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Resource Capital Corp. Reports Results for Three Months Ended March 31, 2013


Resource Capital Corp. Reports Results for Three Months Ended March 31, 2013

NEW YORK, NY -- (Marketwired) -- 05/07/13 -- Resource Capital Corp. (NYSE: RSO)

Highlights


 
--  Adjusted Funds from Operations ("AFFO") of $0.20 per share-diluted
    (see Schedule I).
--  Gross new commercial real estate ("CRE") loan originations of $61.4
    million and $223.0 million, for the three and twelve months ended
    March 31, 2013, respectively.
--  Expansion of Wells CRE lending term facility from $150 to $250 million
    with a two year extension of term to February 28, 2015 and the right
    to extend an additional two years to February 28, 2017.
--  Total revenues increased by $1.9 million, or 6.4% as compared to the
    three months ended March 31, 2012.
--  Reduction of the CRE legacy loan portfolio by over 19% from March 31,
    2012, including a sale of a $34.0 million loan in January 2013.
--  GAAP net income allocable to common shares of $0.11 per share-diluted.
--  Book value allocable to common shares of $5.60 per share at March 31,
    2013 as compared to $5.61 per share at December 31, 2012 (see Schedule
    II).
--  Common stock cash dividend of $0.20 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 ended March 31, 2013.


 
--  AFFO for the three months ended March 31, 2013 was $21.0 million, or
    $0.20 per share-diluted as compared to $18.6 million, or $0.23 per
    share diluted for the three months ended March 31, 2012. 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 ended
    March 31, 2013 was $11.5 million, or $0.11 per share-diluted as
    compared to $14.5 million, or $0.18 per share-diluted for the three
    months ended March 31, 2012, respectively.

Jonathan Cohen, CEO and President of Resource Capital Corp., commented, "Resource Capital Corp. had a very good first quarter, in which we had new loan production of $61 million and a strong pipeline, including the $44 million loan which we announced last week and several more in the works. This quarter we sold a legacy loan portfolio for $34 million, and we have a normalized run rate of adding $60 - $100 million of loans per quarter. Our bank loan portfolio continues to perform extremely well. As of April 30, 2013, we have over $162 million of unrestricted cash and we recently increased and extended our commercial real estate loan warehouse facility. We expect loan production to increase and our growing capital base lets us take advantage of larger and more diverse opportunities."

Additional highlights:

Commercial Real Estate


 
--  CRE loan portfolio is comprised of approximately 85% senior whole
    loans as of March 31, 2013, as compared to 87% a year ago.
--  RSO closed $201.3 million of new whole loans in the last twelve months
    with a weighted average yield of 6.54%, including origination fees. In
    addition, RSO funded $6.5 million of previous loan commitments on
    existing loans for total production of $207.8 million. RSO also
    acquired $15.2 million of loans with a weighted average yield of
    20.0%.

The following table summarizes RSO's CRE loan activities and fundings of previous commitments, at par, for the three and 12 months ended March 31, 2013 (in millions, except percentages):


 
                                                                            
                                                                            
                                                   Floating                 
                    Three Months    12 Months      Weighted      Weighted   
                       Ended          Ended         Average      Average    
                     March 31,      March 31,     Spread (1)    Fixed Rate  
                        2013           2013           (2)           (2)     
                   -------------  -------------  ------------  ------------ 
New whole loans                                                             
 production (3)    $        61.4  $       207.8          3.72%         5.89%
Acquisition of                                                              
 loans                        --           15.2            --%        20.00%
                   -------------  -------------                             
Loan production,                                                            
 gross                      61.4          223.0                             
Payoffs (4)                (44.8)        (136.7)                            
                   -------------  -------------                             
  Sub Total                 16.6           86.3                             
Sales                      (34.0)         (34.0)                            
Principal paydowns            --           (8.6)                            
                   -------------  -------------                             
Loans, net (5)     $       (17.4) $        43.7                             
                   =============  =============                             
                                                                            
                                                                            
(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 March 31, 2013. Of these loans, $170.2 million have     
     LIBOR floors with a weighted average floor of 1.89%.                   
(2)  Reflects rates on RSO's portfolio balance as of March 31, 2013.        
(3)  Whole loan production includes funding of previous commitments of $2.7 
     million for the three months and $6.5 million for the 12 months ended  
     March 31, 2013.                                                        
(4)  CRE loan payoffs and extensions resulted in $489,000 in extension and  
     exit fees during the three months ended March 31, 2013.                
(5)  The basis of net new loans does not include provisions for losses on   
     legacy CRE loans of $1.3 million for the three months and $6.0 million 
     for the twelve months ended March 31, 2013.                            

CMBS


 
--  During the three months ended March 31, 2013, RSO acquired $8.2
    million, par value, of CMBS. These 2013 CMBS purchases were in part
    financed by RSO's Wells Fargo repurchase facility and were AAA rated
    by at least one rating agency. In addition, RSO acquired $32.8
    million, par value, of CMBS which were also partially financed by
    30-day repurchase contracts with a repurchase value of $23.6 million.
    Also, during the three months ended March 31, 2013, RSO acquired $21.2
    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"),
    corporate bonds and certain loans held for sale, at the end of the
    first quarter of 2013 was $1.2 billion, at amortized cost, with a
    weighted-average spread of one-month and three-month LIBOR plus 3.39%
    at March 31, 2013. RSO's bank loan portfolio is 100% match-funded
    through five collateralized loan obligation ("CLO") issuances.
--  During the three months ended March 31, 2013, RSO bought bank loans
    through its CLOs with a par value of $86.5 million, at a net discount
    of $1.2 million. These purchased loans have an aggregate weighted
    average unlevered annual yield of approximately 4.5%.
--  RSO, through its subsidiary, Resource Capital Asset Management, earned
    $1.4 million of net fees during the three months ended March 31, 2013.

Corporate


 
--  RSO issued 2.9 million shares of its common stock through a dividend
    reinvestment plan, at a net price of $6.20 per share for net proceeds
    of $18.0 million during the three months ended March 31, 2013.
--  RSO also sold 1.1 million shares of its 8.25% Series B cumulative
    Preferred Stock at a weighted average price of $24.82 with a
    liquidation preference of $25.00 per share for net proceeds of $26.9
    million for the three months ended March 31, 2013 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 March 31, 2013, 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  
                  ---------- ------  ---------- ------  ----------  ------  
  March 31, 2013                                                            
-----------------                                                           
  Floating rate                                                             
RMBS              $    6,025  36.06% $    6,130  36.68% $      105    0.62% 
CMBS-private                                                                
 placement            28,088 100.00%     13,289  47.39%    (14,799) (52.61)%
Structured notes      16,803  36.10%     26,762  57.50%      9,959   21.40% 
Other ABS                 --     --%         23   0.26%         23    0.26% 
Mezzanine loans                                                             
 (1)                  15,848  99.97%     15,634  98.62%       (214)  (1.35)%
Whole loans (1)      550,414  99.63%    542,392  98.18%     (8,022)  (1.45)%
Bank loans (2)     1,076,033  98.13%  1,068,212  97.42%     (7,821)  (0.71)%
Loans held for                                                              
 sale (3)             18,150  87.01%     18,150  87.01%         --      --% 
ABS Securities        23,682  88.94%     24,821  93.22%      1,139    4.28% 
Corporate Bonds       35,678 101.21%     35,883 101.79%        205    0.58% 
                  ----------         ----------         ----------          
Total floating                                                              
 rate              1,770,721  95.86%  1,751,296  94.80%    (19,425)  (1.06)%
                  ----------         ----------         ----------          
    Fixed rate                                                              
CMBS-private                                                                
 placement           161,902  78.12%    168,266  81.19%      6,364    3.07% 
B notes (1)           16,293  99.35%     16,074  98.01%       (219)  (1.34)%
Mezzanine loans                                                             
 (1)                  66,928  99.72%     66,228  98.68%       (700)  (1.04)%
Loans receivable-                                                           
 related party         7,860 100.00%      7,860 100.00%         --      --% 
                  ----------         ----------         ----------          
Total fixed rate     252,983  84.72%    258,428  86.54%      5,445    1.82% 
                  ----------         ----------         ----------          
   Other (non-                                                              
     interest                                                               
     bearing)                                                               
Investment in                                                               
 real estate          75,142 100.00%     75,142 100.00%         --      --% 
Investment in                                                               
 unconsolidated                                                             
 entities             48,419 100.00%     48,419 100.00%         --      --% 
                  ----------         ----------         ----------          
Total other          123,561 100.00%    123,561 100.00%         --      --% 
                  ----------         ----------         ----------          
Grand total       $2,147,265  94.62% $2,133,285  94.00% $  (13,980)  (0.62)%
                  ==========         ==========         ==========          
                                                                            
                                                                            
(1)  Net carrying amount includes an allowance for loan losses of $9.2      
     million at March 31, 2013, allocated as follows: B notes $219,000,     
     mezzanine loans $914,000 and whole loans $8.0 million.                 
(2)  Net carrying amount includes allowance for loan losses of $7.8 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 April 30, 2013, after paying RSO's first quarter 2013 common and preferred stock dividends, RSO's liquidity is derived from two primary sources:


 
--  unrestricted cash and cash equivalents of $162.8 million, restricted
    cash of $500,000 in margin call accounts and $4.3 million in the form
    of real estate escrows, reserves and deposits; and
--  capital available for reinvestment in one of its collateralized debt
    obligation ("CDO") and two CLO entities of $30.6 million, of which
    $710,000 is designated to finance future funding commitments on CRE
    loans, loan principal repayments that will pay down outstanding CLO
    notes of $74.5 million and $11.4 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 $43.7 million and $185.6 million, respectively.

Capital Allocation

As of March 31, 2013, RSO had allocated its invested equity capital among its targeted asset classes as follows: 75% in CRE assets, 14% in commercial finance assets and 11% in other investments.

Supplemental Information

The following schedules of reconciliations or supplemental information as of March 31, 2013 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 shares 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, a reconciliation of GAAP net income to FFO and AFFO, a book value allocable to common shares rollforward, a summary of CDO and CLO performance statistics and supplemental information regarding RSO's CRE loan and bank loan portfolios.


 
                                                                            
                                                                            
                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES                   
                        CONSOLIDATED BALANCE SHEETS                         
              (in thousands, except share and per share data)               
                                                                            
                                                  March 31,    December 31, 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                  (unaudited)               
ASSETS (1)                                                                  
  Cash and cash equivalents                      $     67,661  $     85,278 
  Restricted cash                                     112,131        94,112 
  Investment securities, trading                       32,892        24,843 
  Investment securities available-for-sale,                                 
   pledged as collateral, at fair value               192,673       195,200 
  Investment securities available-for-sale, at                              
   fair value                                          49,609        36,390 
  Linked transactions, at fair value                   22,455         6,835 
  Loans held for sale                                  18,150        48,894 
  Investment in real estate                            75,142        75,386 
  Loans, pledged as collateral and net of                                   
   allowances of $17.0 million and $17.7 million    1,708,540     1,793,780 
  Loans receivable-related party                        7,860         8,324 
  Investments in unconsolidated entities               48,419        45,413 
  Interest receivable                                   8,913         7,763 
  Deferred tax asset                                    2,887         2,766 
  Principal paydown receivable                             20        25,570 
  Intangible assets                                    12,660        13,192 
  Prepaid expenses                                      3,839        10,396 
  Other assets                                          4,712         4,109 
                                                 ------------  ------------ 
    Total assets                                 $  2,368,563  $  2,478,251 
                                                 ============  ============ 
LIABILITIES (2)                                                             
  Borrowings                                     $  1,649,840  $  1,785,600 
  Distribution payable                                 22,731        21,655 
  Accrued interest expense                              3,096         2,918 
  Derivatives, at fair value                           14,036        14,687 
  Accrued tax liability                                 1,859        13,641 
  Deferred tax liability                                8,376         8,376 
  Accounts payable and other liabilities               10,877        18,029 
                                                 ------------  ------------ 
    Total liabilities                               1,710,815     1,864,906 
                                                 ------------  ------------ 
STOCKHOLDERS' EQUITY                                                        
  Preferred stock, par value $0.001: 8.50%                                  
   Series A 100,000,000 shares authorized,                                  
   676,373 shares issued and outstanding                    1             1 
  Preferred stock, par value $0.001: 8.25%                                  
   Series B 100,000,000 shares authorized,                                  
   2,251,294 shares issued and outstanding                  2             1 
  Common stock, par value $0.001: 500,000,000                               
   shares authorized; 108,169,623 and                                       
   105,118,093 shares issued and outstanding                                
   (including 3,038,084 and 3,308,343 unvested                              
   restricted shares)                                     108           105 
  Additional paid-in capital                          885,511       836,053 
  Accumulated other comprehensive loss                (21,775)      (27,078)
  Distributions in excess of earnings                (205,890)     (195,737)
                                                 ------------  ------------ 
    Total stockholders' equity                        657,957       613,345 
    Non-controlling interest                             (209)           -- 
                                                 ------------  ------------ 
    Total Equity                                      657,748       613,345 
                                                 ------------  ------------ 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $  2,368,563  $  2,478,251 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                                                                            
                   RESOURCE CAPITAL CORP. AND SUBSIDIARIES                  
                  CONSOLIDATED BALANCE SHEETS - (Continued)                 
               (in thousands, except share and per share data)              
                                                                            
                                                    March 31,   December 31,
                                                       2013         2012    
                                                   ------------ ------------
                                                    (unaudited)             
(1) Assets of consolidated Variable Interest                                
 Entities ("VIEs") included in the total                                    
 assets(a)above:                                                            
Restricted cash                                    $    107,620 $     90,108
Investments securities available-for-sale, pledged                          
 as collateral, at fair value                           137,553      135,566
Loans held for sale                                      18,150       14,894
Loans, pledged as collateral and net of allowances                          
 of $13.3 million and $15.2 million                   1,533,796    1,678,719
Interest receivable                                       6,527        5,986
Prepaid expenses                                            303          328
Principal receivable                                         21       25,570
Other assets                                                 --          333
                                                   ------------ ------------
Total assets of consolidated VIEs                  $  1,803,970 $  1,951,504
                                                   ============ ============
                                                                            
(2) Liabilities of consolidated VIEs included in                            
 the total liabilities above (b):                                           
Borrowings                                         $  1,475,014 $  1,614,882
Accrued interest expense                                  2,528        2,666
Derivatives, at fair value                               13,478       14,078
Accounts payable and other liabilities                    1,423          698
                                                   ------------ ------------
Total liabilities of consolidated VIEs             $  1,492,443 $  1,632,324
                                                   ============ ============
                                                                            
(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 INCOME                     
               (in thousands, except share and per share data)              
                                                                            
                                                      Three Months Ended    
                                                           March 31,        
                                                  --------------------------
                                                      2013          2012    
                                                  ------------  ------------
                                                          (unaudited)       
REVENUES                                                                    
  Interest income:                                                          
    Loans                                         $     27,812  $     23,615
    Securities                                           3,642         3,405
    Interest income - other                              1,866         2,829
                                                  ------------  ------------
      Total interest income                             33,320        29,849
    Interest expense                                    11,165         8,383
                                                  ------------  ------------
      Net interest income                               22,155        21,466
      Rental income                                      6,174         1,919
      Dividend income                                       16            17
      Equity in income (losses) of unconsolidated                           
       subsidiaries                                       (425)        1,071
      Fee income                                         1,410         1,610
      Net realized gain on sales of investment                              
       securities available-for-sale and loans             391           380
      Net realized and unrealized gain on                                   
       investment securities, trading                    1,116         2,144
      Unrealized gain (loss) and net interest                               
       income on linked transactions, net                 (259)          119
                                                  ------------  ------------
    Total revenues                                      30,578        28,726
                                                  ------------  ------------
                                                                            
OPERATING EXPENSES                                                          
  Management fees - related party                        2,978         3,443
  Equity compensation - related party                    3,591           868
  Professional services                                  1,446         1,100
  Insurance                                                162           158
  Rental operating expense                               3,937         1,320
  General and administrative                             1,873         1,063
  Depreciation and amortization                          1,138         1,361
  Income tax expense                                     1,762         2,615
  Net impairment losses recognized in earnings              21           139
  Provision for loan losses                              1,042         2,178
                                                  ------------  ------------
    Total operating expenses                            17,950        14,245
                                                  ------------  ------------
NET INCOME                                              12,628        14,481
  Net income allocated to preferred shares              (1,311)           --
  Net loss from non-controlling interests                  209            --
                                                  ------------  ------------
NET INCOME ALLOCABLE TO COMMON SHARES             $     11,526  $     14,481
                                                  ============  ============
NET INCOME PER COMMON SHARE - BASIC               $       0.11  $       0.18
                                                  ============  ============
NET INCOME PER COMMON SHARE - DILUTED             $       0.11  $       0.18
                                                  ============  ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                                    
 OUTSTANDING - BASIC                               104,224,083    81,201,791
                                                  ============  ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                                    
 OUTSTANDING - DILUTED                             105,326,614    81,892,987
                                                  ============  ============

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  
                                                             March 31,      
                                                       -------------------- 
                                                          2013       2012   
                                                       ---------  --------- 
Net income allocable to common shares - GAAP           $  11,526  $  14,481 
Adjustments:                                                                
Real estate depreciation and amortization                    673        710 
  (Gains) losses on sales of properties (1)                   22     (1,087)
                                                       ---------  --------- 
FFO                                                       12,221     14,104 
Adjustments:                                                                
Non-cash items:                                                             
Adjust for impact of imputed interest on VIE                                
 accounting                                               (1,090)        -- 
  Provision for loan losses                                  194      1,584 
  Amortization of deferred costs (non real estate) and                      
   intangible assets                                       1,866      1,655 
  Equity investment losses (gains)                           336         -- 
Share-based compensation                                   3,591        868 
Impairment losses on real property held for sale              21        139 
  Straight-line rental adjustments                             2          8 
REIT tax planning adjustments                                726         -- 
Cash items:                                                                 
  Gains (losses) on sales of joint venture real estate                      
   interests (1)                                             (22)     1,087 
Gain on the extinguishment of debt                         3,585         -- 
Capital expenditures                                        (418)      (803)
                                                       ---------  --------- 
AFFO                                                   $  21,012  $  18,642 
                                                       =========  ========= 
                                                                            
Weighted average common shares - diluted                 105,327     81,893 
                                                                            
AFFO per common share - diluted                        $    0.20  $    0.23 
                                                       =========  ========= 
                                                                            
(1)  Amount represents losses on sales of joint venture real estate         
     interests from a joint venture that were recorded by RSO.              

SCHEDULE II


 
                                                                            
                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES                   
             BOOK VALUE ALLOCABLE TO COMMON SHARES ROLLFORWARD              
               (dollars in thousands, except per share data)                
                                (unaudited)                                 
                                                                            
                                                       Amount     Per Share 
                                                     ----------  ---------- 
Book value at December 31, 2012 allocable to common                         
 shares (1)                                          $  570,893  $     5.61 
Net income allocable to common shareholders              11,526        0.11 
                                                                            
Change in other comprehensive income:                                       
  Available for sale securities                           4,597        0.03 
Derivatives                                                 707        0.01 
Common dividends                                        (21,634)      (0.20)
Proceeds/Accretion from additional shares issued                            
 during the period (2)                                   22,139        0.04 
                                                     ----------  ---------- 
Total net increase (decrease)                            17,335       (0.01)
                                                     ----------  ---------- 
Book value at March 31, 2013, allocable to common                           
 shares (1)(3)                                       $  588,228  $     5.60 
                                                     ==========  ========== 
                                                                            
(1)  Per share calculations exclude unvested restricted stock, as disclosed 
     on the consolidated balance sheet, of 3.0 million and 3.3 million      
     shares as of March 31, 2013 and December 31, 2012, respectively.       
(2)  Includes issuance of common shares from our dividend reinvestment plan 
     of 2.9 million shares and 146,000 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 $657.9       
     million less preferred stock equity of $69.7 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                        
                                            Coverage   Overcollateralization
                    Cash Distributions      Cushion           Cushion       
                ------------------------- ----------- ----------------------
                Three Months                                        As of   
                    Ended     Year Ended     As of      As of      Initial  
                  March 31,  December 31,  March 31,  March 31,  Measurement
                ------------ ------------                                   
          CDO                               2013 (2)                        
  Name    Type    2013 (1)     2012 (1)       (3)      2013 (4)     Date    
------- ------- ------------ ------------ ----------- --------- ------------
                  (actual)     (actual)                                     
Apidos                                                                      
 CDO I                                                                      
 (5)    CLO     $      1,709 $      7,971 $     4,453 $  13,094 $     17,136
Apidos                                                                      
 CDO                                                                        
 III                                                                        
 (6)    CLO     $      2,220 $      8,742 $     4,110 $   9,877 $     11,269
Apidos                                                                      
 Cinco                                                                      
 CDO    CLO     $      3,265 $     11,109 $     5,846 $  20,073 $     17,774
Apidos                                                                      
 CLO                                                                        
 VIII                                                                       
 (7)    CLO     $      1,115 $      2,992 $     3,937 $  15,245 $     13,657
Whitney                                                                     
 CLO I                                                                      
 (8)    CLO     $        689 $        802 $        12 $  15,240          N/A
RREF                                                                        
 2006-1                                                                     
 (9)    CRE CDO $     18,945 $     15,050 $     7,918 $  56,023 $     24,941
RREF                                                                        
 2007-1                                                                     
 (10)   CRE CDO $      3,022 $     13,226 $     8,011 $  38,305 $     26,032
                                                                            
(1)  Distributions on retained equity interests in CDOs (comprised of note  
     investments and preference share ownership) and principal paydowns on  
     notes owned, RREF CDO 2006-1 includes $16.0 million and $2.3 million of
     paydowns as of March 31, 2013 and December 31, 2012, respectively.     
(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,      
     includes $190,000 and $752,000 in base and subordinated management fees
     for the three months ended March 31, 2013 and year ended December 31,  
     2012, respectively; RSO's distributions represent 43% of the           
     subordinated debt as a result of our investment of $15.0 million.      
(8)  Whitney CLO I was acquired in October 2012, when RSO purchased 66.6% of
     the outstanding preference shares, includes $203,000 and $236,000 of   
     collateral management fees for the three months ended March 31, 2013   
     and year ended December 31, 2012, respectively.                        
(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):


 
                                                                            
                                                                            
                                                 March 31,     December 31, 
                                                    2013           2012     
                                               -------------  ------------- 
                                                (unaudited)                 
Allowance for loan losses:                                                  
Specific allowance:                                                         
Commercial real estate loans                   $       3,311  $       2,142 
Bank loans                                             2,607          3,236 
                                               -------------  ------------- 
Total specific allowance                               5,918          5,378 
                                               -------------  ------------- 
General allowance:                                                          
Commercial real estate loans                           5,844          5,844 
Bank loans                                             5,214          6,469 
                                               -------------  ------------- 
Total general allowance                               11,058         12,313 
                                               -------------  ------------- 
Total allowance for loans                      $      16,976  $      17,691 
                                               =============  ============= 
Allowance as a percentage of total loans                 0.9%           0.9%
                                                                            
Loans held for sale:                                                        
Commercial real estate loans held for sale     $          --  $      34,000 
Bank loans held for sale                              18,150         14,894 
                                               -------------  ------------- 
Total loans held for sale (1)                  $      18,150  $      48,894 
                                               =============  ============= 
                                                                            
(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 March 31, 2013 (based on par value):


 
                                                                            
Security type:                                                              
Whole loans                                                            84.8%
Mezzanine loans                                                        12.7%
B Notes                                                                 2.5%
                                                                   -------- 
Total                                                                 100.0%
                                                                   ======== 
                                                                            
Collateral type:                                                            
Retail                                                                 26.7%
Multifamily                                                            25.2%
Hotel                                                                  20.1%
Office                                                                 15.5%
Mixed Use                                                               5.0%
Industrial                                                              2.1%
Self-storage                                                            1.0%
Other                                                                   4.4%
                                                                   -------- 
Total                                                                 100.0%
                                                                   ======== 
                                                                            
Collateral location:                                                        
Southern California                                                    39.0%
Northern California                                                     9.1%
Texas                                                                  11.0%
Arizona                                                                 8.1%
Washington                                                              4.6%
Florida                                                                 3.4%
Other                                                                  24.8%
                                                                   -------- 
Total                                                                 100.0%
                                                                   ======== 

RESOURCE CAPITAL CORP. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION

(unaudited)

The following table presents bank loan portfolio statistics by industry as of March 31, 2013 (based on par value):


 
                                                                            
Industry type:                                                              
Healthcare, education and childcare                                    14.2%
Diversified/conglomerate service                                        9.6%
Broadcasting and entertainment                                          7.9%
Automobile                                                              6.5%
Retail Stores                                                           6.4%
Chemicals, plastics and rubber                                          5.4%
Hotels, motels, inns and gaming                                         4.8%
Telecommunications                                                      3.8%
Personal, food and miscellaneous services                               3.6%
Electronics                                                             3.5%
Leisure, amusement, motion pictures, entertainment                      3.1%
Aerospace and defense                                      
             2.7%
Finance                                                                 2.7%
Other                                                                  25.8%
                                                                   -------- 
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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