Resource Capital Corp. and its subsidiaries purchase and manage a portfolio of commercial real estate-related assets and commercial finance assets. Commercial Real Estate-Related Investments Whole Loans (First Mortgage Loans): The company originates primarily first mortgage loans, or whole loans, directly to borrowers. The direct origination of whole loans enables the company to control the structure of the loans and to maintain direct lending relationships with the borrowers. Senior Interests in Whole Loans (A Notes): The company invests in senior interests in whole mortgage loans, referred to as A notes, either directly originated or purchased from third parties. Subordinate Interests in Whole Loans (B Notes): The company invests in subordinate interests in whole loans, referred to as B notes, which it either directly originate or purchase from third parties. B notes are loans secured by a first mortgage and are subordinated to an A note. Mezzanine Financing: The company invests in mezzanine loans that are senior to the borrower's equity in, and subordinate to a first mortgage loan on, a property. These loans are secured by pledges of ownership interests, in whole or in part, in entities that directly own the real property. In addition, the company might require other collateral to secure mezzanine loans, including letters of credit, personal guarantees of the principals of the borrower, or collateral unrelated to the property. Its mezzanine loans might also have prepayment lockouts, penalties, minimum profit hurdles, and other mechanisms to protect and improve returns in the event of premature repayment. Commercial Mortgage-Backed Securities (CMBS): The company invests in CMBS, which are securities that are secured by or evidence interests in a pool of mortgage loans secured by commercial properties. These securities might be senior or subordinate and might be either investment grade or non-investment grade. Commercial Real Estate Investments The company invests directly in the ownership of commercial real estate as the company restructured two real estate loans to take control of properties. The company also owns two multi-family real estate assets, one through a joint venture and the other directly wholly-owned by it, as well as a hotel property. The company primarily used a related party, Resource Real Estate, a subsidiary of Resource America, to manage these assets on its behalf. Other Real Estate Investments The company invests in joint ventures and other interests that finance the acquisition of distressed commercial properties and mortgage loans on distressed commercial properties. Structured Note Investments and Residential Real Estate-Related Investments, or RMBS The company invests in structured notes and RMBS as part of its trading portfolio. Structured note investments are investments in structured finance vehicles, which are among the most junior debt and equity securities issued by the vehicle. These notes and equity securities receive quarterly interest payments or distributions only after the more senior debt securities issued by the vehicle have received all amounts contractually then owned to them. The company also invests in RMBS, which are securities that are secured or evidenced by interests in a pool of residential mortgage loans. These securities might be issued by government-sponsored agencies or other entities and might or might not be rated investment grade by rating agencies. Residential Mortgage Origination Primary Capital Mortgage, LLC (PCM) is a residential mortgage lender and servicer offering home loans in 35 states through retail, wholesale and correspondent channels. PCM primarily originates agency mortgage loans for the purpose of selling these loans to the appropriate federal agency. Commercial Finance Investments Bank loans: Historically, the company acquired senior and subordinated, secured and unsecured loans made by banks or other financial entities. The company may, in the future, make similar investments consistent with its business strategy. Bank loans may also include revolving credit facilities, under which the lender is obligated to advance funds to the borrower under the credit facility as requested by the borrower from time to time. Some of these loans may have an interest-only payment schedule, with the principal amount remaining outstanding and at risk until the maturity of the loan. These loans may include restrictive financial and operating covenants. Middle Market Loans: The company makes both senior and subordinated, secured and unsecured loans to middle market companies. The company’s middle market loan portfolio focuses on privately held companies in various industries. Preferred Equity: The company has a preferred equity investment in a leasing company that invests in small- and middle-ticket full payout lease receivables. Trust Preferred Securities and Other Asset-Backed Securities: The company has one investment in trust preferred securities. Business Strategy The core components of the company’s business strategy include investment in real estate and commercial finance assets; managing its investment portfolio; managing its interest rate and liquidity risk; and diversification of investments. Tax Status The company has elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended. As a result, the company generally is not subject to Federal or State income taxation at the corporate level to the extent it distributes annually approximately 90% of its REIT taxable income to its shareholders and satisfies certain other requirements.
resource capital corp (RSO:New York)
712 Fifth Avenue
New York, NY 10019
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