Commercial REIT Loses $87M in 4Q12
Commercial mortgage real estate investment trust iStar Financial Inc. lost $87 million in 4Q12 and $273 million for the full year, as a result of $35 million of expenses ($12 million of which was non-cash) related to three capital market transactions undertaken during the period.
For the same periods in 2011, iStar lost $65 million and $62 million, respectively.
In the fourth quarter, iStar raised $2.3 billion in three transactions with the proceeds used to refinance upcoming debt maturities. The transactions include obtaining a $1.8 billion senior secured credit facility due in October 2017 and two debt offerings totaling $500 million, $300 million of 7.125% senior unsecured notes due 2018 and $200 million of 3% convertible senior unsecured notes due 2016.
But the deals cost iStar $8.2 million in transaction-related expenses and $27.1 million for early extinguishment of debt.
After the quarter ended, iStar has entered into a $1.7 senior secured credit facility that replaced the $1.8 million facility.
The new line is priced at Libor plus 3.5% and a 1% floor, while the old line was at Libor plus 4.5% and a 1.25% floor. There was a $17 million prepayment fee but iStar said it will save $60 million in interest as a result.
In the fourth quarter iStar funded $60 million in investments. It also generated $388 million of proceeds from its portfolio including $231 million from repayments and loan sales in its real estate finance portfolio.
As of Dec. 31, the real estate finance portfolio was $1.86 billion, of which $1.36 billion was performing loans. By type $897 million was first mortgage or senior loans and $463 million was mezzanine or subordinated debt.
It took a loan loss provision of $21 million in 4Q12. Nonperforming loans had a carrying value of $503 million at the end of the year.