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, June 30, September December 2009 2009 30, 2009 31, 2009 ---------- --------- --------- -------- Non-CDO CMBS currently $5,923 $2,128 $1,858 $1,223 held by JRT Non-CDO CMBS sold in 1,934 1,839 1,795 1,730 March 2010 CDO I retained interest 650 449 - - CDO II retained interest 1,380 - - - US Debt Fund - - - - --- --- --- --- Total $9,887 $4,416 $3,653 $2,953 ====== ====== ====== ====== For the Twelve Months Ending Year to Date December 31, Through May 2009 31, 2010 --------------- ------------ Non-CDO CMBS currently $11,132 $1,359 held by JRT Non-CDO CMBS sold in 7,298 6,886 (1) March 2010 CDO I retained interest 1,099 - CDO II retained interest 1,380 - US Debt Fund - - Total $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, September 2008 30, 2009 ------------- --------- CMBS Portfolio Total CMBS investments 26 26 Face amount of CMBS investments $1,757,354 $1,717,495 CMBS investments in which JRT owns the 21 21 first-loss position Face amount of first-loss CMBS investments $1,651,790 $1,628,104 Face amount of collateral pool for first-loss $47,729,268 $46,988,003 CMBS investments Credit Statistics on Collateral Pool for First-Loss CMBS Investments 60-day delinquency amount $392,963 $1,500,596 60-day delinquency rate 0.8% 3.2% Special servicing amount $713,515 $3,388,698 Special servicing rate 1.5% 7.2% Realized losses to date $3,404 $27,206 Appraisal reductions to date $19,010 $387,502 Projected losses over life of collateral pool $964,107 $1,686,918 Projected loss rate over life of collateral pool 2.0% 3.6% December 31, March 31, 2009 2010 ------------- ---------- CMBS Portfolio Total CMBS investments 26 25 Face amount of CMBS investments $1,706,288 $1,508,326 CMBS investments in which JRT owns the 21 20 first-loss position Face amount of first-loss CMBS investments $1,616,897 $1,420,174 Face amount of collateral pool for first-loss $46,560,051 $43,705,612 CMBS investments Credit Statistics on Collateral Pool for First-Loss CMBS Investments 60-day delinquency amount $2,152,513 $2,737,134 60-day delinquency rate 4.6% 6.3% Special servicing amount $4,345,045 $5,355,245 Special servicing rate 9.3% 12.3% Realized losses to date $37,575 $66,209 Appraisal reductions to date $474,033 $628,897 Projected losses over life of collateral pool $1,835,649 $2,113,978 Projected loss rate over life of collateral pool 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 ---------------- Repurchase CDO I CDO II Agreements ----- ------ ----------- Assets Cash and cash equivalents $- $- $- Restricted cash 65 6,809 - CMBS financed by CDO I (face amount of $418,748) 41,037 - - CMBS financed by CDO II (face amount of $863,941) - 33,801 - Non-CDO CMBS (face amount of $423,599) (1) - - 10,925 Real estate loans (face amount of $268,455) - 114,222 - Investment in US Debt Fund - - - Other assets 1,287 2,234 689 Total Assets 42,389 157,066 11,614 ------ ------- ------ Liabilities CDO I notes payable, at fair value (face amount of $268,286) 32,926 - - CDO II notes payable, at fair value (face amount of $690,328) - 85,492 - Repurchase agreement - - 6,966 Junior subordinated notes - - - Note payable - - - Interest rate swaps, at fair value 10,868 27,409 - Due to affiliates 915 521 6 Accounts payable, accrued expenses and other liabilities - 8 - Total Liabilities 44,709 113,430 6,972 ------ ------- ----- Implied equity (deficit) by financing source $(2,320) $43,636 $4,642 ======= ======= ====== Financing Source ---------------- Other Unsecured Financing Total ---------- ----- Assets Cash and cash equivalents $668 $668 Restricted cash - 6,874 CMBS financed by CDO I (face amount of $418,748) - 41,037 CMBS financed by CDO II (face amount of $863,941) - 33,801 Non-CDO CMBS (face amount of $423,599) (1) 248 11,173 Real estate loans (face amount of $268,455) - 114,222 Investment in US Debt Fund 65 65 Other assets 1,603 5,813 Total Assets 2,584 213,653 ----- ------- Liabilities CDO I notes payable, at fair value (face amount of $268,286) - 32,926 CDO II notes payable, at fair value (face amount of $690,328) - 85,492 Repurchase agreement - 6,966 Junior subordinated notes 59,028 59,028 Note payable 10,837 10,837 Interest rate swaps, at fair value - 38,277 Due to affiliates 1,396 2,838 Accounts payable, accrued expenses and other liabilities 2,435 2,443 Total Liabilities 73,696 238,807 ------ ------- Implied equity (deficit) by financing source $(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 http://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 http://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 === ====== ======
JER Investors Trust Inc.
CONTACT: J. Michael McGillis , Chief Financial Officer of JER Investors
Trust Inc., +1-703-714-8000
Web Site: http://www.jerinvestorstrust.com/
