RESOURCE AMERICA, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - March 1, 2016

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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 FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2015



Philadelphia, PA - March 1, 2016 - Resource America, Inc. (NASDAQ: REXI)
Fourth Quarter 2015 Highlights
•
Adjusted net income attributable to common shareholders of $4.2 million or $0.20 per common share-diluted (see Schedule I)
•
Raised a record $196.0 million for Resource Real Estate Opportunity REIT II, Inc.
•
Book value per common share of $7.09
•
Repurchased 866,389 shares at an average price of $5.67 per share

Fourth Quarter 2015 Results
Resource America, Inc. (NASDAQ: REXI) (the "Company") reported adjusted net income attributable to common shareholders, a non-GAAP measure, of $4.2 million, or $0.20 per common share-diluted, and $10.6 million, or $0.47 per common share-diluted, for the three months and year ended December 31, 2015, respectively, as compared to adjusted net income attributable to common shareholders of $2.1 million, or $0.09 per common share-diluted, and $12.1 million, or $0.54 per common share-diluted, for the three months and year ended December 31, 2014, respectively. A reconciliation of the Company's reported GAAP net income attributable to common shareholders to adjusted net income attributable to common shareholders, a non-GAAP measure, is included as Schedule I to this release.
The Company reported GAAP net income attributable to common shareholders of $3.7 million, or $0.17 per common share-diluted, and $5.3 million, or $0.24 per common share-diluted, for the three months and year ended December 31, 2015, respectively, as compared to GAAP net income attributable to common shareholders of $2.2 million, or $0.09 per common share-diluted, and $9.0 million, or $0.40 per common share-diluted, for the three months and year ended December 31, 2014.








Assets Under Management
The following table details the Company's assets under management by operating segment which, in gross, increased by $1.5 billion (8%) from December 31, 2014 to 2015 (in billions):
 
December 31,
 
2015
 
2014
Financial fund management
$
16.8

 
$
16.1

Real estate
4.1

 
3.4

Commercial finance
0.8

 
0.7

 
$
21.7

 
$
20.2

 
 
 
 
Net assets under management (1)
$
9.4

 
$
9.7

 
        
(1)
Net assets under management represents the proportionate share of assets managed by the Company after reflecting joint venture arrangements.    As of December 31, 2015 and 2014, net assets reflect the Company's 24% and 33% interests, respectively, in its CVC Credit Partners joint venture.
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 December 31, 2014.

The consolidated financial statements included herein reflect the deconsolidation of Resource Capital Corp. ("RSO"), a publicly-traded REIT managed by the Company, for all prior periods presented, in connection with the Company's election to early adopt the latest accounting guidance regarding consolidations.

On January 29, 2016 the Company announced that it would be evaluating its current strategic position and seeking to identify and evaluate strategic and financial alternatives for the Company to enhance shareholder value, and that it had engaged Evercore to advise the Company.  The Company is in the process of conducting this evaluation; however, the Company has not set a definitive timetable for completion of its evaluation, and there can be no assurances that the process will result in any transaction being announced or completed. The Company does not intend to provide updates or make any further comment until the outcome of the process is determined or until there are significant developments.






Highlights for the Fourth Quarter and Year Ended December 31, 2015 and Recent Developments
REAL ESTATE ASSET MANAGEMENT:
Equity Asset Management
Resource Real Estate Opportunity REIT, Inc. ("Opportunity REIT I"), a public non-traded real estate investment trust ("REIT") managed by the Company, which specializes in acquiring and managing distressed real estate assets, had the following highlights for the year ended December 31, 2015:
•
Increased total assets to $1.1 billion at December 31, 2015, an increase of 12%, from $978.4 million at December 31, 2014.
•
Acquired $256.4 million of assets, placed or assumed financing of $139.3 million and disposed of $87.7 million of multifamily assets.
Resource Real Estate Opportunity REIT II, Inc. ("Opportunity REIT II"), a public non-traded REIT managed by the Company, which specializes in acquiring multifamily rental properties and selected loans, had the following highlights:
•
Raised a record $196.0 million during the three months ended December 31, 2015 and completed fundraising in February 2016 with a total equity capital raise of $556.0 million.
•
Increased total assets to $596.4 million at December 31, 2015, an increase of 634%, from $81.2 million at December 31, 2014.
•
Acquired $170.7 million of assets and placed $42.5 million of financing during the three months ended December 31, 2015. Acquisitions and financings totaled $372.8 million and $116.2 million, respectively, for the year ended December 31, 2015.
Resource Real Estate Diversified Income Fund, a public closed-end real estate focused investment fund managed by the Company, has raised $100.4 million since inception, including $65.2 million during the year ended December 31, 2015.
On February 16, 2016, Resource Innovation Office REIT, Inc., a company-sponsored REIT that will focus on acquiring office buildings, broke escrow. Resource Innovation Office Advisor, LLC, a subsidiary of Resource Real Estate, Inc, which is a wholly-owned subsidiary of the Company, will be the external manager.
Resource Apartment REIT III, Inc. filed a registration statement with the U.S. Securities and Exchange Commission on November 2, 2015 to raise up to $1.0 billion.
Debt Asset Management
RSO originated $255.1 million and $744.2 million in new commercial real estate loans during the three months and year ended December 31, 2015.
The following additional highlights contributed to our real estate asset management operations:
•
The Company's real estate operating segment increased its gross assets under management at December 31, 2015 to $4.1 billion, an increase of $700.3 million, or 21%, from December 31, 2014.
•
Real estate revenues increased 79% and 44% to $24.9 million and $79.1 million for the three months and year ended December 31, 2015, respectively, as compared to $13.8 million and $54.9 million for the three months and year ended December 31, 2014.
FINANCIAL FUND MANAGEMENT:
Credit Asset Management
CVC Credit Partners, L.P. ("CCP"), the Company's global joint venture, closed Apidos CLO XXIII, Ltd. in January 2016. CCP has now closed CLOs issuing notes with a total par value of $8.8 billion. At December 31, 2015, the Company had a 24% interest in this joint venture.
The following additional highlight contributed to the Company's financial fund asset management operations:
•
The Company's financial fund management operating segment increased its gross assets under management at December 31, 2015 to $16.8 billion, an increase of $700.0 million, or 4%, from December 31, 2014.

CORPORATE/OTHER:
Share Repurchases




•
On August 13, 2015, the Company's Board of Directors authorized the repurchase of $25.0 million of its common stock; $7.8 million remains available for repurchase under this plan.
•
The Company repurchased 866,389 and 2.7 million of its shares during the fourth quarter and year ended December 31, 2015, respectively, at average prices of $5.67 and $7.35 per share. The shares repurchased during 2015 represented approximately 12% of outstanding shares.
Dividends
•
The Company's Board of Directors authorized a cash dividend of $0.06 per share on the Company’s common stock which was paid on January 29, 2016 to holders of record as of the close of business on January 15, 2016.
•
RSO's Board of Directors declared a cash dividend of $0.42 per common share for its three months ended December 31, 2015.

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, for its joint ventures, and for outside investors in the real estate, financial fund management and commercial finance sectors.
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, or SEC. 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 SEC. 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 Innovation Office REIT was declared effective by the SEC on October 5, 2015.  A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th Floor, Philadelphia, PA 19103.
A registration statement relating to securities offered by Opportunity REIT II was declared effective by the SEC on February 6, 2014.  A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th Floor, Philadelphia, PA 19103.
A registration statement relating to securities offered by Diversified Income Fund was declared effective by the SEC on November 3, 2013.  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.




RESOURCE AMERICA, INC
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
 
December 31,
 
2015
 
2014
 

 

ASSETS
 
 
 
Cash
$
24,132

 
$
33,947

Restricted cash
937

 
725

Receivables
3,228

 
1,414

Loans and receivables from managed entities and related parties, net
26,667

 
32,745

Investments in real estate, net
16,022

 
17,097

Investment securities, at fair value
45,672

 
41,383

Investments in unconsolidated loan manager
32,616

 
39,655

Investments in unconsolidated entities
17,553

 
16,024

Property and equipment, net
5,371

 
5,063

Deferred tax assets, net
29,264

 
32,818

Other assets
9,733

 
5,556

Total assets
$
211,195

 
$
226,427

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Liabilities:
 
 
 
Accrued expenses and other liabilities
$
27,184

 
$
22,474

Payables to managed entities and related parties
3,145

 
3,124

Borrowings
20,747

 
20,970

Total liabilities
51,076

 
46,568

 
 
 
 
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;
34,973,987 and 34,489,568 shares issued (including nonvested restricted stock of 1,095,238 and 833,082), respectively
339

 
335

Additional paid-in capital
311,491

 
308,134

Accumulated deficit
(31,683
)
 
(32,051
)
Treasury stock, at cost; 14,460,024 and 11,764,417 shares, respectively
(139,858
)
 
(120,182
)
Accumulated other comprehensive income (loss)
(2,526
)
 
3,025

Total stockholders’ equity
137,763

 
159,261

Noncontrolling interests
22,356

 
20,598

Total equity
160,119

 
179,859

Total liabilities and equity
$
211,195

 
$
226,427









RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
Three Months Ended
 
Years Ended
 
December 31,
 
December 31,
 
2015
 
2014
 
2015
 
2014
REVENUES:
 
 
 
 
 
 
 
Real estate
$
24,853

 
$
13,849

 
$
79,130

 
$
54,861

Financial fund management
2,694

 
7,627

 
20,411

 
29,118

Commercial finance
248

 
(6
)
 
314

 
(164
)
 
27,795

 
21,470

 
99,855

 
83,815

COSTS AND EXPENSES:
 
 
 
 
 

 
 

Real estate
12,499

 
10,047

 
47,303

 
37,411

Financial fund management
3,923

 
4,844

 
13,687

 
14,902

Commercial finance
505

 
396

 
1,976

 
979

General and administrative
4,294

 
3,041

 
15,825

 
11,118

Provision for credit losses
2

 
(284
)
 
280

 
3,058

Depreciation and amortization
485

 
450

 
1,961

 
1,819

 
21,708

 
18,494

 
81,032

 
69,287

OPERATING INCOME (LOSS)
6,087

 
2,976

 
18,823

 
14,528

 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
Gain (loss) on sale of investment securities, net
—

 
6

 
—

 
445

Other-than-temporary impairment on investments
(180
)
 
—

 
(4,677
)
 
—

Interest expense
(449
)
 
(458
)
 
(1,775
)
 
(1,905
)
Other income, net
329

 
553

 
1,718

 
2,532

 
(300
)
 
101

 
(4,734
)
 
1,072

Income (loss) from continuing operations before taxes
5,787

 
3,077

 
14,089

 
15,600

Income tax provision (benefit)
3,289

 
862

 
6,745

 
5,853

Net income (loss)
2,498

 
2,215

 
7,344

 
9,747

Net (income) loss attributable to noncontrolling interest
1,188

 
(56
)
 
(2,044
)
 
(729
)
Net income (loss) attributable to common shareholders
$
3,686

 
$
2,159

 
$
5,300

 
$
9,018

 
 
 
 
 
 
 
 
Basic earnings per share:
 
 
 
 
 

 
 

Net income (loss)
$
0.18

 
$
0.09

 
$
0.24

 
$
0.43

Weighted average shares outstanding
20,998

 
22,817

 
22,218

 
21,148

 
 
 
 
 
 
 
 
Diluted earnings per share:
 
 
 
 
 

 
 

Net income (loss)
$
0.17

 
$
0.09

 
$
0.24

 
$
0.40

Weighted average shares outstanding
21,272

 
23,094

 
22,489

 
22,371






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
 
Years Ended
 
 
December 31,
 
December 31,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders - GAAP
 
$
3,686

 
$
2,159

 
$
5,300

 
$
9,018

 
 
 
 
 
 
 
 
 
Adjustments, net of tax:
 
 
 
 
 
 
 
 
Impairment of investment in unconsolidated loan manager
 
—

 
—

 
2,539

 
—

Loss attributable to commercial finance
 
123

 
81

 
1,078

 
2,661

Deferred tax provision (benefit)
 
398

 
(105
)
 
1,686

 
380

Adjusted net income attributable to common shareholders
 
$
4,207

 
$
2,135

 
$
10,603

 
$
12,059

 
 
 
 
 
 
 
 
 
Weighted average diluted shares outstanding
 
21,272

 
23,094

 
22,489

 
22,371

 
 
 
 
 
 
 
 
 
Adjusted net income attributable to common shareholders per
common per share-diluted
 
$
0.20

 
$
0.09

 
$
0.47

 
$
0.54

 
(1)
Adjusted net income attributable to common shareholders presents the Company's operations without the effect of the impairment of its investment in unconsolidated loan manager, its commercial finance operations and deferred tax provision (benefit). 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 months and year ended December 31, 2015 and 2014 separately from its commercial finance operations and deferred tax provision (benefit). 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.




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