Tiptree Inc (TIPT) 2012 Q2 法說會逐字稿

Welcome to the Care Investment Trust Inc. second-quarter 2012 conference call. During today's presentation all participants will be in a listen only mode. Following the presentation the conference will be open for your questions. (Operator Instructions). Today's conference is being recorded August 22, 2012. I would now like to turn the conference over to Han Huie from MWW Group. Please go ahead.

Thank you, Operator. I would like to thank everyone for joining us today. Today we distributed a press release announcing the Company's second-quarter 2012 financial results. If you have not received the press release please visit the Investor Relations section of 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 will 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 August 22, 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 date of this call, August 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. Both reconciliation of these non-GAAP financial measure and the comparable GAAP financial measure of net income can be found in the Company's 10-Q which was filed with the SEC after the close of market on August 10, 2012 and on the Company's website at www.CareREIT.com under the Investor Relations tab.

At this point I would 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, Han. I would like to welcome those on the call this morning. I am Torey Riso, the Chief Executive Officer of Care Investment Trust, and I'm joined here in New York by my fellow executive committee members, Michael Barnes, our Chairman, and Geoffrey Kauffman, our Vice Chairman. Also joining me this morning is Joseph Sacks, Care's Controller and current Principal Accounting Officer.

We are pleased to have the opportunity this morning to review with you our financial results for the second quarter of 2012, to describe for you Care's near-term focus and, finally, to answer any questions that you may have.

Care worked extremely hard during Q2 on its previously described priorities including the deployment of its investable cash. While we cannot say with certainty if or when any of the initiatives in which Care has been working will be realized, the team is focused on meeting its goal of enhancing shareholder value during Q3 and beyond.

I would like to mention one other notable event that occurred at the end of the second quarter and that is the departure of our CFO and Treasurer, Steve Sherwyn. Steve had initially been part of the Care team as a consultant and as CFO following the consumption -- consummation, excuse me, of the change of control transaction with Tiptree Financial Partners in August 2010. Steve resigned at the end of June 2012 to pursue another professional opportunity. We want to thank Steve for his service and wish him well in his future endeavors.

Until we identify a candidate and appoint a new CFO, the executive committee, in consultation with our audit committee and Board of Directors, has asked Joe Sacks, Care's Controller since April of 2011 and now Principal Accounting Officer, to work closely with me and other members of the Care team to take on certain additional responsibilities formerly handled by the CFO.

We and our advisors are confident that the financial and SEC reporting processes as well as the effectiveness of internal controls remain sound during this transition and this will continue to be one of our main priorities. With that I would like to ask Joe to walk you through our second-quarter results.

Thank you, Torey. Before going through the results I would like to say that I welcome the opportunity to take on an expanded role during this transition period and will be working closely with the audit committee, executive committee, other Care team members as well as our outside consultants and auditors to ensure that Care continues to prepare and provide consistent financial reporting. And now the Q2 results.

For the second quarter 2012 Care incurred a net loss of $239,000 or $0.03 per -- loss per basic and diluted common share. Please note that we use the [2 Class] method to compute EPS due to prior RSU grants being treated as participating securities. For the six months ended June 30, 2012 we had income of $55,000. I will break this down further into its relevant pieces.

Revenue for the three months ended June 30, 2012 was consistent with that of Q1 2012 and includes approximately $3.4 million of rental revenue and approximately $400,000 of reimbursable income from our Bickford and Greenfield portfolios. Reimbursable income includes real estate taxes and certain other escrows that we collect on behalf of our Bickford and Greenfield tenants and which are used to pay subsequent expenses as they come due. We earned interest income on our loan investment of approximately $200,000 for the second quarter.

Income from partially-owned entities, our senior management concepts investment, was approximately $100,000 for the second quarter. Notable expense items for the three months ended June 30, 2012 include -- approximately $233,000 of acquisition related transaction expenses; $100,000 of accrued annual cash bonuses, which amount was reduced from prior quarters in order to account for the departure of our CFO. Year to date Care has accrued $300,000 in annual cash bonuses.

Care recorded approximately $120,000 of income tax benefits for state and local taxes which primarily resulted from an overpayment for 2011 taxes and a refund received relating to 2008 taxes paid for which an amended return was filed during Q2 2012.

Finally, no incentive fee was paid to our advisor, TREIT, under the service agreement during Q2 2012. Other income and expenses for the three months ended June 30, 2012 include interest expense of approximately $1.6 million for the three months ended June 30, 2012 which primarily related to the debt underlying the Bickford and Greenfield portfolios.

Of note during the quarter ended March 31, 2012 we became party to the short sale of $15.5 million of 2% U.S. Treasury notes due November 15, 2021 in anticipation of entering into a 10 year fixed-rate mortgage secured by our Greenfield portfolio. During the three-month period ended March 31, 2012 we recognized an unrealized gain on derivative instruments of approximately $400,000 relating to the short position.

During the three-month period ended June 30, 2012 the short position was closed whereby the original unrealized gain was reversed and a net realized gain of $86,000 was recognized.

AFFO and FFO definitions are contained within our recently filed 10-Q for the quarter ended June 30, 2012 and collectively represent non-GAAP financial measures. Q2 FFO/AFFO are as follows. For the second quarter FFO was $736,000 or $0.07 per basic and diluted common share. AFFO for the same period was $1.1 million or $0.11 per basic and diluted common share.

The most notable differences with Q1 AFFO of $0.07 compared with Q2 AFFO of $0.11, which is an increase of $0.04 per common share, include a $420,000 unrealized gain for the short position in Q1 and a $420,000 unrealized loss on the short position offset by the $86,000 in realized gain on the short position in Q2. In addition, we added back $233,000 of acquisition related transaction costs in Q2.

For the six months ended June 30, 2012 FFO was $2 million or $0.20 per basic and diluted common share. AFFO for the same period was $1.9 million or $0.18 per basic and diluted common share.

As it relates to cash balances and other transactions, we ended the second-quarter with approximately $48 million in cash. In addition, Care made dividend payments corresponded to the periods Q4 2011 and Q1 2012 during the Q2 2012 period in the amount of approximately $2.8 million. I would also note that on August 9, Care's Board declared a dividend on $0.135 to be paid on September 6 to shareholders of record August 23.

As you may have seen in our prior filings, in April 2012 Care refinanced a bridge loan from KeyBanc that was entered into in connection with the acquisition of the Greenfield portfolio with permanent financing through KeyCorp Real Estate Capital Markets for an aggregate amount of approximately $15.7 million.

The new financing has a fixed rate of 4.76%, amortizes over a 30 year period and matures on May 1, 2022. The permanent loan was sold to Freddie Mac under their CME program in June 2012. The remaining deferred loan piece to the bridge loan ran off which approximate $[50,000]. We capitalized approximately $500,000 in deferred loan fees for the new (inaudible).

As noted in April 2012, we closed our U.S. Treasury note short position on locking the rate for the permanent Greenfield financing and realized a net gain of approximately $100,000. Torey, that's all I have.

Thank you, Joe. To summarize, I remain optimistic about Care's prospects and look forward to working with the team to accomplish with our near and longer-term goals. With that I will ask the operator to open the lines for any questions. Operator?

(Operator Instructions). I am showing no questions in the queue at this time. I would like to turn the conference back to management.

Thank you, Operator. With that I would like to thank everybody for joining the call this morning and we look forward to having additional good news for you in the future. Thank you. Bye-bye.

Ladies and gentlemen, this concludes our conference for today. If you would like to listen to a replay of today's conference you may do so by dialing 1-800-406-7325 or 303-590-3030 and entering the access code of 4559881 followed by the pound sign. Thank you for your participation. You may now disconnect.