Resource America, Inc. Reports Operating Results for the Second Fiscal Quarter Ended March 31, 2013

Resource America, Inc. Reports Operating Results for the Second Fiscal Quarter 
Ended March 31, 2013 
PHILADELPHIA, PA -- (Marketwired) -- 05/06/13 --  Resource America,
Inc. (NASDAQ: REXI) (the "Company") reported adjusted income from
continuing operations attributable to common shareholders, net of
tax, a non-GAAP measure, of $3.2 million, or $0.14 per common
share-diluted, and $1.1 million, or $0.05 per common share-diluted,
for the second fiscal quarter and six months ended March 31, 2013 as
compared to adjusted income from continuing operations attributable
to common shareholders, net of tax, of $478,000, or $0.02 per common
share-diluted, for the second fiscal quarter ended March 31, 2012 and
an adjusted loss attributable to common shareholders, net of tax, of
$2.2 million, or $0.11 per common share-diluted for the six months
ended March 31, 2012. A reconciliation of the Company's reported GAAP
income (loss) from continuing operations before taxes to adjusted
income (loss) from continuing operations attributable to common
shareholders, net of tax, a non-GAAP measure, is included as Schedule
I to this release.  
The Company reported GAAP net income attributable to common
shareholders of $744,000, or $0.03 per common share-diluted, and a
net loss attributable to common shareholders of $703,000, or $0.03
per common share-diluted, for the second fiscal quarter and six
months ended March 31, 2013 as compared to a GAAP net loss
attributable to common shareholders of $2.3 million, or $0.12 per
common share-diluted, and $2.1 million, or $0.11 per common
share-diluted, for the second fiscal quarter and six months ended
March 31, 2012. 
Jonathan Cohen, CEO and President, commented, "The continued growth
in assets under management to over $15.3 billion is driving our
business and profitability. We raised approximately $100 million of
equity for our real estate REITs in this fiscal quarter. We expect
this number to be much higher for the quarter ending June 30, 2013.
In addition, CVC Credit Partners, LP, our JV with CVC Capital, is
starting to grow both in the United States and Europe with numerous
product offerings starting to raise capital." 
Assets Under Management  
The following table details the Company's assets under management by
operating segment, which increased by $2.3 billion (18%) from March
31, 2012 to March 31, 2013: 


 
                                                                            
                                             March 31,         March 31,    
                                                2013              2012      
                                         ----------------- -----------------
Financial fund management                $    13.0 billion $    10.9 billion
Real estate                                    1.8 billion       1.6 billion
Commercial finance                             0.5 billion       0.5 billion
                                         ---------         ---------        
                                         $    15.3 billion $    13.0 billion
                                         =========         =========        

 
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 fiscal year ended September 30, 2012. 
Highlights for the Second Fiscal Quarter Ended March 31, 2013 and
Recent Developments 
REAL ESTATE: 


 
--  Fundraising:
    
    
    --  Resource Real Estate Opportunity REIT, Inc. ("RRE Opportunity
        REIT") raised a record $20.9 million and $53.5 million during the
        month and second fiscal quarter ended March 31, 2013. Subsequent
        to the quarter end, RRE Opportunity REIT raised an additional
        $25.5 million in total equity capital for the month ended April
        30, 2013.
        
        
    --  Resource Capital Corp. ("RSO") raised $45.2 million of equity
        capital during the second fiscal quarter ended March 31, 2013.
        Subsequent to the quarter end, RSO raised an additional $119.6
        million in equity capital, including $114.5 million, after
        underwriting discounts and expenses, in connection with the April
        2013 public offering of 18.7 million shares of its common stock at
        a price of $6.33 per share.
        
        
--  Second Fiscal Quarter Resource Real Estate ("RRE") Activity:
    
    
    --  In January 2013, in connection with the sale of our interest in a
        property managed on behalf of an institutional real estate joint
        venture partner, the Company received $3.0 million in proceeds and
        management fees, including the recognition of a $1.6 million
        gain.
        
        
    --  During the quarter ended March, 31 2013, on behalf of RRE
        Opportunity REIT, RRE acquired three multifamily rental apartment
        properties totaling $18.6 million located in Lexington, KY,
        Houston, TX and Hermantown, MN.
        
        
--  Property Management: Resource Real Estate Management, Inc., the
    Company's property management subsidiary, increased the apartment
    units it manages to 18,997 units (at 65 properties) as of March 31,
    2013 from 16,513 units (at 59 properties) as of March 31, 2012.
    
    
--  Launch of Diversified Income Fund. RRE launched a new fund, Resource
    Real Estate Diversified Income Fund, or RREDX, which is a
    publicly-registered, diversified, closed-end management investment
    company offered through the independent broker-dealer network. Its
    focus will be to invest at least 80% in real estate and real estate
    related industry securities, primarily in income producing equity and
    debt securities.
    
    
--  Increased Assets Under Management: The Company's real estate operating
    segment increased its assets under management at March 31, 2013 to
    $1.8 billion, an increase of $189.0 million, or 12%, from March 31,
    2012.
    
    
--  Increased Revenues: Real estate revenues increased 17% and 33%,
    respectively, to $11.3 million and $24.5 million for the second fiscal
    quarter and six months ended March 31, 2013 as compared to $9.7
    million and $18.4 million for the second fiscal quarter and six months
    ended March 31, 2012.

  
FINANCIAL FUND MANAGEMENT: 


 
--  New Collateralized Loan Obligations ("CLOs"): In January 2013, CVC
    Credit Partners, L.P. ("CCP"), the Company's global joint venture with
    CVC Capital Partners SICAV-FIS, S.A. ("CVC"), closed Apidos CLO XI
    (par value $400.0 million). In April 2013, CCP closed Apidos CLO XII
    (par value $523.0 million). In connection with these CLOs, CCP expects
    to receive approximately $4.3 million annually in asset management
    fees in the future.
    
    
--  Increased Assets Under Management: The Company's financial fund
    management operating segment increased its assets under management at
    March 31, 2013 to $13.0 billion, an increase of $2.1 billion, or 20%,
    from March 31, 2012.

  
CORPORATE/OTHER: 


 
--  Dividends: The Company's Board of Directors authorized the payment on
    April 30, 2013 of a $0.03 cash dividend per share on the Company's
    common stock to holders of record as of the close of business on April
    19, 2013. RSO declared a cash dividend of $0.20 per common share for
    its first fiscal quarter ended March 31, 2013.

  
Resource Ame
rica, 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., 2005 Market Street, 15th 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 consolidated statements of cash flows and reconciliation of GAAP
income (loss) from continuing operations before taxes to adjusted
income (loss) from continuing operations attributable to common
shareholders, net of tax. 


 
                                                                            
                           RESOURCE AMERICA, INC.                           
                        CONSOLIDATED BALANCE SHEETS                         
                     (in thousands, except share data)                      
                                                                            
                                                 March 31,    September 30, 
                                                    2013           2012     
                                                ------------  ------------- 
                                                 (unaudited)                
ASSETS                                                                      
  Cash                                          $     15,372  $      19,393 
  Restricted cash                                        544            642 
  Receivables                                            403          3,554 
  Receivables from managed entities and related                             
   parties, net                                       32,328         41,051 
  Investments in real estate, net                     17,103         19,149 
  Investment securities, at fair value                28,207         22,532 
  Investments in unconsolidated loan manager          37,803         36,356 
  Investments in unconsolidated entities              13,395         12,993 
  Property and equipment, net                          2,446          2,732 
  Deferred tax assets, net                            35,359         34,565 
  Other assets                                         6,567          3,776 
                                                ------------  ------------- 
    Total assets                                $    189,527  $     196,743 
                                                ============  ============= 
                                                                            
LIABILITIES AND EQUITY                                                      
Liabilities:                                                                
  Accrued expenses and other liabilities        $     18,651  $      23,042 
  Payables to managed entities and related                                  
   parties                                             3,160          4,380 
  Borrowings                                          22,316         23,020 
                                                ------------  ------------- 
    Total liabilities                                 44,127         50,442 
                                                ------------  ------------- 
                                                                            
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; 30,082,416 and 29,866,664                             
   shares issued (including nonvested                                       
   restricted stock of 437,661 and 403,195),                                
   respectively                                          296            294 
  Additional paid-in capital                         286,340        285,844 
  Accumulated deficit                                (26,983)       (24,508)
  Treasury stock, at cost; 9,915,167 and                                    
   9,756,955 shares, respectively                   (103,446)      (102,457)
  Accumulated other comprehensive loss               (11,044)       (13,080)
                                                ------------  ------------- 
    Total stockholders' equity                       145,163        146,093 
  Noncontrolling interests                               237            208 
                                                ------------  ------------- 
    Total equity                                     145,400        146,301 
                                                ------------  ------------- 
                                                $    189,527  $     196,743 
                                                ============  ============= 
                                                                            
                                                                            
                           RESOURCE AMERICA, INC.                           
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
                   (in thousands, except per share data)                    
                                (unaudited)                                 
                                                                            
                                     Three Months Ended   Six Months Ended  
                                          March 31,           March 31,     
                                     ------------------  ------------------ 
                                       2013      2012      2013      2012   
                                     --------  --------  --------  -------- 
REVENUES:                                                                   
Real estate                          $ 11,340  $  9,716  $ 24,494  $ 18,382 
Financial fund management               4,287     6,304     6,962    12,883 
Commercial finance                       (178)   (1,240)     (302)    2,179 
                                     --------  --------  --------  -------- 
                                       15,449    14,780    31,154    33,444 
                                     --------  --------  --------  -------- 
COSTS AND EXPENSES:                                                         
Real estate                             9,440     7,407    17,438    14,599 
Financial fund management               2,528     4,379     3,545    10,183 
Commercial finance                         45       230        (4)    2,193 
Restructuring expenses                     --       365        --       365 
General and administrative              2,157     2,467     4,413     5,363 
Gain on sale of leases and loans           --        --        --       (37)
Provision for credit losses               338     2,962     5,490     5,212 
Depreciation and amortization             416       535       908     2,596 
                                     --------  --------  --------  -------- 
                                       14,924    18,345    31,790    40,474 
                                     --------  --------  --------  -------- 
OPERATING INCOME (LOSS)                   525    (3,565)     (636)   (7,030)
                                     --------  --------  --------  -------- 
                                                                            
OTHER INCOME (EXPENSE):                                                     
Gain on deconsolidation and sale of                                         
 subsidiaries                              --        --        --     8,749 
Loss on extinguishment of debt             --        --        --    (2,190)
Gain on sale of investment                                                  
 securities, net                           --         5        --        63 
Other-than-temporary impairment on                                          
 investments                             (214)      (74)     (214)      (74)
Interest expense                         (494)     (645)   (1,016)   (3,619)
Other income, net                         740       625     1,328     1,184 
                                     --------  --------  --------  -------- 
                                           32       (89)       98     4,113 
                                     --------  --------  --------  -------- 
Income (loss) from continuing                                               
 operations before taxes                  557    (3,654)     (538)   (2,917)
Income tax benefit                       (146)   (1,323)     (387)   (1,169)
                                     --------  --------  --------  -------- 
Income (loss) from continuing                                               
 operations                               703    (2,331)     (151)   (1,748)
Loss from discontinued operations,                                          
 net of tax                                (2)      (16)       (8)      (36)
                                     --------  --------  --------  -------- 
Net income (loss)                         701    (2,347)     (159)   (1,784)
Add: net loss (income) attributable                                         
 to noncontrolling interests               43        39      (544)     (339)
                                     --------  --------  --------  -------- 
Net income (loss) attributable to                                           
 common shareholders                 $    744  $ (2,308) $   (703) $ (2,123)
                                     ========  ========  ========  ======== 
                                                                            
Amounts attributable to common                                              
 shareholders:                                                              
Income (loss) from continuing                                               
 operations                          $    746  $ (2,292) $   (695) $ (2,087)
Discontinued operations                    (2)      (16)       (8)      (36)
                                     --------  --------  --------  -------- 
Net income (loss)                    $    744  $ (2,308) $   (703) $ (2,123)
                                     ========  ========  ========  ======== 
                                                                            
Basic earnings (loss) per share:                                            
Continuing operations                $   0.04  $  (0.12) $  (0.03) $  (0.11)
Discontinued operations                    --        --        --        -- 
                                     --------  --------  --------  -------- 
Net income (loss)                    $   0.04  $  (0.12) $  (0.03) $  (0.11)
                                     ========  ========  ========  ======== 
Weighted average shares outstanding    20,124    19,437    20,100    19,575 
                                     ========  ========  ========  ======== 
                                                                            
Diluted earnings (loss) per share:                                          
Continuing operations                $   0.03  $  (0.12) $  (0.03) $  (0.11)
Discontinued operations                    --        --        --        -- 
                                     --------  --------  --------  -------- 
Net income (loss)                    $   0.03  $  (0.12) $  (0.03) $  (0.11)
                                     ========  ========  ========  ======== 
Weighted average shares outstanding    21,815    19,437    20,100    19,575 
                                     ========  ========  ========  ======== 
                                                                            
                                                                            
                           RESOURCE AMERICA, INC.                           
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                               (in thousands)                               
                                (unaudited)                                 
                                                                            
                                                          Six Months Ended  
                                                             March 31,      
                                                        ------------------- 
                                                          2013       2012   
                                                        --------  --------- 
CASH FLOWS FROM OPERATING ACTIVITIES:                                       
Net loss                                                $   (159) $  (1,784)
Adjustments to reconcile net loss to net cash provided                      
 by (used in) operating activities:                                         
  Depreciation and amortization                            1,006      3,693 
  Provision for credit losses                              5,490      5,212 
  Other-than-temporary impairment on investments             214         74 
  Unrealized gain on trading securities                     (909)        -- 
  Equity in earnings of unconsolidated entities           (2,462)      (228)
  Distributions from unconsolidated entities               1,727      2,021 
  Gain on sale of leases and loans                            --        (37)
  G
ain on sale of investment securities, net                (824)       (63)
  Gain on sale of assets                                  (2,437)        -- 
  Gain on sale and deconsolidation of subsidiaries            --     (8,749)
  Loss on extinguishment of debt                              --      2,190 
  Deferred income tax benefit                               (387)    (1,169)
  Equity-based compensation issued                           498        817 
  Equity-based compensation received                        (860)      (164)
Trading securities purchases and sales, net                1,003         -- 
Loss from discontinued operations                              8         36 
Changes in operating assets and liabilities                 (501)    (4,296)
                                                        --------  --------- 
Net cash provided by (used in) operating activities        1,407     (2,447)
                                                        --------  --------- 
                                                                            
CASH FLOWS FROM INVESTING ACTIVITIES:                                       
Capital expenditures                                        (251)       (95)
Payments received on real estate loans and real estate     2,761      1,550 
Investments in real estate and unconsolidated real                          
 estate entities                                          (1,521)      (503)
Purchase of commercial finance assets                         --    (18,483)
Principal payments received on leases and loans               --      9,037 
Cash divested on deconsolidation of LEAF                      --     (2,284)
Purchase of investments                                   (2,849)      (736)
Proceeds from sale of loans and investments                   --        277 
                                                        --------  --------- 
Net cash used in investing activities                     (1,860)   (11,237)
                                                        --------  --------- 
                                                                            
CASH FLOWS FROM FINANCING ACTIVITIES:                                       
Increase in borrowings                                     2,000    128,845 
Principal payments on borrowings                          (2,340)  (123,924)
Dividends paid                                            (1,182)    (1,135)
Repurchase of common stock                                (1,132)      (955)
Preferred stock dividends paid by LEAF to RSO                 --       (188)
Decrease (increase) in restricted cash                        98       (652)
Other                                                       (150)    (2,275)
                                                        --------  --------- 
Net cash used in financing activities                     (2,706)      (284)
                                                        --------  --------- 
                                                                            
CASH FLOWS FROM DISCONTINUED OPERATIONS:                                    
Operating activities                                        (862)      (569)
                                                        --------  --------- 
Net cash used in discontinued operations                    (862)      (569)
                                                        --------  --------- 
                                                                            
Decrease in cash                                          (4,021)   (14,537)
Cash, beginning of year                                   19,393     24,455 
                                                        --------  --------- 
Cash, end of period                                     $ 15,372  $   9,918 
                                                        ========  ========= 

 
Schedule I  


 
                                                                            
            RECONCILIATION OF GAAP INCOME (LOSS) FROM CONTINUING            
           OPERATIONS BEFORE TAXES TO ADJUSTED INCOME (LOSS) FROM           
 CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS, NET OF TAX (1)  
                   (in thousands, except per share data)                    
                                (unaudited)                                 
                                                                            
                                     Three Months Ended   Six Months Ended  
                                         March 31,            March 31,     
                                    -------------------  ------------------ 
                                       2013      2012      2013      2012   
                                    --------- ---------  --------  -------- 
Income (loss) from continuing                                               
 operations before taxes - GAAP     $     557 $  (3,654) $   (538) $ (2,917)
Loss (income) attributable to                                               
 noncontrolling interests - pre-tax        43        39      (822)     (210)
                                    --------- ---------  --------  -------- 
Income (loss) from continuing                                               
 operations attributable to common                                          
 shareholders - pre-tax                   600    (3,615)   (1,360)   (3,127)
                                    --------- ---------  --------  -------- 
                                                                            
Commercial finance adjustments,                                             
 pre-tax:                                                                   
Loss (income) from operations           3,077     4,365     7,658      (484)
Noncontrolling interests                   --        --        --       223 
                                    --------- ---------  --------  -------- 
Commercial finance operations           3,077     4,365     7,658      (261)
                                    --------- ---------  --------  -------- 
                                                                            
Adjusted income (loss) from                                                 
 continuing operations attributable                                         
 to common shareholders - pre-tax       3,677       750     6,298    (3,388)
Income tax provision (benefit) (2)        521       272     5,174    (1,219)
                                    --------- ---------  --------  -------- 
Adjusted income (loss) from                                                 
 continuing operations attributable                                         
 to common shareholders, net of tax $   3,156 $     478  $  1,124  $ (2,169)
                                    ========= =========  ========  ======== 
                                                                            
Adjusted weighted average diluted                                           
 shares outstanding (3)                21,815    20,355    21,506    19,575 
                                    ========= =========  ========  ======== 
                                                                            
Adjusted income (loss) from                                                 
 continuing operations attributable                                         
 to common shareholders, net of                                             
 tax, per common per share-diluted  $    0.14 $    0.02  $   0.05  $  (0.11)
                                    ========= =========  ========  ======== 

 
1. Adjusted income (loss) from continuing operations attributable to
common shareholders, net of tax, presents the Company's operations
without the effect of its commercial finance operations. 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 six
months ended March 31, 2013 and 2012 separately from its commercial
finance operations. Adjusted income (loss) from continuing operations
attributable to common shareholders, net of tax, should not be
considered as an alternative to income (loss) from continuing
operations before taxes (computed in accordance with GAAP). Instead,
adjusted income (loss) from continuing operations attributable to
common shareholders, net of tax, should be reviewed in connection
with income (loss) from continuing operations before taxes in the
Company's consolidated financial statements, to help analyze how the
Company's business is performing.  
2. Income tax provision (benefit) is calculated using the Company's
tax rate for the period, excluding one-time tax adjustments.  
3. Dilutive shares used in the calculation of adjusted income from
continuing operations attributable to common shareholders per common
share-diluted includes an additional 1.4 million shares for the six
months ended March 31, 2013 and 918,000 for the three months ended
March 31, 2012, which were antidilutive for the period and, as such,
were not used in the calculation of GAAP loss from continuing
operations attributable to common shareholders per common
share-diluted. 
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)