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NEWSLETTER W INTER 2011/2012 President’s Report March 2012 2011 was CDT’s most successful year ever. For the calendar year just ended, CDT added more affordable housing loans to our books than in any previous year. Our financial performance reached an all-time high, and our existing debt and equity portfolios performed well ahead of plan. In light of the slow economic recovery in the U.S., 2011 was an extremely gratifying year for CDT. In 2011, we identified new sources of financing which allowed for our acquisition of two loan portfolios from nationally recognized CDFIs. These portfolio acquisitions helped those organizations generate liquidity, which will allow them to continue the important work they do to meet local market needs for long-term affordable housing financing. The acquisition of these portfolios increased the number of affordable housing units in our debt portfolio to over 17,000. Our commitment to purchase a 200-unit Section 8 property for seniors and disabled adults just south of Boston, will increase the number of units in our equity portfolio to nearly 5,000. The combined portfolios now consist of debt and equity assets with a total market value of more than $675 million. CDT’s financial performance for 2011 was, by far, the strongest in our history. Operating Funds From Operations (Operating FFO) and Funds Available for Distribution (FAD) both reached all-time highs of $1.19 and $1.01 per share, respectively. As a result of CDT’s steadily improving performance, our Board has approved an increase in the quarterly dividend on our common stock to $0.17 per share, up from $0.15 per share, a 13% increase. With a market net worth now approaching $140 million, CDT is well-positioned for continued growth in 2012. We are adding staff to handle both our growing pipeline of loan originations and our increased asset management responsibilities. In 2012, we will continue to explore additional loan portfolio acquisition opportunities, and we are actively analyzing a solid pipeline of equity investment opportunities as well. 2012 is already presenting opportunities for CDT to continue its mission of providing debt and equity financing for affordable housing across the country. We look forward to continued growth throughout 2012. Sincerely, Joseph F. Reilly President & CEO New Investment Profiles: In the past two years, CDT has increased its portfolio purchase activities by working with community development financial institutions (CDFIs). This includes supporting CDFIs looking for greater liquidity, managing borrower concentrations and other capital needs. In the fall of 2011, CDT purchased two portfolios of first mortgages from two experienced CDFIs totaling $71 million. These portfolios consisted primarily of first mortgages on properties in seasoned affordable communities financed with low income housing tax credits. The properties in these communities are located in California, Idaho, Utah and Wyoming. The following profiles include highlights from 4 of the 34 loans purchased by CDT: NEW INVESTMENTS (CONTINUED…) Hayward Senior Housing - Hayward, California CDT purchased a $1,455,593 first mortgage on Hayward Senior Housing, a 60- unit seniors community located in Hayward, California. The community was newly constructed and completed in 2008. The property includes one-bedroom units affordable to seniors with incomes ranging from 30% to 50% of the area median income (AMI). Hayward Senior was developed by Eden Housing. Since its formation, Eden has acquired or developed over 6,300 units of affordable housing throughout northern California. Eden is one of the leading nonprofit housing providers in the state. Eden specializes in “service-enhanced” properties, providing supportive services to its residents through its affiliate Eden Housing Resident Services, Inc. Eden is also a full-service property manager. Andalucia Senior Apartments - Van Nuys, California CDT purchased a $5,770,842 first mortgage on Andalucia Senior Apartments, a newly constructed 94-unit seniors community located in Van Nuys, California. The development was completed in 2010. The property includes one- and two- bedroom units affordable to seniors with incomes ranging from 30% to 60% of AMI. Andalucia Senior was developed by Meta Housing Corporation. Meta is an active affordable housing developer with extensive experience creating family and seniors communities in Southern California. Since 1969, Meta has developed more than 12,000 residential units. Pine Valley – Washington City, Utah CDT purchased three first mortgages totaling $2,559,851 on Pine Valley I, II and III, a three-phase affordable community located in Washington City, Utah. This 148-unit development consists of 50 units in Pine Valley I, 66 units in Pine Valley II, and 32 units in Pine Valley III. Developed for large families, each unit in this phased community is a 3-bedroom home, located in adjoined duplexes, with two-car garages and backyards. Eligible families earn between 35% and 50% AMI. Pine Valley was developed by Adams Construction and Management Company, Inc., an active developer and manager of apartment rental communities. In operation since 1967, Adams has extensive experience utilizing LIHTC and HUD programs to develop affordable housing. Adams currently managing 756 units in 15 properties located in Southern Utah and Arizona. Spring Hollow - West Jordan, Utah CDT purchased a $1,453,907 first mortgage on Spring Hollow in West Jordan, Utah. Spring Hollow is a 44-unit family rental community completed in 2005. The property includes two- and three-bedroom units affordable to families earning between 35 % and 55% of AMI. The units are distributed among four buildings. Spring Hollow was developed by J. Allred Investments, L.C, a Utah- based real estate firm which provides a full range of services including architecture, urban design, land planning and civil engineering – all supporting the development of apartment communities, single-family subdivisions, public facilities and condominium projects. The property is managed by Millwood Management, a local firm with extensive management experience. F I N A N C I A L S U M M A RY Operations - Operating FFO for the year ended December 31, 2011 was $1.19 per share, which is $0.34 per share above the results a year ago. The annual Operating FFO is the highest amount since CDT’s inception. These strong results were from a combination of the following: recognition of grant income from our CDFI Awards; steady equity portfolio returns; increased interest on our mortgage loan portfolio; and reduced operating costs. Operating FFO $1.50 Per Share $1.00 $0.50 $0.00 Dec‐07 Dec‐08 Dec‐09 Dec‐10 Dec‐11 Year Ended Dividends - The Board of Directors declared a quarterly dividend of $0.17 per share on the Class B common shares, payable on March 7, 2012, to all common stockholders of record as of March 2, 2012. The Board of Directors also approved a regular quarterly dividend of $0.53125 per share on the 4.25% convertible preferred shares, payable on February 29, 2012, to all preferred stockholders of record as of February 22, 2012. PORTFOLIO PERFORMANCE Equity Portfolio: CDT’s equity portfolio reported improved operations for 2011. Economic occupancy has remained at approximately 93% over the past year which helped to generate FFO for the entire portfolio which was 6% higher than our plan. During the year, we completed a restructuring of four of our equity investments, which we believe will provide for their improved operations in the future. Furthermore, the size of the CDT’s Watch List decreased, primarily due to improvement in operations of the majority of our extended use LIHTC properties, which is a result of a strengthening in their local economies. Occupancy 100.00% Occupancy Rate 95.00% 90.00% 85.00% 80.00% Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Quarter Ended Debt Portfolio: The overall debt portfolio showed continued strength as the weighted average DCR at December 31, 2011 reached 1.43 versus 1.36 a year ago. The percentage of loans on CDT’s Watch List also showed a significant improvement declining to 16% from 27% a year ago. Part of the improvement was due to the growth in the portfolio, while the remainder was a result of loans being removed based upon their improved operations. Lastly, the weighted average occupancy has remained stable throughout the year at approximately 95%. THE COMMUNITY DEVELOPMENT TRUST, INC. F I N A N C I A L S U M M A RY UNAUDITED Preserving America’s (in thousands, except per share data) Communities Balance Sheet CDT is the country's only December 31, December 31, 2011 2010 private real estate investment Assets trust with a public purpose. Cash and cash equivalents $ 4,684 $ 2,740 Working with local and Restricted cash 2,942 2,066 Investments 2,014 3,627 national partners, our Real estate, including investments in joint venture 51,944 35,531 organization makes long- Subordinate mortgage loans, net 30,040 28,826 Mortgage loans, net 79,246 16,181 term equity investments in Loan participations 4,000 4,000 affordable communities and Other assets 3,119 1,681 serves as a secondary market Total Assets $ 177,989 $ 94,652 provider for low-income Liabilities and Equity Mortgages payable $ 22,560 $ 7,194 multifamily mortgages. Loans payable 57,259 - After more than twelve years Secured revolving credit facilities 10,000 1,400 Other liabilities 8,064 8,050 of operations, CDT has Total Liabilities 97,883 16,644 invested or committed Commitments and Contingencies approximately $836 million Company stockholders' equity 79,837 77,868 in debt and equity capital to Noncontrolling interests 269 140 properties in 42 states and Total Equity 80,106 78,008 regions—helping to preserve Total Liabilities and Equity $ 177,989 $ 94,652 or add approximately Income Statement 31,000 units to the nation's For the year ended affordable housing stock. December 31, 2011 December 31, 2010 Amount Per share Amount Per share Total revenues $ 20,980 $ 10,193 Total expenses 12,812 12,166 Visit Our Website! Consolidated net income (loss) $ 8,168 $ (1,973) Net income applicable to noncontrolling interests 230 220 www.cdt.biz Preferred stock dividend (2,720) (2,720) Net income (loss) applicable to common stock $ 5,218 $ 1.01 $ (4,913) $ (0.94) Add property depreciation 4,778 5,417 Adjustment for (gain)/loss on sale of investments, net (5,032) 736 1350 Broadway, Suite 700 Impairment loss on real estate joint venture - 558 New York, NY 10018 Other GAAP adjustments, net 445 258 Phone: 212-271-5080 Funds from operations $ 5,409 $ 1.04 $ 2,056 $ 0.39 Fax: 212-271-5079 Add write-off of deferred investment expenses 780 49 Email: firstname.lastname@example.org Add restructuring charge - 417 Add loss on loan impairment - 1,917 Operating funds from operations $ 6,189 $ 1.19 $ 4,439 $ 0.85 For additional information on CDT’s programs and invest- Common dividends paid $ 3,110 $ 0.60 $ 3,150 $ 0.60 ments, please visit our website. Weighted average number of shares outstanding - Basic 5,182 5,247 Neither the information in this report nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities. Statements regarding future prospects may not be realized. Past performance is not necessarily a guide to future performance.
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