Thank you, Steve, and good morning to everyone. Thank you for joining us today to review RAIT Financial Trust’s fourth quarter and fiscal 2010 financial results. On the call with me today are Scott Schaeffer, Chief Executive Officer; and Jack Salmon, RAIT’s Chief Financial Officer.
This morning’s call is being webcast on our website at www.raitft.com. There will be a replay of the call available via webcast on the website and telephonically beginning at approximately 1 PM Eastern Time today. The dial-in for the replay is 888-286-8010, with a confirmation code of 87219017.
Before I turn the call over to Scott, I’d like to remind everyone that there may be forward-looking statements made in this call. These forward-looking statements reflect RAIT’s current views with respect to future events and financial performance. Actual results could differ substantially and materially from what RAIT has projected. Such statements are made in good faith pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Please refer to RAIT’s press release and filings with the SEC for factors that could affect the accuracy of our expectations or cause our future results to differ materially from those expectations.
Participants may discuss non-GAAP financial measures in this call. A copy of RAIT’s press release containing financial information, other statistical information and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is attached to RAIT’s most recent current report on Form 8-K, available at RAIT’s website, www.raitft.com, under Investor Relations. RAIT’s other SEC filings are also available through this link. RAIT does not undertake to update forward-looking statements in this call or with respect to matters described herein, except as may be required by law.
Now I’d like to turn the call over to RAIT’s Chief Executive Officer, Scott Schaeffer. Scott?
Scott F. Schaeffer
Thank you very much, Andres, and thank all of you for joining us this morning as we present RAIT’s fourth quarter and fiscal 2010 results.
Let’s get right to it. We are seeing clear signs of improvement in the commercial real estate market, which has had a positive impact on the quality of RAIT’s earnings and the continued improvement in the credit and operating performance of the assets within our portfolios. Quarterly earnings continue to show improvement, driven by increase in rental income combined with decrease in operating costs and credit reserves.
GAAP earnings of $1.11 per diluted share and REIT taxable income of $11.3 million for the year, both showed dramatic improvement over 2009 and supported not only of preferred dividend distributions in 2010, but also an annual common dividend of $0.03 per common share, our first common dividend in over two years.
Operating income came in at $1.9 million, the first operating profit for RAIT since the third quarter of 2008. The drivers of revenue growth during the quarter came from increase in rental income, as well as occupancy and RAIT levels headed in the right direction and declines in property operating expenses as Jupiter Communities and CRP Commercial Services. RAIT’s internal property managers continue to do an excellent job managing our own portfolio.
In addition, we continue to generate gains and reduce interest expense throughout 2010 from repurchasing both our recourse and non-recourse debt at a discount. Also worth noting, corporate G&A expenses declined quarter-over-quarter and year-over-year as we began to realize the benefits of various cost-cutting strategies.
The credit environment continues to improve our stability in the loan portfolio, resulted in a reduction of the quarterly provision for loan loss. At year-end, we feel we are adequately reserved for potential future losses with a 51% reserve against our loans on non-accrual status. We are also seeing an increase in loan repayments as liquidity returns to the commercial real estate market.
We continue to make progress deleveraging the balance sheet. In 2010, we reduced our total indebtedness by $239 million and ended the year with $294 million of recourse indebtedness. We repurchased $55 million of our CRE CDO debt at substantial discounts during the year. We paid $13.5 million on our secured credit facility and retired approximately $102.5 million of our senior convertible notes in 2010.
Now on the new business initiatives. First, in response to the revival in the securitization market, I’m pleased to announce that we recently formed a CMBS lending business, utilizing our existing platform and internal expertise. We have begun quoting loans to perspective borrowers and will rate loans of $5 million to $30 million on stable office, retail, multi-family and light industrial properties on a nationwide basis. The CMBS business will be funded with our own capital and that of an outside investor through a joint venture relationship.
Secondly, we received – we recently announced the acquisition of a development stage, non-traded public REIT, which we have renamed Independence Realty Trust. We plan to position Independence Realty Trust to be a multifamily focused equity REIT externally managed by REIT. So Independence Realty Trust is a separate public company, information concerning its activities will be provided through its SEC filings. We look to build on these initiatives throughout 2011.