NEW YORK--(BUSINESS WIRE)--May 8, 2006--Resource Capital Corp. (NYSE:RSO) (the "Company" or "RCC"), a real estate investment trust focused on investing in commercial and residential real estate-related assets and, to a lesser extent, higher-yielding commercial finance assets, reported net income of $5.2 million or $0.31 per common share-diluted for the first quarter ended March 31, 2006 as compared to a net loss of $48,000 or $0.00 per common share-diluted for the period from March 8, 2005 (date operations commenced) to March 31, 2005. Included in net income for the quarter ended March 31, 2006 is a $1.3 million capital loss on the sale of approximately $125.4 million of agency residential mortgage-backed securities ("RMBS"). For the quarter ended March 31, 2006, REIT taxable income was $7.2 million or $0.43 per common share-diluted. The Company distributed a dividend of $0.33 per share to all shareholders of record as of March 27, 2006.
Highlights for the first quarter and recent developments include:
-- The Company completed the initial public offering of 4.0
million shares of its common stock (including 1.9 million
shares offered by selling stockholders) on February 10, 2006,
generating net proceeds of approximately $27.6 million, after
deducting underwriters' discounts and commissions and offering
expenses.
-- The Company paid a quarterly distribution of $0.33 per common
share for the first quarter of 2006. This distribution was
paid on April 10, 2006 to stockholders of record on March 27,
2006, including those shares purchased in our public offering.
-- The Company's net interest income increased to $8.2 million
for the quarter ended March 31, 2006 as compared to $484,000
for the period ended March 31, 2005.
-- The Company's commercial finance subsidiary entered into a
$100.0 million secured term credit facility with Bayerische
Hypo-und Vereinsbank AG to finance the Company's investments
in equipment leases and notes. The Company acquired through
its direct and indirect channels over $42.0 million of small
ticket equipment leases and notes.
-- The Company decreased its agency RMBS portfolio from $1.0
billion at December 31, 2005 to $835.3 million at March 31,
2006. Included in this decrease was the sale of approximately
$125.4 million of 3/1 hybrid adjustable rate RMBS which
resulted in a loss of $1.3 million. It is the Company's goal
to lower its exposure to interest rate sensitive assets. The
Company has not been reinvesting prepayment proceeds into
agency RMBS and therefore believes that this portfolio will
decrease substantially in size over the next 18 months. As of
May 5, 2006, the portfolio of agency RMBS had an approximate
fair value of $818.0 million.
-- On April 3, 2006, the Company priced Apidos CDO III Ltd., a
$285.5 million collateralized debt obligation ("CDO") that
will provide financing for a portfolio of syndicated bank
loans. As of March 31, 2006, RCC owned $471.7 million of
syndicated bank loans, at cost, with a weighted average spread
of LIBOR plus 2.27 % and a fair value of approximately $474.6
million. Including Apidos CDO III, the Company has
match-funded this loan portfolio through two CDOs with a
weighted average funding cost of LIBOR plus 0.46%. Once Apidos
CDO III is fully ramped, RCC will own approximately $625.0
million of commercial syndicated loans.
-- The Company's investment in commercial real estate loans
increased to $242.8 million as of May 5, 2006 from $171.4 at
December 31, 2005, including the repayment of a $16.5 million
B note secured by a property in Parsippany, NJ. In total, RCC
originated approximately $89.0 million of additional
commercial real estate loans since December 31, 2005. In
addition, through its manager, RCC has added two employees to
its commercial real estate operations focusing on origination,
underwriting and management of commercial real estate loans,
including Thomas Powers who joins RCC from Merrill Lynch,
where he was a senior member of the real estate credit risk
management group. The Company expects that its manager will
continue to build its direct and indirect commercial mortgage
capabilities.
Balance Sheet Summary
At March 31, 2006, RCC's investment portfolio totaled $2.0 billion and included the following: $239 million of commercial real estate-related investments, $835 million of agency RMBS, $345 million of non-agency RMBS, $472 million of syndicated bank loans, $62 million of direct financing leases and $21 million of other asset-backed securities. At March 31, 2006, RCC's investment portfolio was financed with $1.8 billion of total indebtedness and included the following: $698 million of senior notes issued by CDOs secured primarily by mortgage-backed securities, other asset-backed securities and syndicated bank loans; $148 million of repurchase agreements secured by subordinated commercial real estate loans; $769 million of repurchase agreeements secured by agency RMBS; $133 million of warehouse lines secured by syndicated bank loans and $56 million outstanding under a term facility secured by equipment leases and notes.
Dividend Summary
As previously announced, the Board of Directors declared a dividend of $0.33 per share, $5.9 million in the aggregate, for the quarter ended March 31, 2006, which was paid on April 10, 2006 to shareholders of record on March 27, 2006. Estimated REIT taxable income, a non-GAAP financial measurement, totaled approximately $7.2 million for the quarter ended March 31, 2006. REIT taxable income per share based on total shares outstanding at the end of the quarter was $.40 per common share. To maintain our qualification as a REIT under the Internal Revenue Code, the Company intends to make regular quarterly distributions to our stockholders of at least 90% of the Company's annual REIT taxable income.
Book Value
The Company's book value per common share at March 31, 2006 was $12.79 as compared to $12.46 at December 31, 2005, a 3% increase. Total stockholders' equity was $227.9 million at March 31, 2006 and $195.3 million at December 31, 2005. Total common shares outstanding were 17,813,096 and 15,682,334 at March 31, 2006 and December 31, 2005, respectively.
Investment Portfolio
The table below summarizes the amortized cost and estimated fair value of our investment portfolio as of March 31, 2006, classified by interest rate type. The table below includes both (i) the amortized cost of our investment portfolio and the related dollar price, which is computed by dividing amortized cost by par amount, and (ii) the estimated fair value of our investment portfolio and the related dollar price, which is computed by dividing the estimated fair value by par amount (in thousands, except percentages):
Estimated
Amortized cost Dollar price fair value
--------------- --------------- ---------------
Floating rate
-------------
Non-agency RMBS $ 339,038 99.12% $ 338,917
CMBS 444 100.00% 445
Other ABS 18,244 99.87% 18,231
A notes 20,000 100.00% 20,000
B notes 136,262 99.90% 136,262
Mezzanine loans 50,913 99.88% 50,913
Syndicated bank loans 471,472 100.20% 474,331
--------------- ---------------
Total floating rate $ 1,036,373 99.78% $ 1,039,099
=============== ===============
Hybrid rate
-----------
Agency RMBS $ 853,536 100.08% $ 835,276
--------------- ---------------
Total hybrid rate $ 853,536 100.08% $ 835,276
=============== ===============
Fixed rate
----------
Non-agency RMBS $ 6,000 100.00% $ 5,792
CMBS 27,520 98.66% 26,570
Other ABS 3,314 99.97% 3,127
Mezzanine loans 5,012 100.24% 5,012
Syndicated bank loans 249 99.60% 249
Equipment leases and
notes 61,539 100.00% 61,539
--------------- ---------------
Total fixed rate $ 103,634 99.65% $ 102,289
=============== ===============
Grand total $ 1,993,543 99.90% $ 1,976,664
=============== ===============
Estimated
fair value less
amortized
Dollar price cost Dollar price
--------------- --------------- ---------------
Floating rate
-------------
Non-agency RMBS 99.08% $ (121) -0.04%
CMBS 100.23% 1 0.23%
Other ABS 99.80% (13) -0.07%
A notes 100.00% - 0.00%
B notes 99.90% - 0.00%
Mezzanine loans 99.88% - 0.00%
Syndicated bank loans 100.81% 2,859 0.61%
---------------
Total floating rate 100.04% $ 2,726 0.26%
===============
Hybrid rate
-----------
Agency RMBS 97.94% $ (18,260) -2.14%
---------------
Total hybrid rate 97.94% $ (18,260) -2.14%
===============
Fixed rate
----------
Non-agency RMBS 96.53% $ (208) -3.47%
CMBS 95.26% (950) -3.40%
Other ABS 94.33% (187) -5.64%
Mezzanine loans 100.24% - 0.00%
Syndicated bank loans 99.60% - 0.00%
Equipment leases and
notes 100.00% - 0.00%
---------------
Total fixed rate 98.36% $ (1,345) -1.29%
===============
Grand total 99.06% $ (16,879) -0.84%
===============
About Resource Capital Corp
Resource Capital Corp. is a specialty finance company that began operations in March 2005 and intends to elect and qualify to be taxed as a real estate investment trust for federal income tax purposes. RCC's investment strategy focuses on real estate-related assets, and, to a lesser extent, higher-yielding commercial finance assets with a concentration on the following asset classes: commercial real estate-related assets such as B-notes, mezzanine debt and commercial mortgage-backed securities and commercial finance assets such as other asset-backed securities, syndicated bank loans, equipment leases and notes, trust preferred securities and private equity investments principally issued by financial institutions. RCC 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 financial fund management, real estate, and equipment finance sectors. As of March 31, 2006, Resource America managed approximately $9.5 billion of assets in these sectors.
For more information, please visit our website at www.resourcecapitalcorp.com or contact investors relations at pschreiber@resourceamerica.com
Safe Harbor Statement
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. For information pertaining to risks related to these forward-looking statements, see Item 1A, under the caption "Risk Factors" contained in Item 1 of the Company's Annual Report on Form 10-K.
The remainder of this release contains the Company's consolidated balance sheets, consolidated statements of operations and a reconciliation of the Company's estimated REIT taxable income.
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
March 31, December 31,
2006 2005
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 23,671 $ 17,729
Restricted cash 20,040 23,592
Due from broker - 525
Available-for-sale securities, pledged as
collateral, at fair value 1,185,485 1,362,392
Available-for-sale securities, at fair
value 42,873 28,285
Loans, net of allowances of $0 and $0 683,908 570,230
Direct financing leases and notes, net of
unearned income 61,539 23,317
Derivatives, at fair value 4,985 3,006
Interest receivable 10,639 9,337
Accounts receivable 148 183
Principal paydowns receivables 3,382 5,805
Other assets 2,216 1,146
------------ ------------
Total assets $ 2,038,886 $ 2,045,547
============ ============
LIABILITIES
Repurchase agreements, including accrued
interest of $1,485 and $2,104 $ 917,293 $ 1,068,277
Collateralized debt obligations ("CDOs") 687,686 687,407
Warehouse agreements 132,793 62,961
Secured term facility 55,767 -
Unsecured revolving credit facility - 15,000
Distribution payable 5,878 5,646
Accrued interest expense 9,004 9,514
Management and incentive fee
payable - related party 726 896
Security deposits 1,011 -
Accounts payable and accrued liabilities 851 513
------------ ------------
Total liabilities 1,811,009 1,850,214
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.001:
100,000,000 shares authorized; no shares
issued and outstanding - -
Common stock, par value $0.001:
500,000,000 shares authorized; 17,813,096
and 15,682,334 shares issued and
outstanding (including 234,224 and
349,000 restricted shares) 18 16
Additional paid-in capital 247,683 220,161
Deferred equity compensation (1,936) (2,684)
Accumulated other comprehensive loss (14,582) (19,581)
Distributions in excess of earnings (3,306) (2,579)
------------ ------------
Total stockholders' equity $ 227,877 $ 195,333
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,038,886 $ 2,045,547
============ ============
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Period from
March 8, 2005
Three Months (Date Operations
Ended Commenced) to
March 31, March 31,
2006 2005
---------------- ----------------
(Unaudited)
REVENUES
Net interest income:
Interest income from securities
available-for-sale $ 16,372 $ 404
Interest income from loans 11,019 -
Interest income - other 2,042 290
---------------- ----------------
Total interest income 29,433 694
Interest expense 21,202 210
---------------- ----------------
Net interest income 8,231 484
---------------- ----------------
OTHER REVENUE
Net realized loss on investments (699) -
EXPENSES
Management fee expense - related
party 993 208
Equity compensation expense -
related party 582 209
Professional services 261 22
Insurance expense 120 30
General and administrative 426 63
---------------- ----------------
Total expenses 2,382 532
---------------- ----------------
NET INCOME (LOSS) $ 5,150 $ (48)
================ ================
NET INCOME (LOSS) PER SHARE - BASIC $ 0.31 $ (0.00)
================ ================
NET INCOME (LOSS) PER SHARE -
DILUTED $ 0.31 $ (0.00)
================ ================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING - BASIC 16,617,808 15,333,334
================ ================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING - DILUTED 16,752,520 15,333,334
================ ================
DIVIDENDS DECLARED PER SHARE $ 0.33 $ 0.00
================ ================
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME (LOSS) TO
ESTIMATED REIT TAXABLE INCOME
(UNAUDITED)
Period from
March 8, 2005
(Date Operations
Three Months Ended Commenced) to
March 31, 2006 March 31, 2005
------------------ ------------------
Net income (loss) $ 5,150 $ (48)
Additions:
Share-based compensation to
related parties 582 209
Incentive management fee
expense to related parties
paid in shares 31 -
Capital losses from the sale
of available-for-sale
securities 1,412 -
------------------ ------------------
Estimated REIT taxable income $ 7,175 $ 161
================== ==================
REIT taxable income is not a presentation made in accordance with
GAAP, and does not purport to be an alternative to net income (loss)
determined in accordance with GAAP as a measure of operating
performance or to cash flows from operating activities determined in
accordance with GAAP as a measure of liquidity. Total taxable income
is the aggregate amount of taxable income generated by us and by our
domestic and foreign taxable REIT subsidiaries. REIT taxable income
excludes the undistributed taxable income of our domestic taxable REIT
subsidiary, if any such income exists, which is not included in REIT
taxable income until distributed to us. There is no requirement that
our domestic taxable REIT subsidiary distribute its earning to us.
REIT taxable income, however, includes the taxable income of our
foreign taxable REIT subsidiaries because we will generally be
required to recognize and report their taxable income on a current
basis. We believe that a presentation of REIT taxable income provides
useful information to investors regarding our financial condition and
results of operations as this measurement is used to determine the
amount of dividends that we are required to declare to our
stockholders in order to maintain our status as a REIT for federal
income tax purposes. We use REIT taxable income for this purpose.
Because not all companies use identical calculations, this
presentation of REIT taxable income may not be comparable to other
similarly-titled measures of other companies.
CONTACT: Resource Capital Corp.
Thomas C. Elliott, 215-546-5005
Fax: 215-546-4785
SOURCE: Resource Capital Corp.
