ELC Overview
Eastern Light Capital, Incorporated (“ELC”) – formerly known as Capital Alliance Income Trust – is a publicly traded real estate investment trust (“REIT”) listed on the NYSE/Amex (formerly the American Stock Exchange) under the symbol ELC. The name change was a contractual requirement of the transition to self-management. Prior to January 2007, ELC was managed by an outside group. Commencing January 2007, ELC became self-administered and self-advised.
Strategy
ELC’s management has suspended all loan origination to concentrate on non-performing loans and foreclosed real estate. During 2009, ELC will seek to diversify beyond one-to-four unit residential loans and will opportunistically seek other REIT compliant investments to enhance shareholder value. ELC’s 100% owned taxable subsidiary – WrenCap Funding Corporation, which formerly engaged in mortgage origination and secondary market sales – now trades exchange listed marketable securities.
Profitability
A key management objective of 2009 is achieving profitability. Since 2007, revenues have contracted due to the suspension of our mortgage banking activities and the elimination of investment in residential mortgage loans.
As a self-advised and self-administered REIT, the Company has significantly reduced administrative overhead and management costs. Going forward, ELC will continue to maintain lean staffing levels without sacrificing longer term financial performance objectives. However, until California residential home values stabilize, operating income and new business initiatives will remain constrained. Accordingly, management will focus on identifying opportunistic investments in REIT compliant assets and continue to proactively address loan delinquencies and foreclosures.
During the twelve months ended December 31, 2008, ELC’s mortgage investments decreased $5,683,417 from $11,144,365 to $5,460,948, bank borrowings declined $1,636,644 from $3,641,828 to $2,005,184, real estate owned (“REO”) increased $791,668 from $1,804,826 to $2,596,494 and cash and marketable securities increased $1,233,171 from $1,095,649 to $2,328,920. As of December 31, 2008, approximately 47% of the mortgage loan portfolio is non-performing assets. REO and non-performing loan balances are approximately 68% of shareholder equity and 229% of common shareholder equity.
Disclosure:
This overview contains "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) that inherently involve risks and uncertainties. ELC’s actual results, operations and liquidity may differ materially from those anticipated in these forward-looking statements because of changes in the level and composition of ELC’s investments and unseen factors. As discussed in ELC’s filings with the Securities and Exchange Commission, these factors may include, but are not limited to, changes in general economic conditions, the availability of suitable investments, fluctuations in and market expectations of fluctuations in interest rates and levels of mortgage payments, deterioration in credit quality and ratings, the effectiveness of risk management strategies, the impact of leverage, the liquidity of secondary markets and credit markets, increases in costs and other general competitive factors.
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