Attached files
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| 8-K - RSO FORM 8-K - ACRES Commercial Realty Corp. | rso8k093011.htm |
FOR IMMEDIATE RELEASE
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CONTACT:
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DAVID J. BRYANT
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CHIEF FINANCIAL OFFICER
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RESOURCE CAPITAL CORP.
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712 Fifth Ave, 12TH Floor
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New York, NY 10019
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212-506-3870
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RESOURCE CAPITAL CORP.
REPORTS RESULTS FOR
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011
Highlights
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GAAP net income of $0.20 and $0.54 per share-diluted.
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Funds from Operations (“FFO”) of $0.22 and $0.59 per share-diluted.
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Total revenues increased by $4.3 million, or 22% and increased by $17.1 million, or 35% as compared to the three and nine months ended September 30, 2010, respectively.
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Provisions for loan losses decreased by 61% and 70% as compared to the three and nine months ended September 30, 2010, respectively.
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Common stock cash dividend of $0.25 per share.
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Cash on hand of $177.4 million at September 30, 2011, a decline of $58.4 million from $235.8 million at June 30, 2011.
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New York, N.Y., November 2, 2011 - Resource Capital Corp. (NYSE: RSO) (“RSO” or the “Company”), a real estate investment trust, or REIT, whose investment strategy focuses on commercial real estate (“CRE”) assets, commercial mortgage-backed securities (“CMBS”), commercial finance assets and other investments, reported results for the three and nine months ended September 30, 2011.
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GAAP net income for the three and nine months ended September 30, 2011 was $14.9 million, or $0.20 per share-diluted, and $37.3 million, or $0.54 per share-diluted, respectively, as compared to GAAP net income for the three and nine months ended September 30, 2010 of $14.1 million, or $0.27 per share-diluted, and $28.8 million, or $0.64 per share-diluted, respectively, an increase of $891,000, or 6%, and an increase of $8.5 million, or 29%, respectively.
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FFO for the three and nine months ended September 30, 2011 was $16.2 million, or $0.22 per share-diluted, and $40.2 million, or $0.59 per share-diluted, respectively.
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Jonathan Cohen, CEO and President of Resource Capital Corp., commented, “I believe that this quarter again saw improvement in our credit, good cash flow and the ability to grow the balance sheet safely. We accomplished a tremendous amount including earning FFO of $0.22 cents per share, securitizing our leasing portfolio, as well as growing our bank loan portfolio through the completion of Apidos CLO VIII, our newest CLO. It is proof of the market’s belief in our underwriting ability that we were able to access the term markets during September and October. We continue to carry very little short term debt and make significant progress in investing the cash on our balance sheet into new high yielding assets.”
Additional highlights:
Commercial Real Estate
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RSO received repayments and paydowns on CRE loans of $33.0 million and sold five CRE loans for proceeds of $56.7 million for the nine months ended September 30, 2011.
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RSO’s CRE loan portfolio is now comprised of approximately 83% senior whole loans as of September 30, 2011, as compared to 66% a year ago.
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RSO originated $104.6 million of whole loans in the nine months ended September 30, 2011, with a weighted average yield of 7.5% as compared to $17.9 million with a weighted average yield of 8.4% originated during the year ended December 31, 2010.
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RSO has committed over $19.2 million to new CRE whole loans slated to close in the fourth quarter of 2011 from an ongoing pipeline of new CRE loans of over $200.0 million.
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RSO increased its opportunistic and distressed real estate investments with the acquisition of one real estate asset in the quarter ended June 30, 2011, and acquired a second multi-family investment for $18.0 million in the quarter ended September 30, 2011. These acquisitions, coupled with the conversion to equity of two commercial real estate loans during the quarter ended June 30, 2011, demonstrate RSO’s commitment to opportunistic real estate acquisitions.
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The following table summarizes RSO’s CRE loan activities and fundings of previous commitments, at par, for the three, nine and 12 months ended September 30, 2011 (in millions, except percentages):
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Three Months Ended
September 30, 2011
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Nine Months
Ended
September 30, 2011
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12 Months
Ended
September 30, 2011
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Floating Weighted Average Spread (1)
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Weighted Average Fixed Rate (2)
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Whole loans
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$ | 24.5 | $ | 104.6 | $ | 122.5 | 3.42% | 12.0% | ||||||||||||
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Whole loans – future fundings (3)
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4.2 | 7.8 | 9.2 | |||||||||||||||||
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New loans production
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28.7 | 112.4 | 131.7 | |||||||||||||||||
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Sale of real estate loans
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(78.6 | ) | (78.6 | ) | ||||||||||||||||
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Payoffs
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(14.5 | ) | (26.0 | ) | (26.0 | ) | ||||||||||||||
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Principal paydowns
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(0.2 | ) | (8.0 | ) | (9.7 | ) | ||||||||||||||
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Loans, net (4)
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$ | 14.0 | $ | (0.2 | ) | $ | 17.4 | |||||||||||||
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(1)
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Represents the weighted average rate above the London Interbank Offered Rate (“LIBOR”) on loans whose interest rate is based on LIBOR as of September 30, 2011.
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(2)
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Reflects rates on RSO’s portfolio balance as of September 30, 2011.
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(3)
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Consists of fundings of previous commitments.
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(4)
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The basis of new net loans does not include provisions for losses on CRE loans of $0.4 million for the three months ended September 30, 2011, $5.6 million for the nine months ended September 30, 2011 and $22.7 million for the 12 months ended September 30, 2011.
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CMBS Securities
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During the nine months ended September 30, 2011, RSO acquired $76.5 million, at par, of CMBS at a weighted average price of 99.3%. The majority of these purchases were financed by RSO’s Wells Fargo repurchase facility which are all AAA rated by at least one rating agency. RSO has $43.6 million, at par, of CMBS purchased through the Wells Fargo facility as of September 30, 2011.
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Commercial Finance - Syndicated Bank Loans
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RSO’s bank loan portfolio, including asset-backed securities (“ABS”) held-to-maturity and certain loans held for sale, at the end of the third quarter was $1.1 billion, at amortized cost, with a weighted-average spread of one-month and three-month LIBOR plus 3.06% at September 30, 2011. RSO’s bank loan portfolio is now match-funded through four collateralized loan obligation (“CLO”) issuances.
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Apidos CLO VIII (“CLO VIII”)
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RSO’s fourth CLO, CLO VIII, closed on October 13, 2011 with $317.6 million of notes issued at a weighted average cost of three-month LIBOR plus 1.83% at the date of closing. RSO retained an investment of $15.0 million of an aggregate total of $34.7 million of subordinated notes in CLO VIII. Apidos Capital Management, a subsidiary of Resource America, Inc., will manage CLO VIII and RSO’s investment in the structure.
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During the three and nine months ended September 30, 2011, RSO bought bank loans through its four CLOs with a par value of $291.0 million and $591.5 million, respectively, at a significant net discount of $11.4 million and $14.1 million, respectively. These purchased loans had an aggregate weighted average annual yield of approximately 4.27%.
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RSO, through its subsidiary Resource Capital Asset Management, earned $5.9 million of net fees from, February 24, 2011, the date of acquisition, through September 30, 2011.
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Book Value
As of September 30, 2011, RSO’s book value per common share was $5.66. Total stockholders’ equity was $433.3 million as of September 30, 2011 as compared to $348.3 million as of December 31, 2010. Total common shares outstanding were 76,590,035 as of September 30, 2011 as compared to 58,183,425 as of December 31, 2010.
Investment Portfolio
The table below summarizes the amortized cost and net carrying amount of RSO’s investment portfolio as of September 30, 2011, classified by interest rate and by asset type. The following table includes both (i) the amortized cost of RSO’s investment portfolio and the related dollar price, which is computed by dividing amortized cost by par amount, and (ii) the net carrying amount of RSO’s investment portfolio and the related dollar price, which is computed by dividing the net carrying amount by par amount (in thousands, except percentages):
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Amortized
cost (3)
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Dollar
price
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Net carrying amount
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Dollar
price
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Net carrying amount less amortized cost
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Dollar price
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September 30, 2011
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Floating rate
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RMBS
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$ | 7,105 | 19.77 | % | $ | 6,219 | 17.31 | % | $ | (886 | ) | -2.46 | % | |||||||||||
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CMBS-private placement
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29,816 | 100.0 | % | 9,460 | 31.73 | % | (20,356 | ) | -68.27 | % | ||||||||||||||
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Structured notes
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24,039 | 38.99 | % | 28,084 | 45.56 | % | 4,045 | 6.57 | % | |||||||||||||||
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Other ABS
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− | − | % | 23 | 0.28 | % | 23 | 0.28 | % | |||||||||||||||
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Mezzanine loans (1)
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63,903 | 99.97 | % | 62,844 | 98.31 | % | (1,059 | ) | -1.66 | % | ||||||||||||||
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Whole loans (1)
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504,849 | 99.82 | % | 482,766 | 95.46 | % | (22,083 | ) | -4.36 | % | ||||||||||||||
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Bank loans (2)
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1,072,530 | 97.39 | % | 1,026,672 | 93.22 | % | (45,858 | ) | -4.17 | % | ||||||||||||||
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Loans held for sale (3)
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479 | 96.77 | % | 479 | 96.77 | % | − | − | % | |||||||||||||||
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ABS held-to-maturity (4)
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31,214 | 91.10 | % | 25,609 | 74.74 | % | (5,605 | ) | -16.36 | % | ||||||||||||||
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Total floating rate
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1,733,935 | 94.15 | % | 1,642,156 | 89.17 | % | (91,779 | ) | -4.98 | % | ||||||||||||||
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Fixed rate
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CMBS – private placement
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107,187 | 67.08 | % | 99,908 | 62.52 | % | (7,279 | ) | -4.56 | % | ||||||||||||||
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B notes (1)
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16,463 | 99.10 | % | 16,190 | 97.45 | % | (273 | ) | -1.65 | % | ||||||||||||||
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Mezzanine loans (1)
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13,987 | 100.37 | % | 12,288 | 88.17 | % | (1,699 | ) | -12.20 | % | ||||||||||||||
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Whole loans (1)
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10,902 | 98.71 | % | 10,904 | 98.73 | % | 2 | .02 | % | |||||||||||||||
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Loans held for sale
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12,964 | 100.00 | % | 12,964 | 100.00 | % | − | − | % | |||||||||||||||
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Preferred stock and warrants
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36,741 | 100.00 | % | 36,741 | 100.00 | % | − | − | % | |||||||||||||||
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Total fixed rate
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198,244 | 78.95 | % | 188,995 | 75.27 | % | (9,249 | ) | -3.68 | % | ||||||||||||||
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Grand total
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$ | 1,932,179 | 92.33 | % | $ | 1,831,151 | 87.51 | % | $ | (101,028 | ) | -4.82 | % | |||||||||||
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(1)
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Net carrying amount includes an allowance for loan losses of $25.1 million at September 30, 2011, allocated as follows: B notes ($273,000), mezzanine loans ($2.7 million) and whole loans ($22.1 million).
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(2)
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The bank loan portfolio is carried at amortized cost less allowance for loan loss and was $1,069.0 million at September 30, 2011. The amount disclosed represents net realizable value at September 30, 2011, which includes a $3.5 million allowance for loan losses at September 30, 2011.
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(3)
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Loans held for sale are carried at the lower of cost or market. Amortized cost is equal to fair value.
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(4)
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ABS held-to-maturity are carried at amortized cost less other-than-temporary impairments.
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Liquidity
At September 30, 2011, RSO’s liquidity of $177.4 million consisted of three primary sources:
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unrestricted cash and cash equivalents of $28.9 million, restricted cash of $1.5 million in margin call accounts and $2.5 million in the form of real estate escrows, reserves and deposits;
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capital available for reinvestment in its five CDO entities of $129.3 million, of which $1.6 million is designated to finance future funding commitments on CRE loans; and
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restricted cash available for investment in its newly-formed CLO of $15.2 million.
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Capital Allocation
As of September 30, 2011, RSO had allocated its invested equity capital among its targeted asset classes as follows: 65% in CRE investments, 30% in commercial finance and 5% in other investments.
Supplemental Information
The following schedules of reconciliations or supplemental information as of September 30, 2011 are included at the end of this release:
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Schedule I – Reconciliation of GAAP Net Income to Funds from Operations.
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Schedule II – Reconciliation of GAAP Net Income to Estimated REIT Taxable Income.
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Schedule III – Summary of CDO and CLO Performance Statistics.
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Supplemental Information regarding loan and leasing investment statistics, CRE loans and bank loans.
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About Resource Capital Corp.
RSO is a diversified real estate finance company that is organized and conducts its operations to qualify as a REIT for federal income tax purposes. RSO’s investment strategy focuses on CRE and CRE-related assets, and, to a lesser extent, commercial finance assets. RSO invests in the following asset classes: CRE-related assets such as commercial real estate property, whole loans, A-notes, B-notes, mezzanine loans, commercial mortgage-backed securities and investments in real estate joint ventures as well as commercial finance assets such as bank loans, lease receivables, other asset-backed securities, trust preferred securities, debt tranches of CDOs, structured note investments, and private equity investments principally issued by financial institutions.
RSO is externally managed by Resource Capital Manager, Inc., an indirect wholly-owned subsidiary of Resource America, Inc. (NASDAQ: REXI), a specialized asset management company that uses industry specific expertise to generate and administer investment opportunities for its own account and for outside investors in the real estate, commercial finance and financial fund management sectors.
For more information, please visit RSO’s website at www.resourcecapitalcorp.com or contact investor relations at pkamdar@resourceamerica.com.
Safe Harbor Statement
Statements made in this release may include forward-looking statements, which involve substantial risks and uncertainties. RSO’s actual results, performance or achievements could differ materially from those expressed or implied in this release. The risks and uncertainties associated with forward-looking statements contained in this release include those related to:
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fluctuations in interest rates and related hedging activities;
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capital markets conditions and the availability of financing;
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defaults or bankruptcies by borrowers on RSO’s loans or on loans underlying its investments;
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adverse market trends which have affected and may continue to affect the value of real estate and other assets underlying RSO’s investments;
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increases in financing or administrative costs; and
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general business and economic conditions that have impaired and may continue to impair the credit quality of borrowers and RSO’s ability to originate loans.
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For further information concerning these and other risks pertaining to the forward-looking statements contained in this release, and to the general risks to which RSO is subject, see Item 1A, “Risk Factors” included in its Annual Report on Form 10-K and in other of its public filings with the Securities and Exchange Commission.
RSO cautions you not to place undue reliance on any forward-looking statements contained in this release, which speak only as of the date of this release. All subsequent written and oral forward-looking statements attributable to RSO or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this release. Except to the extent required by applicable law or regulation, RSO undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this filing or to reflect the occurrence of unanticipated events.
The remainder of this release contains RSO’s unaudited consolidated balance sheets, unaudited consolidated statements of income, reconciliation of GAAP net income to funds from operations, a reconciliation of GAAP net income to estimated REIT taxable income and a summary of CDO and CLO performance statistics and supplemental information regarding RSO’s CRE loan and bank loan portfolios.
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
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September 30,
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December 31,
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2011
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2010
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(unaudited)
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ASSETS
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Cash and cash equivalents
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$ | 28,897 | $ | 29,488 | ||||
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Restricted cash
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148,515 | 168,192 | ||||||
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Investment securities, trading
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34,303 | 17,723 | ||||||
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Investment securities available-for-sale, pledged as collateral, at fair value
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104,136 | 57,998 | ||||||
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Investment securities available-for-sale, at fair value
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41,996 | 5,962 | ||||||
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Investment securities held-to-maturity, pledged as collateral
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31,214 | 29,036 | ||||||
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Property available-for-sale
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4,074 | 4,444 | ||||||
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Investments in real estate
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48,292 | − | ||||||
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Loans, pledged as collateral and net of allowances of $28.6 million and
$34.2 million
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1,654,020 | 1,443,271 | ||||||
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Loans held for sale
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13,443 | 28,593 | ||||||
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Lease receivables, pledged as collateral, net of allowances of $0 and
$70,000 and net of unearned income
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− | 109,612 | ||||||
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Loans receivable–related party
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16,494 | 9,927 | ||||||
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Investments in unconsolidated entities
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6,693 | 6,791 | ||||||
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Dividend reinvestment plan proceeds receivable
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− | 10,000 | ||||||
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Interest receivable
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6,652 | 6,330 | ||||||
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Deferred tax asset
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4,833 | 4,401 | ||||||
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Intangible assets
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21,232 | − | ||||||
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Other assets
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5,449 | 2,432 | ||||||
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Total assets
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$ | 2,170,243 | $ | 1,934,200 | ||||
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LIABILITIES
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Borrowings
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$ | 1,549,674 | $ | 1,543,251 | ||||
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Unsettled loan purchases
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130,054 | − | ||||||
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Distribution payable
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19,157 | 14,555 | ||||||
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Accrued interest expense
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1,518 | 1,618 | ||||||
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Derivatives, at fair value
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16,218 | 13,292 | ||||||
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Deferred tax liability
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10,192 | 9,798 | ||||||
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Accounts payable and other liabilities
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10,166 | 3,360 | ||||||
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Total liabilities
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1,736,979 | 1,585,874 | ||||||
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STOCKHOLDERS’ EQUITY
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Preferred stock, par value $0.001: 100,000,000 shares authorized;
no shares issued and outstanding
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− | − | ||||||
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Common stock, par value $0.001: 500,000,000 shares authorized;
76,590,035 and 58,183,425 shares issues and outstanding
(including 1,428,931 and 534,957 unvested restricted shares)
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77 | 58 | ||||||
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Additional paid-in capital
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642,424 | 528,373 | ||||||
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Accumulated other comprehensive loss
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(45,041 | ) | (33,918 | ) | ||||
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Distributions in excess of earnings
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(164,196 | ) | (146,187 | ) | ||||
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Total stockholders’ equity
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433,264 | 348,326 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 2,170,243 | $ | 1,934,200 | ||||
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
(Unaudited)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2011
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2010
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2011
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2010
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REVENUES
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Interest income:
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Loans
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$ | 18,863 | $ | 19,597 | $ | 60,704 | $ | 57,085 | ||||||||
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Securities
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3,383 | 3,136 | 9,098 | 8,905 | ||||||||||||
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Leases
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− | 4,614 | − | 6,777 | ||||||||||||
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Interest income − other
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3,899 | 1,902 | 6,834 | 2,651 | ||||||||||||
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Total interest income
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26,145 | 29,249 | 76,636 | 75,418 | ||||||||||||
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Interest expense
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7,175 | 10,089 | 21,170 | 26,955 | ||||||||||||
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Net interest income
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18,970 | 19,160 | 55,466 | 48,463 | ||||||||||||
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Rental income
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1,592 | − | 1,772 | − | ||||||||||||
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Dividend income
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926 | − | 2,453 | − | ||||||||||||
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Fee income
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1,960 | − | 5,859 | − | ||||||||||||
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Total revenues
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23,448 | 19,160 | 65,550 | 48,463 | ||||||||||||
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OPERATING EXPENSES
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Management fees − related party
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3,136 | 4,405 | 8,622 | 9,845 | ||||||||||||
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Equity compensation − related party
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316 | 544 | 1,399 | 1,463 | ||||||||||||
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Professional services
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624 | 491 | 2,532 | 2,186 | ||||||||||||
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Insurance
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161 | 184 | 497 | 576 | ||||||||||||
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Rental operating expense
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1,057 | − | 1,369 | − | ||||||||||||
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General and administrative
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1,281 | 721 | 3,220 | 2,232 | ||||||||||||
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Depreciation on operating leases
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− | 1,658 | − | 2,343 | ||||||||||||
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Depreciation and amortization
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1,856 | − | 2,865 | − | ||||||||||||
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Income tax expense
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1,289 | 4,068 | 4,269 | 5,305 | ||||||||||||
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Total expenses
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9,720 | 12,071 | 24,773 | 23,950 | ||||||||||||
| 13,728 | 7,089 | 40,777 | 24,513 | |||||||||||||
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OTHER INCOME (EXPENSE)
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Net impairment losses recognized in earnings
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− | (4,456 | ) | (4,649 | ) | (10,514 | ) | |||||||||
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Net realized gain on investment securities
available-for-sale and loans
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591 | 1,171 | 4,443 | 1,507 | ||||||||||||
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Net realized and unrealized (loss) gain on
investment securities, trading
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(1,861 | ) | 7,215 | 1,418 | 9,743 | |||||||||||
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Provision for loan and lease losses
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(1,198 | ) | (3,095 | ) | (7,917 | ) | (26,363 | ) | ||||||||
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Gain on the extinguishment of debt
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3,875 | 6,250 | 3,875 | 29,285 | ||||||||||||
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Other (expense) income
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(191 | ) | (121 | ) | (642 | ) | 650 | |||||||||
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Total other income (expense)
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1,216 | 6,964 | (3,472 | ) | 4,308 | |||||||||||
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NET INCOME
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$ | 14,944 | $ | 14,053 | $ | 37,305 | $ | 28,821 | ||||||||
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NET INCOME PER SHARE – BASIC
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$ | 0.20 | $ | 0.27 | $ | 0.55 | $ | 0.64 | ||||||||
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NET INCOME PER SHARE – DILUTED
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$ | 0.20 | $ | 0.27 | $ | 0.54 | $ | 0.64 | ||||||||
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WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING − BASIC
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73,761,028 | 52,273,307 | 68,254,639 | 44,947,256 | ||||||||||||
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WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING − DILUTED
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74,283,893 | 52,578,884 | 68,613,363 | 45,203,521 | ||||||||||||
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DIVIDENDS DECLARED PER SHARE
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$ | 0.25 | $ | 0.25 | $ | 0.75 | $ | 0.75 | ||||||||
SCHEDULE I
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO FUNDS FROM OPERATIONS (“FFO”) (1)
(in thousands, except per share data)
(Unaudited)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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|
2011 (3)
|
2011 (3)
|
|||||||
|
Net income − GAAP
|
$ | 14,944 | $ | 37,305 | ||||
|
Adjustments:
|
||||||||
|
Real estate depreciation and amortization
|
1,272 | 1,493 | ||||||
|
Impairment charges on repossessed real estate assets (2)
|
− | 1,449 | ||||||
|
Funds from operations
|
$ | 16,216 | $ | 40,247 | ||||
|
Weighted average shares – diluted
|
74,284 | 68,613 | ||||||
|
FFO per share – diluted
|
$ | 0.22 | $ | 0.59 | ||||
|
(1)
|
RSO now evaluates its performance based on several performance measures, including Funds from Operations “FFO”, in addition to net income and estimated REIT taxable income. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”) as net income (computed in accordance with GAAP), excluding gains or losses on the sale of depreciable real estate, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization, and after adjustments for unconsolidated/ uncombined partnerships and joint ventures.
|
Management believes that FFO, a non-GAAP measure, is an appropriate measure of the Company’s operating performance in that it is frequently used by analysts, investors and other parties in the evaluation of REITs. Management uses FFO as a performance measure in that it has operating real estate on its balance sheet as of the period ended September 30, 2011. FFO is not intended to be an indication of our cash flow from operating activities (determined in accordance with GAAP) nor is it entirely indicative of funding our cash needs, including our ability to make cash distributions.
|
(2)
|
Amount represents impairment charges recorded by the Company in connection with real estate debt converted to equity.
|
|
(3)
|
Comparative FFO data is not provided since the Company did not own depreciable real property during the comparable periods in 2010.
|
SCHEDULE II
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME
TO ESTIMATED REIT TAXABLE INCOME (1)
(in thousands, except per share data)
(Unaudited)
RSO calculates estimated REIT taxable income, which is a non-GAAP financial measure, according to the requirements of the Internal Revenue Code. The following table reconciles GAAP net income to estimated REIT taxable income for the periods presented (in thousands, except per share data):
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
|||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
Net income – GAAP
|
$ | 14,944 | $ | 14,053 | $ | 37,305 | $ | 28,821 | ||||||||
|
Taxable REIT subsidiary’s loss
|
(1,575 | ) | (5,141 | ) | (5,110 | ) | (6,611 | ) | ||||||||
|
Adjusted net income
|
13,369 | 8,912 | 32,195 | 22,210 | ||||||||||||
|
Adjustments:
|
||||||||||||||||
|
Share-based compensation to related parties
|
(300 | ) | (473 | ) | (387 | ) | (587 | ) | ||||||||
|
Provision for loan and lease losses unrealized
|
410 | 3,265 | 5,623 | 27,294 | ||||||||||||
|
Asset impairments
|
− | 4,456 | 4,649 | 10,514 | ||||||||||||
|
Equity in income of real estate joint venture
|
(2,316 | ) | (2,661 | ) | (13,168 | ) | (7,552 | ) | ||||||||
|
Investments in real estate
|
1,132 | − | 1,132 | − | ||||||||||||
|
Deferral of extinguishment of debt income
|
− | 8,307 | − | − | ||||||||||||
|
Net book to tax adjustments for our taxable
foreign REIT subsidiaries
|
(5,810 | ) | (10,090 | ) | (8,530 | ) | (16,207 | ) | ||||||||
|
Capital loss carry-over utilization/capital losses
from the sale of available-for-sale securities
|
(1,139 | ) | (1,181 | ) | (4,655 | ) | (1,181 | ) | ||||||||
|
Subpart F income limitation (2)
|
− | − | − | − | ||||||||||||
|
Other net book to tax adjustments
|
(94 | ) | (126 | ) | (99 | ) | (1,397 | ) | ||||||||
|
Estimated REIT taxable income
|
$ | 5,252 | $ | 10,409 | $ | 16,760 | $ | 33,094 | ||||||||
|
Amounts per share – diluted
|
$ | 0.07 | $ | 0.20 | $ | 0.24 | $ | 0.73 | ||||||||
|
(1)
|
RSO believes that a presentation of estimated REIT taxable income provides useful information to investors regarding its financial condition and results of operations as this measurement is used to determine the amount of dividends that RSO is required to declare to its stockholders in order to maintain its status as a REIT for federal income tax purposes. Since RSO, as a REIT, expects to make distributions based on estimated REIT taxable income, RSO expects that its distributions may at times be more or less than its reported GAAP net income. Total estimated REIT taxable income is the aggregate amount of estimated REIT taxable income generated by RSO and by its domestic and foreign taxable REIT subsidiaries. Estimated REIT taxable income excludes the undistributed taxable income (if any) of RSO’s domestic taxable REIT subsidiary, which is not included in REIT taxable income until distributed to RSO. There is no requirement that RSO’s domestic taxable REIT subsidiary distribute its income to RSO. Estimated REIT taxable income, however, includes the taxable income of RSO’s foreign taxable REIT subsidiaries because RSO generally will be required to recognize and report their taxable income on a current basis. Because not all companies use identical calculations, this presentation of estimated REIT taxable income may not be comparable to other similarly-titled measures of other companies.
|
|
(2)
|
U.S. shareholders of controlled foreign corporations are required to include their share of such corporations’ income on a current basis; however, losses sustained by such corporations do not offset income of their U.S. shareholders on a current basis.
|
SCHEDULE III
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUMMARY OF CDO AND CLO PERFORMANCE STATISTICS
(in thousands)
(Unaudited)
Collateralized Debt Obligations - Distributions and Coverage Test Summary
The following table sets forth distributions by RSO’s CDOs and coverage test summaries for the periods presented:
|
Annualized
|
||||||||||||||||||||||
|
Interest
|
||||||||||||||||||||||
|
Coverage
|
Overcollateralization
|
|||||||||||||||||||||
|
Cash Distributions
|
Cushion
|
Cushion
|
||||||||||||||||||||
|
Year Ended
|
Nine Months Ended
|
As of
|
As of
|
As of Initial
|
||||||||||||||||||
|
December 31,
|
September 30,
|
September 30,
|
September 30,
|
Measurement
|
||||||||||||||||||
|
Name
|
CDO Type
|
2010 (1)
|
2011 (1)
|
2011 (2) (3)
|
2011 (4)
|
Date
|
||||||||||||||||
|
(actual)
|
(actual)
|
|||||||||||||||||||||
|
Apidos CDO I
|
CLO
|
$ | 7,695 | $ | 6,875 | $ | 9,458 | $ | 14,397 | $ | 17,136 | |||||||||||
|
Apidos CDO III
|
CLO
|
$ | 6,552 | $ | 5,903 | $ | 3,598 | $ | 9,319 | $ | 11,269 | |||||||||||
|
Apidos Cinco CDO
|
CLO
|
$ | 7,792 | $ | 7,321 | $ | 5,397 | $ | 22,440 | $ | 17,774 | |||||||||||
|
RREF 2006-1
|
CRE CDO
|
$ | 8,929 | $ | 6,900 | $ | 12,145 | $ | 59,205 | $ | 24,941 | |||||||||||
|
RREF 2007-1
|
CRE CDO
|
$ | 15,068 | $ | 8,241 | $ | 8,480 | $ | 41,207 | $ | 26,032 | |||||||||||
|
(1)
|
Distributions on retained equity interests in CDOs (comprised of note investment and preference share ownership).
|
|
(2)
|
Interest coverage cushion includes annualized amounts based on the most recent trustee statements.
|
|
(3)
|
Interest coverage cushion represents the amount by which annualized interest income expected exceeds the annualized amount payable on all classes of CDO notes senior to RSO’s preference shares.
|
|
(4)
|
Overcollateralization cushion represents the amount by which the collateral held by the CDO issuer exceeds the maximum amount required.
|
In connection with RSO’s ownership of certain notes held by RREF CDO 2006-1 and RREF CDO 2007-1, respectively, on June 21, 2011, the Company surrendered for cancellation $32.4 million and $30.9 million, respectively, of CDO notes which previously eliminated in consolidation. The surrendered notes were cancelled by the trustee under the applicable indentures, and the obligations due under the surrendered notes were deemed extinguished. The effect of these cancellations improves each CDO’s ability to comply with its over-collateralization and interest coverage tests and strengthens RSO’s long-term interest in these structured vehicles.
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(in thousands, except percentages)
(Unaudited)
Loan and Leasing Investment Statistics
The following table presents information on RSO’s impaired loans and lease receivables and related allowances for the periods indicated (based on amortized cost):
|
September 30,
|
December 31,
|
|||||||
|
2011
|
2010
|
|||||||
|
Allowance for loan and lease receivable losses:
|
||||||||
|
Specific allowance:
|
||||||||
|
Commercial real estate loans
|
$ | 16,210 | $ | 20,844 | ||||
|
Bank loans
|
166 | 112 | ||||||
|
Total specific allowance (1)
|
16,376 | 20,956 | ||||||
|
General allowance:
|
||||||||
|
Commercial real estate loans
|
8,902 | 10,773 | ||||||
|
Bank loans
|
3,336 | 2,504 | ||||||
|
Lease receivables
|
− | 70 | ||||||
|
Total general allowance
|
12,238 | 13,347 | ||||||
|
Total allowance for loans and leases
|
$ | 28,614 | $ | 34,303 | ||||
|
Allowance as a percentage of total loans and lease receivables
|
1.7 | % | 2.1 | % | ||||
|
Loans held for sale:
|
||||||||
|
Commercial Real Estate Loans:
|
||||||||
|
Commercial real estate loans at cost
|
$ | 14,405 | $ | 39,187 | ||||
|
Commercial real estate loans provision
|
(1,441 | ) | (14,621 | ) | ||||
|
Commercial real estate loans held for sale
|
12,964 | 24,566 | ||||||
|
Bank Loans:
|
||||||||
|
Bank loans at cost
|
$ | 495 | $ | 5,172 | ||||
|
Bank loans provision
|
(16 | ) | (1,145 | ) | ||||
|
Bank loans held for sale
|
479 | 4,027 | ||||||
|
Loans held for sale
|
$ | 13,443 | $ | 28,593 | ||||
|
|
(1)
|
Includes allowances on the following specifically reserved assets: commercial real estate loans of $36.5 million and bank loans of $361,000. A loan of $5.0 million that was fully reserved as of December 31, 2010 was charged off as of March 31, 2011.
|
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Unaudited)
The following table presents commercial real estate loan portfolio statistics as of September 30, 2011 (based on par value):
|
Security type:
|
||||
|
Whole loans
|
82.6 | % | ||
|
Mezzanine loans
|
12.4 | % | ||
|
B Notes
|
5.0 | % | ||
|
Total
|
100.0 | % | ||
|
Collateral type:
|
||||
|
Multifamily
|
38.0 | % | ||
|
Hotel
|
30.0 | % | ||
|
Retail
|
14.2 | % | ||
|
Office
|
9.9 | % | ||
|
Flex
|
1.1 | % | ||
|
Self-storage
|
1.0 | % | ||
|
Other
|
5.8 | % | ||
|
Total
|
100.0 | % | ||
|
Collateral location:
|
||||
|
Southern California
|
28.6 | % | ||
|
Northern California
|
13.8 | % | ||
|
Arizona
|
9.2 | % | ||
|
Florida
|
8.2 | % | ||
|
Texas
|
6.1 | % | ||
|
Washington
|
4.9 | % | ||
|
Colorado
|
4.7 | % | ||
|
New York
|
3.2 | % | ||
|
Other
|
21.3 | % | ||
|
Total
|
100.0 | % | ||
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Unaudited)
The following table presents bank loan portfolio statistics by industry as of September 30, 2011 (based on par value):
|
Industry type:
|
||||
|
Healthcare, education and childcare
|
13.4 | % | ||
|
Diversified/conglomerate service
|
8.4 | % | ||
|
Broadcasting and entertainment
|
7.6 | % | ||
|
Automobile
|
6.4 | % | ||
|
Hotels, motels, inns and gaming
|
5.8 | % | ||
|
Chemicals, plastics and rubber
|
5.6 | % | ||
|
Telecommunications
|
5.2 | % | ||
|
Retail stores
|
4.4 | % | ||
|
Printing and publishing
|
4.1 | % | ||
|
Electronics
|
3.8 | % | ||
|
Leisure, amusement, motion pictures, entertainment
|
3.4 | % | ||
|
Personal, food and miscellaneous services
|
3.2 | % | ||
|
Personal transportation
|
3.1 | % | ||
|
CDO
|
3.0 | % | ||
|
Other
|
22.6 | % | ||
|
Total
|
100.0 | % | ||