NEW YORK, NY, Aug 01, 2011 (MARKETWIRE via COMTEX) --
Highlights
-- Adjusted net income of $0.25 and $0.51 per share-diluted.
-- GAAP net income of $0.13 and $0.34 per share-diluted.
-- Net interest income increased by $2.7 million, or 17% and $7.2
million, or 25% as compared to the three and six months ended June 30,
2010, respectively.
-- Provisions for loan losses decreased by 48% and 71% as compared to the
three and six months ended June 30, 2010, respectively.
-- Common stock cash dividend of $0.25 per share.
-- Cash on hand of $236 million, including unrestricted cash of $47
million at June 30, 2011.
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 and six months ended June 30, 2011.
-- Adjusted net income, a non-GAAP measure excluding the effect of
non-cash charges and non-operating capital transactions, was $18.0
million, or $0.25 per share-diluted, and $33.7 million, or $0.51 per
share-diluted for the three and six months ended June 30, 2011,
respectively, as compared to $10.9 million, or $0.24 per
share-diluted, and $21.1 million, or $0.51 per share-diluted, for the
three and six months ended June 30, 2010, respectively, an increase of
$7.1 million, or 65% and $12.7 million, or 60%, respectively. For a
reconciliation of adjusted net income to GAAP net income, see Schedule
I to this press release.
-- GAAP net income for the three and six months ended June 30, 2011 was
$9.2 million, or $0.13 per share-diluted, and $22.4 million, or $0.34
per share-diluted, respectively, as compared to GAAP net income for
the three and six months ended June 30, 2010 of $13.4 million, or
$0.30 per share-diluted, and $14.8 million, or $0.36 per
share-diluted, respectively, a decrease of $4.1 million, or 31%, and
an increase of $7.6 million, or 51%, respectively.
Jonathan Cohen, CEO and President of Resource Capital Corp., commented, "I believe that this quarter saw the continuation of improving credit, good cash flow, new investments and an excellent pipeline of new opportunities. We are still focused on reducing the risk profile of our portfolio by selling legacy subordinate loans, originating newer higher yielding replacements, building the leasing joint venture, and buying distressed and opportunistic real estate equity investments. We look forward to continuing to grow our net interest income aggressively over the remaining six months."
Additional highlights:
Commercial Real Estate
-- RSO received repayments on CRE loans of $19.4 million and sold five
CRE loans for proceeds of $56.7 million for the six months ended June
30, 2011.
-- RSO's CRE loan portfolio is now comprised of approximately 80% senior
whole loans as of June 30, 2011, as compared to 63% a year ago (or at
the height of the crisis).
-- RSO originated $63.9 million of whole loans in the three months ended
June 30, 2011 with a weighted average yield of 7.8% up substantially
from $19.8 million with a weighted average yield of 6.5% originated
during the three months ended March 31, 2011.
-- RSO has already committed over $47 million to new CRE whole loans
slated to close in the third calendar quarter of 2011 from an on-going
pipeline of new CRE loans of over $200.0 million.
-- RSO increased its opportunistic and distressed real estate investments
with the acquisition of one real estate asset in the quarter ended
June 30, 2011, and has acquired a second investment for $18.0 million
in the quarter ended September 30, 2011. These acquisitions coupled
with the conversion to equity of two commercial real estate loans
during the quarter ended June 30, 2011 demonstrate RSO's commitment to
opportunistic real estate acquisitions.
The following table summarizes RSO's CRE loan activities and fundings of previous commitments, at par, for the three, six and 12 months ended June 30, 2011 (in millions, except percentages):
Three Six 12 Floating
Months Months Months Weighted Weighted
Ended Ended Ended Average Average
June 30, June 30, June 30, Spread Fixed
2011 2011 2011 (1) Rate (2)
-------- -------- -------- --------- ---------
Whole loans $ 61.4 $ 80.1 $ 98.0 3.39% 12.0%
Whole loans - future
fundings (3) 2.5 3.6 5.2
======== ======== ========
New loans production 63.9 83.7 103.2
Sale of real estate
loans (34.5) (73.6) (117.1)
Payoffs (11.5) (11.5) (30.2)
Principal paydowns (7.5) (7.8) (11.9)
-------- -------- --------
Loans, net (4) $ 10.4 $ (9.2) $ (56.0)
======== ======== ========
(1) Represents the weighted average rate above the London Interbank Offered
Rate ("LIBOR") on loans whose interest rate is based on LIBOR as of June
30, 2011.
(2) Reflects rates on RSO's portfolio balance as of June 30, 2011.
(3) Consists of fundings of previous commitments.
(4) The basis of new net loans does not include provisions for losses on CRE
loans of $2.1 million for the three months ended June 30, 2011, $5.3
million for the six months ended June 30, 2011 and $25.6 million for the
12 months ended June 30, 2011.
CMBS Securities
-- During the six months ended June 30, 2011, RSO acquired $42.5 million
par value of CMBS at a weighted average price of 100.2%. The majority
of these purchases were financed by RSO's new Wells Fargo facility and
are highly-rated bonds.
Commercial Finance - Syndicated Bank Loans
-- RSO's bank loan portfolio, including asset-backed securities ("ABS")
held-to-maturity and certain loans held for sale, at the end of the
second quarter was $907.1 million, at amortized cost, with a
weighted-average spread of one-month and three-month LIBOR plus 3.02%.
RSO's bank loan portfolio is predominately match-funded through three
collateralized loan obligation ("CLO") issuances with a
weighted-average cost of three-month LIBOR plus 0.47% (0.78% at June
30, 2011).
-- During the three and six months June 30, 2011, RSO bought bank loans
through its three CLOs with a par value of $126.5 million at modest
net discount of $1.1 million. These purchased loans had an aggregate
weighted average annual yield of approximately 4.26%.
-- RSO, through its subsidiary Resource Capital Asset Management, earned
$3.9 million of net fees from the date of acquisition through June 30,
2011.
Book Value
As of June 30, 2011, RSO's book value per common share was $5.84, a decrease from $5.99 per common share at December 31, 2010. Total stockholders' equity was $433.4 million as of June 30, 2011 as compared to $348.3 million as of December 31, 2010. Total common shares outstanding were 74,230,500 as of June 30, 2011 as compared to 58,183,425 as of December 31, 2010.
Investment Portfolio
The table below summarizes the amortized cost and net carrying amount of RSO's investment portfolio as of June 30, 2011, 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 (3) price amount price cost price
---------- ------- ---------- ------- ---------- -------
June 30, 2011
---------------
Floating rate
CMBS-private
placement $ 29,923 100.00% $ 8,442 28.21% $ (21,481) -71,79%
Structured
notes 19,351 38.68% 25,238 50.45% 5,887 11.77%
RMBS 7,974 22.23% 7,107 19.82% (867) -2.41%
Other ABS -- --% 23 0.28% 23 0.28%
Mezzanine loans
(1) 76,888 100.00% 75,647 98.39% (1,241) -1.61%
Whole loans (1) 476,098 99.80% 454,596 95.29% (21,502) -4.51%
Bank loans (2) 876,431 97.83% 866,903 96.76% (9,528) -1.07%
Loans held for
sale (3) 1,650 56.94% 1,650 56.94% -- --%
ABS held-to-
maturity (4) 29,616 91.56% 26,956 83.33% (2,660) -8.23%
---------- ---------- ----------
Total
floating
rate 1,517,931 94.32% 1,466,562 91.13% (51,369) -3.19%
---------- ---------- ----------
Fixed rate
CMBS - private
placement 80,789 60.52% 82,902 62.10% 2,113 1.58%
B notes (1) 30,891 99.49% 30,392 97.89% (499) -1.60%
Mezzanine loans
(1) 13,995 100.38% 11,095 79.58% (2,900) -20.80%
Whole loans (1) 10,843 98.55% 10,843 98.55% -- --%
Preferred stock
and warrants 36,741 100.00% 36,741 100.00% -- --%
---------- ---------- ----------
Total fixed
rate 173,259 76.59% 171,973 76.02% (1,286) -0.57%
---------- ---------- ----------
Grand total $1,691,190 92.14% $1,638,535 89.27% $ (52,655) -2.87%
========== ========== ==========
(1) Net carrying amount includes an allowance for loan losses of $26.1
million at June 30, 2011, allocated as follows: B notes ($499,000),
mezzanine loans ($4.1 million) and whole loans ($21.5 million).
(2) The bank loan portfolio is carried at amortized cost less allowance for
loan loss and was $907.1 million at June 30, 2011. The amount disclosed
represents net realizable value at June 30, 2011, which includes a $3.6
million allowance for loan losses at June 30, 2011.
(3) Loans held for sale are carried at the lower of cost or market.
Amortized cost is equal to fair value.
(4) ABS held-to-maturity are carried at amortized cost less other-than-
temporary impairments.
Liquidity
At July 29, 2011, after disbursing the second quarter 2011 dividend, RSO's liquidity of $216.5 million consists of three primary sources:
-- unrestricted cash and cash equivalents of $27.8 million and restricted
cash of $2.0 million in margin call accounts;
-- capital available for reinvestment in its five CDO entities of $176.7
million, of which $9.1 million is designated to finance future funding
commitments on CRE loans; and
-- restricted cash available for investment in its newly-formed CLO
warehouse line of $10.0 million.
Capital Allocation
As of June 30, 2011, RSO had allocated its invested equity capital among its targeted asset classes as follows: 66% in CRE investments, 29% in commercial finance and 5% in other investments.
Supplemental Information
The following schedules of reconciliations or supplemental information as of June 30, 2011 are included at the end of this release:
-- Schedule I - Reconciliation of GAAP Net Income to Adjusted Net
Income.
-- Schedule II - Reconciliation of GAAP Net Income to Estimated REIT
Taxable Income.
-- Schedule III - Summary of CDO and CLO Performance Statistics.
-- Supplemental Information regarding loan and leasing 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 and CRE-related assets, and, to a lesser extent, commercial finance assets. RSO invests in the following asset classes: CRE-related assets such as commercial real estate property, whole loans, A-notes, B-notes, mezzanine loans, commercial mortgage-backed securities and investments in real estate joint ventures as well as commercial finance assets such as bank loans, lease receivables, other asset-backed securities, 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, commercial finance and financial fund management 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;
-- capital markets conditions and the availability of financing;
-- 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 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, reconciliation of GAAP net income to adjusted net income, a reconciliation of GAAP net income to estimated REIT taxable income and 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)
June 30, December 31,
2011 2010
-------------- --------------
(unaudited)
ASSETS
Cash and cash equivalents $ 46,898 $ 29,488
Restricted cash 188,897 168,192
Investment securities, trading 32,345 17,723
Investment securities available-for-sale,
pledged as collateral, at fair value 82,242 57,998
Investment securities available-for-sale,
at fair value 45,866 5,962
Investment securities held-to-maturity,
pledged as collateral 29,616 29,036
Property available-for-sale 4,444 4,444
Investments in real estate 31,599 --
Loans, pledged as collateral and net of
allowances of $29.7 million and $34.2
million 1,455,445 1,443,271
Loans held for sale 1,650 28,593
Lease receivables, pledged as collateral,
net of allowances of $0 and $70,000 and
net of unearned income -- 109,612
Loans receivable-related party 9,663 9,927
Investments in unconsolidated entities 6,437 6,791
Dividend reinvestment plan proceeds
receivable -- 10,000
Interest receivable 5,107 6,330
Deferred tax asset 4,401 4,401
Intangible assets 21,678 --
Other assets 6,145 2,432
-------------- --------------
Total assets $ 1,972,433 $ 1,934,200
============== ==============
LIABILITIES
Borrowings $ 1,473,202 $ 1,543,251
Distribution payable 18,567 14,555
Accrued interest expense 1,382 1,618
Derivatives, at fair value 16,535 13,292
Deferred tax liability 9,798 9,798
Accounts payable and other liabilities 19,569 3,360
-------------- --------------
Total liabilities 1,539,053 1,585,874
-------------- --------------
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; 74,230,500
and 58,183,425 shares issues and
outstanding (including 1,192,388 and
534,957 unvested restricted shares) 74 58
Additional paid-in capital 630,420 528,373
Accumulated other comprehensive loss (37,131) (33,918)
Distributions in excess of earnings (159,983) (146,187)
-------------- --------------
Total stockholders' equity 433,380 348,326
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,972,433 $ 1,934,200
============== ==============
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
REVENUES
Net interest income:
Loans $ 20,591 $ 19,389 $ 41,841 $ 37,938
Securities 2,955 2,895 5,715 5,769
Leases -- 1,928 -- 2,163
Interest income - other 1,716 248 2,935 299
----------- ----------- ----------- -----------
Total interest income 25,262 24,460 50,491 46,169
Interest expense 7,062 8,929 13,995 16,866
----------- ----------- ----------- -----------
Net interest income 18,200 15,531 36,496 29,303
Rental income 157 -- 180 --
Dividend income 866 -- 1,527 --
Fee income 2,253 -- 3,899 --
----------- ----------- ----------- -----------
Total revenues 21,476 15,531 42,102 29,303
----------- ----------- ----------- -----------
OPERATING EXPENSES
Management fees - related
party 3,148 4,288 5,486 5,440
Equity compensation -
related party 623 197 1,083 919
Professional services 989 876 1,908 1,695
Insurance 159 180 336 392
Rental operating expense 176 -- 312 --
General and
administrative 1,130 864 1,939 1,511
Depreciation on operating
leases -- 685 -- 685
Depreciation and
amortization 756 -- 1,009 --
Income tax expense 1,171 1,132 2,980 1,237
----------- ----------- ----------- -----------
Total expenses 8,152 8,222 15,053 11,879
----------- ----------- ----------- -----------
13,324 7,309 27,049 17,424
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Net impairment losses
recognized in earnings (4,649) (6,058) (4,649) (6,058)
Net realized gain on
investment securities
available-for-sale and
loans 3,696 190 3,852 336
Net realized and
unrealized gain on
investment
securities, trading 1,473 2,528 3,279 2,528
Provision for loan and
lease losses (4,113) (7,897) (6,719) (23,268)
Gain on the
extinguishment of debt -- 16,407 -- 23,035
Other (expense) income (512) 883 (451) 771
----------- ----------- ----------- -----------
Total other (expense)
income (4,105) 6,053 (4,688) (2,656)
----------- ----------- ----------- -----------
NET INCOME $ 9,219 $ 13,362 $ 22,361 $ 14,768
=========== =========== =========== ===========
NET INCOME PER SHARE -
BASIC $ 0.13 $ 0.30 $ 0.34 $ 0.36
=========== =========== =========== ===========
NET INCOME PER SHARE -
DILUTED $ 0.13 $ 0.30 $ 0.34 $ 0.36
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC 70,704,579 44,424,281 65,455,811 41,233,517
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING -
DILUTED 71,008,075 44,724,087 65,732,464 41,555,127
=========== =========== =========== ===========
DIVIDENDS DECLARED PER
SHARE $ 0.25 $ 0.25 $ 0.50 $ 0.50
=========== =========== =========== ===========
SCHEDULE I
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME(1)
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Net income - GAAP $ 9,219 $ 13,362 $ 22,361 $ 14,768
Adjustments:
Provision for loan and lease
losses (2) 4,113 7,897 6,719 23,268
Net impairment losses recognized
in earnings (3) 4,649 6,058 4,649 6,058
Gains on the extinguishment of
debt -- (16,407) -- (23,035)
--------- --------- --------- ---------
Adjusted net income, excluding non-
cash charges (1) $ 17,981 $ 10,910 $ 33,729 $ 21,059
========= ========= ========= =========
Adjusted net income per share -
diluted, Excluding non-cash
charges $ 0.25 $ 0.24 $ 0.51 $ 0.51
========= ========= ========= =========
(1) RSO evaluates its performance based on several performance measures,
including adjusted net income, in addition to net income and estimated
REIT taxable income. Adjusted net income represents net income available
to common shares, computed in accordance with GAAP, before provision for
loan and lease losses, gain on the extinguishment of debt and non-
operating capital items. These items are recorded in accordance with
GAAP and are typically non-cash or non-operating items that do not
impact RSO's operating performance or ability to pay a dividend.
Management views adjusted net income as a useful and appropriate
supplement to GAAP net income because it helps management evaluate RSO's
performance without the effects of certain GAAP adjustments that may not
have a direct financial impact on RSO's current operating performance
and dividend paying ability. Management uses adjusted net income to
evaluate the performance of RSO's investment portfolios, ability to
manage its expenses and dividend paying ability. RSO believes this is a
useful performance measure for investors to evaluate these aspects of
RSO's business as well. The most significant items RSO excludes in
determining adjusted earnings as of June 30, 2011 and 2010 are its
provision for loan and lease losses, loss from asset impairments and
gain on the extinguishment of debt. Management excludes all such items
from its calculation of adjusted net income because these items are not
charges or losses which would impact RSO's current operating
performance. However, by excluding these significant items, adjusted net
income assists an investor's understanding of RSO's operating
performance by excluding management's expectation of possible future
gains or losses from RSO's investment portfolio.
Adjusted net income, as a non-GAAP financial measurement, does not
purport to be an alternative to GAAP net income, or a measure of
operating performance or cash flows from operating activities determined
in accordance with GAAP as a measure of liquidity. Instead, adjusted net
income should be reviewed in connection with net income and cash flows
from operating, investing and financing activities in RSO's consolidated
financial statements to help analyze management's expectation of
potential future losses from RSO's investment portfolio and other non-
cash or capital matters that impact its financial results. Adjusted net
income and other supplemental performance measures are defined in
various ways throughout the REIT industry. Investors should consider
these differences when comparing RSO's adjusted net income to these
other REITs.
(2) Non-cash charges for loan and lease losses.
(3) Net impairment losses recognized in earnings on available-for-sale
securities.
SCHEDULE II
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME
TO ESTIMATED REIT TAXABLE INCOME (1)
(in thousands, except per share data)
(Unaudited)
RSO calculates estimated REIT taxable income, which is a non-GAAP financial measure, according to the requirements of the Internal Revenue Code. The following table reconciles GAAP net income to estimated REIT taxable income for the periods presented (in thousands, except per share data):
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Net income - GAAP $ 9,219 $ 13,362 $ 22,361 $ 14,768
Taxable REIT subsidiary's
(income) loss (1,531) (1,345) (3,535) (1,470)
--------- --------- --------- ---------
Adjusted net income 7,688 12,017 18,826 13,298
Adjustments:
Share-based compensation to
related parties 6 202 (87) (114)
Capital loss carryover
(utilization)/losses from the
sale of securities (3,516) -- (3,516) --
Provisions for loan and lease
losses unrealized 2,091 8,529 5,213 24,029
Asset Impairments 4,649 6,058 4,649 6,058
Equity in income of Real Estate
Joint Venture (6,379) (4,891) (10,852) (4,891)
Deferral of extinguishment of
debt income -- (8,307) -- (8,307)
Net book to tax adjustments for
the inclusion of our taxable
foreign REIT subsidiaries (1,622) 261 (2,720) (6,117)
Subpart F income limitation (2) -- (322) -- --
Other net book to tax adjustments (16) (188) (5) (1,271)
--------- --------- --------- ---------
Estimated REIT taxable income $ 2,901 $ 13,359 $ 11,508 $ 22,685
========= ========= ========= =========
Amounts per share - diluted $ 0.04 $ 0.30 $ 0.18 $ 0.55
========= ========= ========= =========
(1) RSO believes that a presentation of estimated REIT taxable income
provides useful information to investors regarding its financial
condition and results of operations as this measurement is used to
determine the amount of dividends that RSO is required to declare to its
stockholders in order to maintain its status as a REIT for federal
income tax purposes. Since RSO, as a REIT, expects to make distributions
based on estimated REIT taxable income, RSO expects that its
distributions may at times be more or less than its reported GAAP net
income. Total estimated REIT taxable income is the aggregate amount of
estimated REIT taxable income generated by RSO and by its domestic and
foreign taxable REIT subsidiaries. Estimated REIT taxable income
excludes the undistributed taxable income (if any) of RSO's domestic
taxable REIT subsidiary, which is not included in REIT taxable income
until distributed to RSO. There is no requirement that RSO's domestic
taxable REIT subsidiary distribute its income to RSO. Estimated REIT
taxable income, however, includes the taxable income of RSO's foreign
taxable REIT subsidiaries because RSO generally will be required to
recognize and report their taxable income on a current basis. 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.
(2) U.S. shareholders of controlled foreign corporations are required to
include their share of such corporations' income on a current basis;
however, losses sustained by such corporations do not offset income of
their U.S. shareholders on a current basis.
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 distributions by RSO's CDOs and coverage test summaries for the periods presented:
Annualized
Interest
Coverage Overcollateralization
Cash Distributions Cushion Cushion
---------------------- ------------ ----------------------
Year Ended Six Months As of
December Ended As of As of Initial
CDO 31, June 30, June 30, June 30, Measurement
Name Type 2010 (1) 2011 (1) 2011 (2) (3) 2011 (4) Date
--------- ------- ----------- ---------- ------------ --------- ------------
(actual) (actual)
Apidos
CDO I CLO $ 7,695 $ 4,581 $ 8,965 $ 14,265 $ 17,136
Apidos
CDO III CLO $ 6,552 $ 4,058 $ 4,092 $ 9,135 $ 11,269
Apidos
Cinco
CDO CLO $ 7,792 $ 4,845 $ 5,031 $ 22,421 $ 17,774
RREF
2006-1 CRE CDO $ 8,929 $ 4,075 $ 9,047 $ 59,205 $ 24,941
RREF
2007-1 CRE CDO $ 15,068 $ 5,825 $ 7,330 $ 47,993 $ 26,032
(1) Distributions on retained equity interests in CDOs (comprised of note
investment and preference share ownership).
(2) Interest coverage cushion 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.
In connection with RSO's ownership of certain notes held by RREF CDO 2006-1 and RREF CDO 2007-1, respectively, on June 21, 2011, the Company surrendered for cancellation $32.4 million and $30.9 million, respectively, of CDO notes which previously eliminated in consolidation. The surrendered notes were cancelled by the trustee under the applicable indentures, and the obligations due under the surrendered notes were deemed extinguished. The effect of these cancellations improves each CDO's ability to comply with its over-collateralization and interest coverage tests and strengthens RSO's long term interest in these structured vehicles.
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(in thousands, except percentages)
(Unaudited)
Loan and Leasing Investment Statistics
The following table presents information on RSO's impaired loans and lease receivables and related allowances for the periods indicated (based on amortized cost):
June 30, December 31,
2011 2010
-------------- --------------
Allowance for loan and lease receivable
losses:
Specific allowance:
Commercial real estate loans $ 15,800 $ 20,844
Bank loans 136 112
-------------- --------------
Total specific allowance (1) 15,936 20,956
-------------- --------------
General allowance:
Commercial real estate loans 10,342 10,773
Bank loans 3,423 2,504
Lease receivables -- 70
-------------- --------------
Total general allowance 13,765 13,347
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Total allowance for loans and leases $ 29,701 $ 34,303
============== ==============
Allowance as a percentage of total loans
and lease receivables 2.0% 2.1%
Loans held for sale:
Commercial Real Estate Loans:
Commercial real estate loans at cost $ 1,669 $ 39,187
Commercial real estate loans provision (1,061) (14,621)
-------------- --------------
Commercial real estate loans held for
sale 608 24,566
-------------- --------------
Bank Loans:
Bank loans at cost $ 1,228 $ 5,172
Bank loans provision (186) (1,145)
-------------- --------------
Bank loans held for sale 1,042 4,027
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Loans held for sale $ 1,650 $ 28,593
============== ==============
(1) Includes allowances on the following assets: commercial real estate
loans of $36.5 million and bank loans of $361,000. A loan of $5.0
million that was fully reserved as of December 31, 2010 was charged off
as of June 30, 2011.
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION, A NON-GAAP MEASURE
(Unaudited)
The following table presents commercial real estate loan portfolio statistics as of June 30, 2011 (based on par value):
Security type:
Whole loans 80.0%
Mezzanine loans 14.9%
B Notes 5.1%
-------
Total 100.0%
=======
Collateral type:
Multifamily 38.5%
Hotel 30.5%
Office 12.0%
Retail 10.8%
Flex 1.1%
Self-storage 1.0%
Other 6.1%
-------
Total 100.0%
=======
Collateral location:
Southern California 27.9%
Northern California 13.7%
Arizona 9.3%
Florida 8.3%
Washington 5.1%
Texas 4.9%
Colorado 4.8%
New York 3.9%
Other 22.1%
-------
Total 100.0%
=======
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Unaudited)
The following table presents bank loan portfolio statistics by industry as of June 30, 2011 (based on par value):
Industry type:
Healthcare, education and childcare 11.4%
Diversified/conglomerate service 10.0%
Broadcasting and entertainment 7.2%
Automobile 5.7%
Telecommunications 5.4%
Printing and publishing 5.1%
Chemicals, plastics and rubber 5.1%
Retail stores 4.7%
Hotels, motels, inns and gaming 4.0%
Personal transportation 4.0%
Electronics 3.7%
Other 33.7%
-------
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
SOURCE: Resource Capital Corp.
