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Exantas Capital Corp. Reports Results For Three Months And Year Ended December 31, 2019

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NEW YORK , March 3, 2020 /PRNewswire/ --  Exantas Capital Corp . (NYSE: XAN) ("XAN" or the "Company") reports results for the three months and year ended December 31, 2019.

Significant Items and Highlights

  • GAAP net income allocable to common shares was $0.12 per share-diluted for the three months ended December 31, 2019 , including $(0.10) per share-diluted of negative fair value adjustments discussed below.
     
  • Core Earnings were $0.23 per common share-diluted for the three months ended December 31, 2019 (see Schedule I).
     
  • Management anticipates the Company will declare a cash dividend of $0.275 per share on its common stock for the first quarter of 2020, which would be a 37.5% increase over the first quarter of 2019 dividend of $0.20 per share.
     
  • XAN originated or acquired $203.0 million and $942.0 million of new commercial real estate ("CRE") loans during the three months and year ended December 31, 2019 , respectively (see Schedule III).
     
  • On February 24, 2020 , XAN announced the expansion of its CRE debt platform to include fixed-rate CRE loans through its integration of C-III Commercial Mortgage LLC into its Manager.
     
  • GAAP book value was $14.00 per common share at December 31, 2019 as compared to $14.02 per common share at December 31, 2018 .
     
  • Economic book value, which adjusts for the face redemption amounts of the Company's outstanding preferred stock and convertible senior notes, was $13.61 per common share at December 31, 2019 , up from $13.54 per common share at December 31, 2018 (see Schedule IV).
     
  • XAN priced a CRE debt securitization on March 2, 2020 that will finance CRE loans of $522.6 million at a weighted average cost of the one-month London Interbank Offered Rate ("LIBOR") plus 1.43%. The Company intends to purchase $26.1 million and $16.3 million of the Class D notes and Class E notes, respectively, upon close.

Three Months and Year Ended December 31, 2019 Results

  • GAAP net income allocable to common shares was $3.8 million , or $0.12 per share-diluted, and $25.6 million , or $0.81 per share-diluted, for the three months and year ended December 31, 2019 , respectively, as compared to GAAP net income allocable to common shares of $7.4 million , or $0.23 per share-diluted, and $7.0 million , or $0.22 per share-diluted, for the three months and year ended December 31, 2018 , respectively.
     
  • GAAP net income allocable to common shares for the three months ended December 31, 2019 includes approximately $(3.2) million , or $(0.10) per share-diluted, of fair value adjustments on the Company's remaining CRE asset held for sale.
     
  • Core Earnings were $7.3 million , or $0.23 per common share-diluted, and $34.0 million , or $1.07 per common share-diluted, for the three months and year ended December 31, 2019 , respectively, as compared to Core Earnings, adjusted of $7.5 million , or $0.24 per common share-diluted, and $22.3 million , or $0.71 per common share-diluted, for the three months and year ended December 31, 2018 , respectively (see Schedule I).
     
  • Common stock cash dividends of $0.275 and $0.95 per share were declared and paid for the three months and year ended December 31, 2019 , respectively.

Additional Items

Commercial Real Estate

  • Substantially all of XAN's $1.8 billion CRE loan portfolio comprised floating-rate senior whole loans at December 31, 2019 .
     
  • XAN's CRE floating-rate whole loan portfolio had a weighted average spread of 3.49% over the one-month LIBOR of 1.76% at December 31, 2019 .

The following table summarizes XAN's CRE loan activities and fundings of previous commitments for the three months and years ended December 31, 2019 and 2018 (in millions, except percentages and amounts in footnotes):



Three Months
Ended

December   31,
2019



Year Ended

December   31,
2019



Three Months
Ended

December   31,
2018



Year Ended

December   31,
2018


New CRE loan commitments


$

203.0



$

722.5



$

274.9



$

842.4


New CRE preferred equity investments






8.7







19.2


Total CRE loan commitments and investments



203.0




731.2




274.9




861.6


Payoffs and paydowns (1)(2)



(182.0)




(643.2)




(203.1)




(575.6)


Previous commitments funded



10.8




43.0




13.3




51.4


New unfunded loan commitments and investments



(13.6)




(53.1)




(30.5)




(81.0)


Net CRE loans funded



18.2




77.9




54.6




256.4



















Acquired CRE loans (committed balance)






210.8








Payoffs and paydowns (1)



(22.8)




(39.6)








Previous commitments funded






0.2








Acquired unfunded loan commitments






(14.0)








Net CRE loans (repaid) acquired



(22.8)




157.4

























Net CRE loans (repaid) funded and acquired


$

(4.6)



$

235.3



$

54.6



$

256.4



















Weighted average one-month LIBOR floor on new originations
and acquisitions (3)



1.80

%



2.17

%



2.09

%



1.86

%

Weighted average spread above one-month LIBOR (3)



2.89

%



3.31

%



3.06

%



3.39

%

Weighted average unlevered yield, including amortization of
origination fees and acquisition costs



5.04

%



5.72

%



5.72

%



5.83

%


(1)  CRE loan payoffs and extensions resulted in exit and extension fees of $869,000 and $1.0 million during the three months ended December 31, 2019 and 2018, respectively, and $2.6 million and $3.0 million during the years ended December 31, 2019 and 2018, respectively.

(2)  Activity excludes legacy CRE loans (see Strategic Plan Update).

(3)  Applies to new floating-rate CRE whole loans funded and acquired.

Commercial Mortgage-Backed Securities

XAN's $582.1 million commercial mortgage-backed securities ("CMBS") portfolio, at par, had a carrying value of $520.7 million (due substantially to net purchase discounts) and a weighted average coupon of 4.30% at December 31, 2019.

The following table summarizes XAN's CMBS activities, at face value, for the three months and years ended December 31, 2019 and 2018 (in millions, except percentages):



Three Months
Ended

December   31,
2019



Year Ended

December   31,
2019



Three Months
Ended

December   31,
2018



Year Ended

December   31,
2018


CMBS acquisitions


$

73.0



$

147.2



$

83.2



$

252.3


Sales






(0.6)




(4.9)




(14.9)


Principal paydowns



(22.9)




(56.4)




(6.7)




(20.9)


CMBS acquisitions, net


$

50.1



$

90.2



$

71.6



$

216.5



















Weighted average coupon at the respective period end (1)



3.99

%



4.22

%



4.71

%



4.57

%


(1)  Applies to new CMBS acquired during the respective periods.

Commercial Real Estate Securitizations

  • XAN priced a CRE debt securitization on March 2, 2020 that will finance CRE loans of $522.6 million and issue $435 .7 million of non-recourse, floating-rate notes, of which $393.3 million will be sold to third parties at a weighted average cost of one-month LIBOR plus 1.30%. The Company intends to purchase $26.1 million and $16.3 million of the Class D notes and Class E notes, respectively, rated BBB(high)(sf) and BBB(low)(sf), respectively, upon close.

Liquidity

  • At February 28, 2020 , XAN had available liquidity of $138.7 million from two primary sources:
     
  • In January 2020 , the 8.00% convertible senior notes due 2020 were paid off upon maturity.

Common Stock Book Value, Economic Book Value and Total Stockholders' Equity

The following table rolls forward XAN's common stock book value from September 30, 2019 to December 31, 2019 and reconciles common stock book value to economic book value (a non-GAAP measure) at December 31, 2019 (see Schedule IV) (in thousands, except per share data and amounts in footnotes):



Total

Amount



Per Share

Amount


Common stock book value at September 30, 2019 (1)


$

444,070



$

14.12


Net income allocable to common shares



3,798




0.12


Change in other comprehensive income:









Available-for-sale securities



(1,139)




(0.04)


Derivatives



1,804




0.06


Common stock dividends



(8,651)




(0.28)


Common stock dividends on unvested shares



(116)





Accretion from additional shares outstanding at December 31, 2019 (2)



676




0.02


Total net decrease



(3,628)




(0.12)


Common stock book value at December 31, 2019 (1)(3)


$

440,442



$

14.00











Reconciling items in arriving at economic book value at December 31, 2019:









Non-cash convertible senior notes' unamortized discounts:









4.50% Convertible Senior Notes



(8,133)




(0.26)


8.00% Convertible Senior Notes



(6)





Series C Preferred Stock redemption value in excess of carrying value



(4,045)




(0.13)


Economic book value at December 31, 2019


$

428,258



$

13.61



(1)  Per share calculations exclude unvested restricted stock, as disclosed on the consolidated balance sheets, of 420,962 and 424,164 shares at December 31, 2019 and September 30, 2019, respectively. The denominators for the calculations are 31,459,632 and 31,446,738 at December 31, 2019 and September 30, 2019, respectively.

(2)  Per share amount calculations include 12,894 additional shares of restricted stock that vested during the three months ended December 31, 2019.

(3)  Common stock book value is calculated as total stockholders' equity of $556.4 million less preferred stock equity of $116.0 million at December 31, 2019.

The following table presents the economic book value per common share at the dates presented:



At December 31,

2019



At September 30,

2019



At June 30,

2019



At March 31,

2019



At December 31,

2018


Economic book value


$

13.61



$

13.71



$

13.63



$

13.60



$

13.54























Investment Portfolio

The following table summarizes the amortized cost and net carrying amount of XAN's investment portfolio at December 31, 2019, classified by asset type (in thousands, except percentages and amounts in footnotes):

At December   31, 2019


Amortized Cost



Net Carrying
Amount



Percent of
Portfolio



Weighted
Average
Coupon


Core Assets:

















CRE whole loans (1)(2)


$

1,749,093



$

1,747,633




75.10

%


5.52%


CRE mezzanine loan and preferred equity investments (2)



30,848




30,848




1.33

%


11.18%


CMBS, fixed-rate (3)



132,235




138,039




5.93

%


4.10%


CMBS, floating-rate (3)



382,659




382,675




16.44

%


4.39%


Total Core Assets



2,294,835




2,299,195




98.80

%





Non-Core Assets:

















Legacy CRE assets (4)(5)



35,539




28,004




1.20

%


1.47%



















Total Core and Non-Core Assets


$

2,330,374



$

2,327,199




100.00

%






(1)  Net carrying amount includes an allowance for loan losses of $1.5 million at December 31, 2019.

(2)  Classified as CRE loans on the consolidated balance sheet.

(3)  Classified as investment securities available-for-sale on the consolidated balance sheet.

(4)  Includes one legacy CRE loan with an amortized cost of $11.5 million classified as a CRE loan on the consolidated balance sheet as XAN intends to hold this loan to maturity.

(5)  Net carrying amount includes a lower of cost or market value adjustment at December 31, 2019.

Strategic Plan Update

In November 2016 , XAN's board of directors approved the strategic plan (the "Plan"). The Plan contemplated disposing of certain loans underwritten prior to 2010, exiting non-core businesses and investments and maintaining a dividend policy based on sustainable earnings. XAN has substantially completed the execution of the Plan.

In November 2019 , XAN foreclosed on the remaining legacy CRE loan held for sale. The property is being marketed for sale and is classified as an asset held for sale on the consolidated balance sheet at December 31, 2019 . At December 31, 2019, XAN had approximately $28.0 million remaining of the $480.1 million of identified Plan assets.

Supplemental Information

The following schedules of reconciliations and supplemental information at December 31, 2019 are included at the end of this release:

  • Schedule I - Reconciliation of GAAP Net Income (Loss) to Core Earnings;
  • Schedule II - Summary of Securitization Performance Statistics;
  • Schedule III - CRE Loan Activities;
  • Schedule IV - Economic Book Value Per Share; and
  • Schedule V - Supplemental Information.

About Exantas Capital Corp.

Exantas Capital Corp. is a real estate investment trust that is primarily focused on originating, holding and managing commercial real estate mortgage loans and other commercial real estate-related debt investments.

The Company is externally managed by Exantas Capital Manager Inc. (the "Manager"), which is an indirect wholly-owned subsidiary of C-III Capital Partners LLC, a leading commercial real estate investment management and services company engaged in a broad range of activities.

For more information, please visit XAN's website at www.exantas.com  or contact investor relations at IR@exantas.com .

Safe Harbor Statement

Statements made in this release may include forward-looking statements, which involve substantial risks and uncertainties. XAN's actual results, performance or achievements could differ materially from those expressed or implied in this release. The risks and uncertainties associated with forward-looking statements contained in this release include those related to:

  • fluctuations in interest rates and related hedging activities;
  • the availability of debt and equity capital to acquire and finance investments;
  • defaults or bankruptcies by borrowers on XAN's loans or on loans underlying its investments;
  • adverse market trends that have affected and may continue to affect the value of real estate and other assets underlying XAN's investments;
  • increases in financing or administrative costs; and
  • general business and economic conditions that have in the past impaired and may in the future impair the credit quality of borrowers and XAN's ability to originate loans.

For further information concerning these and other risks pertaining to the forward-looking statements contained in this release, and to the general risks to which XAN is subject, see Item 1A, "Risk Factors," included in its most recent Annual Report on Form 10-K and the risks expressed in its other public filings with the Securities and Exchange Commission (the "SEC").

XAN cautions you not to place undue reliance on any forward-loo...