<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2000
------------------
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from TO
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Commission file number 1-14760
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RAIT INVESTMENT TRUST
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 23-2919819
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1818 MARKET STREET, 28TH FLOOR, PHILADELPHIA, PA 19103
------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
(215) 861-7900
----------------------------------------------------
(Registrant's telephone number, including area code)
RESOURCE ASSET INVESTMENT TRUST
-----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
As of October 31, 2000, 6,309,651 common shares of beneficial interest,
par value $0.01 per share, were outstanding.
<PAGE>
RAIT INVESTMENT TRUST
and Subsidiaries
Index to Quarterly Report
on Form 10-Q
PART I - FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 2000 (unaudited)
and December 31, 1999 3
Consolidated Statements of Income (unaudited) for the three
and nine months ended September 30, 2000 and 1999 4
Consolidated Statements of Cash Flows (unaudited) for the
three and six months ended September 30, 2000 and 1999 5
Notes to Consolidated Financial Statements-
September 30, 2000 (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
PART II - OTHER INFORMATION
Item 6. Exhibits 15
The accompanying notes are an integral part of these
consolidated financial statements
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
----------------------------
RAIT INVESTMENT TRUST
and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, 2000
(unaudited) December 31, 1999
--------- -----------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 14,439,958 $ 11,323,301
Restricted cash 10,016,025 5,283,886
Tenant escrows 230,526 164,378
Accrued interest receivable 2,013,120 1,544,984
Investments in real estate loans, net 143,540,269 160,485,767
Investments in real estate, net 107,919,340 89,936,339
Furniture, fixtures and equipment, net 96,910 88,243
Prepaid expenses and other assets 2,895,682 1,001,775
------------ ------------
Total Assets $281,151,830 $269,828,673
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities $ 123,639 $ 332,040
Accrued interest payable 1,611,871 1,033,484
Deferred interest payable 1,085,172 788,841
Tenant security deposits 489,430 270,908
Borrowers' escrows 10,215,970 5,308,136
Dividends payable 3,217,769 -
Deferred income 766,658 693,162
Senior indebtedness secured by real estate
underlying the Company's wraparound loans 59,856,138 78,478,730
Long term debt secured by real estate owned 94,290,370 82,685,074
Secured line of credit 20,000,000 14,000,000
------------ ------------
Total Liabilities 191,657,017 183,590,375
Minority interest 2,656,679 -
Shareholders' Equity
Preferred Shares, $.01 par value; 25,000,000
authorized shares - -
Common Shares, $.01 par value; 200,000,000
authorized shares; 6,309,251 at September
30, 2000 and 6,199,127 at December 31, 1999;
issued and outstanding 63,097 61,991
Additional paid-in-capital 87,306,383 86,159,238
(Accumulated deficit)/retained earnings (531,346) 17,069
------------ ------------
Total Shareholders' Equity 86,838,134 86,238,298
------------ ------------
Total Liabilities and Shareholders' Equity $281,151,830 $269,828,673
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
-3-
<PAGE>
RAIT INVESTMENT TRUST
and Subsidiaries
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Mortgage interest income $ 4,868,917 $ 5,328,172 $ 13,575,950 $ 15,056,232
Rental income 4,725,219 3,174,264 13,512,150 8,811,984
Fee income and other 221,951 22,500 921,251 317,500
Investment income 74,539 78,115 418,347 182,933
Gain on sale of loan - - - 131,125
----------- ----------- ------------ ------------
Total Revenues 9,890,626 8,603,051 28,427,698 24,499,774
COSTS AND EXPENSES
Interest 3,488,359 2,791,536 9,502,768 8,311,380
Property operating expenses 2,229,926 1,741,340 6,473,896 4,469,736
General and administrative 437,153 387,172 1,237,671 1,176,034
Depreciation and amortization 754,374 338,848 2,104,183 1,391,763
----------- ----------- ------------ ------------
Total Costs and Expenses 6,909,812 5,258,896 19,318,518 15,348,913
----------- ----------- ------------ ------------
Net Income before minority interest 2,980,814 3,344,155 9,109,180 9,150,861
----------- ----------- ------------ ------------
Minority interest 14,106 - (38,598) 17,761
----------- ----------- ------------ ------------
Net Income $ 2,994,920 $ 3,344,155 $ 9,070,582 $ 9,168,622
----------- ----------- ------------ ------------
Net Income per common share-basic $ .48 $ .54 $ 1.46 $ 1.49
=========== =========== ============ ============
Weighted average common shares
outstanding-basic 6,279,391 6,165,614 6,232,675 6,165,428
=========== =========== ============ ============
Net income per common share-diluted $ .48 $ .54 $ 1.45 $ 1.48
=========== =========== ============ ============
Weighted average common shares
outstanding-diluted 6,298,478 6,181,496 6,241,294 6,179,704
=========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
-4-
<PAGE>
RAIT INVESTMENT TRUST
and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended September 30,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities
Net Income $9,070,582 $9,168,622
Adjustments to reconcile net income to net cash provided by
operating activities:
Gain on sale of loan - (131,125)
Minority interest 38,598 (17,761)
Depreciation and amortization 2,104,183 1,391,763
Accretion of loan discount (213,474) (566,307)
Increase in security deposit escrows (66,148) -
Decrease (increase) in accrued interest receivable 60,197 (1,564,052)
Increase in prepaid expenses and other assets (1,397,812) (407,192)
(Decrease) increase in accounts payable and accrued liabilities (208,400) 86,786
Increase in accrued interest payable 578,387 280,613
Increase in deferred interest payable 296,331 551,601
Increase in tenant security deposits 218,522 39,123
Increase in deferred income 73,496 507,163
Increase (decrease) in borrowers' escrows 175,695 (402,322)
------------ -----------
Net cash provided by operating activities 10,730,157 8,936,912
------------ -----------
Cash flows from investing activities
Purchase of furniture, fixtures and equipment (2,081) (5,460)
Real estate loans purchased (1,828,333) (14,835,230)
Real estate loans originated (25,940,782) (23,659,877)
Proceeds from sale of loan - 2,481,782
Principal repayments of loans 12,260,006 24,844,266
Real estate purchases and improvements (6,269,440) (2,387,001)
Utilization of reserves held by mortgagee to pay taxes 643,889 77,541
Cash paid for RAIT Capital Corp. (712,148) -
------------ -----------
Net cash used in investing activities (21,848,889) (13,483,979)
------------ -----------
Cash flows from financing activities
Advances on secured line of credit 6,000,000 14,000,000
Issuance of common stock, net 539,575 -
Payment of dividends (5,878,875) (6,288,640)
Principal repayments on senior indebtedness (291,394) (284,842)
Principal repayments on long-term debt (506,411) (327,397)
Proceeds of senior indebtedness underlying Company's loans 14,000,000 -
Proceeds of long-term debt secured by real estate owned 330,805 -
Other 41,689 (4,079)
------------ -----------
Net cash provided by financing activities 14,235,389 7,095,042
------------ -----------
Net change in cash and cash equivalents 3,116,657 2,547,975
------------ -----------
Cash and cash equivalents, beginning of period 11,323,301 5,011,666
------------ -----------
Cash and cash equivalents, end of period $ 14,439,958 $ 7,559,641
============ ===========
Noncash items: Stock issued for purchase of RAIT Capital Corp. $ 146,875 $ -
============ ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
-5-
<PAGE>
RAIT INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
In the opinion of management, these unaudited financial statements
contain all disclosures, which are necessary to present fairly the Company's
consolidated financial position at September 30, 2000, and the results of
operations and the cash flows for the three and nine months ended September 30,
2000 and 1999. The financial statements include all adjustments (consisting only
of normal recurring adjustments) which in the opinion of management are
necessary in order to present fairly the financial position and results of
operation for the interim periods. Certain information and footnote disclosures
normally included in financial statements under generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
NOTE 2 - RESTRICTED CASH AND BORROWERS' ESCROWS
Restricted cash and borrowers' escrows represent borrowers' funds held
by the Company to fund certain expenditures or to be released at the Company's
discretion upon the occurrence of certain pre-specified events, and to serve as
additional collateral for the loans.
NOTE 3-INVESTMENTS IN REAL ESTATE LOANS
The Company's portfolio of investments in real estate loans consisted
of the following at September 30, 2000:
<TABLE>
<CAPTION>
<S> <C>
Long-term first mortgages and senior loan participations $ 10,850,130
Mezzanine (including wraparound) loans 93,152,871
Short-term bridge loans 39,513,449
Loan costs 249,976
Less: Provision for loan losses (226,157)
------------
Investments in real estate loans 143,540,269
Less: Senior indebtedness secured by real estate
underlying the Company's wraparound loans (59,856,138)
------------
Net Investments in real estate loans $ 83,684,131
============
</TABLE>
The following is a summary description of the Company's real estate
loan portfolio:
<TABLE>
<CAPTION>
Number of Average Loan-to- Yield Range of
Type of Loan Loans Value Range Maturities
------------ --------- ----------------- ----- ----------
<S> <C> <C> <C> <C> <C>
Long-term first mortgages and senior loan participations 6 44% 10-15% 3/28/01-7/14/09
Mezzanine (including wraparound) loans 13 86% 11-18% 2/1/02-1/31/09
Short term bridge loans 6 78% 13-44%(1) 8/31/00-1/28/02
(1) Includes loan fees charged.
</TABLE>
-6-
<PAGE>
Approximately $74.0 million of the loans are secured by multi-family
residential properties and $69.5 million of the loans are secured by commercial
properties.
As of September 30, 2000, twelve of the Company's purchased loans were
still subject to forbearance agreements or other contractual restructurings that
existed at the time the Company acquired the loans. During the quarter ended
September 30, 2000, all payments under the agreements were timely and all
borrowers were otherwise in full compliance with the terms of the agreements.
The remaining thirteen loans in the Company's portfolio were performing in
accordance with their terms as originally underwritten by the Company and were
current as to payments as of September 30, 2000.
As of September 30, 2000, senior indebtedness secured by real estate
underlying the Company's wraparound loans consists of the following:
Loan payable, secured by real estate, monthly
installments of $13,789, including interest at
7.08%, remaining principal due
December 1, 2008 $ 1,887,997
Loan payable, secured by real estate, monthly
installments of $17,051, including interest at
6.83%, remaining principal due
December 1, 2008 2,385,312
Loan payable, secured by real estate, monthly
installments of $10,070, including interest at
6.83%, remaining principal due
December 1, 2008 1,513,741
Loan payable, secured by real estate, monthly
installments of $80,427, including interest at 6.95%,
remaining principal due July 1, 2008 11,868,655
Loan payable, secured by real estate, monthly
installments of $28,090, including interest at 6.82%,
remaining principal due November 1, 2008 4,214,157
Loan payable, secured by real estate, monthly
installments of $72,005, including interest at
7.55%, remaining principal due
December 1, 2008 9,786,276
Loan payable, secured by real estate, monthly
installments of $88,575, including interest at
8.68%, remaining principal due November 1, 2008 11,000,000
-7-
<PAGE>
Loan payable, secured by real estate, interest
only at LIBOR + 200 basis points, with a ceiling
of 10.00% and a floor of 8.60% (8.62% at
September 30, 2000) due monthly, principal
balance due September 30, 2002 3,200,000
Loan payable, secured by Company's interest in
short-term bridge loan of $4,495,000, interest
only at 11.00% due monthly, principal balance
due December 14, 2000 2,000,000
Loan payable, secured by Company's interest in
short-term bridge loan of $14,000,000, interest
only at 9.50% due monthly, principal balance due
July 11, 2001 9,000,000
Loan payable, secured by Company's interest in
short-term bridge loan of $5,300,000, interest
only at 9.00% due monthly, principal balance due
February 1, 2002 3,000,000
-----------
$59,856,138
===========
As of September 30, 2000 the senior indebtedness secured by real estate
underlying the Company's wraparound loans maturing in the remainder of 2000,
over the next four years, and the aggregate indebtedness maturing thereafter is
as follows:
2000 $ 2,118,884
2001 9,534,637
2002 6,775,952
2003 620,489
2004 668,501
Thereafter 40,137,675
------------
$ 59,856,138
============
NOTE 4-INVESTMENTS IN REAL ESTATE
Investments in real estate are comprised of the following at September
30, 2000:
Land $ 12,262,186
Office buildings and improvements 65,095,624
Apartment buildings 35,109,676
-------------
Subtotal 112,467,486
Less: Accumulated depreciation (4,548,146)
-------------
Investments in real estate, net $ 107,919,340
=============
-8-
<PAGE>
As of September 30, 2000, long-term debt secured by the Company's
investments in real estate consists of the following:
Loan payable, secured by real estate, monthly
installments of $8,008, including interest at 7.33%,
remaining principal due August 1, 2008 $ 1,065,422
Loan payable, secured by real estate, monthly
installments of $288,314, including interest at
6.85%, remaining principal due August 1, 2008 43,102,366(1)
Loan payable, secured by real estate, monthly
payments of interest only at 10%, principal due
August 1, 2008 5,024,563(1)
Loan payable, secured by partnership interests
in a real estate partnership, monthly payments
of interest only at 8.19%, additional interest
of 3.81% is deferred and payable from net cash
flow, principal and deferred interest due
September 1, 2008 18,472,538(1)
Loan payable, secured by real estate, monthly
installments of $107,255, including interest at
7.73%, remaining principal due December 1, 2009 14,901,831
Loan payable, secured by real estate, monthly
installments of $87,960, including interest at
8.37%, remaining principal due March 1, 2008 11,723,650
-----------
$94,290,370
===========
(1) These loans all relate to a single investment in real estate.
As of September 30, 2000 the amount of long-term debt secured by the
Company's investments in real estate maturing in the remainder of 2000, over the
next four years, and the aggregate indebtedness maturing thereafter, is as
follows:
2000 $ 184,522
2001 749,574
2002 806,222
2003 867,177
2004 932,770
Thereafter 90,750,105
------------
$ 94,290,370
============
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In addition to historical information, this discussion and analysis
contains forward-looking statements. These statements can be identified by the
use of forward-looking terminology including "may", "believe", "will", "expect",
"anticipate", "estimate", "continue" or similar words. These forward-looking
statements are subject to risks and uncertainties as more particularly set forth
in the Company's Annual Report on Form 10-K for 1999, that could cause actual
results to differ materially from those projected in the forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis only as of the
date hereof. The Company undertakes no obligation to publicly revise or update
these forward-looking statements to reflect events or circumstances that arise
after the date of this report.
Overview
The Company commenced investment operations in January 1998. Its
principal business objective is to generate income for distribution to its
shareholders from a combination of interest, rents and distributions from loans
that the Company originates and funds, loans or property interests acquired and
other investments. The Company completed two public offerings of its common
shares during 1998 and utilized these proceeds, combined with repayment and
refinancing of its loans and property interests and its line of credit, to build
its investment portfolio.
Liquidity and Capital Resources
Since commencement of investment operations in January 1998, the
principal source of the Company's capital resources has been the two offerings
of its common shares, which, after offering costs and underwriting discounts and
commissions, resulted in net proceeds to the Company of $86.0 million.
Secondarily, the Company has obtained capital resources from the repayment,
refinancing, and sale of loans in its portfolio (or principal payments on those
loans), aggregating $13.8 million for the quarter ended September 30, 2000
($26.6 million for the nine months ended September 30, 2000). The principal use
of these funds has been the origination, acquisition and purchase of loans in
the amount of $20.6 million for the quarter ended September 30, 2000 ($27.8
million for the nine months ended September 30, 2000), the purchase of real
estate and improvements in the amount of $0 for the quarter ended September 30,
2000 ($6.3 million for the nine months ended September 30, 2000), and the
acquisition, in August 2000, of RAIT Capital Corp., a real estate financing
company that specializes in first mortgages, in the amount of $859,000.
The Company also receives funds from interest payments on its loans and
operating income from its property interests. As required by the Internal
Revenue Code of 1986, the Company utilizes these funds (to the extent of not
less than 95% of its taxable income) to pay dividends to its shareholders. For
the quarter ended September 30, 2000, the Company declared dividends of $3.2
million, which were paid on October 12, 2000.
In order to maintain liquidity, the Company continues to pursue a
strategy of providing shorter-term financing to its borrowers (generally in the
form of bridge financing) to increase the turnover of its investments, and
pursuing borrower refinancing of the Company's loans through senior lenders,
with the Company retaining junior interests. The Company is not currently
experiencing material difficulties in originating shorter-term financings or
obtaining senior lien refinancings on acceptable terms. However, there can be no
assurance that difficulties will not be encountered in the future, depending
upon the development of conditions in the credit markets.
-10-
<PAGE>
At September 30, 2000, the Company had approximately $11.2 million in
funds available for investment ($3.2 million of cash held at September 30, 2000
was reserved to pay a cash dividend on October 12, 2000). All cash was
temporarily invested in a money-market account that the Company believes has a
high degree of liquidity and safety.
Results of Operations
The Company had average earning assets for the three and nine months
ended September 30, 2000 of $106.7 million and $105.0 million, respectively
($98.6 million and $93.3 million for the three and nine months ended September
30, 1999), including $8.6 million and $12.9 million of average earning assets
invested in a money-market account for the three and nine months ended September
30, 2000, respectively ($7.4 million and $6.3 million for the three and nine
months ended September 30, 1999.) The increases in total average earning assets
and average earning assets invested in a money-market account from the three and
nine months ended September 30, 1999 to the corresponding periods in 2000 were
due the utilization of the Company's credit line ($20.0 million and $14.0
million outstanding at September 30, 2000 and 1999, respectively) in
anticipation of approximately $12.0 million of loans to be originated in the
fourth quarter 2000.
Interest income derived from financings was $4.9 million and $13.6
million for the three and nine months ended September 30, 2000 as compared to
$5.3 million and $15.1 million for the corresponding periods in 1999. Interest
income from the money market account was $75,000 and $418,000 for the three and
nine months ended September 30, 2000 compared to $78,000 and $183,000 for the
corresponding periods in 1999. The decrease in interest income from both the
three and nine months ended September 30, 1999 to the corresponding periods in
2000 was due to a decrease in the Company's net investments in real estate loans
($83.7 million at September 30, 2000 versus $91.5 million at September 30, 1999)
and an increase in the Company's net investment in real estate ($107.9 million
at September 30, 2000 versus $72.4 million at September 30, 1999). The increase
in interest income from the money market account from the nine months ended
September 30, 1999 to the corresponding period in 2000 was due to a higher
balance of assets invested in the money-market account due to a loan repayment
in the first quarter of 2000, and a draw on the secured line of credit in the
amount of $6.0 million in anticipation of several loan closings. The yield on
average earning non-money market assets was 17.7% and 17.2% for the three and
nine months ended September 30, 2000 and was 18.6% and 18.4% for the
corresponding periods in 1999. The decreases in yield are due to an increase in
the Company's cost of funds due to an increase in interest charged on the
secured line of credit (based on the Prime rate of interest), partially offset
by the Company's ability to increase the pricing of its loans in response to
market conditions. The yield on average earning money market account assets was
4.8% and 4.3% for the three and nine months ended September 30, 2000 as compared
to 4.8% and 4.4% for the three and nine months ended September 30, 1999. The
Company derived $4.7 million from rents from its property interests for the
quarter ended September 30, 2000 ($13.5 million for the nine months ended
September 30, 2000) compared to $3.2 million for the quarter ended September 30,
1999 ($8.8 million for the nine months ended September 30, 1999). The increase
in rents from the Company's property interests from the three and nine months
ended September 30, 1999 to the same periods in 2000 was due to an increase in
the Company's investment in real estate and a decrease in the Company's
investment in real estate loans as discussed above. The Company recognized fee
and other income in the amount of $222,000 for the three months ended September
30, 2000 ($921,000 for the nine months ended September 30, 2000) as compared to
$23,000 for the three months ended September 30, 1999 ($318,000 for the nine
months ended September 30, 1999). The increases in fee and other income from the
three and nine months ended September 30, 1999 to the same periods in 2000 are
due to income from the Company's new real estate finance subsidiary, RAIT
Capital Corp., which was acquired in August 2000 ($163,000 for the three and
nine months ended September 30, 2000), and a $500,000 subordination fee earned
in the second quarter of 2000.
-11-
<PAGE>
Twelve of the Company's purchased loans remained subject to forbearance
agreements or other contractual restructurings that existed at the time the
Company acquired the loans. During the quarter ended September 30, 2000, all
payments under the agreements were timely made and all borrowers were otherwise
in full compliance with the terms of the agreements. The remaining thirteen
loans in the Company's portfolio are performing in accordance with their terms
as originally underwritten by the Company and were current as to payments as of
September 30, 2000.
During the quarter ended September 30, 2000, the Company incurred
expenses of $6.9 million ($19.3 million for the nine months ended September 30,
2000) compared to $5.3 million for the three months ended September 30, 1999
($15.3 million for the nine months ended September 30, 1999). The expenses
consist of interest expense, operating expenses relating to the Company's
property interests, general and administrative expenses and depreciation and
amortization. Interest expense was $3.5 million and $9.5 million for the three
and nine months ended September 30, 2000 as compared to $2.8 million and $8.3
million for the corresponding periods in 1999. Interest expense relates to
interest payments made on senior indebtedness encumbering properties underlying
the Company's investments in wraparound loans and properties owned by the
Company and interest payments made on the Company's secured line of credit, all
of which increased as a result of the increase in the Company's loan portfolio.
Property operating expenses were $2.2 million and $6.5 million for the three and
nine months ended September 30, 2000 compared to $1.7 million and $4.5 million
for the corresponding periods in 1999. Depreciation and amortization was
$754,000 and $2.1 million for the three and nine months ended September 30, 2000
as compared to $387,000 and $1.4 million for the corresponding periods in 1999.
The increases in property operating expenses, depreciation and amortization from
the three and nine months ended September 30, 1999 to the corresponding periods
in 2000, were due to an increase in the Company's investment in real estate and
a decrease in the Company's investment in real estate loans as discussed above.
General and administrative expenses were $437,000 and $1.2 million for the three
and nine months ended September 30, 2000 as compared to $387,000 and $1.2
million for the corresponding periods in 1999. The increase in general and
administrative expenses from the three and nine months ended September 30, 1999
to the same period in 2000 was due to the acquisition of the Company's real
estate finance subsidiary, RAIT Capital Corp., in August, 2000 and the general
and administrative expense incurred by that subsidiary which approximated
$158,000 for both the three and nine months ended September 30, 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the Company's assessment of its
sensitivity to market risk since its presentation in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999.
-12-
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ending September 30,
2000.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
November 14, 2000 /S/ Ellen J. DiStefano
----------------- ----------------------
DATE Ellen J. DiStefano
Chief Financial Officer
(On behalf of the registrant and
as its principal financial officer)
-14-
