MCLEAN, Va., June 4 /PRNewswire-FirstCall/ -- JER Investors
Trust Inc. (Pink Sheets: JERT)("JERT" or the "Company") released
its annual Statement of Affairs of the Company for the twelve
months ended December 31, 2009.
2009 Unaudited Operating Results:
- Operating Results: Net loss was $74.9 million and $254.2
million, or $(14.20) and
$(98.75) per diluted common share,
for the twelve months ended December 31,
2009 and 2008, respectively.
- Stockholders' Equity: Stockholders' equity (deficit) at
December 31, 2009 was $(25.2) million, or $(4.32) per common share.
The unaudited consolidated balance sheets as of December 31, 2009 and 2008 and consolidated
statements of operations for the twelve months ended December 31, 2009, 2008 and 2007 are attached as
an exhibit to this release.
Liquidity:
The Company's unrestricted cash balances were $0.7 million and $0.9
million at December 31, 2009
and June 2, 2010, respectively.
The Company had repurchase agreement balances outstanding of
$7.0 million at December 31, 2009, and had no repurchase
agreements outstanding at June 2,
2010.
As previously disclosed, the Company continues to have
outstanding payment defaults related to the following:
- Unfunded capital calls of $3.3
million related to its investment in the JER US Debt
Co-Investment Vehicle, L.P. (the "US Debt Fund"). As a result
of these defaults, effective January 1,
2010, the Company no longer receives a management fee from
the US Debt Fund.
- Payment default on its interest rate swap obligations to
National Australia Bank Limited ("NAB") (the "NAB Note Payable"),
which based on its terms is classified as a note payable on the
Company's balance sheet. As of April
19, 2010, NAB terminated the NAB Note Payable, and
established a termination value of $29.0
million.
- Payment default on its junior subordinated notes with an
outstanding face amount of $70.3
million, exclusive of unpaid interest and penalties.
Currently, the Company's primary source of liquidity is from its
non-CDO CMBS investments. The Company is no longer receiving
distributions from its retained interests in CDO I and CDO II, and
it does not expect to receive distributions from such CDOs for the
foreseeable future, if at all. In addition, the Company's US
Debt Fund investment is not expected to generate any liquidity to
the Company in the foreseeable future, and the Company anticipates
that any future distributions from the US Debt Fund will be
retained by the US Debt Fund to reduce the Company's unfunded
capital call obligations to the US Debt Fund. As a result,
the Company is focused on seeking to preserve liquidity by
minimizing its non-CDO cash operating costs, to the extent
possible, primarily by (i) ceasing management fee payments to its
external manager effective December
2009, after significantly reducing such cash payments from
April 2009 to November 2009, (ii) filing a Form 15 with the
Securities and Exchange Commission (the "SEC") on March 31, 2010 and ceasing to be an SEC reporting
company, and (iii) effective January 1,
2010, discontinuing payments currently due on its NAB Note
Payable and junior subordinated notes.
The Company's recent historical cash receipts by source are as
follows (in thousands):
|
|
For the Three
Months Ending
|
|
|
|
|
|
|
|
|
March 31,
2009
|
|
June 30,
2009
|
|
September 30,
2009
|
|
December 31,
2009
|
|
For the Twelve
Months Ending December 31, 2009
|
|
Year to Date
Through May 31, 2010
|
|
|
Non-CDO CMBS currently
held by JRT
|
|
$
5,923
|
|
$
2,128
|
|
$
1,858
|
|
$
1,223
|
|
$
11,132
|
|
$
1,359
|
|
|
Non-CDO CMBS sold in
March 2010
|
|
1,934
|
|
1,839
|
|
1,795
|
|
1,730
|
|
7,298
|
|
6,886
|
(1)
|
|
CDO I retained interest
|
|
650
|
|
449
|
|
-
|
|
-
|
|
1,099
|
|
-
|
|
|
CDO II retained interest
|
|
1,380
|
|
-
|
|
-
|
|
-
|
|
1,380
|
|
-
|
|
|
US Debt Fund
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Total
|
|
$
9,887
|
|
$
4,416
|
|
$
3,653
|
|
$
2,953
|
|
$
20,909
|
|
$
8,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes proceeds from sale of
these bonds of $5.5 million, compared to a December 31, 2009
estimated fair value of $6.4 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As noted above, the Company's cash receipts continue to decline
as delinquencies and special servicing transfers on loans
underlying our CMBS continue to increase.
Credit Performance:
Below are selected credit statistics on our CMBS investments and
the commercial real estate loans that serve as collateral on our
first-loss CMBS investments (dollars in thousands):
|
|
December 31,
2008
|
|
September 30,
2009
|
|
December 31,
2009
|
|
March
31,
2010
|
|
CMBS Portfolio
|
|
|
|
|
|
|
|
|
|
Total CMBS investments
|
|
26
|
|
26
|
|
26
|
|
25
|
|
Face amount of CMBS
investments
|
|
$
1,757,354
|
|
$
1,717,495
|
|
$
1,706,288
|
|
$
1,508,326
|
|
CMBS investments in which JRT owns
the
first-loss position
|
|
21
|
|
21
|
|
21
|
|
20
|
|
Face amount of first-loss CMBS
investments
|
|
$
1,651,790
|
|
$
1,628,104
|
|
$
1,616,897
|
|
$
1,420,174
|
|
Face amount of collateral pool for
first-loss
CMBS investments
|
|
$
47,729,268
|
|
$
46,988,003
|
|
$
46,560,051
|
|
$
43,705,612
|
|
|
|
|
|
|
|
|
|
|
|
Credit Statistics on Collateral Pool
for
First-Loss CMBS
Investments
|
|
|
|
|
|
|
|
|
|
60-day delinquency amount
|
|
$
392,963
|
|
$
1,500,596
|
|
$
2,152,513
|
|
$
2,737,134
|
|
60-day delinquency rate
|
|
0.8%
|
|
3.2%
|
|
4.6%
|
|
6.3%
|
|
|
|
|
|
|
|
|
|
|
|
Special servicing amount
|
|
$
713,515
|
|
$
3,388,698
|
|
$
4,345,045
|
|
$
5,355,245
|
|
Special servicing rate
|
|
1.5%
|
|
7.2%
|
|
9.3%
|
|
12.3%
|
|
|
|
|
|
|
|
|
|
|
|
Realized losses to date
|
|
$
3,404
|
|
$
27,206
|
|
$
37,575
|
|
$
66,209
|
|
Appraisal reductions to
date
|
|
$
19,010
|
|
$
387,502
|
|
$
474,033
|
|
$
628,897
|
|
|
|
|
|
|
|
|
|
|
|
Projected losses over life of
collateral pool
|
|
$
964,107
|
|
$
1,686,918
|
|
$
1,835,649
|
|
$
2,113,978
|
|
Projected loss rate over life of
collateral pool
|
|
2.0%
|
|
3.6%
|
|
3.9%
|
|
4.8%
|
|
|
|
|
|
|
|
|
|
|
We expect that delinquencies and transfers of loans to special
servicing, realized losses and appraisal reductions will continue
to increase during 2010, further eroding cash flows to the CMBS
bonds owned by JERT, and in particular, to the non-CDO CMBS bonds
which are the Company's primary source of liquidity at this
time.
If the credit losses that are ultimately realized are in line
with the Company's current expectations regarding the amount and
timing of such losses, it is expected that the Company's common
stockholders would not recover any value and unsecured creditors of
the Company would receive little, if any value.
Balance Sheet Review:
The Company's assets and liabilities at December 31, 2009 can be broken down by financing
sources as follows (in thousands):
|
|
Financing
Source
|
|
|
|
CDO
I
|
|
CDO
II
|
|
Repurchase
Agreements
|
|
Other Unsecured
Financing
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
668
|
|
$
668
|
|
Restricted cash
|
|
65
|
|
6,809
|
|
-
|
|
-
|
|
6,874
|
|
CMBS financed by CDO I (face amount of
$418,748)
|
|
41,037
|
|
-
|
|
-
|
|
-
|
|
41,037
|
|
CMBS financed by CDO II (face amount
of $863,941)
|
|
-
|
|
33,801
|
|
-
|
|
-
|
|
33,801
|
|
Non-CDO CMBS (face amount of $423,599)
(1)
|
|
-
|
|
-
|
|
10,925
|
|
248
|
|
11,173
|
|
Real estate loans (face amount of
$268,455)
|
|
-
|
|
114,222
|
|
-
|
|
-
|
|
114,222
|
|
Investment in US Debt Fund
|
|
-
|
|
-
|
|
-
|
|
65
|
|
65
|
|
Other assets
|
|
1,287
|
|
2,234
|
|
689
|
|
1,603
|
|
5,813
|
|
Total Assets
|
|
42,389
|
|
157,066
|
|
11,614
|
|
2,584
|
|
213,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
CDO I notes payable, at fair value
(face amount of $268,286)
|
|
32,926
|
|
-
|
|
-
|
|
-
|
|
32,926
|
|
CDO II notes payable, at fair value
(face amount of $690,328)
|
|
-
|
|
85,492
|
|
-
|
|
-
|
|
85,492
|
|
Repurchase agreement
|
|
-
|
|
-
|
|
6,966
|
|
-
|
|
6,966
|
|
Junior subordinated notes
|
|
-
|
|
-
|
|
-
|
|
59,028
|
|
59,028
|
|
Note payable
|
|
-
|
|
-
|
|
-
|
|
10,837
|
|
10,837
|
|
Interest rate swaps, at fair
value
|
|
10,868
|
|
27,409
|
|
-
|
|
-
|
|
38,277
|
|
Due to affiliates
|
|
915
|
|
521
|
|
6
|
|
1,396
|
|
2,838
|
|
Accounts payable, accrued expenses and
other liabilities
|
|
-
|
|
8
|
|
-
|
|
2,435
|
|
2,443
|
|
Total Liabilities
|
|
44,709
|
|
113,430
|
|
6,972
|
|
73,696
|
|
238,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied equity (deficit) by financing
source
|
|
$
(2,320)
|
|
$
43,636
|
|
$
4,642
|
|
$
(71,112)
|
|
$
(25,154)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Proforma for the March 2010 sale
of certain CMBS bonds, the face amount is $270.3
million.
|
|
|
|
|
|
|
|
|
|
|
|
|
With respect to the implied equity (deficit) of our CDOs, while
the Company believes the balance sheet reflects the fair value of
the individual CDO related assets and liabilities, the Company
believes the estimated economic fair value of its CDO retained
interests is significantly less than the implied equity determined
in accordance with GAAP. The Company does not currently
project any future distributions from its retained interests in
these CDOs. The Company has negative equity at December 31, 2009, and that negative equity would
further increase if (i) the face amount of CDO Notes Payable were
substituted for the fair value of such liabilities and (ii) the
termination value of the NAB Note Payable of $29.0 million were substituted for the carrying
value of the NAB Note Payable of $10.8
million.
Repurchase Agreements:
As previously reported, on March 30,
2010, the Company sold certain of its CMBS investments with
a face amount of $152.9 million for
$5.5 million, the majority of the
proceeds of which were used to repay all outstanding repurchase
agreement borrowings.
Dividends:
The Company did not declare any dividends in 2009 and, given the
Company's expectations of continued tax losses, the Company does
not expect to declare dividends in the foreseeable future, if at
all.
2010 Annual Meeting of Shareholders:
The 2010 annual meeting of shareholders of the Company is
scheduled to be held on June 28, 2010
at 11:00 AM, Eastern Daylight Time,
at the Courtyard by Marriott—Tysons Corner, 1960-A Chain Bridge
Road, McLean, Virginia 22102.
At the 2010 annual meeting, shareholders will be asked to
vote upon a proposal to elect three directors to serve until the
2011 annual meeting of shareholders and until their respective
successors are elected and duly qualified. In addition, this
statement of affairs will be submitted at the annual meeting and
filed in the Company's corporate records within twenty (20)
calendar days following the annual meeting.
Financial Statements:
The December 31, 2009 financial
statements included in this press release have not been audited at
this time by our independent registered public accounting firm.
Accordingly, the Company gives no assurance that such
financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP").
About JER Investors Trust Inc.
JER Investors Trust Inc. is a specialty finance company quoted
on the Pink Sheets that manages a portfolio of commercial real
estate structured finance products. Our investments include
commercial mortgage backed securities, mezzanine loans and
participations in mortgage loans, and an interest in the US Debt
Fund. JER Investors Trust Inc. is organized and conducts its
operations so as to qualify as a real estate investment trust
("REIT") for federal income tax purposes. For more
information regarding JER Investors Trust Inc., please visit
www.jerinvestorstrust.com.
Forward-Looking Statements
This press release does not constitute an offer of any
securities. Certain items in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements
are based on management's current expectations and beliefs and are
subject to a number of trends and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements. The Company can give no assurance that
its expectations will be attained. Factors that could cause actual
results to differ materially from the Company's expectations
include, but are not limited to, changes in the real estate and
capital markets, our ability to maintain existing financing
arrangements and other risks detailed in the Company's previously
filed SEC reports and other press releases/ public filings made by
the Company and/or available at www.jerinvestorstrust.com. As
noted above, the Company filed a Form 15 with the SEC on
March 31, 2010 and has ceased to be
an SEC reporting company. Since the Company is no longer an
SEC reporting company, the information contained in previously
filed SEC reports is not current and circumstances may have changed
significantly since the dates of such filings. Any forward-looking
statements contained herein speak only as of the date of this press
release. The Company expressly disclaims any obligation to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.
CONTACT:
|
|
J. Michael McGillis
|
|
Chief Financial Officer
|
|
JER Investors Trust Inc.
|
|
(703) 714-8000
|
|
|
JER INVESTORS
TRUST INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS (unaudited)
|
|
(In thousands,
except share data)
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
668
|
|
$
8,357
|
|
|
Restricted cash
|
|
6,874
|
|
1,149
|
|
|
CMBS financed by CDOs, at fair
value
|
|
74,838
|
|
180,210
|
|
|
CMBS not financed by CDOs, at fair
value
|
|
11,173
|
|
42,432
|
|
|
Real estate loans, held for
investment, financed by CDOs, at fair value
|
|
114,222
|
|
189,980
|
|
|
Investments in unconsolidated joint
ventures
|
|
65
|
|
843
|
|
|
Accrued interest receivable
|
|
4,154
|
|
8,343
|
|
|
Due from affiliate
|
|
368
|
|
157
|
|
|
Deferred financing fees,
net
|
|
888
|
|
981
|
|
|
Other assets
|
|
|
402
|
|
2,349
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
213,653
|
|
$
434,801
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
CDO notes payable, at fair
value
|
|
$
118,418
|
|
$
211,695
|
|
|
Repurchase agreements
|
|
6,966
|
|
16,108
|
|
|
Junior subordinated debentures and
notes
|
|
59,028
|
|
61,860
|
|
|
Notes payable
|
|
|
10,837
|
|
500
|
|
|
Interest rate swap agreements related
to CDOs, at fair value
|
|
38,277
|
|
91,984
|
|
|
Accounts payable and accrued
expenses
|
|
919
|
|
839
|
|
|
Dividends payable
|
|
-
|
|
2,274
|
|
|
Due to affiliate
|
|
|
2,443
|
|
689
|
|
|
Other liabilities
|
|
|
1,920
|
|
2,489
|
|
|
|
Total Liabilities
|
|
238,807
|
|
388,438
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
Common stock, $0.01 par value,
100,000,000 shares authorized,
|
|
|
|
|
|
|
5,827,678 and
2,590,104 shares issued and outstanding
|
|
|
|
|
|
|
at December 31,
2009 and 2008, respectively
|
|
58
|
|
26
|
|
|
Additional paid-in capital
|
|
413,573
|
|
392,744
|
|
|
Cumulative cash dividends
paid/declared
|
|
(157,705)
|
|
(157,705)
|
|
|
Cumulative stock dividends
paid/declared
|
|
(20,462)
|
|
-
|
|
|
Cumulative deficit
|
|
(240,513)
|
|
(165,626)
|
|
|
Accumulated other comprehensive
loss
|
|
(20,105)
|
|
(23,076)
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
(Deficit)
|
|
(25,154)
|
|
46,363
|
|
|
|
Total Liabilities and Stockholders'
Equity (Deficit)
|
|
$
213,653
|
|
$
434,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JER INVESTORS
TRUST INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
|
|
(In thousands,
except share and per share data)
|
|
|
|
|
|
|
|
|
For the Twelve
Months Ended
December
31,
|
|
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
REVENUES
|
|
|
|
|
|
|
|
|
Interest income from CMBS
|
|
$
53,984
|
|
$
80,495
|
|
$
80,884
|
|
|
Interest income from real estate
loans
|
|
9,649
|
|
27,691
|
|
41,008
|
|
|
Interest income from cash and cash
equivalents
|
|
18
|
|
836
|
|
5,569
|
|
|
Lease income from real estate
assets
|
|
-
|
|
-
|
|
6,408
|
|
|
Equity in (losses) earnings, net, of
unconsolidated joint ventures
|
|
(2,382)
|
|
(1,449)
|
|
753
|
|
|
Fee income
|
|
1,051
|
|
544
|
|
19
|
|
|
|
Total Revenues
|
|
62,320
|
|
108,117
|
|
134,641
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
Interest expense
|
|
26,731
|
|
52,989
|
|
75,984
|
|
|
Management fees, affiliate
|
|
4,151
|
|
6,725
|
|
7,331
|
|
|
Incentive fees, affiliate
|
|
-
|
|
-
|
|
826
|
|
|
Depreciation and amortization of real
estate assets
|
|
-
|
|
-
|
|
1,128
|
|
|
General and administrative
|
|
7,009
|
|
7,037
|
|
7,648
|
|
|
|
Total Expenses
|
|
37,892
|
|
66,751
|
|
92,917
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE OTHER GAINS
(LOSSES)
|
|
24,428
|
|
41,366
|
|
41,724
|
|
|
|
|
|
|
|
|
|
|
|
OTHER GAINS (LOSSES)
|
|
|
|
|
|
|
|
|
Unrealized loss on financial assets
financed with CDOs
|
|
(168,552)
|
|
(454,232)
|
|
-
|
|
|
Unrealized gain (loss), net, on CDO
related financial liabilities
|
|
114,210
|
|
438,046
|
|
-
|
|
|
Loss on interest rate swaps
|
|
(23,232)
|
|
(17,238)
|
|
-
|
|
|
Loss on impairment of CMBS
|
|
(26,496)
|
|
(163,017)
|
|
(4,434)
|
|
|
Unrealized gain (loss), net, on real
estate loans held for sale
|
|
-
|
|
13,866
|
|
(13,866)
|
|
|
Unrealized gain (loss) on non-CDO
related interest rate swaps
|
|
13,860
|
|
(13,516)
|
|
-
|
|
|
Unrealized (loss) due to hedge
ineffectiveness
|
|
-
|
|
-
|
|
(361)
|
|
|
Gain on exchange and cancellation of
TRUPs
|
|
3,175
|
|
-
|
|
-
|
|
|
Loss on sale of real estate loans held
for sale
|
|
-
|
|
(92,541)
|
|
-
|
|
|
Loss on termination of interest rate
swaps
|
|
(12,280)
|
|
(6,885)
|
|
-
|
|
|
Total other gains
(losses)
|
|
(99,315)
|
|
(295,517)
|
|
(18,661)
|
|
NET INCOME (LOSS)
|
|
$
(74,887)
|
|
$
(254,151)
|
|
$
23,063
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
(14.20)
|
|
$
(98.75)
|
|
$
8.97
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
(14.20)
|
|
$
(98.75)
|
|
$
8.97
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common
stock outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
5,274,010
|
|
2,573,759
|
|
2,570,088
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
5,274,010
|
|
2,573,759
|
|
2,572,281
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common
share
|
|
$
-
|
|
$
17.80
|
|
$
24.40
|
|
|
|
|
|
|
|
|
|
|
SOURCE JER Investors Trust Inc.