RESOURCE AMERICA, INC. - FORM 8-K - EX-99.1 - PRESS RELEASE - November 18, 2013

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Exhibit 99.1

FOR IMMEDIATE RELEASE
CONTACT:
THOMAS C. ELLIOTT
 
 
CHIEF FINANCIAL OFFICER
 
 
RESOURCE AMERICA, INC.
 
 
ONE CRESCENT DRIVE, SUITE 203
 
 
PHILADELPHIA, PA 19112
 
 
(215) 546-5005; (215) 640-6357 (fax)
 
RESOURCE AMERICA, INC.
REPORTS OPERATING RESULTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2013

Philadelphia, PA, November 18, 2013 - Resource America, Inc. (NASDAQ: REXI) (the "Company") reported GAAP net income attributable to common shareholders of $3.4 million, or $0.16 per common share-diluted, and $5.1 million, or $0.23 per common share-diluted, for the three and nine months ended September 30, 2013, respectively, as compared to a GAAP net loss attributable to common shareholders of $2.3 million, or $0.11 per common share-diluted, and net income attributable to common shareholders of $25.6 million, or $1.23 per common share-diluted, for the three and nine months ended September 30, 2012, respectively. Included in GAAP net income (loss) attributable to common shareholders for the nine months ended September 30, 2012, was a $32.7 million gain, net of tax, on the sale of the Company's credit loan manager.

The Company reported adjusted net income attributable to common shareholders, a non-GAAP measure, of $5.1 million, or $0.23 per common share-diluted, and $10.4 million, or $0.48 per common share-diluted, for the three and nine months ended September 30, 2013, respectively, as compared to adjusted net income attributable to common shareholders of $3.1 million, or $0.15 per common share-diluted, and $103,000, or $0.00 per common share-diluted, for the three and nine months ended September 30, 2012, respectively. A reconciliation of the Company's reported GAAP net income (loss) attributable to common shareholders to adjusted net income attributable to common shareholders, a non-GAAP measure, is included as Schedule I to this release.

Assets Under Management

The following table details the Company's assets under management by operating segment, which increased by $1.5 billion (10%) from September 30, 2012 to September 30, 2013 (in billions):

 
September 30,
 
2013
 
2012
Financial fund management
$
13.8

 
$
12.7

Real estate
2.1

 
1.7

Commercial finance
0.6

 
0.6

 
$
16.5

 
$
15.0

A description of how the Company calculates assets under management is set forth in Item 1 of the Company's Annual Report on Form 10-K for the year ended September 30, 2012.




Highlights for the Third Quarter Ended September 30, 2013 and Recent Developments
REAL ESTATE ASSET MANAGEMENT:
Equity Asset Management
Resource Real Estate Opportunity REIT, Inc, a public non-traded REIT managed by the Company, which specializes in acquiring and managing distressed real estate assets, had the following highlights:
•
Raised a record $101.5 million during the three months ended September 30, 2013 and a record $58.3 million for the month ended October 31, 2013.
•
Increased total assets to $382.6 million at September 30, 2013, an increase of $234.0 million, or 157%, from September 30, 2012, reflecting the acquisition during the three months ended September 30, 2013 of four multifamily rental apartment properties totaling $105.3 million located in Plano, TX, Newport News, VA and Denver, CO.
•
In July 2013, entered into an agreement to acquire 11 multifamily assets totaling 2,513 units and two office properties that contain 75,518 rentable square feet for $52.7 million.
•
In October 2013, acquired a 437-unit multifamily rental apartment in Alpharetta, GA for $26.3 million.
Debt Asset Management
Resource Capital Corp. ("RSO"), a publicly traded REIT managed by the Company which focuses on commercial real estate assets, had the following highlights:
•
Originated $94.2 million of commercial real estate whole loans during the quarter.
•
In July 2013, closed a $200.0 million commercial real estate credit facility with Deutsche Bank AG.
•
In October 2013, closed a $115.0 million public offering of 6.00% convertible senior notes due 2018.
The following additional highlights contributed to our real estate asset management operations:
•
Resource Real Estate Management, Inc., the Company's property management subsidiary, increased the apartment units it manages to 18,737 units (at 65 properties) as of September 30, 2013 from 17,979 units (at 61 properties) as of September 30, 2012.
•
The Company's real estate operating segment increased its assets under management at September 30, 2013 to $2.1 billion, an increase of $406.0 million, or 24%, from September 30, 2012.
•
Real estate revenues increased 42% and 24%, to $16.0 million and $39.4 million, for the three and nine months ended September 30, 2013, respectively, as compared to $11.3 million and $31.9 million for the three and nine months ended September 30, 2012, respectively.
FINANCIAL FUND MANAGEMENT:
Credit Asset Management
CVC Credit Partners, L.P. ("CCP"), the Company's global joint venture with CVC Capital Partners ("CVC"), closed Apidos CLO XIV (par value $617.0 million) and Apidos CLO XV (par value $500.0 million) in July and October 2013, respectively. In connection with these Collateralized Loan Obligation issuers, CCP expects to receive approximately $4.9 million annually in asset management fees in the future.
The following additional highlight contributed to our financial fund asset management operations:
The Company's financial fund management operating segment increased its assets under management at September 30, 2013 to $13.8 billion, an increase of $1.1 billion, or 9%, from September 30, 2012.
CORPORATE/OTHER:
Share Repurchase
•
In August 2013, the Company repurchased 205,627 shares at $7.53 per share. Since August 2012, the Company has repurchased over 588,000 shares at an average price of $6.88 under its share repurchase plan.
Dividends
•
The Company's Board of Directors authorized an increase in the Company’s cash dividend from $0.03 to $0.04 per share on the Company’s common stock and payment on October 31, 2013 to holders of record as of the close of business on October 18, 2013.
•
RSO's Board of Directors declared a cash dividend of $0.20 per common share for its three months ended September 30, 2013.





Resource America, Inc. is a specialized asset management company that uses industry specific expertise to evaluate, originate, service and manage investment opportunities for its own account and for outside investors in the real estate, financial fund management and commercial finance sectors as well as our joint ventures.
For more information, please visit our website at www.resourceamerica.com or contact investor relations at pkamdar@resourceamerica.com.
Statements made in this release include forward-looking statements, which involve substantial risks and uncertainties. The Company's actual results, performance or achievements could differ materially from those expressed or implied in this release and its other reports filed with the Securities and Exchange Commission. For information pertaining to risks relating to these forward-looking statements, reference is made to the section "Risk Factors" contained in Item 1A of the Company's Annual Report on Form 10-K and in other of its public filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements to reflect new or changing information or events except as may be required by law.
A registration statement relating to securities offered by RRE Opportunity REIT was declared effective by the SEC on June 16, 2010.  A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th Floor, Philadelphia, PA 19103.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
The remainder of this release contains the Company's unaudited consolidated balance sheets, consolidated statements of operations and reconciliation of GAAP net income (loss) attributable to common shareholders to adjusted net income attributable to common shareholders.


The following financial statements reflect for all periods presented (i) the consolidation of RSO and (ii) reflect the corresponding change in the Company's fiscal year end from September 30th to December 31st to conform to the fiscal year of RSO.






RESOURCE AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

 
September 30,
2013
 
December 31,
2012
 
(unaudited)
 
(unaudited)
ASSETS
 
 
(restated)
Cash
$
19,439

 
$
11,899

Restricted cash
558

 
638

Receivables
3,348

 
468

Receivables from managed entities and related parties, net
30,288

 
30,618

Investments in real estate, net
17,128

 
18,041

Investment securities, at fair value
9,758

 
10,576

Investments in unconsolidated loan manager
37,345

 
37,221

Investments in unconsolidated entities
13,899

 
13,156

     Assets of consolidated variable interest entity ("VIE") - RSO:
 
 
 
   Cash and cash equivalents (including restricted cash)
203,658

 
179,390

   Investments, at fair value
232,783

 
256,433

   Loans
1,644,587

 
1,849,428

   Investment in real estate and unconsolidated entities
128,099

 
120,706

   Other assets
62,341

 
70,600

     Total assets of consolidated VIE - RSO
2,271,468

 
2,476,557

Property and equipment, net
4,955

 
2,590

Deferred tax assets, net
29,751

 
28,274

Other assets
5,574

 
6,726

Total assets
$
2,443,511

 
$
2,636,764

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 

 
 

Accrued expenses and other liabilities
$
27,613

 
$
21,559

Payables to managed entities and related parties
3,037

 
3,536

Borrowings
20,380

 
21,040

Liabilities of consolidated VIE - RSO:
 
 
 
Borrowings
1,422,430

 
1,785,600

Other liabilities
62,955

 
71,239

Total liabilities of consolidated VIE - RSO
1,485,385

 
1,856,839

  Total liabilities
1,536,415

 
1,902,974

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Equity:
 

 
 

Preferred stock, $1.00 par value, 1,000,000 shares authorized; none outstanding
—

 
—

Common stock, $.01 par value, 49,000,000 shares authorized; 30,341,710 and 30,069,822 shares issued (including nonvested restricted stock of 419,606 and 604,353), respectively
299

 
295

Additional paid-in capital
288,238

 
286,048

Accumulated deficit
(26,420
)
 
(29,486
)
Treasury stock, at cost; 10,109,435 and 9,914,090 shares, respectively
(104,869
)
 
(103,472
)
Accumulated other comprehensive loss
(2,310
)
 
(2,197
)
Total stockholders’ equity
154,938

 
151,188

Noncontrolling interests
218

 
279

Noncontrolling interests attributable to RSO
751,940

 
582,323

Total equity
907,096

 
733,790

 
$
2,443,511

 
$
2,636,764







RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
REVENUES:
 
 
(Restated)
 
 
 
(Restated)
Real estate (includes revenues of $4,701, $2,446, $9,794 and $9,169 related to RSO)
$
15,950

 
$
11,292

 
$
39,443

 
$
31,929

Financial fund management (includes revenues of $450, $2,508, $720 and $4,902 related to RSO)
8,502

 
6,083

 
15,234

 
15,378

Commercial finance
(30
)
 
(167
)
 
(243
)
 
(1,535
)
 
24,422

 
17,208

 
54,434

 
45,772

Revenues from consolidated VIE - RSO
23,786

 
35,669

 
76,011

 
90,657

Elimination of consolidated revenues attributed to operating segments
(5,183
)
 
(4,988
)
 
(10,608
)
 
(12,733
)
Total revenues
43,025

 
47,889

 
119,837

 
123,696

COSTS AND EXPENSES:
 

 
 

 
 
 
 
Real estate
11,178

 
7,684

 
29,514

 
22,477

Financial fund management
3,547

 
3,909

 
7,769

 
11,282

Commercial finance
75

 
103

 
(99
)
 
451

Restructuring expenses
—

 
—

 
—

 
365

General and administrative
2,505

 
2,530

 
6,807

 
7,564

Impairment charges
—

 
2,280

 
—

 
2,280

Provision for credit losses
1,808

 
6,336

 
3,793

 
14,996

Depreciation and amortization
413

 
529

 
1,318

 
1,592

 
19,526

 
23,371

 
49,102

 
61,007

Expenses from consolidated VIE - RSO
15,554

 
13,230

 
43,110

 
39,752

Elimination of consolidated expenses attributed to operating segments
(4,861
)
 
(4,950
)
 
(10,178
)
 
(12,589
)
Total expenses
30,219

 
31,651

 
82,034

 
88,170

OPERATING INCOME
12,806

 
16,238

 
37,803

 
35,526

 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 

 
 

 
 
 
 
(Loss) gain on deconsolidation and sale of subsidiary
—

 
(140
)
 
—

 
54,542

Other-than-temporary impairment on investments
—

 
—

 
(214
)
 
(74
)
Interest expense
(530
)
 
(544
)
 
(1,525
)
 
(1,767
)
Other income, net
128

 
29

 
400

 
6

 
(402
)
 
(655
)
 
(1,339
)
 
52,707

Other income of consolidated VIE - RSO
16,607

 
—

 
16,607

 
5,464

Elimination of consolidated VIE - RSO other income attributable to operating segments
162

 
34

 
224

 
101

 
16,367

 
(621
)
 
15,492

 
58,272

Income from continuing operations before taxes
29,173

 
15,617

 
53,295

 
93,798

Income tax provision of consolidated VIE - RSO
722

 
3,979

 
4,221

 
6,978

Income tax provision (benefit)
1,261

 
(3,984
)
 
(396
)
 
13,358

Income from continuing operations
27,190

 
15,622

 
49,470

 
73,462

Loss from discontinued operations, net of tax
—

 
(8
)
 
(2
)
 
(38
)
Net income
27,190

 
15,614

 
49,468

 
73,424

Net (income) loss attributable to noncontrolling interests - RAI
(40
)
 
36

 
(23
)
 
30

Net income attributable to noncontrolling interests of consolidated VIE - RSO
(23,708
)
 
(17,917
)
 
(44,394
)
 
(47,892
)
Net income (loss) attributable to common shareholders
$
3,442

 
$
(2,267
)
 
$
5,051

 
$
25,562

 
 
 
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - (Continued)
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2013
 
2012
 
2013
 
2012
 
 
 
(Restated)
 
 
 
(Restated)
Amounts attributable to common shareholders:
 

 
 

 
 
 
 
Income (loss) from continuing operations
$
3,442

 
$
(2,259
)
 
$
5,053

 
$
25,600

Discontinued operations
—

 
(8
)
 
(2
)
 
(38
)
Net income (loss)
$
3,442

 
$
(2,267
)
 
$
5,051

 
$
25,562

 
 
 
 
 
 
 
 
Basic earnings (loss) per share:
 

 
 

 
 
 
 
Continuing operations
$
0.17

 
$
(0.11
)
 
$
0.25

 
$
1.29

Discontinued operations
—

 
—

 
—

 
—

Net income (loss)
$
0.17

 
$
(0.11
)
 
$
0.25

 
$
1.29

Weighted average shares outstanding
20,342

 
20,102

 
20,255

 
19,786

 
 
 
 
 
 
 
 
Diluted earnings (loss) per share:
 

 
 

 
 
 
 
Continuing operations
$
0.16

 
$
(0.11
)
 
$
0.23

 
$
1.23

Discontinued operations
—

 
—

 
—

 
—

Net income (loss)
$
0.16

 
$
(0.11
)
 
$
0.23

 
$
1.23

Weighted average shares outstanding
21,872

 
20,102

 
21,931

 
20,845







Schedule I


RECONCILIATION OF GAAP NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS TO
ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS (1) 
(in thousands, except per share data)
(unaudited)

 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2013
 
2012
 
2013
 
2012
 
 
 
 
(Restated)
 
 
 
(Restated)
Net income (loss) attributable to common shareholders - GAAP
 
$
3,442

 
$
(2,267
)
 
$
5,051

 
$
25,562

 
 
 
 
 
 
 
 
 
Adjustment, net of tax:
 
 
 
 
 
 
 
 
Net loss attributable to common shareholders - commercial finance
 
1,660

 
5,359

 
5,384

 
7,266

Gain on sale of subsidiary
 
—

 
—

 
—

 
(32,725
)
 
 
 
 
 
 
 
 
 
Adjusted net income attributable to common shareholders
 
$
5,102

 
$
3,092

 
$
10,435

 
$
103

 
 
 
 
 
 
 
 
 
Adjusted weighted average diluted shares outstanding (2)
 
21,872

 
21,141

 
21,931

 
20,845

 
 
 
 
 
 
 
 
 
Adjusted net income attributable to common shareholders per common per share-diluted
 
$
0.23

 
$
0.15

 
$
0.48

 
$
—

 
1.
Adjusted net income attributable to common shareholders presents the Company's operations without the effect of its commercial finance operations and gain on the sale of subsidiary. The Company believes that this provides useful information to investors since it allows investors to evaluate the Company's progress in both its real estate and financial fund management segments for the three and nine months ended September 30, 2013 and 2012 separately from its commercial finance operations and gain realized on the sale of a subsidiary. Adjusted net income attributable to common shareholders should not be considered as an alternative to net income (loss) attributable to common shareholders (computed in accordance with GAAP). Instead, adjusted net income attributable to common shareholders should be reviewed in connection with net income (loss) attributable to common shareholders in the Company's consolidated financial statements, to help analyze how the Company's business is performing.

2.
Dilutive shares used in the calculation of adjusted net income attributable to common shareholders per common share-diluted included an additional 1.0 million shares for the three months ended September 30, 2012, which were anti-dilutive for the period and, as such, were not used in the calculation of GAAP loss attributable to common shareholders per common share-diluted.




RESOURCE AMERICA, INC. Reports