RAIT Financial Trust (“RAIT”) (NYSE: RAS), a national direct
lender to owners of commercial real estate and an
internally-managed real estate investment trust, today announced
that it has entered into a cooperation agreement with Highland
Capital Management, L.P. and its affiliates, which, in the
aggregate, beneficially own approximately 5.9% of RAIT’s
outstanding common shares. Under the terms of the cooperation
agreement, RAIT has agreed that, following the certification of the
vote at its 2017 Annual Meeting of Shareholders, it will appoint to
its Board of Trustees a new trustee who will be one of two
candidates recommended by Highland Capital. In addition, RAIT has
agreed that within 120 days from the date of the cooperation
agreement, it will appoint an additional new trustee to its
Board.
Michael J. Malter, RAIT’s non-executive and independent Chairman
of the Board, stated, “We are pleased to have reached this
cooperation agreement with Highland Capital, as we believe this
outcome serves the best interests of RAIT and its shareholders. By
constructively engaging and collaborating with Highland Capital, we
have been introduced to two very attractive candidates for our
Board of Trustees, either of whom we believe would bring
substantive skills and experience that will complement the
strengths of the current members of our Board and enhance
management’s ability to drive the execution of its various
initiatives.”
James D. Dondero, the Co-Founder and President of Highland
Capital, said, “We are pleased to have worked collaboratively with
the RAIT Board and senior management team to reach this cooperation
agreement, which we believe is a good outcome for all shareholders.
We believe the addition of two new trustees will strengthen the
RAIT Board and further facilitate the ongoing efforts of the senior
management team to enhance shareholder value.”
Under the terms of the cooperation agreement, Highland Capital
and its affiliates have agreed to vote their shares in support of,
among other things, the election of the slate of trustees
recommended by RAIT’s Board at the 2017 annual meeting and to abide
by certain other voting and customary standstill provisions.
The complete cooperation agreement between RAIT and Highland
Capital and its affiliates will be filed as an exhibit to a Current
Report on Form 8-K with the Securities and Exchange Commission.
UBS Investment Bank served as financial advisor to RAIT. Morgan,
Lewis & Bockius LLP served as legal counsel to RAIT and its
Board of Trustees. FTI Consulting, Inc. served as investor
relations advisor to RAIT.
About RAIT Financial Trust
RAIT Financial Trust (NYSE: RAS) is an internally managed real
estate investment trust focused on providing debt financing options
to owners of commercial real estate. Additional information about
RAIT can be found on its website at www.rait.com.
Forward-Looking Information
This press release may contain certain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Such forward-looking statements can generally
be identified by our use of forward-looking terminology such as
“guidance,” “may,” “plan,” “should,” “expect,” “intend,”
“anticipate,” “estimate,” “believe,” “seek,” “opportunities” or
other similar words or terms.
RAIT’s forward-looking statements include, but are not limited
to, statements regarding RAIT’s plans and initiatives to (i)
simplify its business model, (ii) focus originations on high credit
quality, first lien loans, (iii) adopt a direct loan origination
model that facilitates improved credit and long-term borrower
relationships, (iv) deleverage and streamline lending strategy to
focus on RAIT’s core competencies, (v) opportunistically divest and
maximize the value of RAIT’s legacy REO portfolio and existing
property management operations and, ultimately, minimize REO
holdings, (vi) significantly reduce its total expense base, (vii)
reinvest capital into what it believes is a higher yielding lending
business, (viii) achieve its asset mix targets, (ix) sell non-core
CRE and lower asset management costs, (x) minimize the issuance of
mezzanine debt and preferred equity, (xi) optimize the level of
working capital on the balance sheet, (xii) achieve its financial
targets, (xiii) achieve its capital structure targets, (xiv) reduce
reliance on the issuances of corporate debt and/or preferred stock,
(xv) reduce leverage, including preferred stock as a percentage of
total assets, (xvi) reduce legacy CDOs as a percentage of total
secured indebtedness, (xvii)determine its future dividend policy,
(xviii) achieve significant annual expense savings in connection
with the internalization of IRT, (xix) exit the commercial property
management business, and (xx) enhance its long-term prospects and
create value for its shareholders. Such forward-looking statements
are based upon RAIT’s historical performance and its current plans,
estimates, predictions and expectations and are not a
representation that such plans, estimates, predictions or
expectations will be achieved. Because such statements include
risks, uncertainties and contingencies, actual results may differ
materially from the expectations, intentions, beliefs, plans or
predictions of the future expressed or implied by such
forward-looking statements.
Risks, uncertainties and contingencies that may affect the
results expressed or implied by RAIT’s forward-looking statements
include, but are not limited to: (i) whether RAIT will be able to
continue to implement its strategy to transition RAIT to a more
lender focused, simpler, and more cost-efficient business model, to
deleverage and to generate enhanced returns for its shareholders;
(ii) whether RAIT will be able to continue to opportunistically
divest and maximize the value of RAIT’s legacy REO portfolio and
existing property management operations and the majority of RAIT’s
non-lending assets; (iii) whether anticipated cost savings from the
internalization of IRT will be achieved; (iv) whether the
divestiture of RAIT’s CRE portfolio will lead to lower asset
management costs and lower expenses; (v) whether RAIT will be able
to reduce compensation and G&A expenses and indebtedness; (vi)
whether RAIT’s new leadership will lead to enhanced value for
shareholders; (vii) whether RAIT will be able to create sustainable
earnings and grow book value; (viii) whether RAIT will be able to
redeploy capital from non-lending related asset sales; (ix) whether
RAIT will be able to increase loan origination levels; (x) whether
the disposition of non-core assets, reductions in debt levels and
expected loan repayments will impact RAIT’s Cash Available for
Distribution (CAD); (xi) whether RAIT will continue to pay
dividends and the amount of such dividends; (xii) whether RAIT will
be able to organically increase reliance on match-funded
asset-level debt; (xiii) overall conditions in commercial real
estate and the economy generally; (xiv) whether market conditions
will enable us to continue to implement our capital recycling and
debt reduction plan involving selling properties and repurchasing
or paying down our debt; (xv) whether we will be able to originate
sufficient bridge loans; (xvi) whether the timing and amount of
investments, repayments, any capital raised and our use of leverage
will vary from those underlying our assumptions; (xvii) changes in
the expected yield of our investments; (xviii) changes in financial
markets and interest rates, or to the business or financial
condition of RAIT or its business; (xix) whether RAIT will be able
to originate loans in the amounts assumed; (xx) whether RAIT will
generate any CMBS gain on sale profits; (xxi) whether the amount of
loan repayments will be at the level assumed; (xxii) whether our
management changes will be beneficial to RAIT; (xxiii) whether RAIT
will be able to dispose of its industrial portfolio or sell the
other properties; (xxiv) the availability of financing and capital,
including through the capital and securitization markets; and (xxv)
other factors described in RAIT’s Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and in other filings with the SEC.
RAIT undertakes no obligation to update these forward-looking
statements to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events, except as may
be required by law.
Important Additional Information And Where To Find It
RAIT, its trustees and certain of its executive officers are
deemed to be participants in the solicitation of proxies from
RAIT’s shareholders in connection with the matters to be considered
at RAIT’s 2017 Annual Meeting of Shareholders. On May 15, 2017,
RAIT filed a definitive proxy statement and accompanying
definitive WHITE proxy card with the SEC in
connection with the solicitation of proxies from RAIT shareholders
in connection with the matters to be considered at RAIT’s 2017
Annual Meeting of Shareholders. Information regarding the names of
RAIT’s trustees and executive officers and their respective
interests in RAIT by security holdings or otherwise are set forth
in such definitive proxy statement, including the schedules and
appendices thereto. INVESTORS AND SHAREHOLDERS ARE STRONGLY
ENCOURAGED TO READ ANY SUCH PROXY STATEMENT AND THE ACCOMPANYING
WHITE PROXY CARD AND OTHER DOCUMENTS FILED BY RAIT WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY
WILL CONTAIN IMPORTANT INFORMATION. Shareholders will be able
to obtain the Proxy Statement, any amendments or supplements to the
Proxy Statement, the accompanying WHITE proxy card, and other documents filed
by RAIT with the SEC for no charge at the SEC’s website at
www.sec.gov. Copies will also be available at no charge at the
Investor Relations section of RAIT’s corporate website at
www.RAIT.com, by writing to RAIT’s Corporate Secretary at RAIT
Financial Trust, Two Logan Square, 100 N. 18th Street, 23rd Floor,
Philadelphia, PA 19103, or by calling RAIT’s Secretary at (215)
207.2100.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170526005260/en/
RAIT Financial TrustAndres Viroslav,
215-207-2100aviroslav@rait.com