The yield curve does continue to surreptitiously steepen as the 10-year backed up 23 basis points in the fourth quarter and another almost 45 since year end.
With two 10s at approximately 125 basis points, this hardly qualifies as a steep yield curve by historical standards, but it has steepened by about 45 basis points since the end of the year.
I do have to smile a little when I hear this recent chatter about higher rates, however, with 10s yielding 135 as 10s were above 3% less than two and a half years ago.
Yes, we're off the lows at least for 10 years, but let's not kid ourselves.
Please turn to Page 4.
We reported GAAP earnings of $0.08 per share in the fourth quarter.
On the other hand, fourth-quarter earnings were reduced by expenses related to the acceleration of discount in connection with our payoff of the $500 million, 11% Apollo/Athene senior note in September and October.
And the overall dilution associated with these transactions was less than 4%.
Obviously, our GAAP book value would have been up by approximately 2.4% for the quarter had it not been for these warrants.
Economic book value also negatively impacted by 3.9% by the warrants was nevertheless unchanged at $4.92 during the fourth quarter as our loans held at carrying value appreciated further.
We repurchased 14.1 million common shares for an aggregate purchase price of a little over $50 million during the quarter at an average price of less than 80% of September 30 GAAP book value and less than 75% of economic book value.
Our leverage declined modestly over the quarter to 1.7:1, primarily due to the payoff of the Apollo/Athene debt.
And we paid $0.075 dividend to shareholders on January 29.
Please turn to Page 5.
These sales totaled over $270 million for the year and were executed at prices well above our carrying value.
We believe that the hard work that we've done since emerging from forbearance at the end of June has benefited stockholders as our total shareholder return was 62% from June 30 to December 31.
We did add $111 million of loans in the fourth quarter.
On the financing side, you can see that 67% of our asset-based financing is non mark to market.
With the SFR securitization that we closed at the beginning of February, this is now over 70%.
Please turn to Page 7.
Again, continuing the theme of aggressively taking advantage of available market opportunities, we've executed three additional securitizations on $1.2 billion of UPB at successively tighter levels.
As you can see on this page, AAA yields on bonds sold on the most recent two deals were below 1%, and the blended cost of debt sold was in the low ones and was in some cases almost 200 basis points lower than the cost of borrowing we replaced.
Bonds sold generated cash of between 91% and 94% of UPB, which also produced approximately $250 million of additional liquidity.
Please turn to Page 8.
Page 8 provides the details of the repurchase and exercise of the previously outstanding warrant position.
Through a straight repurchase of warrants on December 10 for $33.7 million.
In an exercise through a combination of cash and cashless exercise on December 28, we were able to limit the dilution of warrants granted, which was 7.5% at the time of grant to less than 4%.
Apollo/Athene holds 12.3 million shares or about 2.7% of outstanding shares, and we continue to maintain a strong partnership with both Apollo and Athene.
Please turn to Page 9.
We announced on our third-quarter earnings call that our board had authorized a $250 million stock repurchase program and we executed this during the open-window period in the fourth quarter by purchasing 14.1 million shares at an average price of $3.61, which was accretive to GAAP and economic book value by $0.03 and $0.04, respectively.
In addition, the $33.7 warrant repurchase was included under this plan.
So, all in, we deployed almost $85 million during the quarter and still have $165 million available under this authorization.
Please turn to Page 10.
We announced the redemption of our $100 million 8% senior notes due in 2042.
These $25 par bonds were issued in 2012.
This redemption, which was completed shortly after year end will save $8 million in annual interest expense.
We did book a noncash charge of $3.1 million in the fourth quarter for unamortized issuance expenses.
These $25 par bonds were sold primarily to retail investors, similar to 20 firms, and hence, the relatively high issuance expense.
Please turn to Page 11.
We were recognized as one of 380 public companies across 44 countries and regions for our commitment to and support of gender equality.
Net income to common shareholders was $37.6 million or $0.08 per share.
Net income includes $25.3 million or $0.06 per common share of expenses recognized on the repayment of the senior secured term loan from Apollo/Athene.
Recall that as we elected to account for this financing at fair value, GAAP required us to allocate a portion of the day 1 loan-to-value or approximately $14 million of the associated warrants.
This was recorded in shareholders' equity, while the residual loan value of approximately $481 million is recorded on our balance sheet as a liability.
Specifically, the key items impacting our results are as follows: net interest income for Q4 was $19.4 million, almost double Q3, and it reflects the following.
The payoff of the senior secured debt resulted in high net interest income by approximately $12 million.
And as Craig noted, we redeemed our 8% senior notes early in January '21.
Q4 net interest expense includes a noncash charge of $3.1 million for unamortized deferred expenses that we incurred when this debt was originally issued in 2012.
In addition, future quarterly interest expense will be $2 million lower as a result of this note redemption.
I would also note that since exiting forbearance in June, we have lowered our cost of funds across our entire portfolio by 140 basis points to 3.1% December 31, 2020, and this falls even further to 2.9% with the senior note redemption.
Also, we reduced our overall CECL allowance in our current value loans to $86.8 million, primarily reflecting lower estimates of future unemployment used for credit loss modeling purposes, but also partially due to lower loan balances.
This reversal and other net adjustments to our CECL reserves positively impacted net income for the quarter by approximately $16 million.
After the initial significant increase in CECL reserves taken in Q1 and uncertainty related to COVID-19 economic impacts were at the highest, we have reduced our CECL reserves by almost $60 million in the past three quarters.
Actual charge-off experience to date remains very modest, with less than $2.5 million of net charge-offs taken in 2020.
Net gains of $49.8 million were recorded, including $30.9 million of market value increases and $18.9 million of interest payments, liquidation gains, and other cash income.
Finally, our operating and other expenses were $20.4 million for the quarter.
We continue to estimate that annualized G&A expenses to equity should run at about 2% each quarter.
Turning to Page 13.
We were able to purchase approximately $80 million in the fourth quarter and are on track to purchase over $100 million in the first two months of 2021.
We executed on two additional securitizations in the fourth quarter, bringing the amount of collateral securitized in 2020 to approximately $1.25 billion.
Securitization, combined with non-mark-to-market term -- a non-mark-to-market term facility, has resulted in over 75% of our non-QM portfolio financed with non-mark-to-market leverage.
Turning to Page 14.
Through our services, we granted almost 32% of the portfolio temporary payment relief, which, we believe, helps put our borrowers in a better position for long-term payment performance.
In addition, approximately 30% of delinquent loans made a payment in December.
Turning to Page 15.
Our RPL portfolio of $1.1 billion has been impacted by the pandemic but continues to perform well.
81% of our portfolio remains less than 60 days delinquent.
And although the percentage for the portfolio 60 days delinquent in status is 19%, over 24% of those borrowers continue to make payments.
And while 30% of our RPL borrowers were impacted by COVID, we have worked with our servicers to provide assistance to borrowers and have seen improvement in delinquency levels over the quarter.
Turning to Page 16.
36% of loans that were delinquent at purchase are now either performing or paid in full.
45% have either liquidated or REO to be liquidated.
We have significantly increased our activity, liquidating REO properties, selling 87% more properties as compared to a year ago.
19% are still in nonperforming status.
Turning to Page 17.
This, combined with the seasoned nature of our portfolio, currently at weighted average loan rates of 17 months, led to us receiving $141 million of principal payments in the fourth quarter and a total of approximately $650 million for all of 2020.
MSA's fix-and-flip portfolio declined $118 million to $581 million in UPB at the end of the fourth quarter.
Principal paydowns were $141 million, which is equivalent to a quarterly paydown rate of 59 CPR on an annualized basis.
We advanced about $11 million of rehab draws and converted $3 million to REO.
We began purchasing fix-and-flip loans again in the fourth quarter and acquired approximately $15 million UPB of new loans in the quarter.
The average yield for the fix-and-flip portfolio in the fourth quarter was 5.97%.
All of our fix-and-flip financing is non-mark-to-market debt with the remaining term of 18 months.
After declining by approximately $40 million in the third quarter, the total amount of seriously delinquent fix-and-flip loans increased $19 million in the fourth quarter to $162 million.
Loan loss reserves declined by $4 million to approximately $18 million at the end of the fourth quarter.
Turning to Page 18.
Seriously delinquent fix-and-flip loans increased $19 million in the quarter to $162 million at the end of the fourth quarter.
In the quarter, we saw $25 million of loans paid off in full, $3 million cured to current of 30 days delinquent pay status, and $3 million of loans converted to REO, while $50 million became new 60-plus day delinquent loans.
In addition, approximately 15% of the seriously delinquent loans are already listed for sale potentially shortening the time until resolution.
Since inception, we have collected approximately $2.6 million in these types of fees across our fix-and-flip portfolio.
Turning to Page 19.
The portfolio yielded 5.27% in the quarter.
When including those, the SFR portfolio yield was 5.99% in the fourth quarter.
Prepayments increased in the quarter to a three-month CPR of 33%.
60-plus state delinquencies increased modestly in the quarter to 5.6%.
We resumed our acquisition of rental loans in the fourth quarter and purchased $12 million of loans in the quarter.
Approximately $218 million of loans were securitized.
We sold approximately 91% of the bonds at a weighted average coupon of 106 basis points.
This transaction lowers the funding rate of the underlying asset by over 150 basis points and increases the percentage of SFR financing that is non mark to market to 77%, up 54% from 23% at the end of the fourth quarter.

We reported GAAP earnings of $0.08 per share in the fourth quarter.
Net income to common shareholders was $37.6 million or $0.08 per share.


Our myopia management portfolio continued to strengthen, including MiSight growing 82% to 3 million and CooperSurgical posted a very strong quarter with Paragard growing 16% and fertility 10%.
Regarding the quarter and reporting all percentages on a constant currency basis, even with continuing COVID challenges, we posted consolidated revenues of 681 million with CooperVision revenues of 507 million, up 1%, and CooperSurgical revenues of 174 million, up 7%.
Non-GAAP earnings per share were $3.17.
By geography, the Americas grew 6% led by strength in Biofinity and daily silicones, including nice growth from both Clariti and MyDay.
EMEA was down 4% as several countries continued managing through stringent COVID-related restrictions.
Asia Pac was up 3% led by strength in MyDay, especially in Japan.
Our silicone hydrogel dailies grew 8% with both MyDay and Clariti growing.
Overall, dailies silicones are leading the market right now as health and wellness trends drive adoption, and we believe that will continue as there's still 2.4 billion in annual global sales of older hydrogels that need to be traded up.
Biofinity grew 6% with strike noted in Biofinity Energys and Biofinity toric multifocal.
And lastly, we're incredibly busy with our myopia management portfolio of MiSight and Ortho-k lenses, which grew 46% for the quarter to 12 million.
Within this, MiSight grew 82% to 3 million and Ortho-k grew 37%, including 1 million of revenue from our acquisition of GP Specialists from August of last year.
With respect to MiSight, we now have over 30,000 kids around the world wearing the lens, including over 2,000 in the U.S., and our momentum is accelerating.
We've also made advancements in discussions with several large retailers and buying groups regarding MiSight and even moved into a test phase with one large retailer for roughly 70 stores.
From a fitting perspective, if we look at U.S. data, the average age for a new MiSight wear remains 11 years old, and in a positive sign, it's trending younger.
Comparing this to the average age of a regular new contact lens wear of 17 shows we're bringing kids into contacts at a much younger age, which is fantastic.
This is all extremely exciting and supports our goal of reaching or exceeding 25 million of MiSight sales this fiscal year and over 50 million next year.
It's estimated that roughly one-third of the world is currently myopic, and that's expected to increase to 50% by 2050.
Overall revenues were 174 million, up a healthy 7% as markets rebounded and we took share.
Revenues grew 10% year over year to 70 million with strikes seen around the world and throughout our product portfolio.
Within our office and surgical unit, we were up 5% led by Paragard's growth of 16%.
As the only 100% hormone-free IUD in the U.S. market, the product offers a fantastic, long-lasting birth control option that addresses the needs and interest of women looking for a healthy alternative.
Our fourth-quarter consolidated revenues increased 5% year over year, or 3% in constant currency to $681 million.
Consolidated gross margin increased 50 basis points year over year to 67.8%.
Opex was up only 2.1% year over year as we kept expenses under control.
This resulted in consolidated operating margins of 26.9%, up nicely from 25% last year.
Interest expense for the quarter was $6.4 million driven by lower rates and lower average debt, and the effective tax rate was 11.3%.
Non-GAAP earnings per share was $3.17 with roughly 49.7 million average shares outstanding.
Free cash flow was solid at $92 million comprised of $148 million of operating cash flow, offset by $56 million of capex.
Net debt increased slightly to $1.7 billion, while our adjusted leverage ratio decreased to 2.1 times with improving EBITDA.
And finally, we repurchased $25 million worth of stock this past quarter at an average price of $357 per share.
The business did $4.7 million in sales last year and added $500,000 in revenue in our Q1.
Within CooperVision, as Al mentioned, we acquired the remaining 80% stake of SightGlass Vision in January for $41 million in cash plus aggregate potential earn-outs of up to $139 million based on revenue milestones and regulatory approvals.
After the close of the quarter, we entered into an agreement to form a 50-50 joint venture with EssilorLuxottica that we hope to close soon.
The business did $4.4 million in sales last year.
And we repurchased -- I'm sorry, we purchased it for $52 million in cash plus a potential earn-out of up to $14 million.
The guidance includes consolidated revenues of 2.8 to 2.845 billion, up 15 to 17%, or up 12 to 14% in constant currency, with CooperVision revenues of 2.090 to 2.120 billion, up 13 to 15%, or up 9 to 11% and in constant currency, and CooperSurgical revenues of 710 to 725 million, up 21 to 23%, or 19 to 22% in constant currency.
Non-GAAP earnings per share is expected to be in the range of $12.90 to $13.10.
Lastly, on free cash flow, we now expect to approach 500 million this year as operating cash flow improves, and capex reduces.

Non-GAAP earnings per share were $3.17.
Non-GAAP earnings per share was $3.17 with roughly 49.7 million average shares outstanding.
Non-GAAP earnings per share is expected to be in the range of $12.90 to $13.10.


By the way of background for those who may be unfamiliar, I have been with EnPro for the better part of 12 years.
I know as well as anyone that the success of our organization is built on the hard work, dedication and tireless execution and commitment of our 4,400 employees around the world.
In the second quarter, sales of $298.6 million increased 20.9% year over year, with organic sales increasing 27.1%.
We saw a sequential growth of 6.9% from the prior quarter.
Our second-quarter adjusted EBITDA of $57.2 million increased 52.5% year over year, and the adjusted EBITDA margin expanded 400 basis points to 19.2%.
As reported, sales of $298.6 million in the second quarter increased 20.9% year over year.
Organic sales for the quarter increased 27.1% compared to the second quarter of 2020.
As Eric noted, sequentially, sales were up 6.9%.
Gross profit margin of 39.2% increased 580 basis points versus the prior-year period.
Adjusted EBITDA of $57.2 million increased 52.5% over the prior-year period as a result of higher operating leverage from solid organic sales growth, the addition of Alluxa, and increased pricing, partially offset by increased raw material costs and higher incentive compensation accruals.
Adjusted EBITDA margin of 19.2% increased approximately 400 basis points compared to the second quarter of 2020.
Corporate expenses of $12.8 million in the second quarter of 2021 increased from $7.1 million a year ago.
Adjusted diluted earnings per share of $1.56 increased 77.3% compared to the prior-year period.
Amortization of acquisition-related intangible assets in the second quarter was $11.3 million, compared to $9 million in the prior-year period, reflecting the addition of Alluxa.
We anticipate amortization of acquisition-related intangibles will be between 44 and $46 million in 2021.
As a reminder, our estimated normalized tax rate used in determining adjusted earnings per share is 30%.
sealing technologies sales of $162.5 million increased 7.9% compared to the prior-year period despite the impact of divestitures in 2020.
Excluding the impact of foreign exchange translation and divested businesses, sales increased 25.3%, driven by strong demand in the heavy-duty truck, general industrial, food and pharma, and petrochemical markets, offset partially by power generation and aerospace markets.
Sequentially, sales increased 10.9% as we saw momentum accelerate in our heavy-duty truck, general industrial, aerospace, and petrochemical markets.
For the second quarter, adjusted segment EBITDA increased 39% to $42.4 million, and adjusted segment EBITDA margin expanded 580 basis points to 26.1%.
Excluding the impact of favorable foreign exchange translation and divestitures, adjusted segment EBITDA increased 45.6% compared to the prior-year period.
Second-quarter sales of $59.2 million increased 48%, driven by continued strong growth in semiconductor and the addition of Alluxa.
Excluding the impact of foreign exchange translation and the Alluxa acquisition, sales increased 23.8% versus the prior-year period.
Sequentially, sales increased 8.2%, driven by growth in semiconductor markets.
For the second quarter, adjusted segment EBITDA increased 41.8% to $15.6 million, and adjusted segment EBITDA margin contracted from 27.5% a year ago to 26.4%.
In engineered materials, second-quarter sales of $80 million increased 36.5% compared to the prior year, driven by stronger sales in all major markets, including general industrial, automotive, oil and gas, and petrochemical.
Sales for the quarter increased 34.2%.
Second-quarter adjusted segment EBITDA increased 165% over the prior-year period to $13 million, and adjusted segment EBITDA margin expanded 790 basis points to 16.3%.
Excluding the favorable impact of foreign exchange translation and the impact of the bushing block business divestiture, adjusted EBITDA increased 155% compared to the prior-year period.
We ended the quarter with cash of $262 million and full availability of our $400 million revolver, less $11 million in outstanding letters of credit.
At the end of June, our net debt to adjusted EBITDA ratio was approximately one times, a sequential improvement from the 1.4 times reported at the end of the first quarter.
Free cash flow for the first six months of 2021 was $48 million, up from $25 million in the prior year, driven primarily by higher operating profits, offset partially by working capital investments supporting stronger sales.
During the second quarter, we paid a $0.27 per share quarterly dividend.
For the first six months of the year, dividend payments totaled $11.3 million, a 4.6% increase versus the prior year.
Taking into consideration all the factors that we know at this time, including current order patterns, we are increasing our guidance for 2021 adjusted EBITDA to be in the range of $200 million to $210 million, up from our previous guidance of $190 million to $200 million.
The updated adjusted EBITDA range is based on sales growth of 9% to 14% over 2020 pro forma sales of $983 million, up from a previous range of 7% to 12% growth.
We expect adjusted diluted earnings per share from continuing operations to be in the range of $5.16 to $5.50, up from a range of $4.74 to $5.08 provided last quarter.
Our guidance assumes depreciation and amortization expense, excluding amortization of acquisition-related intangible assets in the range of $30 million to $32 million and net interest expense of $14 million to $16 million.

As reported, sales of $298.6 million in the second quarter increased 20.9% year over year.
Adjusted diluted earnings per share of $1.56 increased 77.3% compared to the prior-year period.
We expect adjusted diluted earnings per share from continuing operations to be in the range of $5.16 to $5.50, up from a range of $4.74 to $5.08 provided last quarter.


We further strengthened connections with customers with $156 million of new bookings with record results in both a zero to 1 megawatt and greater than a megawatt category and ended the year with $500 million in new bookings, a 15% increase over the prior year.
And finally, we continue to strengthen our balance sheet by raising equity capital through the establishment of Digital Core REIT in a highly successful IPO on the Singapore Stock Exchange and the related sale of a 90% interest in 10 fully utilized core data centers.
First, we continue to globalize our business with record global bookings and strength across all regions and all product types, including quarterly highs in both our sub-1 megawatt and greater than 1 megawatt categories.
and Canada, valued at $1.4 billion at a 4.25% cap rate.
We generated net proceeds of over $950 million from the transaction, and we retained a 35% equity interest in the publicly traded REIT.
The offering was very well received, and Digital Core REIT has traded up approximately 30% since the IPO, enhancing the gain on our remaining ownership stake.
As mentioned, Digital Realty will continue to own a 10% direct ownership stake in each of the assets in addition to 35% in the publicly traded vehicle.
Our second global initiative, which we announced just after quarter end, is the definitive agreement to acquire roughly a 55% stake in Teraco, Africa's leading carrier-neutral colocation provider.
Teraco has seven state-of-the-art data centers across three key metros in South Africa and serves over 600 customers, including more than 275 connectivity providers, over 25 cloud and content platforms and approximately 300 enterprises.
Teraco facilitates approximately 22,000 interconnections between customers and hosts seven cloud on-ramps and provides direct access to seven subsea cables.
The current development pipeline will expand the existing asset base by over 25%.
Let's discuss our sustainable growth initiatives on Page 3.
1 ranked data center company.
Let's turn to our investment activity on Page 4.
We spent $580 million on growth capex in the fourth quarter, our largest quarterly growth capex investment to date.
We currently have 44 projects underway, totaling more than 250 megawatts of IT capacity in 27 metros around the world.
This capacity was 46% presold as of year-end.
Geographically, we continue to invest most heavily in EMEA with 27 projects underway, totaling more than 140 megawatts across 16 metros.
In January, we opened Digital Seoul 1, our first data center in South Korea and the first carrier-neutral facility in the country.
This facility will serve as a connectivity gateway for latency-sensitive customer workloads, but can be connected to hyperscale applications hosted in our second facility in Korea, totaling over 60 megawatts of capacity currently under construction just outside the city center.
Let's turn to the macro environment on Page 5.
Industry research firm Gartner recently updated their global IT spending forecast for 2022, projecting a 5.1% increase to $4.5 trillion, driven by companies investing in digital data growth strategies.
Additionally, Gartner believes that by 2024, 75% of organizations will have deployed multiple data hubs to drive mission-critical data analytics sharing and governance in support of digital data growth strategies.
Let's turn to our leasing activity on Page 7.
As Bill noted, we delivered record bookings of $156 million with an $11 million contribution from interconnection during the fourth quarter.
For the full year, we booked $0.5 billion of new business with roughly a 60-40 split between greater than 1 megawatt and less than 1 megawatt plus interconnection.
The EMEA region had a particularly strong quarter accounting for approximately 60% of total bookings led by Frankfurt with standout performance across product types.
Nearly 30% of our sub-1 megawatt plus interconnection bookings were exported from one region to another, a strong indication of the value customers derive from our global platform.
Both EMEA and APAC had strong export quarters as well, with over 15% of their sub-1-megawatt plus interconnection bookings landing out of region.
The weighted average lease term was nearly 10 years primarily driven by hyperscale pre-leasing in EMEA.
We landed over 130 new logos during the fourth quarter, our second best quarterly result and just shy of last quarter's record 140 for our full year total of 480 new logos.
A Global 2000 U.S. energy provider is expanding with Digital Realty, consolidating their own on-premise facilities and using PlatformDIGITAL to scale their business across multiple metros.
A Global 2000 insurance brokerage is consolidating their data center footprint and has adopted PlatformDIGITAL to remove data gravity barriers and interconnect with clouds across multiple metros.
Turning to our backlog on Page 9.
The current backlog of leases signed but not yet commenced rose from $330 million to $378 million as our fourth -- record fourth quarter signings more than offset commencements.
The lag between signings and commencements was unusually high at nearly 14 months, primarily driven by long-term leases on recent development starts in EMEA as customers accelerated efforts to secure a long-term runway for growth against a backdrop of steadily dwindling inventory.
Moving on to renewal leasing activity on Page 10.
We signed $151 million of renewal leases during the fourth quarter in addition to the record new leases signed.
Renewal rates rolled down 4%, driven by a handful of large deals in North America as negative releasing spreads on greater than 1 megawatt renewals more than offset the positive releasing spreads on the sub-1 megawatt renewals.
In terms of operating performance, overall portfolio occupancy ticked down 60 basis points, almost entirely due to development deliveries placed in service during the quarter.
Same capital cash NOI growth was negative 6.6% in the fourth quarter, primarily driven by churn in North America, as well as higher property operating and net utilities expense.
Turning to our economic risk mitigation strategies on Page 11.
The U.S. dollar strengthened during the fourth quarter relative to prior year exchange rates, and FX represented roughly a 130 basis point headwind to the year-over-year growth in our reported results from the top to the bottom line.
Given our strategy of matching the duration of our long-lived assets with long-term fixed-rate debt, a 100 basis point move in base rates would have roughly a 50 basis point impact on our full year FFO per share.
In terms of earnings growth, fourth quarter core FFO per share was up 4% year over year and up 1% sequentially, driven by solid operational execution, cost controls and a reduction in financing costs due to proactive balance sheet management over the past 12 months.
For the full year, core FFO per share was up 5% year over year and came in $0.03 above the high end of our initial guidance range, which did not contemplate the contribution of $1.4 billion of assets through Digital Core REIT in early December.
As a reminder, full year core FFO per share excludes the $20 million promote fee on the Prudential joint venture in the third quarter, as well as the $25 million PPA settlement in the first quarter.
Looking ahead to 2022, we expect core FFO per share will be between $6.80 and $6.90, including the 1% dilution from Teraco, as well as 100 to 200 basis points of expected FX headwinds due to the strength of the dollar relative to 2021.
We expect to deliver revenue between $4.7 billion and $4.8 billion in 2022 and adjusted EBITDA of approximately $2.5 billion.
We are off to a great start on our financing plans for the year with a highly successful 750 million bond offering in early January of 10.5-year paper at 1.375% coupon.
Finally, we expect to raise $500 million to $1 billion from capital recycling whether through contributions to Digital Core REIT, noncore asset sales to third parties or a combination of both.
Given the continued growth in our cash flows and taxable income, we would expect to see continued growth in the per share dividend, just as we have had each and every year since our IPO in 2004.
Last, but certainly not least, let's turn to the balance sheet on Page 12.
As of year-end, our reported leverage ratio stood at 6.1 times, while fixed charge coverage was 5.4 times.
Pro forma for settlement of the $1 billion September forward equity offering, leverage drops to 5.7 times, while fixed charge coverage also improved to 5.7 times.
As Bill previously mentioned, we recast our credit facility during the fourth quarter, upsizing from $2.35 billion to $3 billion, extending the maturity by three years and tightening pricing by 5 basis points.
Subsequent to quarter end, we raised approximately $850 million from the 10.5-year euro bonds at 1.375%, and we used a portion of the proceeds to redeem all $450 million of our outstanding 4.75% U.S. dollar bonds due 2025.
As you can see from the chart on Page 13, our weighted average debt maturity is over six years and our weighted average coupon is just over 2%.
A little over three-quarters of our debt is non-U.S. dollar denominated, reflecting the growth of our global platform while also acting as a natural FX hedge for our investments outside the U.S. 94% of our debt is fixed rate, guarding against a rising rate environment, and 99% of our debt is unsecured, providing the greatest flexibility for capital recycling.
Finally, as you can see from the left side of Page 13, we have a clear runway with nominal near-term debt maturities and no bar too tall in the out years.

In terms of earnings growth, fourth quarter core FFO per share was up 4% year over year and up 1% sequentially, driven by solid operational execution, cost controls and a reduction in financing costs due to proactive balance sheet management over the past 12 months.
Looking ahead to 2022, we expect core FFO per share will be between $6.80 and $6.90, including the 1% dilution from Teraco, as well as 100 to 200 basis points of expected FX headwinds due to the strength of the dollar relative to 2021.
As you can see from the chart on Page 13, our weighted average debt maturity is over six years and our weighted average coupon is just over 2%.


We also entered our second half of fiscal 2020 with a strong balance sheet, having reduced outstanding debt by $115 million over two years, post our acquisition of FCX, with net leverage down to our stated target of 2.5 times.
Consolidated sales decreased 0.8% over the prior year quarter, excluding 3.2% growth contribution from acquisitions, sales declined 4% on an organic basis.
As highlighted on Slide 6 and 7, sales in our Service Center segment declined 2.3% year-over-year or 3.5%, excluding a 1.2% incremental impact from acquisitions.
Segment sales were unusually weak during the month of December.
Within our Fluid Power and Flow Control segment, sales increased 2.7% over the prior year quarter with acquisitions adding 7.6% growth.
On an organic basis, segment sales declined 4.9% reflecting weaker flow control sales and slower activity across our industrial OEM customer base, as well as the remaining year-over-year drag from the large project referenced in prior quarters.
Excluding the project related drag, segment sales declined approximately 3% on an organic basis over the prior year.
As highlighted on Page 8 of the deck, reported gross margin of 28.9% was up 4 basis points year-over-year.
Results include a non-cash LIFO charge during the quarter of approximately $1.9 million, which compared favorably to prior year LIFO expense of $2.7 million, resulting in a roughly 9 point -- basis point positive impact year-over-year.
Excluding LIFO, our gross margin was down a modest 5 basis points year-over-year.
On a reported basis, selling, distribution and administrative expenses were up 0.3% year-over-year, but down 3.4% on an organic basis, when adjusting out the impact of acquisitions and foreign currency translation.
SD&A was 21.9% of sales during the quarter, down 15 basis points sequentially on an adjusted basis.
EBITDA in the quarter was $74.5 million compared to $76 million in the prior year quarter, while EBITDA margin was 8.9% or 9.2% excluding non-cash LIFO expense in the quarter.
Reported earnings per share for the quarter was $0.97 per share compared to $0.99 per share in the prior year.
Cash generated from operating activities was $34.9 million, while free cash flow was $47.9 million or approximately 126% of net income.
Year-to-date free cash flow of $93 million represents 119% of adjusted net income and is up nearly 60% from the prior year.
We expect additional tailwinds into the second half of fiscal 2020, as inventory levels declined from the second quarter ending position.
We paid down $5 million of outstanding debt during the quarter.
Our debt is down nearly $115 million since financing the acquisition of FCX with net leverage at 2.5 times EBITDA at quarter end below the prior year period of 2.8 times.
We are narrowing our previous guidance ranges and now expect sales of down 2% to flat year-over-year or down 5% to down 3% on an organic day per day basis as well as earnings per share in the range of $4.20 to $4.40 per share.
Previously, our guidance assumes sales down 5% to down 1% organically and earnings per share of $4.20 to $4.50 per share.
Our guidance also assumes gross margins are flat to up 10 basis points for the full year, slightly below our prior guidance of up 10 basis points to 20 basis points.
We continue to view 10 basis points to 20 basis points of gross margin expansion as the appropriate annual target over time, given our internal initiatives.
Lastly, we reaffirm our free cash flow outlook of $200 million to $220 million, which represents a 30% increase of our fiscal 2019 at the midpoint.

Segment sales were unusually weak during the month of December.
Reported earnings per share for the quarter was $0.97 per share compared to $0.99 per share in the prior year.
We expect additional tailwinds into the second half of fiscal 2020, as inventory levels declined from the second quarter ending position.
We are narrowing our previous guidance ranges and now expect sales of down 2% to flat year-over-year or down 5% to down 3% on an organic day per day basis as well as earnings per share in the range of $4.20 to $4.40 per share.
Lastly, we reaffirm our free cash flow outlook of $200 million to $220 million, which represents a 30% increase of our fiscal 2019 at the midpoint.


This strong foundation, coupled with other factors that benefited earnings, enabled us to deliver solid financial results for the second quarter, $0.45 per share compared to $0.39 per share in the same period last year, while achieving important progress on our long-term goals.
We're seeing the effects of reopening of our local economy and unprecedented federal stimulus, which is estimated to have delivered approximately $7.7 billion in funding to our state thus far.
Hawaii's unemployment rate improved to 13.9% in June after peaking at 23.8% in April.
At our utility, while sales were 11.6% below the same quarter last year, we've seen sales improve in some areas such as shopping centers and retail since opening of our local economy began.
Recognizing Hawaii's prudent management of COVID-19, Japan announced Hawaii's addition to a list of 12 global destinations deemed safe for Japan residents to resume travel.
We continue to benefit from a robust federal government presence here as host to the U.S.-Indo Pacific Command, from which the U.S. watches 52% of the world's surface and all component service commands.
A customer using 500-kilowatt hours of electricity in July paid 14% less for that energy than in March.
And as of June 30, we recorded $7.2 million in a regulatory liability account related to ERP benefits, amounts that are to be returned to customers as a reduction in O&M expenses included in rates.
In response to the audit and as part of the settlement, we committed to ramp up to $25 million in annual savings by year-end 2022 to be delivered to customers beginning by 2023.
To offset the lack of a base rate increase and achieve our $25 million by year-end 2022 commitment, we're developing and have begun implementing plans to reduce costs, including through overtime reductions, better scheduling and coordination, managed reductions of our workforce and reducing lower priority work.
We continue to aggressively advance efforts to help move our state toward 100% renewable energy and carbon neutrality.
We're excited to have 14 projects, all solar plus storage or storage only, from the original 16 selected moving forward through the contract negotiation and community engagement phase.
If all are completed, they could add about 450 megawatts of solar and about three gigawatt hours of storage to our system.
We're gathering information on parcels as small as one acre and rooftops of at least 3,200 square feet for future grid-scale solar and wind projects and community solar projects.
And just this week, Hawaiian Electric announced its commitment to convert its entire fleet of light-duty vehicles across the islands, nearly 400 sedans, SUVs, small vans and light trucks to be electric by 2035, leading the state of Hawaii in electric vehicle fleets.
Our team worked aggressively to secure and deploy PPP funding, delivering $370 million in loans for approximately 4,100 small businesses that represent roughly 40,000 jobs in our state.
At the bank, we have a front-row seat to the effects of federal stimulus with federal stimulus checks, leading to significant deposit growth, 24% on an annualized basis.
Consolidated earnings per share were $0.45 versus $0.39 in the same quarter last year.
Consolidated 12-month ROE remains healthy at 9.4%.
Utility ROE increased 10 basis points versus the same time last year to 7.9%.
Bank ROE, which we look at on an annualized rather than a trailing 12-month basis, was 8% for the quarter, down from last year due to economic impacts of COVID-19.
Utility earnings were $42.3 million compared to $32.6 million in the same quarter last year, reflecting, in part, savings due to process improvements and targeted cost reductions.
The most significant drivers of the variance were $7 million lower operations and maintenance expenses, primarily due to fewer generating unit overhauls, less generating station maintenance work associated with overhauls, the reclassification of COVID-19-related bad debt expense from the first quarter of 2020 to a regulatory asset as a result of the PUC approval to defer these expenses and lower labor costs due to lower staffing levels and reduced over time.
The lower generation overhauls and station maintenance work represented approximately $4 million of the $7 million O&M variance and are largely timing related as some of that work will be performed later this year or next year.
Earnings also reflected a $5 million revenue increase from $4 million higher RAM revenues and $1 million for recovery of West Loch project and grid modernization projects under the MPIR mechanism.
$1 million higher net income due to an unfavorable adjustment in 2019 related to reliability performance incentives and $1 million lower interest expense due to debt refinancings at lower rates.
These items were slightly offset by the following after tax items: $1 million lower allowance for funds used during construction as we were as there were fewer long-duration projects in construction work in progress; $1 million higher cost savings from ERP system implementation to be returned to customers; and $1 million higher depreciation due to increasing investments to integrate more renewable energy, improve customer reliability and strengthen system efficiency.
Turning to the drivers of the utility's financial performance for the remainder of the year, the Public Utility Commission issued its final decision for our Hawaii Island Utility, confirming Hawaii Electric's 9.5% allowed ROE and 58% equity capitalization with no change to base rates.
Separately, if the PUC approves our settlement with the consumer advocate in the Hawaiian Electric rate case for Oahu, we should see a similar outcome, no increase in base rates with 9.5% allowed ROE and 58% equity capitalization.
In the second quarter, we reclassified a pre-tax amount of $2.5 million in bad debt expense and incurred in the first quarter to a regulatory asset.
COVID related costs have been $6.5 million to date.
Although sales were down 11.6% versus the second quarter of last year, due to decoupling revenues, we were not significantly impacted.
Steel prices were down close to 30% in the quarter, and the average customer bill declined by over $20 per month monthly since the pandemic began.
On Slide 10, we continue to forecast approximately $360 million of CapEx during 2020.
Last quarter, you may recall, we indicated the potential for up to $30 million below the forecast given potential COVID impacts.
After a full quarter in the COVID environment, we have confidence in achieving the $360 million we forecast for the year.
In 2021 to 2022 period, we still expect CapEx to average approximately $400 million per year or about 2 times depreciation.
American's net income was $14 million, down from $15.8 million in the prior quarter and $17 million in the same quarter last year.
Net interest income was $56.7 million compared to $61.1 million in the linked quarter and $61.5 million in the second quarter of 2019.
ASB took an additional $7 million in credit reserves related to COVID as well as an additional $4 million for unfunded commitments.
We realized $7.1 million gain related to the sale of Visa Class B restricted shares and $2.2 million gain on the sale of investment securities as we sold some legacy positions to reduce credit risk and yield volatility in our investment portfolio.
American incurred $3.7 million in COVID-related expenses, consisting of additional pay to frontline employees, the payout of excess vacation days for employees unable to use vacation while working through the pandemic, purchases of PPE and sanitation supplies and employee meals purchased to promote employee safety and support small business restaurants.
On Slide 12, ASB's net interest margin declined to 3.21% this quarter from 3.72% in the first quarter.
The lower interest rate environment was the largest driver of the net interest margin compression, comprising 34 basis points of the decline.
FAS 91 amortization was also a large factor, reflecting a faster rate of prepayments due to lower rates at the long end of the curve.
This accounted for 15 basis points of compression.
In the second quarter, NIM compression compressed quickly as variable rate loans repriced after the Fed lowered its benchmark rate to near 0 in March.
Approximately 93% of our variable rate portfolio have now repriced and indices to which those variable rates are tied are at or near their floors.
For mortgage-backed securities, which comprise 90% of this portfolio, the amortization increases if prepayments accelerate.
Given these factors, we now expect net interest margin to be in the 3.35% to 3.25% range for the year.
The total provision recognized during the quarter was $15.1 million as reflected in our on our income statement, which also included $4.3 million allowance related to unfunded commitments.
Overall, we have a high-quality loan book that remains healthy with only 3% of our borrowers requesting or qualifying for additional deferral thus far.
Our residential book comprises approximately 60% of the loan portfolio, and the loan-to-value of that portfolio remains conservative at 52%.
Only a small portion of that portfolio, roughly 8%, have requested payment relief.
In consumer loans, which make up just over 4% of the overall portfolio, we've seen a high-volume of deferment request but at low balances.
The bank has strong liquidity with over $3 billion available from a combination of FHLB and unencumbered securities.
ASB's Tier one leverage ratio of 8.4% was comfortably above well-capitalized levels at the end of the second quarter.
As of June 30, we had $425 million of undrawn credit facility capacity, consisting of $150 million at the holding company and $275 million at the utility with just $16.5 million in commercial paper outstanding, all at the holding company.
The utility paid off $14 million in long-term debt when it matured in July with no other long-term debt maturities until 2022.
As of June 30, it had $65 million in unrestricted cash balances.
In 2021, the utility has $50 million in short-term bank loan maturity and expects to access the debt capital markets to help fund its capital investment program.
At the holding company, we have $50 million long-term debt and $65 million short-term bank term loan maturing in the first half of 2021, and we are currently planning refinancing options for those maturities.
On Tuesday, the Board approved our quarterly dividend of $0.33 per share at an annualized rate of $1.32 per share.
At the bank, we are continuing to provide pre-tax pre-provision income guidance, which includes net interest income, noninterest income and noninterest expense to range from $90 million to $110 million.
Given the current low interest rate environment and excess liquidity, we expect interest margin in the 3.25% to 3.35% range.
Our holding company guidance is unchanged at $0.27 to $0.29 loss.

This strong foundation, coupled with other factors that benefited earnings, enabled us to deliver solid financial results for the second quarter, $0.45 per share compared to $0.39 per share in the same period last year, while achieving important progress on our long-term goals.
Consolidated earnings per share were $0.45 versus $0.39 in the same quarter last year.


In a year of closures and shutdowns, we opened our first virtual brand in over 1,000 restaurants by leveraging our technological infrastructure, It's Just Wings surpassed our $150 million target in our company-owned restaurants.
And along with the support of our franchise partners, It's Just Wings became more than $170 million business in the U.S., with many of our international franchisees also now operating the brand.
In a year, we thought we might have to borrow money more to survive the pandemic, we paid down our debt by over $300 million and we're committed to continuing that trend this year.
And in a year where we worried we wouldn't be able to support our charitable partners at levels we're used to, our team set a record, raising more than $10 million for St. Jude during an exceptionally critical time for their patients and families.
Our teams have raised nearly $90 million for St. Jude's patients during our partnership.
It's now in over 250 restaurants today and doing very well.
We're getting great guest feedback, and we're anticipating being in restaurants 900 restaurants by the end of the fiscal year.
These technology investments are helping us do a better job handling the increased mix of off-premise business from pre-pandemic mid-teens to what's now more than 30%, and as well as leveraging the full capacity of our assets with very little incremental capital.
It's in more than 250 restaurants now, and we anticipate full implementation by November.
For the fourth quarter, Brinker reported total revenues of $1.009 billion, with a consolidated comp sales of 65%.
In keeping with our ongoing strategy, the majority of these sales were driven by traffic, up 53% for the quarter, a 10% beat versus the industry on a two-year basis.
These sales translated into solid earnings per share with fourth-quarter adjusted earnings of $1.68.
At the brand level, Chili's comparable restaurant sales were positive 8.5% versus the fourth quarter of fiscal-year '19, which we believe is the more appropriate comparison for the quarter.
Additionally, on an absolute dollar basis, the fourth quarter was Chili's largest sales quarter on record, topping $900 million in total revenue.
Maggiano's, while down 18% compared to fourth quarter of fiscal '19, made very solid progress with its recovery curve and built positive momentum to carry into the current fiscal year.
Our fourth-quarter restaurant operating margin was 16.9%.
Adjusting this performance for the impact of the 53rd week, the resulting 16% operating margin still represents a material year-over-year improvement and more importantly was a 110-basis-point margin improvement versus the pre-COVID fourth quarter of fiscal '19.
Food and beverage expense for the fourth quarter as a percent of company sales was 20 basis points unfavorable as compared to prior year.
Labor expense for the quarter, again, as a percent of company sales was favorable 240 basis points versus prior year, primarily driven by the extra week sales leverage versus fixed labor expenses and the slower reopening pace in a couple of high wage states such as California.
To reward our operator's strong performance throughout the fiscal year, we also chose to further invest in our hourly team members and managers through a variety of incremental bonus structures, totaling approximately $4 million for the quarter beyond our normal payout formulas.
This incremental investment impacted quarterly earnings per share by approximately $0.06 and increased labor expense margin by roughly 40 basis points, well worth the benefits it will accrue.
Restaurant expense was 830 basis points favorable year over year as we fully leveraged many of our fixed costs, particularly from the benefit of the additional week in the quarter.
The continued positive operating performance did result in a meaningful increase in our quarterly tax rate, 15% for the quarter, which includes a catch-up adjustment to increase the annual income tax accrual.
This increase negatively impacted fourth-quarter earnings per share approximately $0.06.
Our operating cash flow for the fourth quarter and fiscal year remained strong with $101 million and $370 million for those time frames, respectively.
EBITDA for the quarter totaled $144 million, bringing the fiscal-year EBITDA total to $368 million.
By year-end, our revolver balance was reduced to $171 million.
This decreased our total funded debt leverage to 2.5 times and our lease-adjusted leverage to 3.6 times at year end.
The new $800 million five-year revolver includes improved pricing allows the return of restricted payments and provides ample liquidity and flexibility to support our growth strategies.
Our board of directors has also reinstated the share repurchase authorization that was suspended in the early days of the pandemic with an authorization amount of $300 million.
For example, we expect commodity and labor inflation percentages each in the mid-single digits with commodity inflation toward the lower end of the range.
Capex of $155 million to $165 million, an annual effective tax rate of 14% to 15%, and weighted annual share count of 45 million to 47 million shares.

These sales translated into solid earnings per share with fourth-quarter adjusted earnings of $1.68.
For example, we expect commodity and labor inflation percentages each in the mid-single digits with commodity inflation toward the lower end of the range.


Adjusted operating revenues of $654 million increased 25% compared to the second quarter of 2020, while diluted adjusted operating income per share of $3.25 rose 33%.
ROAE also increased to 27.8% compared to 25.6% during the same quarter last year.
We attracted nearly 90,000 new recruits during the quarter.
More than 10,000 individuals obtained a new life insurance license during the quarter, and we are encouraged by those results.
We ended the quarter with about 132,000 life license representatives, including a total of 2,400 individuals with either COVID temporary licenses or a license with an extended renewal date.
Excluding all 2,400 of these licenses from our total sales force provides a more appropriate and conservative understanding of the underlying size of our sales force and the foundation for future growth.
We remain committed to growing our sales force and expect to end the year at around 131,000 life licensed representatives after all the COVID-temp licenses and extended renewals have expired compared to a normalized count of 130,700 at the end of 2020.
Nonetheless, we issued nearly 90,000 new life insurance policies during the quarter, a figure that is slightly below last year's second quarter record levels yet outstanding by historical standards.
Productivity remains above our historical range at 0.23 policies per life license representative per month and total face amount grew to $887 billion in force at quarter end.
Looking ahead, as we see trends normalizing, we project full year-over-year life sales to decline approximately 5% versus last year's elevated levels.
Sales exceeded $3 billion for the first time in history with solid demand from both the U.S. and Canada clients and across all product lines, including mutual funds, annuities and managed accounts.
Net inflows at $1.2 billion during the quarter were twice the level in the prior year period and slightly above the $1.1 billion in the first quarter of 2021.
We ended the quarter with client asset values of $92 billion, a 34% increase year-over-year, combining strong equity markets and nearly $3.5 billion of net new inflows over the last 12 months.
Barring an unforeseen period of market uncertainty, which would have a negative impact on investor sentiment, we expect third quarter investment sales to grow in the 30% to 40% range versus last year's third quarter.
We are now actively engaged to do business in fiftheen states with about 1,000 license representatives.
We estimate the mortgage business will earn around $4 million in pre-tax earnings during the second half of 2021 for a full year total of $7 million.
Segment results were very strong and operating revenues of $384 million increased 17% and pre-tax operating income of $117 million rose 23% year-over-year.
Given more context, lapse rate in last year's second quarter was 50% lower than 2019 levels, while the current quarter lapses were an estimated 25% lower than 2019.
The compounding impact of sustained higher sales and policy retention over the last five quarters drove 16% growth in adjusted direct premiums year-over-year.
adding $11 million to pre-tax income over baseline 2019 levels.
The similar contribution in 2020 was $3 million.
The higher persistency lowered DAC amortization by $14 million, which was partly offset by $6 million in higher benefit reserves for a net contribution of $8 million to pre-tax income for the quarter.
The net contribution in the prior year period was $4 million.
We incurred about $6 million in COVID claims and an additional $3 million of claims that were not identified as COVID for a total of nine million excess claims for the quarter.
This compares to $10 million of excess claims in the prior year quarter, which were fully attributable to COVID debt.
The $6 million of COVID claims was in line with our expectations but increased our experience from $10 million per 100,000 population deaths to $13 million per 100,000 population deaths.
It's not unusual for us to experience normal claims volatility in the $3 million range in the quarter.
Looking at the third quarter, we estimate $6 million in COVID claims for the quarter based on an estimated 57,000 population deaths, including 500 deaths in Canada.
If the improvement is in the 10% range, margins would likely increase 80 to 100 basis points from where they were prior to the pandemic.
Insurance expense ratio remained below its pre-COVID historical average during the quarter at 6.6% compared to 6.8% in the prior year period as higher adjusted direct premiums led to greater fixed cost absorption.
Operating revenues of $238 million increased 45% and pre-tax income of $71 million was 52%.
The 67% increase in sales base revenues was somewhat lower than the growth in revenue generating sales due to an increase in large dollar trades, which have a lower commission rate.
Asset-based revenues increased 39%, largely in line with the higher average client asset value.
Other operating expenses grew by 11%, largely driven by fees based on client asset value.
Canadian segregated fund DAC amortization for the quarter was at a normal run rate, but was $1.7 million higher than the prior year due to a significant market correction that occurred during the second quarter of 2020.
The adjusted operating loss increased by $5.2 million compared to the prior year excluding $2.1 million in transaction-related expenses incurred during the quarter as a result of the acquisition of e-TeleQuote.
The year-over-year change results reflects around $3 million higher employee and technology-related costs as well as $1.6 million of higher reserves on a block of discontinued business due to the low interest rate environment and improved persistency.
Allocated net investment income in the segment declined by $2 million largely driven by a higher allocation to the Term Life segment to support growth in that business, along with lower overall yield on the invested asset portfolio.
Our growing mortgage business added a net $1.6 million to pre-tax income during the quarter year-over-year.
Consolidated insurance and other operating expenses on slide 10 were in line with expectations that are $113 million during the second quarter, rising 13% or $13 million over the prior year.
We anticipate third quarter insurance and other operating expenses in our three existing segments to be approximately $119 million or 12% higher than the prior year period.
The unrealized gain on our invested asset portfolio at the end of June was $123 million, up from $98 million at the end of March as rates declined and credit spreads tightened.
With the new bond factors, Primerica Life estimated risk-based capital ratio is about 410% at the end of the second quarter, and we plan to remain above 400% for the rest of the year as we continue to fund business growth and take ordinary dividends to the holding company.
On slide 12, holding company liquidity at June 30 was $656 million reflecting the buildup in anticipation of the e-TeleQuote acquisition and includes the $125 million draw against our revolving credit facility.
Immediately following the closing on July 1, holding company liquidity was approximately $169 million.


I'm very pleased with our strong third quarter results, which saw EBITDA -- adjusted EBITDA increased over 165% compared to Q3 of 2020 and the record results we have posted for the first nine months of the year.
Adjusted EBITDA totaled $741 million thus far in 2021, compared to $261 million for the first nine months of 2020.
We had a very active quarter, completing $1.8 billion of investment transactions, bringing our year-to-date total to $4.4 billion.
Our assets under management has grown by 17% in 2021 to a record $20.5 billion, from $17.6 billion at the end of 2020.
Global transaction volumes remain healthy, with Q3 volumes in the U.S. increasing 150% from last year's levels, according to Real Capital Analytics.
Our Mountain West apartment portfolio, which is our largest region, with almost 11,000 units, outperformed once again, driven by very attractive migration trends and relative affordability.
We also saw significant improvements in our Pacific Northwest and California portfolio, as pandemic-related moratoriums began to burn off, and we expect meaningful rent growth in all of these areas over the next 15 months.
Strong leasing demand in our Dublin multifamily portfolio resulted in occupancy growing by over 400 basis points in Q3 to 96.6 occupancy.
The key acquisitions in the quarter were three wholly owned with multifamily assets totaling 879 units that we acquired for a total of $399 million.
Our multifamily portfolio globally grew to a record 33,400 units at quarter end, including almost 5,000 units under development, which we expect to complete at yields well above current market cap rates.
We're on track to increase our global unit count to 35,000 by year-end.
Our Q3 transactions grew estimated annual NOI to $413 million, an increase of $19 million in the year, and we increased our fee-bearing capital to $4.8 billion, representing a 23% growth year to date.
I'm also pleased to announce that yesterday, our board of directors authorized a 9% increase to our quarterly dividend, which now annualizes to $0.96 per share.
In Q3, we had GAAP earnings per share of $0.47 per diluted share, compared to a loss of $0.18 in Q3 of last year.
Adjusted net income in the quarter grew to $112 million, compared to $27 million last year.
And adjusted EBITDA grew to $203 million in the quarter, compared to $76 million in 2020.
For the year, we've had GAAP earnings per share of $1.96 per share, adjusted net income of $424 million, and as Bill mentioned, adjusted EBITDA of $741 million, representing record results for the first nine months of the year.
This strong performance led to $79 million in gains and $46 million of accrued performance fees in the quarter.
For the quarter, including promotes, total adjusted fees were $56 million, up from $8 million in Q3 of last year.
Turning to our balance sheet, in August, we issued $600 million of unsecured bonds maturing in 2030.
The proceeds were used to fully pay off our line of credit, as well as the remaining $296 million of our KWE bonds due in 2022, which was completed in October.
We have significantly improved our maturity schedule, with no unsecured debt maturities until 2025 and nothing outstanding on our $500 million revolving credit facility.
Our debt has a pro forma average interest rate of 3.6% and a weighted average maturity of 6.5 years, which has improved by 2.5 years since the beginning of the year.
During the quarter, we bought back $25 million of stock at an average price of $21.55.
Since the beginning of 2018, we've now returned $750 million, or approximately $5.40 per share, to shareholders in the form of dividends or share repurchases, which includes repurchasing 15.7, million shares or approximately 10%, of our outstanding share count.
We still have $213 million on our $500 million buyback authorization remaining, a portion of which was utilized in October.
Positive migration trends and affordability continue to create outsized demand, in particular for our Mountain West portfolio, which saw same-property revenues grow by 11% and NOI grew by 15%.
We think there remains strong upside in our Mountain West portfolio, where average rents are $1,366 per month, and as people continue to seek a higher quality of life and migrate out of higher rent, higher tax states.
Rent concessions in the U.S. were down 63% in Q3 compared to Q3 of 2020, and we saw leasing spreads average a record 27% on new leases across our U.S. portfolio.
The combination of these factors resulted in robust same-store revenue growth across our U.S. market rate multifamily portfolio of 8% and NOI growth of 12% versus Q3 of 2020.
Sequentially, from Q2 of this year, revenues grew by an impressive 6% and NOI by 8%.
In-place rents in our U.S. portfolio are now 6% above pre-pandemic levels.
And with an average loss to lease of 15%, we believe our portfolio is set up for strong growth in 2022 and beyond.
And currently, Capital Dock is 77% leased and on track to be stabilized in Q4.
A great recent example is at one of our largest office assets, 111 Buckingham Palace Road in London, where by October, we transacted on approximately 100,000 square feet of lease transactions, including 20,000 square feet under offer, which in total represents 45% of the building.
These transactions will improve the occupancy significantly, from 80% to 100% in Q4, deliver 26% growth above in-place rents and 40% of the income at pre-COVID top rents in excess of GBP70 per square foot, compared to 15% in Q3 of 2020.
Major tech firms represented 80% of the new leases, illustrating that top tenants are active in the market and willing to make decisions for the right space.
71% of our office NOI is from our European portfolio, which saw Q3 same-property revenue grow by 4% and NOI grow by 5%.
We continue to see this play out in our own portfolio, with approximately 90% of the NOI from low and midrise properties.
We completed 585,000 square feet of leasing in the quarter, bringing our year-to-date total to 1.5 million square feet, with a WALT of 7.6 years.
Our leasing pipeline remains strong, with 152,000 square feet of leasing completed thus far in Q4 and another 600,000 square feet in legals that we're actively working on closing out, giving us good momentum heading into next year.
Turning to our investment management platform, we continued to see strong growth in the quarter, with our fee-bearing capital growing to $4.8 billion.
This has now increased over 160% since the beginning of 2018.
In July, we announced a new GBP500 million commitment focused on European loans, bringing total global commitments to $3 billion.
In Q3, we completed $440 million of loan investments, including our first loans in Europe on a few large industrial portfolios.
Our debt platform grew by 24% to $1.4 billion in loans outstanding, with $140 million in future unfunded commitments.
We've been able to attract institutional-quality borrowers with high-quality assets to our debt platform, with an average loan size of $70 million and weighted average maturity of four years.
Occupational demand has driven vacancy to an all-time low in the U.K. of 3.4%, and yields continued to compress across Europe, due to accelerating rent growth.
COVID has accelerated the thesis, as online sales penetration continues to grow, with online sales making up 28% of total retail sales in the U.K.
Our industrial portfolio has grown rapidly, and including assets under offer, our portfolio has a gross value of approximately $1.1 billion today across 59 assets, with KW's share at approximately 20%.
We look forward to further growing both our debt platform and our logistics platform in the fourth quarter and continued expansion of our investment management business, which has, in total, $2.1 billion in future commitments from our various strategic partners.
Our developments, totaling $2.7 billion at cost, are being delivered with strong sustainability credentials, with environmental improvements and tenant wellness at the center of our focus.
Once these assets are completed and stabilized, we expect an incremental $105 million of estimated annual NOI to KW, which represents an initial yield on cost of approximately 6%.
We are nearing completion of two office properties in the heart of Dublin, Hannover Quay and Kildaire Street, which total 134,000 square feet that are expected to complete in Q4 and Q1, respectively.
We are going to develop 589 residential units as part of a master-planned community in Camarillo, California.
The project will have 310 wholly owned market-rate units, 170 affordable units built through our vintage housing joint venture, and 109 for-sale townhomes sold by Comstock Homes.
As I mentioned on the last call, we have a clear path to grow our stabilized NOI at the rate of 10% to 15% a year over the next three years, driven by strong organic NOI growth, new acquisitions, and the completion of our construction.
We also plan to grow our fee-bearing capital and resulting fees by 15% to 20% per year over the next three years.
Second, over the last 18 months, we either grew or establish new investment platforms with well capitalized, extremely liquid, global strategic partners who have a keen desire to expand their relationship with Kennedy-Wilson.


And that's the predominant theme today not just our growth in key metrics like rental revenue where we gained 22% year-over-year, but also the growth we see going forward.
Our companywide recordable rate remained below one again for the quarter and 11 of our regions worked injury-free in September.
We've grown our team by almost 2,000 employees this year including 500 employees over and above our acquired people and our turnover rate has remained in line with pre-COVID levels.
In the third quarter pricing in our retail channels was up 7% sequentially and up by double digits year-over-year.
Used proceeds were 60% of original costs which is a new high watermark for us.
In the third quarter, rental revenue on our gen rent segment was up almost 18% year-over-year with all regions showing growth.
Our Specialty segment as a whole was up 36% year-over-year with 21% growth in same-store rental revenue.
We've also opened 24 specialty locations through September which keeps us on track for the 30 cold starts targeted for the year.
On the Construction side, the gains were just as broad led by non-res construction where we were up 18% year-over-year.
Rental revenue for the third quarter was $2.28 billion, or an increase of $416 million.
That's up just over 22% year-over-year.
Within rental revenue, OER increased $325 million, or 20.7%.
The biggest driver here was fleet productivity, which was up 13.5%, or $212 million.
Our average fleet size was up 8.7%, or a $137 million tailwind to revenue.
Rounding out the change in OER is the normal inflation impact of 1.5%, which cost us $24 million.
Also within rental, ancillary revenues in the quarter were up about $71 million, or 29%, and rerent was up $20 million.
Used sales for the quarter were $183 million, which was down $16 million, or about 8% from the third quarter last year.
Adjusted used margin was 50.3% and represents a sequential improvement of 240 basis points and a year-over-year improvement of 610 basis points.
Our used proceeds in Q3 recovered 60% of the original cost of the fleet sold.
Now compared to the third quarter of last year, that's a 900 basis point improvement from selling fleet that averages over seven years old.
Adjusted EBITDA for the quarter was just over $1.23 billion, an increase of 14% year-over-year, or $152 million.
The dollar change includes a $219 million increase from rental.
Now in that OER contributed $200 million.
Ancillary was up $17 million and rerent added $2 million.
Used sales helped adjusted EBITDA by $4 million, and other non-rental lines of business provided $8 million.
SG&A was a headwind to adjusted EBITDA of $79 million in part from the reset of bonus expense that we've discussed on our prior earnings call.
Our adjusted EBITDA margin in the quarter was 47.5%, down 190 basis points year-over-year, and flow-through as reported was just over 37%.
I'll also remind you that we had $20 million of one-time benefits recorded in the third quarter last year that did not repeat.
Adjusting for these items, the flow-through was about 58% with margins up 130 basis points year-over-year.
I'll shift to adjusted EPS, which was $6.58 for the third quarter.
That's up $1.18 versus last year and that's from higher net income.
Looking at capex and free cash flow for the quarter, gross rental capex was $1.1 billion.
Our proceeds from used equipment sales were $183 million, resulting in net capex in the third quarter of $917 million.
That's up $684 million versus the third quarter last year.
Now turning to ROIC, which was a healthy 9.5% on a trailing 12-month basis, which is up 30 basis points both sequentially and year-over-year.
Through September 30, we generated a robust $1.25 billion in free cash flow, which is after considering the sizable increase in capex so far this year.
We've utilized that free cash flow to help fund over $1.4 billion in acquisition activity and we reduced net debt almost $100 million.
Leverage was 2.4 times at the end of the third quarter that's down 10 basis points sequentially and flat versus the end of the third quarter last year even as we funded acquisitions this past year.
Liquidity at the end of the third quarter remained strong at over $2.6 billion.
That's made up of ABL capacity of just over $2.2 billion and availability on our AR facility of $68 million.
We've also had $320 million in cash.
I'll also mention we refinanced $1 billion of five and seven-eighths notes earlier in the quarter and refinancing that debt will save $29 million in cash interest in 2022 and extends our next long-term note maturity out to 2027.
We've again raised our outlook for growth capex this year with a $250 million increase at the midpoint.
And even with that increased investment in capex, free cash flow remains strong at over $1.5 billion at the midpoint.


In the current highly competitive environment, the strength of the Apollo Commercial Real Estate Debt platform again has proven to be incredibly beneficial as we have completed approximately $1.5 billion of new transactions for ARI through the first three quarters of the year.
We expect ARI loan origination totals for 2021 will approach pre-pandemic levels as we have already committed to an additional $340 million of transactions in the fourth quarter and we are working through a number of other transactions that should close by year-end.
As a result of our success in Europe, loans securing properties in Europe represent approximately 40% of ARI's portfolio at quarter-end.
Through September 30, we have received almost $800 million of loan repayments and an additional $277 million of loans have repaid since quarter-end.
As a result, ARI's construction exposure continues to decline, representing approximately only 14% of the portfolio at quarter-end.
In the past year ARI, expanded the company's Board of Directors from 8 to 10 members, with the addition of Pamela Carlton and Carmencita Whonder.
Our distributable earnings for the quarter were $49 million and $0.35 per share, and GAAP net income available to common stockholders was $57 million or $0.38 per diluted share.
GAAP book value per share prior to depreciation and the General CECL Reserve increased slightly to $15.54 from $15.48 at the end of last quarter.
The loan portfolio at quarter-end was $7.3 billion, a slight decline from the end of previous quarter due to increased loan repayments.
The portfolio had a weighted average unlevered yield of 5.2% and the remaining fully extended term of just under three years.
Approximately 89% of our floating rate U.S. loans have LIBOR floors that are in the money today, with a weighted average floor 1.20%.
During the quarter, we made a $180 million first mortgage, $141 million of which was funded.
We also made $113 million of add-on fundings for previously closed loans.
We increased our secure facility with J.P. Morgan to $1.5 billion and extended the maturity to September of 2024.
We ended the quarter with almost $600 million of total liquidity, which was a combination of cash and capacity on our lines.
Our debt-to-equity ratio at quarter-end decreased slightly to 2.2 times and we ended the quarter with $1.7 billion of unencumbered loan assets.


As of May 4 we have had sadly 17 deaths and a total case load of 621 but also 16 days where new cases were in the single digits.
Post 9/11 and post the Great Recession tourism came back strongly.
And they believe that local economic activity will return by 35% to 45% in May and June and 75% by year-end.
And we remain committed to our state's 100% renewable portfolio standard and carbon neutrality goals.
For example on Oahu in May lower fuel costs would reduce a 500-kilowatt hour per month bill by more than $12 compared to March.
We're proud that Americans secured over $370 million for approximately 3600 small businesses employing roughly 40000 individuals.
And that Hawaii banks in total obtained funding for 78% of our states eligible payrolls in the first round placing Hawaii in the top five states in the nation.
Our utility has delivered power for our state for over 125 years through many different economic and social conditions.
And indeed in the last week of March we saw lower loads 7% lower on Oahu and Hawaii Island and 14% lower on Maui.
The lower loads also impact our renewable portfolio standard or RPS performance albeit in a positive fashion since the lower kilowatt hour sales reduces the denominator in the RPS calculation and we expect to comfortably exceed our 2020 RPS goal of 30%.
Our bank has served our state for 95 years and has a conservative risk culture lending practices and loan portfolio.
These attributes helped ASB perform well compared to other banks during the 2008 2009 financial crisis and position it well for the challenge at hand.
We have paid uninterrupted dividends since [1901 including during the Great Recession and maintaining the stability of our dividend is no less important today.
I was CEO of HEI through 9/11 and the Great Recession.
On slide nine our Q1 earnings were $0.31 per share compared to $0.42 per share in the prior-year quarter.
COVID-19 expense impacted earnings at both the utility and the bank including $2.5 million higher utility bad debt expense pre-tax than Q1 of last year and additional provisioning for COVID-19 of over $4 million at the bank.
Loads were strong and showed increases over the prior year of nearly 5%.
On slide 10 utility earnings were $23.9 million compared to $32.1 million in the first quarter of 2019.
The most significant drivers of the variance were: $3 million revenue increase from higher rate adjustment mechanism revenues $1 million revenue increase from the recovery of West Loch and Grid Modernization projects under the major project interim recovery mechanism; and $1 million lower interest expense due to debt refinancings at lower rates.
These items were offset by $7 million higher O&M expenses compared to Q1 2019 primarily due to increased bad debt expense due to COVID-19 the absence of onetime of a onetime benefit in Q1 2019 due to deferral treatment for certain previously incurred expenses and an increase in vegetation management work and higher outside service costs.
In addition we had approximately $1 million higher depreciation expense $1 million lower net income from the absence of renewable procurement performance incentive mechanism.
And we received that we received in 1Q 2019 $1 million from the absence of mutual assistant work reimbursement from the first quarter of 2019 and $1 million lower AFUDC as there were fewer long duration projects in construction work in progress particularly after the West Loch was placed in service in November.
American's net income was $15.8 million in the quarter down from $28.2 million in the previous quarter.
Although as a reminder 4Q the fourth quarter of 2019 included $7.7 million of net income from the sales of the former of former properties.
Net income was also down by $5 million versus the first quarter of 2019 mostly due to the provision taken due to COVID-19.
Following our adoption of CECL and the additional provision in the first quarter relating to COVID we believe we are well positioned and our allowance for loan and lease losses ratio of 149 basis points is above our local peers who average about 126 basis points.
We also saw a strong loan growth during the quarter of 4.7% annualized with solid loan growth in commercial and commercial real estate portfolios as well as strong deposit growth of 7.1% on an annualized basis.
HEI issued $65 million a $65 million 364-day term loan freeing up the full capacity of our $150 million credit facility.
Hawaiian Electric added $75 million of capacity through a new revolver and launched and repriced and priced $160 million private placement $95 million of which was used to free up credit capacity on its revolver.
The private placement also included a $50 million green bond portion.
Looking at maturities over the our long-term debt maturities over the remainder of 2020 only $14 million remains at the utility.
We have a modest holding company maturity of $50 million in the first quarter of 2021 which we expect to refinance in advance of that maturity.
The bank has strong liquidity with approximately $3 billion available from the combination of the FHLB and unencumbered securities.
We remain committed to investment-grade rating and can turn on our dividend reinvestment program if needed which can cost effectively generate about $30 million of cash and incremental equity annually based on historical levels.
We're currently forecasting approximately $22 million of COVID-19 related expenses at the utility.
We had originally requested 4% revenue increase or about $78 million.
We are now approximately we now forecast approximately $330 million to $360 million of Capex in 2020.
As we see about $30 million of potential downside due to COVID related delays.
In the 2021 through 2022 period we expect Capex to average approximately $400 million per year or about 2x depreciation.
Our bank guidance for the year of $0.73 to $0.80 is shown on the left on the left lower left.
We estimate the pre-tax provision income range to be from $90 million to $110 million for 2020.
Given our already very low-cost of funds at 24 basis points in the first quarter there is little room to move lower and improve to improve net interest margins.
If you look at the 2008 through 2011 period our provision expense averaged 0.52% of our loan portfolio and peaked at 0.81%.
If you apply that to a portfolio of our size today you'd have approximately you'd have an average credit cost of $27 million and a peak of $42 million.
We expect pre-tax pre-provision income which includes net interest income noninterest income and noninterest expense to range from $90 million to $110 million.
Given our current low interest rate environment we expect net interest margin in the 3.45% to 3.55% range.
Our holding company guidance is unchanged at $0.27 to $0.29 earnings per share loss.


For our combined Brokerage and Risk Management segments, we posted 17% growth in revenue, 10% organic growth and nearly 11% organic if you control for last year's large life sale that we've discussed frequently.
Net earnings growth of 22%, adjusted EBITDAC growth of 13%.
And we completed five new mergers in the quarter, bringing our year-to-date closed merger count to 19, representing nearly $200 million of annualized revenue.
And if you add in the pending Willis Reinsurance merger, that number would be pushing $1 billion.
We're looking forward to welcoming 2,200 new colleagues to Gallagher as a family of professionals this holiday season.
Reported revenue growth was excellent at 16%.
Of that, 9% was organic revenue growth, at the upper end of our September IR Day expectation and nearly 10% controlling for last year's large life product sale.
Net earnings growth was 23%, and we grew our adjusted EBITDAC 13%.
First, our domestic retail operations were very strong with more than 10% organic.
Risk Placement Services, our domestic wholesale operations, grew 16%.
This includes more than 30% organic in open brokerage and 5% organic in our MGA programs and binding businesses.
Outside the U.S., our U.K. operations posted more than 9% organic.
Specialty was 12%, and retail was a solid 6%, both supported by excellent new business production.
Australia and New Zealand combined grew more than 6%, also benefiting from good new business.
And finally, Canada was up nearly 10% on the back of double-digit new business and stable retention.
Third quarter organic was up about 5%, in line with our September IR Day commentary.
Controlling for last year's large life insurance product sale, organic would have been up high single digits and represents a really nice step-up from the 4% organic we reported for the second quarter and a 2% organic for the first.
So total Brokerage segment organic solidly in that 9% to 10% range, simply an excellent quarter.
Overall third quarter renewal premium increases were about 8% and similar to increases during the first half of this year.
Moving around the world, U.S. retail premium was up about 8%, including nearly 10% increases in casualty and professional liability.
Even workers' comp was up around 5%.
In Canada, premium was up about 9%, driven by double-digit increases in professional liability and casualty.
Australia and New Zealand combined up 3% to 4%.
And U.K. retail was up about 7% with double-digit increases in professional liability, while commercial auto was closer to flat.
Finally, within RPS, wholesale open brokerage premiums were up more than 10% and binding operations were up 5%.
Global third quarter natural catastrophe losses, likely in excess of $40 billion, increased cyber incidences, social inflation, replacement cost inflation and supply chain disruptions.
So as I sit here today, I think fourth quarter Brokerage segment organic will be similar to the third quarter, and that could take full year 2021 organic toward 8%.
That would be a really nice improvement from the 3.2% organic we reported in 2020.
To put that in perspective, 8% would be our best full year Brokerage segment organic growth in nearly two decades, and we think 2022 organic will end up in a very similar range.
I mentioned earlier we completed five brokerage mergers during the quarter, representing about $16 million of estimated annualized revenues.
As I look at our tuck-in M&A pipeline, we have more than 50 term sheets signed or being prepared, representing around $400 million of annualized revenues.
Third quarter organic growth was 16.6%, even better than our September IR Day expectation.
Adjusted EBITDAC margin once again came in above 19%.
Looking forward, while our fourth quarter comparison is somewhat more challenging, the recovering global economy, improving employment situation and excellent new business production should result in fourth quarter organic over 10%.
That puts us on track for double-digit full year organic and an EBITDAC margin nicely above 19%.
Headline all-in organic of 9%, outstanding in itself, but as Pat said, really running closer to 10% due to last year's life sale.
Either way, a nice step-up from the 6% we posted in the first quarter and the 6.8% in the second.
Underlying margin after controlling for the life sale was around 160 basis points.
First, headline margins were down 48 basis points, right about where we forecasted at our September IR day.
Second, in September, we forecasted about $25 million of expenses returning into our structure as we emerge from the pandemic and a small amount of performance comp time.
So controlling for these expenses also brings you to that underlying margin expansion of about 160 basis points.
That feels about right on organic in that 9% to 10% range.
Looking forward, we think about $30 million of our pandemic period expense savings return in the fourth quarter.
And if you assume, say, 9% organic, math would say we should show 90 to 100 basis points of expansion here in the fourth quarter.
So in the end, the headline story is that we have a really decent chance at growing our full year '21 margins by nearly 150 basis points.
Add that to expanding margins over 400 basis points last year means we'd be growing margins more than 550 basis points over two years.
Moving to the Risk Management segment EBITDAC table on Page 7.
Adjusted EBITDAC margin of 19.5% in the quarter is an excellent result.
Year-to-date, our margins are at 19.2%, which underscores our ability to maintain a large portion of our pandemic period savings.
Looking forward, we think we can hold margins above 19% in the fourth quarter and for the full year.
That would result in about 100 basis points of margin expansion relative to 2020, another fantastic margin story.
Now let's shift to our CFO commentary document we posted on our IR website, starting on Page 4.
One small exception is Brokerage segment amortization expense, about $3 million below our September IR Day estimate.
The non-GAAP adjustment here is that $12 million charge related to the early extinguishment of debt that we issued in May related to the terminated Aon and Willis remedy package.
On the corporate cost line, in line on an adjusted basis after controlling for $5 million of a onetime permanent tax item, that's a noncash and it's simply a small valuation allowance related to a couple of international M&A transactions.
We are increasing our full year net earnings range to $87 million to $95 million on the back of the third quarter upside.
At September 30, cash on hand was about $2.7 billion, and we have no outstanding borrowings on our credit facility.
Our Brokerage and Risk Management segments combined have produced 15% growth in revenue, nearly 8% organic growth.
We completed 19 new mergers this year with nearly $200 million investment made at annualized revenue.
Net earnings margin expanded 81 basis points.
Adjusted EBITDAC margin expanded 153 basis points.
And our clean energy investments are on track to being up 30% this year, setting us up nicely for substantial additional cash flows for the coming five to seven years.


This summer, we had 12 storms, with five having over 100,000 outages.
In an effort to accelerate our preventative maintenance, we are increasing our tree trimming workforce from 1,200 to almost 1,500 people, and our overhead line workforce from 850 to over 1,000 people.
We made the decision to invest an additional $70 million in our tree trimming program from 2021 to 2023 as over two-thirds of our outages are tree-related.
As you'll see in our 2022 outlook and our five-year plan, we are on track to deliver 5% to 7% earnings per share growth through 2026 and dividend growth in line with our earnings per share growth.
We are raising the midpoint of our operating earnings per share guidance from $5.77 to $5.84 per share.
This is 14% growth in earnings per share from our original 2020 guidance.
For 2022, we are providing an operating earnings per share early outlook range of $5.70 to $5.97 per share.
Even with the area -- earnings rolling off at the end of this year, we continue to deliver 6% growth from the 2021 original guidance midpoint.
Today, we are also announcing a 7% increase for our 2022 annualized dividend, in line with the top end of our operating earnings per share growth target.
This is nearly 2,000 megawatts of coal retirements or 30% of our coal generation fleet.
Our updated five-year utility plan is $18 billion, which is $1 billion higher than the prior plan.
Over 90% of our five-year investment plan will be at our two utilities.
Overall, we have a robust total investment agenda of $19.5 billion over the next five years.
At DTE Electric, we announced our plan to accelerate decarbonization by ceasing coal use at the Belle River Power Plant by 2028, reducing carbon emissions by 50% two years earlier than originally planned.
The $1 billion increase in our DTE Electric five-year plan is driven by distribution infrastructure investments, preparing our grid for electrification, and hardening initiatives, an increased cleaner energy investment due to our voluntary renewable program, which is still exceeding our high expectations.
So far, we have reached over 950 megawatts of voluntary renewable commitments with large business customers and over 40,000 residential customers.
We have an additional 400 megawatts in advanced stages of discussion with future customers.
This $15 billion investment over the next five years supports our long-term operating earnings growth of 7% to 8% at the electric company.
At DTE Gas, we are on track to achieve net zero greenhouse gas emissions by 2050.
This program provides the opportunity for customers to purchase both carbon offsets and renewable natural gas to enable them to offset up to 100% of the carbon from their natural gas usage.
Earlier we have over 4,000 customers subscribed, and we look forward to seeing it become as successful as our voluntary renewable program at DTE Electric.
Overall, at DTE Gas, we are planning on investing $3 billion over the next five years to upgrade and replace aging infrastructure with potential upside to the plan of $500 million.
Overall, we expect our long-term operating earnings growth to be 9% at DTE Gas.
We are planning on investing between $1 billion to $1.5 billion at this segment over the next five years.
We are targeting operating earnings of $85 million to $95 million in 2022, growing to $160 million to $170 million in 2026 with approximately 80% of the operating earnings in this business coming from decarbonization-related projects.
In aggregate, these three projects will serve the vehicle fuel market, producing over 500,000 million Btus of RNG per year, with 100% of the production offtake contracted long-term.
Total operating earnings for the quarter were $334 million.
This translates into a $1.72 per share.
DTE Electric earnings were $342 million for the quarter.
Moving on to DTE Gas, operating earnings were $10 million lower than the third quarter last year.
Operating earnings were $73 million.
This is $26 million higher than the third quarter of 2020 driven primarily by REF earnings and new RNG projects.
Finally, Corporate & Other was unfavorable $39 million quarter-over-quarter.
As we look forward to the balance of the year, the tax timing adjustments for the first three quarters will result approximately a $50 million favorable reversal in the fourth quarter, so our full-year 2021 results at Corporate & Others is expected to fall within our guidance for that segment.
Overall, DTE earned $1.72 per share from continuing operations in the third quarter of 2021.
As Jerry mentioned, we are raising the midpoint of our 2021 operating earnings per share guidance from $5.77 to $5.84 per share.
Our revised operating earnings per share guidance range for 2021 is $5.70 to $5.98 per share.
This bias to the higher end also reflects the additional investment in reliability as we are investing $70 million to combat extreme weather-related power outages with no impact to our customer bills.
We are continuing strong 5% to 7% long-term operating earnings per share growth through some significant milestones.
We are converting $1.3 billion of mandatory equity in '22, and the REF business will sunset at the end of 2021.
Through this, we'll achieve 6% growth from 2021 original guidance.
Our 2022 operating earnings per share early outlook midpoint is $5.84 per share, and we will work toward hitting the higher end of our range of $5.70 to $5.97 per share.
Approximately $90 million of REF earnings net of associated costs rolls off at the end of the year.
Due to our strong cash flows, DTE has minimal equity issuances in our plan beyond the convertible equity units in 2022, while also increasing our five-year capital investment plan by $1 billion.
We have a strong investment-grade credit rating and target an FFO to debt of 16%.
Additionally, we are increasing our 2022 dividend by 7% to $3.54 per share.
Using the funds raised from DTM's debt issuance, we repurchased a little over $2.6 billion of corporate debt and incurred approximately $400 million of debt breakage fees associated with the early retirement of this debt.
2022 is looking good with a 6% earnings per share growth from 2021 original guidance and our increased five-year capital plan supports our 5% to 7% long-term growth, while delivering cleaner generation and increased reliability for our customers.

For 2022, we are providing an operating earnings per share early outlook range of $5.70 to $5.97 per share.
This translates into a $1.72 per share.
Overall, DTE earned $1.72 per share from continuing operations in the third quarter of 2021.
Our revised operating earnings per share guidance range for 2021 is $5.70 to $5.98 per share.
Our 2022 operating earnings per share early outlook midpoint is $5.84 per share, and we will work toward hitting the higher end of our range of $5.70 to $5.97 per share.