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PHILADELPHIA-RAIT Financial Trust's net income for the final quarter and full year of 2006 fell, while total revenue rose for both the quarter and year. The locally based REIT merged with Taberna Realty Finance Trust during fourth quarter.
Net income for the quarter fell to $13.1 million, down from $18.1 million in the parallel quarter of 2005. The 2006 net income was $67.8 million, down from $68 million for 2005. Total revenues for the final quarter of 2006 was $28.8 million, up from $24 million for the prior-year quarter, and full year revenues for 2006 rose to $102.3 million, compared with $92.4 million in 2005. On Dec. 31, the company's investment portfolio totaled $11.2 billion.
During a conference call, Daniel Cohen, CEO, said, "we're seeing the fruits of the merger," and reported that during the opening quarter of 2007, "production is stronger than previous quarters." He said, year to date, for the first half of this quarter, "closings [on loans] are greater than closings for full fourth quarter 2006."
The merged company is now able to provide both mezzanine and three- to five-year loans to borrowers, Betsey Cohen, chairman, pointed out. "Having executed on CDOs [collateralized debt obligations], we've reduced the costs associated with borrowing," she said and forecast a continued ramp up of CDOs through the middle of this quarter.
RAIT anticipates continuing demand from its traditional borrowers and cited two main additional targets this year. They are well-capitalized private companies and "substantial demand from the formation of REITs overseas." The private-company transactions take longer, and Cohen said they would come to fruit during the last half of the year.
At the end of January, Friedman Billings & Ramsey raised its share price target for RAS common stock from $36 per share to $42 per share over the next 12 months. At mid-day on Feb. 22, the day of the conference call, shares of RAS were trading at $35.75 a share on the NYSE, down approximately 2% for the day. The 52-week high of $38.25 was reached on Feb. 7, and the 52-week low of $24.81 occurred on May 17, 2006.
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