Real Estate & Other Debt
We actively manage four CDOs and other real estate related investments. These investments are primarily secured by or related to commercial real estate. We often utilize match funding and term financing strategies to increase returns to shareholders and minimize exposure to refinancing and interest rate risks.
To enhance our returns, we seek to execute on strategies such as collapsing our CDOs or opportunistically investing within our CDOs.
Portfolio as of 1Q 2013
As of 1Q 2013, our real estate debt portfolio consisted of:
-
$1.7 billion face amount of assets (value of 80.6% of par) in four CDOs financed with $1.0 billion of debt; total direct holdings of $0.7 billion
-
$1.0 billion face amount of assets (value of 73.5% of par) in Other Real Estate‐Related Investments financed with $0.5 billion of debt; total direct holdings of $0.5 billion
Composition of Real Estate Debt Portfolio
| ($ thousands, as of 03/31/13) |
Assets |
Financing |
||||
|
Fair Value |
Newcastle Direct Holdings(5) |
|||||
| Primary Type | Face Amount | % | $ | Face Amount | ||
| CDOs | ||||||
| CDO IV | Securities | 153,780 | 91.4% | $140,589 | 76,854 | $76,926 |
| CDO VI | Securities | 177,513 | 67.3% | $119,428 | 134,411 | 43,102 |
| CDO VIII | Loans | 820,930 | 77.4% | $635,606 | 549,789 | 271,141 |
| CDO IX | Loans | 705,060 | 79.0% | $557,337 | 423,412 | 281,648 |
| Elimination(1) | (169,473) | 55.1% | (93,355) | (169,473) | - | |
| WA/Subtotal | $1,687,810 | 80.6% | $1,359,605 | $1,014,993 | $672,817 | |
| Other Real Estate-Related Investments | ||||||
| MH Loan Sec. | MH Loans | 261,220 | 90.0% | 235,158 | 198,536 | 62,684 |
| FNMA/FHLMC Securities(2) | Securities | 292,840 | 106.1% | 310,690 | 291,374 | 1,466 |
| Other Investments(3) | Various | 468,053 | 47.1% | 220,383 | 49,979 | 418,074 |
| Eliminations(4) | (70,474) | 94.4% | (66,537) | (70,474) | - | |
| WA/Subtotal | $951,639 | 73.5% | $699,694 | $469,415 | $482,224 | |
| WA/TOTAL | $2,639,449 | 78.0% | $2,059,299 | $1,484,408 | $1,155,041 | |
1) Represents $169.5 million (value of $93.4 million) of debt issued by a consolidated CDO which is held by other consolidated CDOs. 2) Excludes FNMA/FHLMC securities contributed to New Residential Investment Corp. 3) Assets include $17.8 million of Newcastle CDO V bonds. CDO V is not consolidated under GAAP. 4) Represents $70.5 million (value of $66.5 million) of debt financing “Other Real Estate Related Investments” which is held by consolidated CDOs. 5) Newcastle Direct Holdings represents the face amount of the assets less the face amount of the financing. |
||||||
More detailed information about our business is included in our reports filed with the Securities and Exchange Commission (SEC). These reports describe, among other things, certain risks that could have a material adverse impact on our ability to achieve our business objectives, realize our expected investment returns, and pay dividends. We urge you to review these risks and the other information in our SEC reports.