Resource Capital Corp. Reports Results for Three Months and Year Ended December 31, 2012

Resource Capital Corp. Reports Results for Three Months and Year Ended December 
31, 2012 
NEW YORK, NY -- (Marketwire) -- 03/04/13 --  Resource Capital Corp.
(NYSE: RSO) 
Highlights 


 
--  Adjusted Funds from Operations ("AFFO") of $0.22 and $0.97 per
    share-diluted (see Schedule I).
    
    
--  Book value allocable to common shareholders per share of $5.61 at
    December 31, 2012 as compared to $5.48 at December 31, 2011 (see
    Schedule II).
    
    
--  Total revenues increased by $7.8 million, or 31.1% and $27.7 million,
    or 28.9% as compared to the three months and year ended December 31,
    2011, respectively.
    
    
--  GAAP net income allocable to common shares of $0.14 and $0.71 per
    share-diluted.
    
    
--  Common stock cash dividend of $0.20 and $0.80 per share.

  
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 months and year ended December 31,
2012. 


 
--  AFFO for the three months and year ended December 31, 2012 was $22.3
    million, or $0.22 per share-diluted, and $86.2 million, or $0.97 per
    share-diluted, respectively. A reconciliation of GAAP net income to
    AFFO is set forth in Schedule I of this release.
    
    
--  GAAP net income allocable to common shares for the three months and
    year ended December 31, 2012 was $14.1 million, or $0.14 per
    share-diluted and $63.2 million, or $0.71 per share-diluted,
    respectively as compared to $0.4 million, or $0.01 per share-diluted
    and $37.7 million, or $0.53 per share-diluted for the three months and
    year ended December 31, 2011, respectively.

  
Jonathan Cohen, CEO and President of Resource Capital Corp., commented,
"Resource Capital Corp had a very good 2012 and is well positioned
for 2013. We continue to source new investments across all of the
asset classes in which we participate. With growing revenues, good
liquidity, good credit quality and good dividend coverage, I believe
that we are in excellent shape. We are very excited about ou
r
expanding commercial real estate mortgage business. The re-emergence
of loan securitization for this asset class greatly enhances our
growth prospects." 
Additional highlights: 
Commercial Real Estate  


 
--  CRE loan portfolio is comprised of approximately 85% senior whole
    loans as of December 31, 2012, as compared to 87% a year ago.
    
    
--  RSO closed $157.7 million of new whole loans in the last twelve months
    with a weighted average yield of 6.7%, including origination fees. RSO
    also acquired $15.2 million of loans purchased with a weighted average
    yield of 20.0%. In addition, RSO funded $5.7 million of previous loan
    commitments on existing loans.

  
The following table summarizes RSO's CRE loan activities and fundings
of previous commitments, at par, for the three months and year ended
December 31, 2012 (in millions, except percentages): 


 
                                                                            
                                                                            
                                                          Floating          
                                      Three              Weighted   Weighted
                                     Months   Year Ended  Average   Average 
                                      Ended                Spread    Fixed  
                                                          (1) (2)   Rate (2)
                                                                            
                                    December   December                     
                                      31,        31,                        
                                      2012       2012                       
                                   ---------- ---------- --------- ---------
New whole loans production (3)     $    48.0  $   163.4      3.43%     6.15%
Acquisition of loans                    15.2       15.2        --     20.00%
                                   ---------- ----------                    
Loan production, gross                  63.2      178.6                     
Payoffs (4)                            (35.3)     (92.0)                    
Principal paydowns                      (4.4)      (9.4)                    
                                   ---------- ----------                    
Loans, net (5)                     $    23.5  $    77.2                     
                                   ========== ==========                    
                                                                            
(1) Represents the weighted average rate above the one-month London         
 Interbank Offered Rate ("LIBOR") on loans whose interest rate is based on  
 LIBOR as of December 31, 2012. Of these loans, $168.6 million have LIBOR   
 floors with a weighted average floor of 2.08%.                             
(2) Reflects rates on RSO's portfolio balance as of December 31, 2012.      
(3) Whole loan production includes funding of previous commitments of $1.5  
 million for the three months and $5.7 million for the year ended December  
 31, 2012.                                                                  
(4) CRE loan payoffs and extensions resulted in $567,000 and $1.7 million in
 extension and exit fees during the three months and year ended December 31,
 2012, respectively.                                                        
(5) The basis of net new loans does not include provisions for losses on    
 legacy CRE loans of $384,000 for the three months and $5.1 million for the 
 year ended December 31, 2012.                                              

 
CMBS 


 
--  During the year ended December 31, 2012, RSO acquired $51.3 million,
    par value, of CMBS. These 2012 CMBS purchases were financed by RSO's
    Wells Fargo repurchase facility and were AAA rated by at least one
    rating agency. In addition, RSO acquired $19.7 million, par value, of
    CMBS which were financed by 30-day repurchase contracts with a
    repurchase value of $13.2 million. Also, during the year ended
    December 31, 2012, RSO acquired $43.5 million, par value, of CMBS,
    which were not financed with debt.

  
Commercial Finance - Syndicated Bank Loans 


 
--  RSO's bank loan portfolio, including asset-backed securities ("ABS")
    and certain loans held for sale, at the end of the fourth quarter of
    2012 was $1.3 billion, at amortized cost, with a weighted-average
    spread of one-month and three-month LIBOR plus 3.47% at December 31,
    2012. RSO's bank loan portfolio is 100% match-funded through five
    collateralized loan obligation ("CLO") issuances.
    
    
--  During the three months and year ended December 31, 2012, RSO bought
    bank loans through its CLOs with a par value of $109.7 million and
    $479.5 million, respectively, at a net discount of $1.2 million and
    $7.1 million, respectively. These purchased loans have an aggregate
    weighted average unlevered annual yield of approximately 5.1% and
    4.5%, respectively.
    
    
--  RS
O, through its subsidiary, Resource Capital Asset Management, earned
    $7.0 million of net fees during the year ended December 31, 2012.

  
Corporate  


 
--  RSO issued 3.9 million shares of its common stock through a dividend
    reinvestment plan, at a net price of $5.81 per share for net proceeds
    of $22.6 million during the three months ended December 31, 2012.
    
    
--  RSO also sold 127,000 shares of its 8.25% Series B cumulative
    Preferred Stock at a weighted average price of $24.85 with a
    liquidation preference of $25.00 per share for net proceeds of $3.1
    million for the three months ended December 31, 2012 pursuant to an
    at-the-market program.

  
Investment Portfolio 
The table below summarizes the amortized cost and net carrying amount
of RSO's investment portfolio as of December 31, 2012, 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): 


 
                                                                            
                                                                            
                                                             Net            
                                                          carrying          
                                                            amount          
                                           Net               less           
                    Amortized   Dollar  carrying   Dollar amortized  Dollar 
                       cost     price     amount   price     cost     price 
                    ---------- ------- ---------- ------- --------- --------
 December 31, 2012                                                          
   Floating rate                                                            
RMBS                $    6,047  36.14% $    5,564  33.25% $   (483)  (2.89)%
CMBS-private                                                                
 placement              28,147 100.00%     12,814  45.52%  (15,333) (54.48)%
Structured notes         9,413  26.67%     19,279  54.62%    9,866   27.95% 
Other ABS                   --     --          23   0.27%       23    0.27% 
Mezzanine loans (1)     15,845  99.95%     15,644  98.68%     (201)  (1.27)%
Whole loans (1)        533,938  99.64%    527,018  98.35%   (6,920)  (1.29)%
Bank loans (2)       1,178,420  97.09%  1,168,715  97.08%   (9,705)  (0.01)%
Loans held for sale                                                         
 (3)                    48,894  92.42%     48,894  92.38%       --   (0.04)%
ABS Securities          26,479  89.42%     27,052  91.36%      573    1.94% 
Corporate Bonds         33,767 101.82%     33,700 101.61%      (67)  (0.21)%
                    ----------         ----------         ---------         
Total floating rate  1,880,950  95.98%  1,858,703  94.85%  (22,247)  (1.13)%
                    ----------         ----------         ---------         
     Fixed rate                                                             
CMBS-private                                                                
 placement             154,681  68.14%    158,001  69.61%    3,320    1.47% 
B notes (1)             16,327  99.30%     16,121  98.05%     (206)  (1.25)%
Mezzanine loans (1)     66,941  99.70%     66,282  98.73%     (659)  (0.97)%
Loans receivable-                                                           
 related party           8,324 100.00%      8,324 100.00%       --      --  
                    ----------         ----------         ---------         
Total fixed rate       246,273  77.23%    248,728  78.00%    2,455    0.77% 
                    ----------         ----------         ---------         
Other (non-interest                                                         
      bearing)                                                              
Investment in real                                                          
 estate                 75,386 100.00%     75,386 100.00%       --      --  
Investment in                                                               
 unconsolidated                                                             
 entities               45,413 100.00%     45,413 100.00%       --      --  
                    ----------         ----------         ---------         
Total other            120,799 100.00%    120,799 100.00%       --      --  
                    ----------         ----------         ---------         
Grand total         $2,248,022  93.70% $2,228,230  92.87% $(19,792)  (0.83)%
                    ==========         ==========         =========         
                                                                            
(1). Net carrying amount includes an allowance for loan losses of $8.0      
 million at December 31, 2012, allocated as follows: B notes ($206,000),    
 mezzanine loans ($860,000) and whole loans ($6.9) million.                 
(2) Net carrying amount includes allowance for loan losses of $9.7 million  
 as of December 31, 2012.                                                   
(3) Loans held for sale are carried at the lower of cost or fair market     
 value. Amortized cost is equal to fair value.                              

 
Liquidity  
At February 28, 2013, after paying RSO's fourth quarter 2012 common
and preferred stock dividends, RSO's liquidity is derived from two
primary sources: 


 
--  unrestricted cash and cash equivalents of $99.3 million, restricted
    cash of $500,000 in margin call accounts and $4.1 million in the form
    of real estate escrows, reserves and deposits; and
    
    
--  capital available for reinvestment in its seven collateralized debt
    obligation ("CDO") and CLO entities of $30.0 million, of which
    $775,000 is designated to finance future funding commitments on CRE
    loans, loan principal repayments that will pay down outstanding CLO
    notes of $79.1 million and $11.2 million in interest collections.

  
In addition, RSO has funds available through two CRE term facilities to
finance the purchase of CMBS and the origination of commercial real
estate loans of $40.4 million and $56.9 million, respectively.  
Capital Allocation  
As of December 31, 2012, RSO had allocated its invested equity
capital among its targeted asset classes as follows: 83% in CRE
assets, 15% in commercial finance assets and 2% in other investments. 
Supplemental Information 
The following schedules of reconciliations or supplemental
information as of December 31, 2012 are included at the end of this
release: 


 
--  Schedule I - Reconciliation of GAAP Net Income to Funds from
    Operations ("FFO") and AFFO.
--  Schedule II - Book value allocable to common shareholders rollforward.
--  Schedule III - Summary of CDO and CLO Performance Statistics.
--  Supplemental Information regarding loan investment statistics, CRE
    loans and bank loans.

  
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 assets, and,
to a lesser extent, commercial finance assets and other investments.
RSO invests in the following asset classes: CRE-related assets such
as commercial real estate property, whole loans, A-notes, B-notes,
mezzanine loans, CMBS and investments in real estate joint ventures
as well as commercial finance assets such as bank loans, lease
receivables, other asset-backed securities, corporate bonds, 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, financial fund management and commercial finance
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: 


 
--  fluctuations in interest rates and related hedging activities;
    
    
--  the availability of debt and equity capital to acquire and finance
    investments;
    
    
--  defaults or bankruptcies by borrowers on RSO's loans or on loans
    underlying its investments;
    
    
--  adverse market trends which have affected and may continue to affect
    the value of real estate and other assets underlying RSO's
    investments;
    
    
--  increases in financing or administrative costs; and
    
    
--  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.

  
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 the risks expressed 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 FFO and AFFO, Book value
allocable to common shareholders rollforward, 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)              
                                                                            
                                                December 31,   December 31, 
                                                    2012           2011     
                                               -------------- --------------
                                                 (unaudited)                
ASSETS (1)                                                                  
  Cash and cash equivalents                    $      85,278  $      43,116 
  Restricted cash                                     94,112        142,806 
  Investment securities, trading                      24,843         38,673 
  Investment securities available-for-sale,                                 
   pledged as collateral, at fair value              195,200        136,188 
  Investment securities available-for-sale, at                              
   fair value                                         36,390          4,678 
  Linked transactions, net at fair value               6,835          2,275 
  Loans held for sale                                 48,894          3,154 
  Property available-for-sale                             --          2,980 
  Investment in real estate                           75,386         48,027 
  Loans, pledged as collateral and net of                                   
   allowances of $17.7 million and $27.5                                    
   million                                         1,793,780      1,772,063 
  Loans receivable-related party                       8,324          9,497 
  Investments in unconsolidated entities              45,413         47,899 
  Interest receivable                                  7,763          8,836 
  Deferred tax asset                                   2,766            626 
  Principal paydown receivable                        25,570             -- 
  Intangible assets                                   13,192         19,813 
  Prepaid expenses                                    10,396            648 
  Other assets                                         4,109          3,445 
                                               -------------  ------------- 
    Total assets                               $   2,478,251  $   2,284,724 
                                               =============  ============= 
LIABILITIES (2)                                                             
  Borrowings                                   $   1,785,600  $   1,794,083 
  Distribution payable                                21,655         19,979 
  Accrued interest expense                             2,918          3,260 
  Derivatives, at fair value                          14,687         13,210 
  Accrued tax liability                               13,641         12,567 
  Deferred tax liability                               8,376          5,624 
  Accounts payable and other liabilities              18,029          6,311 
                                               -------------  ------------- 
    Total liabilities                              1,864,906      1,855,034 
                                               -------------  ------------- 
STOCKHOLDERS' EQUITY                                                        
  Preferred stock, par value $0.001: 8.50%                                  
   Series A 100,000,000 shares authorized,                                  
   676,373 shares issued and outstanding                   1             -- 
  Preferred stock, par value $0.001: 8.25%                                  
   Series B 100,000,000 shares authorized,                                  
   1,126,898 shares issued and outstanding                 1             -- 
  Common stock, par value $0.001: 500,000,000                               
   shares authorized; 105,118,093 and                                       
   79,877,516 shares issued and outstanding                                 
   (including 3,308,343 and 1,428,931 unvested                              
   restricted shares)                                    105             80 
  Additional paid-in capital                         836,053        659,700 
  Accumulated other comprehensive loss               (27,078)       (46,327)
  Distributions in excess of earnings               (195,737)      (183,763)
                                               -------------  ------------- 
    Total stockholders' equity                       613,345        429,690 
                                               -------------  ------------- 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $   2,478,251  $   2,284,724 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                                                                            
                 RESOURCE CAPITAL CORP. AND SUBSIDIARIES                    
                CONSOLIDATED BALANCE SHEETS - (Continued)                   
             (in thousands, except share and per share data)                
                                                                            
                                                                            
                                                  December 31,  December 31,
                                                      2012           2011   
                                                 -------------  ------------
(1) Assets of consolidated Variable Interest                                
 Entities ("VIEs") included in the total assets                             
 (a)above:                                                                  
Restricted cash                                  $      90,108
  $    138,120
Investments securities available-for-sale,                                  
 pledged as collateral, at fair value                  135,566        89,045
Loans held for sale                                     14,894         3,154
Property available-for-sale                                 --         2,980
Loans, pledged as collateral and net of                                     
 allowances of $15.2 million and $17.2 million       1,678,719     1,730,950
Interest receivable                                      5,986         6,003
Prepaid expenses                                           328           212
  Principal paydown receivable                          25,570            --
Other assets                                               333            24
                                                 -------------  ------------
Total assets of consolidated VIEs                $   1,951,504  $  1,970,488
                                                 =============  ============
                                                                            
(2) Liabilities of consolidated VIEs included in                            
 the total liabilities above (b):                                           
Borrowings                                       $   1,614,882  $  1,689,638
Accrued interest expense                                 2,666         2,943
Derivatives, at fair value                              14,078        12,000
Accounts payable and other liabilities                     698           442
                                                 -------------  ------------
Total liabilities of consolidated VIEs           $   1,632,324  $  1,705,023
                                                 =============  ============
                                                                            
(a) Assets of each of the consolidated VIEs may only be used to settle the  
 obligations of each respective VIE.                                        
(b) The creditors of the Company's VIEs have no recourse to the general     
 credit of the Company.                                                     
                                                                            
                                                                            

 
                                                                            
                                                                            
                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES                  
                    CONSOLIDATED STATEMENTS OF OPERATIONS                   
               (in thousands, except share and per share data)              
                                                                            
                            Three Months Ended            Years Ended       
                               December 31,               December 31,      
                        -------------------------- -------------------------
                             2012         2011         2012         2011    
                        ------------- ------------ ------------ ------------
                                (unaudited)         (unaudited)             
REVENUES                                                                    
  Interest income:                                                          
    Loans               $     38,273  $    26,035  $   109,030  $    86,739 
    Securities                 3,776        3,507       14,296       12,424 
    Interest income                                                         
     − other             1,800        3,877       10,004       10,711 
                        ------------  -----------  -----------  ----------- 
      Total interest                                                        
       income                 43,849       33,419      133,330      109,874 
  Interest expense            17,332       11,071       42,792       32,186 
                        ------------  -----------  -----------  ----------- 
      Net interest                                                          
       income                 26,517       22,348       90,538       77,688 
  Rental income                4,821        1,884       11,463        3,656 
  Dividend income                 18          518           69        3,045 
  Equity in (losses)                                                        
   earnings of                                                              
   unconsolidated                                                           
   subsidiaries               (1,240)         819       (2,709)         112 
  Fee income                   1,540        1,930        7,068        7,789 
  Net realized gain                                                         
   (loss) on sales of                                                       
   investment                                                               
   securities                                                               
   available-for-sale                                                       
   and loans                   1,958       (1,821)       4,106        2,643 
  Net realized and                                                          
   unrealized (loss)                                                        
   gain on investment                                                       
   securities, trading          (915)        (560)      12,435          837 
  Unrealized                                                                
   gain/(loss) and net                                                      
   interest income on                                                       
   linked transactions,                                                     
   net                           342           93          728          216 
                        ------------  -----------  -----------  ----------- 
      Total revenues          33,041       25,211      123,698       95,986 
                        ------------  -----------  -----------  ----------- 
                                                                            
OPERATING EXPENSES                                                          
  Management fees                                                           
   − related                                                          
   party                       5,000        2,400       18,512       11,022 
  Equity compensation                                                       
   − related                                                          
   party                       1,224        1,127        4,636        2,526 
  Professional services        2,138        1,259        4,700        3,791 
  Insurance                      161          161          639          658 
  Rental operating                                                          
   expense                     3,590        1,348        8,046        2,743 
  General and                                                               
   administrative              1,057          754        4,434        3,950 
  Depreciation and                                                          
   amortization                1,911        1,754        5,885        4,619 
  Income tax expense           7,624        7,767       14,602       12,036 
  Net impairment losses                                                     
   recognized in                                                            
   earnings                       --        2,249          180        6,898 
  Provision for loan                                                        
   losses                      9,017        5,979       16,818       13,896 
                        ------------  -----------  -----------  ----------- 
    Total operating                                                         
     expenses                 31,722       24,798   
    78,452       62,139 
                        ------------  -----------  -----------  ----------- 
                               1,319          413       45,246       33,847 
                        ------------  -----------  -----------  ----------- 
OTHER REVENUE (EXPENSE)                                                     
  Gain on consolidation        2,498           --        2,498           -- 
  Gain on the                                                               
   extinguishment of                                                        
   debt                       11,235           --       16,699        3,875 
  Other expenses                  --           --           --           (6)
                        ------------  -----------  -----------  ----------- 
    Total other revenue       13,733           --       19,197        3,869 
                        ------------  -----------  -----------  ----------- 
NET INCOME                    15,052          413       64,443       37,716 
  Net income allocated                                                      
   to preferred shares          (911)          --       (1,244)          -- 
                        ------------  -----------  -----------  ----------- 
NET INCOME ALLOCABLE TO                                                     
 COMMON SHARES          $     14,141  $       413  $    63,199  $    37,716 
                        ============  ===========  ===========  =========== 
NET INCOME PER COMMON                                                       
 SHARE - BASIC          $       0.14  $      0.01  $      0.71  $      0.54 
                        ============  ===========  ===========  =========== 
NET INCOME PER COMMON                                                       
 SHARE - DILUTED        $       0.14  $      0.01  $      0.71  $      0.53 
                        ============  ===========  ===========  =========== 
WEIGHTED AVERAGE NUMBER                                                     
 OFCOMMON SHARES                                                            
 OUTSTANDING - BASIC      99,773,470   76,806,318   88,410,272   70,410,131 
                        ============  ===========  ===========  =========== 
WEIGHTED AVERAGE NUMBER                                                     
 OFCOMMON SHARES                                                            
 OUTSTANDING - DILUTED   100,958,978   77,325,974   89,284,488   70,809,088 
                        ============  ===========  ===========  =========== 

 
SCHEDULE I 
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
 RECONCILIATION OF GAAP NET
INCOME TO FFO and AFFO
 (in thousands, except per share data) 
(unaudited) 
Funds from Operations 
We evaluate our performance based on several performance measures,
including funds from operations, or FFO, and adjusted funds from
operations, or AFFO, in addition to net income. We compute FFO in
accordance with the standards established by the National Association
of Real Estate Investment Trusts 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. 
AFFO is a computation made by analysts and investors to measure a
real estate company's cash flow generated by operations. We calculate
AFFO by adding or subtracting from FFO the non-cash impacts of the
following: non-cash impairment losses resulting from fair value
adjustments on financial instruments, provision for loan losses,
non-economic income related to VIE accounting, gains on the
extinguishment of debt, equity investment gains and losses,
straight-line rental effects, share based compensation, amortization
of various deferred items and intangible assets, gains on sales of
property through a joint venture in addition to the cash impact of
capital expenditures that are related to our real estate owned. 
Management believes that FFO and AFFO are appropriate measures of our
operating performance in that they are frequently used by analysts,
investors and other parties in the evaluation of REITs. Management
uses FFO and AFFO as measures of our operating performance, and
believes they are also useful to investors, because they facilitate
an understanding of our operating performance after adjustment for
certain non-cash items, such as real estate depreciation, share-based
compensation and various other items required by GAAP, and capital
expenditures, that may not necessarily be indicative of current
operating performance and that may not accurately compare our
operating performance between periods. 
While our calculations of AFFO may differ from the methodology used
for calculating AFFO by other REITs and our AFFO may not be
comparable to AFFO reported by other REITs, we also believe that FFO
and AFFO may provide us and our investors with an additional useful
measure to compare its performance with some other REITs. Neither FFO
nor AFFO is equivalent to net income or cash generated from operating
activities determined in accordance with GAAP. Furthermore FFO and
AFFO do not represent amounts available for management's
discretionary use because of needed capital replacement or expansion,
debt service obligations or other commitments or uncertainties.
Neither FFO nor AFFO should be considered as an alternative to GAAP
net income as an indicator of our operating performance or as an
alternative to cash flow from operating activities as a measure of
our liquidity. 
The following table reconciles GAAP net income to FFO and AFFO for
the periods presented (in thousands): 


 
                                                                            
                                                                            
                             Three Months Ended           Years Ended       
                                December 31,              December 31,      
                         ------------------------- -------------------------
                             2012         2011         2012         2011    
                         ------------ ------------ ------------ ------------
                          (unaudited)  (unaudited)  (unaudited)             
Net income allocable to                                                     
common shares - GAAP     $    14,141  $       413  $    63,199  $    37,716 
Adjustments:                                                                
Real estate depreciation                                                    
and amortization                 661        1,112        2,686        2,606 
  Gains on sales of                                                         
  properties (1)                (224)          --       (1,664)          -- 
Impairment charges on                                                       
repossessed real estate                                                     
assets                            --           --           --        1,449 
                         -----------  -----------  -----------  ----------- 
FFO                           14,578        1,525       64,221       41,771 
Adjustments:                                                                
Non-cash items:                                                             
Adjust for impact of                                                        
imputed interest on VIE                                                     
accounting                    (3,049)          --       (3,049)          -- 
  Provision for loan                                                        
  losses                       7,900        2,249       12,408        6,898 
  Amortization of                                                           
  deferred costs (non                                                       
  real estate) and                                
                          
  intangible assets            3,140          193        8,896          317 
  Equity investment                                                         
  losses (gains)                 956           (7)       3,256          (17)
Share-based compensation       1,224        1,127        4,636        2,526 
Impairment losses on                                                        
real property held for                                                      
sale                              --        1,771          180        5,870 
  Straight-line rental                                                      
  adjustments                      1           --           15           -- 
Gain on the                                                                 
extinguishment of debt       (11,235)          --      (13,070)      (3,875)
  Incentive Management                                                      
  Fee adjustment related                                                    
  to extinguishment of                                                      
  debt                         2,614           --        2,614           -- 
REIT tax planning                                                           
adjustments                    6,810       11,008        6,810       11,751 
Cash items:                                                                 
  Gains on sales of                                                         
  joint venture real                                                        
  estate interests (1)           224           --        1,664           -- 
Gain on the                                                                 
extinguishment of debt             7           --          670           -- 
Capital expenditures            (826)        (864)      (3,081)      (1,296)
                         -----------  ------------ -----------  ----------- 
AFFO                     $    22,344  $    17,002  $    86,170  $    63,945 
                         ===========  ===========  ===========  =========== 
                                                                            
Weighted average common                                                     
shares - diluted             100,959       77,326       89,284       70,809 
                                                                            
AFFO per common share -                                                     
diluted                  $      0.22  $      0.22  $      0.97  $      0.90 
                         ===========  ===========  ===========  =========== 
                                                                            
(1) Amount represents gains on sales of joint venture real estate interests 
from a joint venture that were recorded by us.                              

 
SCHEDULE II 


 
                                                                            
                                                                            
                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES                   
          BOOK VALUE ALLOCABLE TO COMMON SHAREHOLDERS ROLLFORWARD           
               (dollars in thousands, except per share data)                
                                (unaudited)                                 
                                                       Amount     Per Share 
                                                     ----------  ---------- 
Book value at December 31, 2011, allocable to common                        
 shareholders (1)                                    $  429,690  $     5.48 
Net income allocable to common shareholders              63,199        0.62 
                                                                            
Change in other comprehensive income:                                       
  Available for sale securities                          20,498        0.20 
Derivatives                                              (1,249)      (0.01)
Common dividends                                        (75,095)      (0.73)
Proceeds/Accretion from additional shares issued                            
 during the year (2)                                    133,850        0.05 
                                                     ----------  ---------- 
Total net increases                                     141,203        0.13 
                                                     ----------  ---------- 
Book value at December 31, 2012, allocable to common                        
 shareholders (1)(3)                                 $  570,893  $     5.61 
                                                     ==========  ========== 
                                                                            
(1) Per share calculations exclude unvested restricted stock, as disclosed  
    on the consolidated balance sheet, of 1.4 million and 3.3 million shares
    as of December 31, 2011 and December 31, 2012, respectively. The book   
    value calculations above at December 31, 2011 are revised from previous 
    disclosures to reflect the adjustment for the exclusion of the unvested 
    restricted stock.                                                       
(2) Includes issuance of common shares from a common stock offering of 9.8  
    million shares and from our dividend reinvestment plan of 13.1 million  
    shares and 460,000 combined incentive management fee shares issued to   
    the Manager and vesting of shares of restricted stock.                  
(3) Book value is calculated as total stockholder's equity of $613.3 million
    less preferred stock equity of $42.4 million.                           

 
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 cash distributions from RSO's CDO investments
 and a summary of coverage test compliance for the CDO issuers for the      
 periods presented:                                                         
                                                                 
           
                                     Annualized                             
                                      Interest                              
                        Cash          Coverage      Overcollateralization   
                   Distributions      Cushion              Cushion          
                 ----------------- ------------- ---------------------------
                                                                            
                     Year Ended        As of         As of     As of Initial
                    December 31,    December 31,  December 31,  Measurement 
                 -----------------                                          
  Name  CDO Type 2012 (1) 2011 (1)  2012 (2) (3)    2012 (4)        Date    
------- -------- -------- -------- ------------- ------------- -------------
                 (actual) (actual)                                          
Apidos                                                                      
 CDO I                                                                      
 (5)    CLO      $  7,971 $  9,305 $       5,521 $      13,386 $      17,136
Apidos                                                                      
 CDO                                                                        
 III                                                                        
 (6)    CLO      $  8,742 $  8,351 $       3,997 $       9,900 $      11,269
Apidos                                                                      
 Cinco                                                                      
 CDO    CLO      $ 11,109 $  9,941 $       6,420 $      19,294 $      17,774
Apidos                                                                      
 CLO                                                                        
 VIII                                                                       
 (7)    CLO      $  5,186 $      - $       4,681 $      14,610 $      13,657
Whitney                                                                     
 CLO I                                                                      
 (8)    CLO      $    567 $      - $          22 $      15,171 $           -
RREF                                                                        
 2006-1                                                                     
 (9)    CRE CDO  $ 15,032 $ 11,637 $      10,167 $      45,837 $      24,941
RREF                                                                        
 2007-1                                                                     
 (10)   CRE CDO  $ 13,226 $ 10,743 $      11,621 $      32,641 $      26,032
                                                                            
(1)  Distributions on retained equity interests in CDOs (comprised of note  
     investments and preference share ownership).                           
(2)  Interest coverage 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. 
(5)  Apidos CDO I reinvestment period expired in July 2011.                 
(6)  Apidos CDO III reinvestment period expired in June 2012.               
(7)  Distributions from Apidos CLO VIII, which closed in October 2011,      
     include $757,000 in subordinated management fees; RSO's contribution of
     $15.0 million represents 43% of the subordinated debt.                 
(8)  Whitney CLO I was acquired in October 2012, when RSO purchased 66% of  
     the outstanding preference shares.                                     
(9)  RREF CDO 2006-1 reinvestment period expired in September 2011.         
(10) RREF CDO 2007-1 reinvestment period expired in June 2012.              
                                                                            
                                                                            
                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES                   
                          SUPPLEMENTAL INFORMATION                          
                     (in thousands, except percentages)                     
                                                                            
Loan Investment Statistics                                                  
                                                                            
The following table presents information on RSO's impaired loans and        
 related allowances for the periods indicated (based on amortized cost):    
                                                                            
                                                December 31,   December 31, 
                                                    2012           2011     
                                               -------------  ------------- 
                                                (unaudited)                 
Allowance for loan losses:                                                  
Specific allowance:                                                         
Commercial real estate loans                   $       2,142  $      17,065 
Bank loans                                             3,236          1,593 
                                               -------------  ------------- 
Total specific allowance                               5,378         18,658 
                                               -------------  ------------- 
General allowance:                                                          
Commercial real estate loans                           5,844          7,156 
Bank loans                                             6,468          1,704 
                                               -------------  ------------- 
Total general allowance                               12,312          8,860 
                                               -------------  ------------- 
Total allowance for loans                      $      17,690  $      27,518 
                                               =============  ============= 
Allowance as a percentage of total loans                 0.9%           1.5%
                                                                            
Loans held for sale:                                                        
Commercial real estate loans held for sale     $      34,000  $           - 
Bank loans held for sale                              14,894          3,154 
                                               -------------  ------------- 
Total loans held for sale (1)                  $      48,894  $       3,154 
                                               =============  ============= 
                                                                            
(1) Loans held for sale are presented at the lower of cost or fair value.   
                                                                            
                                                                            
                                                                            
                                                                            
                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES                   
                          SUPPLEMENTAL INFORMATION                          
                                (unaudited)                                 
                                                                            
The following table presents commercial real estate loan portfolio          
 statistics as of December 31, 2012 (based on par value):                   
                                                                            
Security type:                                                              
Whole loans                                                            85.1%
Mezzanine loans                                                        12.4%
B Notes                                                                 2.5%
                                                                     ------ 
Total                                                                 100.0%
                                                                     ====== 
                                                                            
Collateral type:                                                            
Multifamily                                                            35.6%
Hotel                                                                  19.5%
Retail                                                                 17.2%
Office                                                                 15.6%
 
Flex                                                                    4.9%
Industrial                                                              2.1%
Self-storage                                                            0.9%
Other                                                                   4.2%
                                                                     ------ 
Total                                                                 100.0%
                                                                     ====== 
                                                                            
Collateral location:                                                        
Southern California                                                    33.8%
Northern California                                                    13.9%
Texas                                                                  11.1%
Arizona                                                                 7.9%
Washington                                                              4.5%
Florida                                                                 3.3%
Other                                                                  25.5%
                                                                     ------ 
Total                                                                 100.0%
                                                                     ====== 
                                                                            
                                                                            
                                                                            
                                                                            
                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES                   
                          SUPPLEMENTAL INFORMATION                          
                                (unaudited)                                 
                                                                            
The following table presents bank loan portfolio statistics by industry as  
 of December 31, 2012 (based on par value):                                 
                                                                            
Industry type:                                                              
Healthcare, education and childcare                                    13.2%
Diversified/conglomerate service                                        8.7%
Broadcasting and entertainment                                          7.5%
Automobile                                                              6.8%
Chemicals, plastics and rubber                                          5.8%
Retail Stores                                                           5.7%
Electronics                                                             4.9%
Hotels, motels, inns and gaming                                         4.7%
Telecommunications                                                      3.8%
Personal, food and miscellaneous services                               3.4%
Personal transportation                                                 3.1%
Leisure, amusement, motion pictures, entertainment                      3.1%
Printing and publishing                                                 2.8%
Other                                                                  26.5%
                                                                     ------ 
Total                                                                 100.0%
                                                                     ====== 

  
Contact:
David J. Bryant
Chief Financial Officer
Resource Capital Corp.
712 Fifth Ave, 12th Floor
New York, NY 10019
212-506-3870 
 
 
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