Tiptree Inc (TIPT) 2012 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Care Investment Trust, Inc., first quarter 2012 conference call. During today's presentation all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions).

This conference is being recorded today, Tuesday, May 22, 2012. And at this time I'd like to turn the conference over to Scott Eckstein, with Financial Relations Board. Please go ahead, sir.

Thank you, operator. I'd like to thank everyone for joining us today.

On May 15 we distributed a press release announcing the Company's first-quarter 2012 financial results. If you have not received the press release, please visit the investor relations section on the Company's website at www.CareReit.com to obtain a copy.

During today's conference call, management will provide an overview of the results. We'll then open the call to your questions.

Before we begin, please be advised that this call may involve forward-looking statements as discussed in the press release dated May 15, 2012. Risks associated with these statements can be found in the Company's latest SEC filings.

Additionally, we want to remind participants that the information contained in this call is current only as of the day of this call, May 22, 2012 and the Company assumes no obligation to update any statements, including forward-looking statements made during this call. Listeners to any replay should understand the passage of time by itself will diminish the quality of these statements.

Also during today's conference call, the Company may discuss funds from operations, or FFO; or adjusted funds from operations, or AFFO, both of which are non-GAAP financial measures as defined by SEC Regulation G. For a reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure on net income can be found in the Company's 10-Q, which was filed with the SEC after the close of market on May 15, 2012, and on the Company's website at www.CareReit.com under the investor relations tab.

At this point I'd like to turn the call over to Torey Riso, Care Investment Trust's President and CEO, for his opening remarks. Torey, please go ahead.

Thank you, Scott. I'd like to welcome everyone to the first quarter earnings call of Care Investment Trust. I am Torey Riso, Chief Executive Officer of Care. I'm joined here in New York by Care's Chairman, Michael Barnes; Vice Chairman, Geoffrey Kauffman; and Chief Financial Officer, Steve Sherwyn.

Because only a short amount of time has passed since the filing of our 10-K and our Q4 earnings call, we will focus primarily on financial results for Q1 2012, and any questions you may have when we open the lines in a few minutes.

During the first quarter of 2012, Care continued its conversations with owners and operators of senior housing facilities relating to possible property acquisitions involving triple net leases for RIDEA-compliant joint venture structures, as well as potential debt and equity financing providers including private capital sources, commercial lenders, and investment banks.

While we aren't able to guarantee a favorable outcome to such conversations, we are working diligently to make progress on both fronts during the second and third quarters of 2012.

As we leave 2011 and look back upon the first quarter of 2012, we feel that in the maturation of the Company we've gone from a period of transition as described in our last earnings call to one of stabilization, poised for future growth. The operating results for the first quarter of 2012 reflect this period of stabilization, as we position ourselves for future growth through strategic acquisitions and alliances with operators who share both our vision with respect to senior housing, as well as the growth of our Company.

At this point, I'd like to ask Steve Sherwyn, our CFO, to walk you through our first quarter results. Steve?

Thank you, Torey. Good morning. Before discussing the actual results for the first quarter, I would like to point out one significant change in the presentation of our statement of operations.

Starting in Q1 we have broken out as separate line items reimbursable income and reimbursed property expenses. These two numbers represent property reimbursements which we receive from our tenants pursuant to our triple net leases on our wholly-owned real estate. For example, our tenants are responsible for real estate taxes on the underlying properties.

On a monthly basis we receive funds from our tenants with respect to real estate taxes, which are then used to pay such taxes when they come do. By segregating these numbers, we feel that we are providing investors with a more transparent and accurate reflection of our operating results.

For the quarter we had GAAP income of approximately $294,000, or $0.03 a share. One-time items which are included in this figure are -- unrealized gain of approximately $420,000 on a derivative short position on the 10-year U.S. Treasury that we entered into in anticipation of entering into a 10-year mortgage with Freddie Mac, secured by our greenfield portfolio; and approximately $250,000 increase in professional fees from the prior quarter, representing a change in our methodology for accruing for certain audit fees; and incremental legal fees incurred with respect to certain acquisition opportunities, which we are currently reviewing.

For comparison purposes, it is difficult to compare our GAAP results quarter to quarter or to the immediately preceding quarter, as in Q1 of 2011 we had not yet restructured our investment in our medical office portfolio. And in Q4 of 2011, we sold our interest in our medical office portfolio and recorded a gain of approximately $15 million.

Funds from operations, or FFO, for the first quarter were $0.12 a share. And adjusted funds from operations, or AFFO, for the quarter were $0.07 a share. Again, due to the sale of our interest in our medical office portfolio in November of 2011, it is difficult to compare Q1 2012 to Q1 2011 and/or compare the recently completed quarter to the immediately preceding quarter.

At quarter end, the Company had approximately $50 million of cash, which, while positioning the Company for future acquisitions and growth, will continue to have a negative impact on our operating results until reinvested. Torey.

Thank you, Steve. As described at the outset of this call, we continue to pursue future acquisitions and debt and equity capital-raising opportunities. I remain very optimistic about Care's prospects and look forward to working with the other members of the Care team to increase shareholder value.

With that, I'll ask the operator to open the lines for your questions. Operator?

(Operator Instructions). [Eric Shahaney], Cadence Partners.

Thanks. I actually have two questions. The first one, could you just provide a little bit more detail on the marketing in general and administrative? It was a little bit high in the quarter.

Sorry, can you repeat the question?

G&A.

Sorry. Could you just provide a little bit more color into the G&A being slightly higher?

Well, again, during -- there were two changes in that number, as I pointed out. First, historically we had accrued audit fees over the prior year. So, for instance, in 2010 we would have accrued expected audit fees monthly during 2010, even though most of the work was done in 2011.

We changed that this year. So most of the audit fees with regard to 2011, when the work was done in the first quarter 2012, that's when the expense showed up. Secondly (multiple speakers)

I remember you saying that. So those account for most of the differences, is what you're saying.

That's a significant percentage of it. The other amount pertains to various investment opportunities we're currently looking at. We've incurred professional fees with regard to reviewing of due diligence and certain documentation that, since the transactions have not closed, we've expense those fees and costs.

Right, okay. So that leads to my second question. So you guys have spoken about potentially equity and debt financing for some of the deals. Could you give some color into the kinds of things you're looking at in terms of size, location, things that you think are interesting? I mean, are you seeing things to do? How has that experience been thus far?

This is Torey. We've been actively pursuing conversations for some time. They are directed where we have identified our growth path, so to speak, which is in the senior housing space.

Geographically, they would be diverse from where we are today. And they are with, as we said, in somewhat more generic and general terms, with operators that have long-standing experience and reputation in the space. And so we're working on various different opportunities; some more sizable, some less sizable. But we're trying to bring those to fruition as quickly as possible.

Right. Okay, so it is -- potentially stated a different way, I guess given the way that you guys are describing the opportunity set, it would lead me to believe that some of the deals that you are looking at are larger than the cash balance you have on hand. Would that be safe to say?

That we would utilize the cash balance we have on hand? Correct, yes. Job one is to utilize -- to reinvest the cash balance that we currently have in the transactions we're looking at.

Right. So, do you think potentially would you guys be open if there was a single deal that could take up the cash and then you could arrange financing for the rest of it? Would you be open to that or are you looking to do it in smaller deals?

No, we're looking at -- as I just said a moment ago, there's actually different sizes of transactions. Some are -- one or more on the more sizable side, which would use up a chunk of that capital. And then others would be on the smaller side that would allow us to diversify into more than one transaction and more than one structure.

Okay. That's helpful. Thanks.

Thank you. And at this time I'm showing no further questions. I'd like to turn the conference back over to Mr. Riso for any closing comments.

Thank you, operator. And thanks again for all that have joined the call today. We look forward to sharing more positive news with you in the future, and answering any of your additional questions as we have more to talk about in the upcoming quarters. Thanks again for joining.

Thank you, sir. Ladies and gentlemen, if you would like to listen to a replay of today's conference, please dial 1-800-406-7325 or 303-590-3030 using the access code of 4539049, followed by the pound key.

This does conclude the Care Investment Trust, Inc. first quarter 2012 conference call. Thank you very much for your participation. You may now disconnect.