NEW YORK--(BUSINESS WIRE)--Aug. 3, 2006--Resource Capital Corp. (NYSE:RSO) (the "Company" or "RCC"), a real estate investment trust focused on originating and investing in commercial real estate secured loans, whole loans, B-notes, mezzanine loans, mortgage-related securities and other real estate related assets and, to a lesser extent, higher-yielding commercial finance assets and asset-backed securities reported net income of $6.1 million or $0.34 per diluted share for the quarter ended June 30, 2006 as compared to net income of $2.3 million or $0.15 per diluted share for the quarter ended June 30, 2005 an increase of $3.8 million (166%) and $0.19 (127%) per diluted share, respectively. For the quarter ended June 30, 2006, estimated REIT taxable income was $6.4 million or $0.36 per diluted share, as compared to $3.1 million or $0.20 per diluted share for the quarter ended June 30, 2005. Net income for the six months ended June 30, 2006 was $11.2 million, or $0.65 per diluted share, as compared to net income for the period ended June 30, 2005 of $2.2 million, or $0.15 per diluted share an increase of $9.0 million (403%) and $0.50 (333%) per diluted share, respectively.
Highlights for the second quarter and recent developments include:
- Resource Capital Corp. paid a quarterly dividend of $0.36 per common share for the second quarter of 2006, an increase of $0.03 per common share or 9% from the dividend paid for the first quarter of 2006. This distribution was paid on July 21, 2006 to all shareholders of record as of June 29, 2006. Based on this dividend, the annualized dividend would be $1.44 or 11.25% yield on the price of the stock at the close of the market on August 1, 2006.
- The Company's net interest income increased by $3.9 million or 88% to $8.4 million for the quarter ended June 30, 2006 as compared to $4.5 million for the same period in 2005.
Commercial Real Estate
- The Company continued to increase its investment in commercial real estate loans. The portfolio of loans grew by $80.2 million to $292.6 million at June 30, 2006 from $212.4 million at March 31, 2006. As of July 31, 2006, the Company had closed an additional $35.2 million of loans and is currently in the closing process for seven additional commercial real estate investment opportunities in excess of $130.0 million. In addition, RCC received a repayment in July 2006 on one loan of $27.5 million.
- The Company announced on May 28, 2006 the addition by its manager of Kyle Geoghegan and Darryl Myrose, former managing Directors at Bear Stearns to lead its direct loan origination team based in Los Angeles, CA.
- On July 27, 2006 the Company priced Resource Real Estate CDO-1, Ltd., a collateralized debt obligation ("CDO") that will provide long-term financing for a $345.0 million portfolio of commercial real estate loans. The notes issued by CDO-1 will bear interest at a weighted-average interest rate of LIBOR plus 0.82%. The Company will retain approximately $79.4 million of equity in this financing.
- Commercial Finance
- The Company closed Apidos CDO III, Ltd., in May 2006, a $285.5 million CDO that provided financing for a portfolio of syndicated bank loans. RCC continued to ramp up its syndicated bank loan portfolio and ended the quarter with a total of $605.1 million, at cost, with a weighted-average spread of LIBOR plus 2.35% and a fair value of $603.4 million. Including Apidos CDO III, the Company's syndicated loan portfolio is completely match-funded through two CDO's with a weighted-average cost of LIBOR plus 0.46%.
- RCC's commercial finance subsidiary acquired an additional $62.5 million in direct financing leases and notes since December 31, 2005, including $20.3 million since March 31, 2006.
RMBS Agency Portfolio
- The Company decreased its agency RMBS portfolio from $1.0 billion at December 31, 2005 ($835.3 million at March 31, 2006) to $790.8 million at June 30, 2006. It is the Company's goal to lower its exposure to interest rate sensitive assets. RCC has not been reinvesting prepayment proceeds into agency RMBS and continues to believe that this portfolio will decrease substantially in size over the next 18 months. As of August 1, 2006 the portfolio of agency RMBS had an approximate fair value of $783.5 million.
- Corporate Matters
- The Company issued a $25.8 unsecured junior subordinated debenture that bears interest at LIBOR plus 3.95% related to a trust preferred security (Trups) on May 24, 2006. RCC received net proceeds of $24.2 million from the issuance.
- The Company appointed David J. Bryant, a former Pennsylvania REIT executive, as its Senior Vice President and Chief Financial Officer effective June 28, 2006.
Balance Sheet Summary
At June 30, 2006, RCC's investment portfolio totaled $2.2 billion and included the following: $319.0 million of commercial real estate-related investments, $790.8 million of agency RMBS, $347.8 million of non-agency RMBS, $605.1 million of syndicated bank loans, $78.0 million of direct financing leases and notes and $21.7 million of other asset-backed securities. At June 30, 2006, RCC's investment portfolio was financed with $2.0 billion of total indebtedness and included the following: $960.0 million of senior notes issued by CDOs secured primarily by mortgage-backed securities, other asset-backed securities and syndicated bank loans; $203.9 million of repurchase agreements secured by commercial real estate loans; $730.2 million of repurchase agreements secured by agency RMBS; $73.3 million outstanding under a term facility secured by equipment leases and notes and $25.8 million of an unsecured junior subordinated debenture.
Book Value
The Company's book value per common share at June 30, 2006 was $12.66 as compared to $12.46 at December 31, 2005, a 2% increase. Total stockholders' equity was $225.5 million at June 30, 2006 and $195.3 million at December 31, 2005. Total common shares outstanding were 17,815,182 and 15,682,334 at June 30, 2006 and December 31, 2005, respectively.
Investment Portfolio
The tables below summarize the amortized cost and estimated fair value of our investment portfolio as of June 30, 2006 and as of December 31, 2005, classified by interest rate type. The tables below include 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):
June 30, 2006
-----------------------------------
Amortized Dollar Estimated
cost price fair value
------------ -------- -----------
Floating rate
----------------------------------
Non-agency RMBS $ 341,148 99.15% $ 341,951
CMBS 429 100.00% 433
Other ABS 18,571 98.92% 18,642
A notes 20,000 100.00% 20,000
B notes 147,639 99.90% 147,639
Mezzanine loans 55,484 100.21% 55,484
Syndicated bank loans 604,842 99.97% 603,128
------------ -----------
Total floating rate $ 1,188,113 99.83% $1,187,277
============ ===========
Hybrid rate
----------------------------------
Agency RMBS $ 812,791 100.08% $ 790,815
------------ -----------
Total hybrid rate $ 812,791 100.08% $ 790,815
============ ===========
Fixed rate
----------------------------------
Non-agency RMBS $ 6,000 100.00% $ 5,882
CMBS 27,528 98.69% 26,002
Other ABS 3,314 99.97% 3,095
B notes 16,705 98.26% 16,705
Mezzanine loans 52,687 89.87% 52,687
Syndicated bank loans 249 99.60% 249
Equipment leases and notes 77,984 100.00% 77,984
------------ -----------
Total fixed rate $ 184,467 96.55% $ 182,604
============ ===========
Grand total $ 2,185,371 99.64% $2,160,696
============ ===========
June 30, 2006
-----------------------------------
Estimated
Dollar fair value less Dollar
price amortized cost price
-------- --------------- --------
Floating rate
----------------------------------
Non-agency RMBS 99.39% $ 803 0.23%
CMBS 100.93% 4 0.93%
Other ABS 99.30% 71 0.38%
A notes 100.00% - 0.00%
B notes 99.90% - 0.00%
Mezzanine loans 99.97% - 0.00%
Syndicated bank loans 99.93% (1,714) -0.28%
---------------
Total floating rate 99.76% $ (836) -0.07%
===============
Hybrid rate
----------------------------------
Agency RMBS 97.38% $ (21,976) -2.71%
---------------
Total hybrid rate 97.38% $ (21,976) -2.71%
===============
Fixed rate
----------------------------------
Non-agency RMBS 98.03% $ (118) -1.97%
CMBS 93.22% (1,526) -5.47%
Other ABS 93.36% (219) -6.61%
B notes 98.26% - 0.00%
Mezzanine loans 89.87% - 0.00%
Syndicated bank loans 99.60% - 0.00%
Equipment leases and notes 100.00% - 0.00%
---------------
Total fixed rate 95.57% $ (1,863) -0.98%
===============
Grand total 98.51% $ (24,675) -1.13%
===============
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 whole loans, B-notes, mezzanine loans and mortgage-related 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 June 30, 2006, Resource America managed approximately $10.5 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)
June 30, December 31,
2006 2005
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 3,648 $ 17,729
Restricted cash 33,534 23,592
Due from broker - 525
Available-for-sale securities, pledged as
collateral, at fair value 1,146,888 1,362,392
Available-for-sale securities, at fair
value 39,932 28,285
Loans 897,606 569,873
Direct financing leases and notes, net of
unearned income 77,984 23,317
Investment in unconsolidated trust 774 -
Derivatives, at fair value 6,673 3,006
Interest receivable 10,183 9,337
Accounts receivable 121 183
Principal paydown receivables 3,795 5,805
Other assets 2,956 1,503
------------ ------------
Total assets $ 2,224,094 $ 2,045,547
============ ============
LIABILITIES
Repurchase agreements, including accrued
interest of $1,342 and $2,104 $ 934,060 $ 1,068,277
Collateralized debt obligations ("CDOs")
(net of debt issuance costs of
$13,474 and $10,093) 946,526 687,407
Warehouse agreement - 62,961
Secured term facility 73,343 -
Unsecured revolving credit facility - 15,000
Distribution payable 6,413 5,646
Accrued interest expense 8,809 9,514
Unsecured junior subordinated debenture
held by an unconsolidated trust that
issued trust preferred securities 25,774 -
Management and incentive fee payable -
related party 930 896
Security deposits 1,191 -
Due to broker 771 -
Accounts payable and accrued liabilities 738 513
------------ ------------
Total liabilities 1,998,555 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;
17,815,182 and 15,682,334 shares issued
and outstanding (including 234,224 and
349,000 restricted shares) 18 16
Additional paid-in capital 247,160 220,161
Deferred equity compensation (1,466) (2,684)
Accumulated other comprehensive loss (16,519) (19,581)
Distributions in excess of earnings (3,654) (2,579)
------------ ------------
Total stockholders' equity 225,539 195,333
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,224,094 $ 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
(Date
Three Months Ended Six Months Operations
June 30, Ended Commenced)
----------------------- June 30, to June 30,
2006 2005 2006 2005
----------- ----------- ----------- -------------
REVENUES (Unaudited) (Unaudited)
Net interest
income:
Interest
income from
securities
available-
for-sale $ 16,053 $ 10,089 $ 32,425 $ 10,493
Interest
income from
loans 15,700 1,458 26,720 1,458
Interest
income -
other 3,150 852 5,192 1,142
----------- ----------- ----------- -------------
Total
interest
income 34,903 12,399 64,337 13,093
Interest
expense 26,519 7,930 47,721 8,140
----------- ----------- ----------- -------------
Net
interest
income 8,384 4,469 16,616 4,953
----------- ----------- ----------- -------------
OTHER REVENUE
Net realized
gains (losses)
on investments 161 (14) (538) (14)
EXPENSES
Management fees -
related party 1,237 808 2,230 1,016
Equity
compensation -
related party 240 827 822 1,036
Professional
services 304 100 565 122
Insurance 125 120 246 150
General and
administrative 573 320 998 383
----------- ----------- ----------- -------------
Total expenses 2,479 2,175 4,861 2,707
----------- ----------- ----------- -------------
NET INCOME $ 6,066 $ 2,280 $ 11,217 $ 2,232
=========== =========== =========== =============
NET INCOME PER SHARE
- BASIC $ 0.35 $ 0.15 $ 0.66 $ 0.15
=========== =========== =========== =============
NET INCOME PER SHARE
- DILUTED $ 0.34 $ 0.15 $ 0.65 $ 0.15
=========== =========== =========== =============
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING - BASIC 17,580,293 15,333,334 17,099,051 15,333,334
=========== =========== =========== =============
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING -
DILUTED 17,692,586 15,373,644 17,222,553 15,356,872
=========== =========== =========== =============
DIVIDENDS DECLARED
PER SHARE $ 0.36 $ 0.00 $ 0.69 $ 0.00
=========== =========== =========== =============
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS)
TO ESTIMATED REIT TAXABLE INCOME
(Unaudited)
Period from
March 8, 2005
(Date
Six Months Operations
Three Months Ended Ended Commenced)
June 30, June 30, to June 30,
-----------------------
2006 2005 2006 2005
----------- ----------- ----------- -------------
Net income $ 6,066 $ 2,280 $ 11,217 $ 2,232
Additions:
Share-based
compensation to
related parties 240 827 822 1,036
Incentive
management fee
expense to
related party
paid in shares 77 - 108 -
Capital losses
from the sale of
available-for-
sale securities - - 1,411 -
----------- ----------- ----------- -------------
Estimated REIT
taxable income $ 6,383 $ 3,107 $ 13,558 $ 3,268
=========== =========== =========== =============
Estimated 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. Estimated REIT taxable income excludes the undistributed taxable income of our domestic taxable REIT subsidiary, if any such income exists, which is not included in estimated REIT taxable income until distributed to us. There is no requirement that our domestic taxable REIT subsidiary distribute its earning to us. Estimated 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 estimated 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 estimated REIT taxable income for this purpose. Because not all companies use identical calculations, this presentation of estimated REIT taxable income may not be comparable to other similarly-titled measures of other companies.
CONTACT: Resource Capital Corp.
David J. Bryant, 215-546-5005
Fax: 215-546-5388
SOURCE: Resource Capital Corp.
