust
Preferred Securities through a wholly owned subsidiary. The securities have a
30-year term ending April 2036, are redeemable at par on or after April 30, 2011
and pay distributions at a fixed rate of 7.45% for the first ten years ending
April 2016 and, thereafter, at a floating rate of three month LIBOR plus 2.65%.
On February 13, 2006, the Company announced its fourth CDO which it refers to as
CDO IV. CDO IV is secured by a $490 million portfolio of CMBS and other
commercial real estate debt. The collateral is comprised of $186 million of
assets which the
<PAGE>
Capital Trust
Page 5
Company owned and $304 million of CMBS that it will purchase in connection with
the closing of CDO IV. The Company expects to sell $431 million of CDO notes to
third parties and retain all of the below investment grade notes and issuer
equity.
The offering of the CDO IV notes will be made in a private placement transaction
exempt from registration under the Securities Act of 1993 (the "Securities
Act"). This press release does not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the Notes
referred to herein in any state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
any such state. The Notes will not be registered under the Securities Act or
applicable state securities laws, and may not be offered or sold in the United
States except pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and applicable state
securities laws.
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, the continued credit performance of the Company's loan and CMBS
investments, the asset/liability mix, the effectiveness of the Company's hedging
strategy and the 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.
About Capital Trust
-------------------
Capital Trust, Inc. is a finance and investment management company that
specializes in credit-sensitive structured financial products. To date, the
Company's investment activities have focused primarily on the U.S. commercial
real estate subordinate debt markets. Capital Trust executes its business both
as a balance sheet investor and as an investment manager through its CT
Mezzanine Partners family of funds. Capital Trust is a real estate investment
trust traded on the New York Stock Exchange under the symbol "CT." The Company
is headquartered in New York City.
Tables to follow
<PAGE>
Capital Trust, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2005 and 2004
(in thousands, except per share data)
<TABLE>
<CAPTION>
2005 2004
---------------- ----------------
Assets
<S> <C> <C>
Cash and cash equivalents $ 24,974 $ 24,583
Restricted cash 1,264 611
Commercial mortgage-backed securities 487,970 247,765
Loans receivable 990,142 556,164
Total return swap 4,000 --
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") 14,301 21,376
Deposits and other receivables 5,679 10,282
Accrued interest receivable 9,437 4,029
Interest rate hedge assets 2,273 194
Deferred income taxes 3,979 5,623
Prepaid and other assets 13,511 7,139
---------------- ----------------
Total assets $ 1,557,530 $ 877,766
================ ================
Liabilities and Shareholders' Equity
Liabilities:
Accounts payable and accrued expenses $ 24,957 $ 17,388
Credit facility -- 65,176
Repurchase obligations 369,751 225,091
Collateralized debt obligations ("CDOs") 823,744 252,778
Deferred origination fees and other revenue 228 836
---------------- ----------------
Total liabilities 1,218,680 561,269
---------------- ----------------
Shareholders' equity:
Class A common stock, $0.01 par value, 100,000 shares authorized,
14,870 and 14,769 shares issued and outstanding at December 31,
2005 and 2004, respectively ("class A common stock") 149 148
Restricted class A common stock, $0.01 par value, 404 and 283 shares
issued and outstanding at December 31, 2005 and 2004, respectively
("restricted class A common stock" and together with class A common
stock, "common stock") 4 3
Additional paid-in capital 326,299 321,937
Accumulated other comprehensive gain 14,879 3,815
Accumulated deficit (2,481) (9,406)
---------------- ----------------
Total shareholders' equity 338,850 316,497
---------------- ----------------
Total liabilities and shareholders' equity $ 1,557,530 $ 877,766
================ ================
</TABLE>
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<PAGE>
Capital Trust, Inc. and Subsidiaries
Consolidated Statements of Income
Three and Twelve Months Ended December 31, 2005 and 2004
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Twelve months Ended
December 31, December 31,
---------------------------------- ---------------------------------
2005 2004 2005 2004
----------------- ---------------- ---------------- ----------------
(unaudited) (unaudited) (audited) (audited)
<S> <C> <C> <C> <C>
Income from loans and other investments:
Interest and related income $ 28,841 $ 15,392 $ 86,200 $ 46,561
Less: Interest and related expenses on
secured debt (13,520) (4,876) (37,229) (13,724)
Less: Interest and related expenses on
step up convertible junior subordinated
debentures -- -- -- (6,417)
----------------- ---------------- ---------------- ----------------
Income from loans and other investments,
net 15,321 10,516 48,871 26,420
----------------- ---------------- ---------------- ----------------
Other revenues:
Management and advisory fees from Funds 980 1,828 13,124 7,853
Income/(loss) from equity investments in
Funds 613 1,281 (222) 2,407
Gain on sales of investments 4,951 -- 4,951 300
Special servicing fees -- 10 -- 10
Other interest income 179 43 553 78
----------------- ---------------- ---------------- ----------------
Total other revenues 6,723 3,162 18,406 10,648
----------------- ---------------- ---------------- ----------------
Other expenses:
General and administrative 5,555 5,102 21,939 15,229
Depreciation and amortization 277 278 1,114 1,100
Unrealized loss on available-for-sale
securities for other-than-temporary
impairment -- 5,886 -- 5,886
Provision for/(recapture of) allowance for
possible credit losses -- (6,672) -- (6,672)
----------------- ---------------- ---------------- ----------------
Total other expenses 5,832 4,594 23,053 15,543
----------------- ---------------- ---------------- ----------------
Income before income taxes 16,212 9,084 44,324 21,525
Provision for income taxes (102) (451) 213 (451)
----------------- ---------------- ---------------- ----------------
Net income $ 16,314 $ 9,535 $ 44,111 $ 21,976
================= ================ ================ ================
Per share information:
Net earnings per share of common stock:
Basic $ 1.07 $ 0.63 $ 2.92 $ 2.17
================= ================ ================ ================
Diluted $ 1.06 $ 0.63 $ 2.88 $ 2.14
================= ================ ================ ================
Weighted average shares of common stock
outstanding:
Basic 15,165,621 15,050,782 15,124,187 10,141,380
================= ================ ================ ================
Diluted 15,364,287 15,223,516 15,335,914 10,276,886
================= ================ ================ ================
Dividends declared per share of common
stock $ 0.80 $ 0.50 $ 2.45 $ 1.85
================= ================ ================ ================
</TABLE>
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