Shareholders' Equity

6 Months Ended

Jun. 30, 2012

Shareholders Equity

Shareholders' Equity

Note 8. Shareholders’ Equity

Authorized Capital

We have the authority to issue up to 200,000,000 shares of stock, consisting of 100,000,000 shares of class A common stock and 100,000,000 shares of preferred stock. Subject to applicable NYSE listing requirements, our board of directors is authorized to issue additional shares of authorized stock without shareholder approval. In addition, to the extent not issued, currently authorized stock may be reclassified between class A common stock and preferred stock.

Common Stock

Shares of class A common stock are entitled to vote on all matters presented to a vote of shareholders, except as provided by law or subject to the voting rights of any outstanding preferred stock. Holders of record of shares of class A common stock on the record date fixed by our board of directors are entitled to receive such dividends as may be declared by the board of directors subject to the rights of the holders of any outstanding preferred stock. A total of 23,173,226 shares of class A common stock and stock units were issued and outstanding as of June 30, 2012.

We did not repurchase any of our class A common stock during the six months ended June 30, 2012, other than the 6,959 shares we acquired pursuant to elections by incentive plan participants to satisfy tax withholding obligations through the surrender of shares equal in value to the amount of the withholding obligation incurred upon the vesting of restricted class A common stock.

        

Preferred Stock

We have not issued any shares of preferred stock since we repurchased all of the previously issued and outstanding preferred stock in 2001.

Warrants

In conjunction with the March 2009 restructuring of our legacy repurchase obligations, we issued to our former repurchase lenders warrants to purchase an aggregate 3,479,691 shares of our class A common stock at an exercise price of $1.79 per share. The warrants became exercisable on March 16, 2012, will expire on March 16, 2019, and may be exercised in a cashless manner at the option of the warrant holders. The fair value assigned to these warrants, totaling $940,000, has been recorded as an increase to additional paid-in capital, and was amortized into interest expense over the term of the related debt obligations. The warrants were valued using the Black-Scholes valuation method.

Dividends

We generally intend to distribute each year substantially all of our taxable income (which does not necessarily equal net income as calculated in accordance with GAAP) to our shareholders to comply with the REIT provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code.

In addition, ourdividend policy remains subject to revision at the discretion of our board of directors. All distributions will be made at the discretion of our board of directors and will depend upon our taxable income, our financial condition, our maintenance of REIT status and other factors as our board of directors deems relevant.

No dividends were declared during the six months ended June 30, 2012 or 2011.

Accumulated Other Comprehensive Loss

The following table details the primary components of accumulated other comprehensive loss as of June 30, 2012, and significant activity for the six months ended June 30, 2012 (in thousands):

Accumulated Other Comprehensive Loss	Market on Interest Rate Hedges			Deferred Gains on Settled Hedges			Other-than-Temporary Impairments			Unrealized Gains on Securities			Total
Total as of December 31, 2011		($27,423	)		$56			($16,578	)		$3,361			($40,584	)
Unrealized gain on derivative     financial instruments		3,749			—			—			—			3,749
Ineffective portion of cash flow     hedges (1)		2,481			—			—			—			2,481
Amortization of net unrealized gains     on securities		—			—			—			(765	)		(765	)
Amortization of net deferred gains     on settlement of swaps		—			(56	)		—			—			(56	)
Other-than-temporary impairments     of securities (2)		—			—			203			—			203
Deconsolidation of CT Legacy     Assets (3)		—			—			3,879			(2,586	)		1,293
Total as of June 30, 2012		($21,193	)		$—			($12,496	)		$10			($33,679	)
Allocation to non-controlling interest (3)														—
Accumulated other comprehensive loss as of June 30, 2012														($33,679	)

(1)	As a result of the deconsolidation of CT Legacy Assets in the first quarter of 2012, the balance of accumlated other comprehensive income related to cash flow hedges of CT Legacy Assets was reclassified to interest expense.
(2)	Represents other-than-temporary impairments of securities in excess of credit losses, including amortization of prior other-than-temporary impairments of $391,000.
(3)	As further described in Note 1 above, we deconsolidated CT Legacy Assets in the first quarter of 2012. As a result, the balances of accumulated other comprehensive income related to CT Legacy Assets, including those allocable to noncontrolling interests are no longer included in our consolidated financial statements.

Noncontrolling Interests

The noncontrolling interests included on our consolidated balance sheet represent the equity interests in CT Legacy REIT which are not owned by us, as described in Note 6. CT Legacy REIT’s outstanding common stock includes class A-1 common stock, class A-2 common stock, and subordinate class B common stock. A portion of CT Legacy REIT’s consolidated equity and results of operations are allocated to these noncontrolling interests based on their pro-rata ownership of CT Legacy REIT.

The following table describes activity relating to noncontrolling interests for the six months ended June 30, 2012 (in thousands):

	Noncontrolling Interests
December 31, 2011		($18,515	)
Net income attributable to noncontrolling interests		75,137
Other comprehensive income attributable to     noncontrolling interests		10
Distributions to noncontrolling interests		(7	)
June 30, 2012		$56,625

As of December 31, 2011, the noncontrolling interests recorded on our consolidated balance sheet was a deficit, which reflected the consolidated book value of CT Legacy REIT, including certain securitization vehicles in which losses had been recorded in excess of CT Legacy REIT’s net investment. As a result of our deconsolidation of CT Legacy Assets during the first quarter of 2012, the impact of these excess losses has been reversed, resulting in a positive allocation to noncontrolling interests as of June 30, 2012.

Earnings Per Share

The following table sets forth the calculation of Basic and Diluted earnings per share, or EPS, based on the weighted average of both restricted and unrestricted class A common stock outstanding, for the three and six months ended June 30, 2012 (in thousands, except share and per share amounts):

	Three Months Ended June 30, 2012						Six Months Ended June 30, 2012
	Net		Wtd. Avg.		Per Share		Net		Wtd. Avg.		Per Share
	Income		Shares		Amount		Income		Shares		Amount
Basic EPS:
Net income allocable to      common stock		$2,283		22,893,522		$0.10		$68,836		22,865,819		$3.01
Effect of Dilutive Securities:
Warrants outstanding for the      purchase of common stock		—		1,533,335				—		1,487,570
Diluted EPS:
Net income per share of      common stock and assumed      conversions		$2,283		24,426,857		$0.09		$68,836		24,353,388		$2.83

The following table sets forth the calculation of Basic and Diluted EPS based on the weighted average of both restricted and unrestricted class A common stock outstanding, for the three and six months ended June 30, 2011 (in thousands, except share and per share amounts):

	Three Months Ended June 30, 2011								Six Months Ended June 30, 2011
	Net			Wtd. Avg.		Per Share			Net		Wtd. Avg.		Per Share
	Income			Shares(1)		Amount			Income		Shares(1)		Amount
Basic EPS:
Net (loss) income allocable to      common stock		($1,845	)		22,723,146		($0.08	)		$252,740		22,580,143		$11.19
Effect of Dilutive Securities:
Warrants outstanding for the      purchase of common stock		—			—					—		1,444,079
Diluted EPS:
Net income (loss) per share of      common stock and assumed      conversions		($1,845	)		22,723,146		($0.08	)		$252,740		24,024,222		$10.52

(1) Diluted EPS excludes 3.5 million warrants which were not dilutive for the period. These instruments could potentially impact Diluted EPS in future periods, depending on changes in our stock price.