Exantas Capital Corp. Reports Results for Three and Six Months Ended June 30, 2018

NEW YORK, Aug. 01, 2018 (GLOBE NEWSWIRE) -- Exantas Capital Corp. (NYSE: XAN) ("XAN" or the "Company") (formerly known as Resource Capital Corp.) reports results for the three and six months ended June 30, 2018.

Significant Items and Highlights

• GAAP net income allocable to common shares and Core Earnings of $0.20 per common share-diluted for the three months ended June 30, 2018 (see Schedule I).
  
  
• Management anticipates the Company will declare a cash dividend of $0.15 per share on its common stock for the third quarter of 2018, which would be a 50% increase over the second quarter dividend of $0.10 per share and a 200% increase over the first quarter dividend of $0.05 per share.
  
  
• XAN closed a $514.2 million commercial real estate ("CRE") debt securitization on June 26, 2018 at a weighted average cost of the one-month London Interbank Offered Rate ("LIBOR") plus 1.12%.
  
  
• XAN has monetized $418.2 million of the investments that were included in management's previously communicated strategic plan (the "Plan") (see Schedule III). This includes $38.1 million and $52.0 million of assets liquidated during the three and six months ended June 30, 2018, respectively, and $2.1 million of assets liquidated in July 2018.
  
  
• XAN originated $195.3 million and $341.6 million of new CRE loans during the three and six months ended June 30, 2018, respectively (see Schedule IV).
  
  
• XAN originated and acquired $1.0 billion of new CRE loans and commercial mortgage-backed securities ("CMBS") during the twelve months ended June 30, 2018.
  
  
• Book value of $14.09 per common share at June 30, 2018, as compared to $13.92 per common share at March 31, 2018.

Three and Six Months Ended June 30, 2018 Results

• GAAP net income allocable to common shares of $6.2 million, or $0.20 per share-diluted, and GAAP net loss allocable to common shares of $6.4 million, or $(0.21) per share-diluted, for the three and six months ended June 30, 2018, respectively, as compared to GAAP net income allocable to common shares of $2.5 million, or $0.08 per share-diluted, and $5.2 million, or $0.17 per share-diluted, for the three and six months ended June 30, 2017, respectively.
  
  
• Core Earnings were $6.3 million, or $0.20 per common share-diluted, for the three months ended June 30, 2018. Core Earnings were $(2.3) million, or $(0.08) per common share-diluted, for the six months ended June 30, 2018 and were $7.3 million, or $0.23 per common share-diluted, after adjustments for the non-recurring charges related to the redemption of the Company's 8.25% Series B Cumulative Redeemable Preferred Stock ("Series B Preferred Stock") and the pending settlement of a securities litigation.

Additional Items

Commercial Real Estate

• Substantially all of XAN's $1.4 billion CRE loan portfolio comprised floating rate senior whole loans at June 30, 2018.
  
  
• XAN's CRE floating rate whole loan portfolio had a weighted average spread of 4.39% over one-month LIBOR of 2.09% at June 30, 2018.

The following table summarizes XAN's CRE loan activities and fundings of previous commitments, at par, for the three, six and twelve months ended June 30, 2018 (in millions, except percentages and amounts in footnotes):

Commercial Mortgage-Backed Securities

• XAN's CMBS portfolio had a carrying value of $318.4 million and a weighted average coupon of 4.44% at June 30, 2018.

The following table summarizes XAN's CMBS activities, at face value, for the three, six and twelve months ended June 30, 2018 (in millions, except percentages):

Commercial Real Estate Securitizations

• XAN closed a $514.2 million debt securitization on June 26, 2018 and issued approximately $405.0 million of notes at a weighted average cost of one-month LIBOR plus 1.12%.

Discontinued Operations

• In July 2018 substantially all of the assets of the borrower on XAN's one remaining directly originated middle market loan were sold, resulting in a $2.1 million repayment. At June 30, 2018, the loan had a carrying value of $2.0 million.

Liquidity

• At July 31, 2018, XAN's available liquidity consisted of two primary sources:
  
  
  • unrestricted cash and cash equivalents of $50.0 million; and
    
    
  • approximately $152.0 million of available liquidity from the financing of unlevered CRE loans and CMBS.

Common Stock Book Value and Total Stockholders' Equity

The following table reconciles XAN's common stock book value from March 31, 2018 to June 30, 2018 (in thousands, except per share data and amounts in footnotes):

Common stock book value includes $12.6 million of unamortized discount resulting from the value of the conversion option on XAN's convertible senior notes. The convertible senior notes' discounts will be amortized into interest expense over the remaining life of each note issuance. At June 30, 2018, common stock book value excluding this item would have been $427.4 million, or $13.68 per common share.

Total stockholders' equity at June 30, 2018, which measures equity before accounting for non-controlling interests, was $555.9 million, of which $116.0 million was attributable to preferred stock. Total stockholders' equity at December 31, 2017 was $671.5 million, of which $223.8 million was attributable to preferred stock.

Investment Portfolio

The following table summarizes the amortized cost and net carrying amount of XAN's investment portfolio at June 30, 2018, classified by asset type (in thousands, except percentages and amounts in footnotes):

Supplemental Information

The following schedules of reconciliations and supplemental information at June 30, 2018 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 - Strategic Plan Update;
• Schedule IV - CRE Loan Activities; 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 mortgage loans and commercial real estate-related debt investments.

The Company is externally managed by Exantas Capital Manager Inc. (the "Manager") (formerly known as Resource Capital Manager, Inc.), 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 impaired and may continue to 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 Annual Report on Form 10-K for the year ended December 31, 2017 and the risks expressed in its other public filings with the Securities and Exchange Commission.

XAN cautions you not to place undue reliance on any forward-looking statements contained in this release, which speak only as of the date of this release. All subsequent written and oral forward-looking statements attributable to XAN or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this release. Except to the extent required by applicable law or regulation, XAN undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Furthermore, certain non-GAAP financial measures are discussed in this release. XAN's presentation of this information is not intended to be considered in isolation of or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP are set forth in Schedule I of this release and can be accessed through XAN's filings with the SEC at www.sec.gov.

The remainder of this release contains XAN's unaudited (2018) and audited (2017) consolidated balance sheets, unaudited consolidated statements of operations, a reconciliation of GAAP net income (loss) to Core Earnings, a summary of securitization performance statistics, an update on XAN's strategic plan, a summary of XAN's CRE loan activities and supplemental information regarding XAN's CRE loan portfolio and loans held for sale.

EXANTAS CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

EXANTAS CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Continued)
(in thousands, except share and per share data)

EXANTAS CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)

SCHEDULE I

EXANTAS CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME (LOSS) TO CORE EARNINGS
(unaudited)

XAN uses Core Earnings as a non-GAAP financial measure to evaluate its operating performance.

Core Earnings exclude the effects of certain transactions and GAAP adjustments that XAN believes are not indicative of its current CRE loan portfolio and other CRE-related investments and operations. Core Earnings exclude income (loss) from all non-core assets, such as commercial finance, middle market lending, residential mortgage lending, certain legacy CRE loans and other non-CRE assets designated as assets held for sale at the initial measurement date.⁽¹⁾

Core Earnings, for reporting purposes, is defined as GAAP net income (loss) allocable to common shareholders, excluding (i) non-cash equity compensation expense, (ii) unrealized gains and losses, (iii) non-cash provisions for loan losses, (iv) non-cash impairments on securities, (v) non-cash amortization of discounts or premiums associated with borrowings, (vi) net income or loss from a limited partnership interest owned at the initial measurement date, (vii) net income or loss from non-core assets,⁽²⁾⁽³⁾ (viii) real estate depreciation and amortization, (ix) foreign currency gains or losses and (x) income or loss from discontinued operations. Core Earnings may also be adjusted periodically to exclude certain one-time events pursuant to changes in GAAP and certain non-cash items.

Although pursuant to the Third Amended and Restated Management Agreement XAN calculates incentive compensation using Core Earnings excluding incentive fees payable to the Manager, beginning with the three months and year ended December 31, 2017 XAN includes incentive fees payable to the Manager in Core Earnings for reporting purposes.

Core Earnings does not represent net income or cash generated from operating activities and should not be considered as an alternative to GAAP net income or as a measure of liquidity under GAAP. XAN's methodology for calculating Core Earnings may differ from methodologies used by other companies to calculate similar supplemental performance measures, and, accordingly, its reported Core Earnings may not be comparable to similar performance measures used by other companies.

The following table provides a reconciliation from GAAP net income (loss) allocable to common shares to Core Earnings allocable to common shares for the periods presented (in thousands, except per share data):

XAN has five operating segments: commercial real estate debt investments; commercial finance; middle market lending; residential mortgage lending; and corporate & other. The commercial real estate debt investments operating segment includes our activities and operations related to commercial real estate loans and commercial real estate-related securities. The commercial finance operating segment includes the activities and operations related to syndicated corporate loans, syndicated corporate loan-related securities and direct financing leases. The middle market lending operating segment includes the activities and operations related to the origination and purchase of middle market corporate loans. The residential mortgage lending operating segment includes the activities and operations related to originating and servicing residential mortgage loans and investments in residential mortgage-backed securities. The corporate & other segment includes corporate level interest income, interest expense, inter-segment eliminations not allocable to any particular operating segment and general and administrative expense.

As part of the plan to exit non-CRE businesses, the entire middle market lending and substantially all of the residential mortgage lending segments are reported as discontinued operations. The following table presents a reconciliation of GAAP net income (loss) allocable to common shares to Core Earnings allocable to common shares for the three months ended June 30, 2018 presented by operating segment (in thousands, except per share data):

SCHEDULE II

EXANTAS CAPITAL CORP. AND SUBSIDIARIES
SUMMARY OF SECURITIZATION PERFORMANCE STATISTICS
(unaudited)

Distributions, Coverage Tests and Liquidations

The following table sets forth the distributions received by XAN and coverage test summaries for its active securitizations for the periods presented (in thousands):

The following table sets forth the distributions received by XAN and liquidation details for its liquidated securitizations for the periods presented (in thousands):

SCHEDULE III

EXANTAS CAPITAL CORP. AND SUBSIDIARIES
STRATEGIC PLAN UPDATE
(unaudited)

In November 2016, XAN's board of directors approved the Plan, pursuant to which XAN is primarily focused on making CRE debt investments. The Plan includes disposing of certain non-core businesses and investments and underperforming legacy CRE loans ("Identified Assets"), as well as maintaining a dividend policy based on sustainable earnings. As part of the Plan, certain Identified Assets were reclassified as discontinued operations and/or assets held for sale during the fourth quarter of 2016. The following table delineates these disposable investments by business segment and details the current net book value of the businesses and investments included in the Plan (in millions, except amounts in footnotes):

SCHEDULE IV

EXANTAS CAPITAL CORP. AND SUBSIDIARIES
CRE LOAN ACTIVITIES
(unaudited)

                The following table summarizes XAN's CRE loan activities and fundings of previous commitments, at par, for the periods then ended (in millions):

SCHEDULE V

EXANTAS CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION

Certain Loan Statistics

The following table presents information on XAN's allowance for CRE loan losses and its loans held for sale portfolio at the dates indicated (amounts in thousands, percentages based on amortized cost):

The following table presents unaudited CRE loan portfolio statistics at June 30, 2018, excluding a legacy CRE loan classified as assets held for sale (percentages based on carrying value at June 30, 2018):

CONTACT:    DAVID J. BRYANT
                      CHIEF FINANCIAL OFFICER
                      EXANTAS CAPITAL CORP.
                      717 Fifth Avenue
                      New York, NY 10022
                      212-621-3210