NEW YORK, NY, Nov 02, 2011 (MARKETWIRE via COMTEX) --
Resource Capital Corp. (NYSE: RSO)
Highlights
-- GAAP net income of $0.20 and $0.54 per share-diluted.
-- Funds from Operations ("FFO") of $0.22 and $0.59 per share-diluted.
-- Total revenues increased by $4.3 million, or 22% and increased by
$17.1 million, or 35% as compared to the three and nine months ended
September 30, 2010, respectively.
-- Provisions for loan losses decreased by 61% and 70% as compared to the
three and nine months ended September 30, 2010, respectively.
-- Common stock cash dividend of $0.25 per share.
-- Cash on hand of $177.4 million at September 30, 2011, a decline of
$58.4 million from $235.8 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 nine months ended September 30, 2011.
-- GAAP net income for the three and nine months ended September 30, 2011
was $14.9 million, or $0.20 per share-diluted, and $37.3 million, or
$0.54 per share-diluted, respectively, as compared to GAAP net income
for the three and nine months ended September 30, 2010 of $14.1
million, or $0.27 per share-diluted, and $28.8 million, or $0.64 per
share-diluted, respectively, an increase of $891,000, or 6%, and an
increase of $8.5 million, or 29%, respectively.
-- FFO for the three and nine months ended September 30, 2011 was $16.2
million, or $0.22 per share-diluted, and $40.2 million, or $0.59 per
share-diluted, respectively.
Jonathan Cohen, CEO and President of Resource Capital Corp., commented, "I believe that this quarter again saw improvement in our credit, good cash flow and the ability to grow the balance sheet safely. We accomplished a tremendous amount including earning FFO of $0.22 cents per share, securitizing our leasing portfolio, as well as growing our bank loan portfolio through the completion of Apidos CLO VIII, our newest CLO. It is proof of the market's belief in our underwriting ability that we were able to access the term markets during September and October. We continue to carry very little short term debt and make significant progress in investing the cash on our balance sheet into new high yielding assets."
Additional highlights:
Commercial Real Estate
-- RSO received repayments and paydowns on CRE loans of $33.0 million and
sold five CRE loans for proceeds of $56.7 million for the nine months
ended September 30, 2011.
-- RSO's CRE loan portfolio is now comprised of approximately 83% senior
whole loans as of September 30, 2011, as compared to 66% a year ago.
-- RSO originated $104.6 million of whole loans in the nine months ended
September 30, 2011, with a weighted average yield of 7.5% as compared
to $17.9 million with a weighted average yield of 8.4% originated
during the year ended December 31, 2010.
-- RSO has committed over $19.2 million to new CRE whole loans slated to
close in the fourth quarter of 2011 from an ongoing 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 acquired a second multi-family 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, nine and 12 months ended September 30, 2011 (in millions, except percentages):
Three Nine Floating
Months Months 12 Months Weighted Weighted
Ended Ended Ended Average Average
September September September Spread Fixed
30, 2011 30, 2011 30, 2011 (1) Rate (2)
--------- --------- --------- -------- --------
Whole loans $ 24.5 $ 104.6 $ 122.5 3.42% 12.0%
Whole loans - future
fundings (3) 4.2 7.8 9.2
========= ========= =========
New loans production 28.7 112.4 131.7
Sale of real estate
loans (78.6) (78.6)
Payoffs (14.5) (26.0) (26.0)
Principal paydowns (0.2) (8.0) (9.7)
--------- --------- ---------
Loans, net (4) $ 14.0 $ (0.2) $ 17.4
========= ========= =========
(1) Represents the weighted average rate above the London Interbank Offered
Rate ("LIBOR") on loans whose interest rate is based on LIBOR as of
September 30, 2011.
(2) Reflects rates on RSO's portfolio balance as of September 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 $0.4 million for the three months ended September 30, 2011,
$5.6 million for the nine months ended September 30, 2011 and $22.7
million for the 12 months ended September 30, 2011.
CMBS Securities
-- During the nine months ended September 30, 2011, RSO acquired $76.5
million, at par, of CMBS at a weighted average price of 99.3%. The
majority of these purchases were financed by RSO's Wells Fargo
repurchase facility which all are AAA rated by at least one rating
agency. RSO has $43.6 million, at par, of CMBS purchased through the
Wells Fargo facility as of September 30, 2011.
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
third quarter was $1.1 billion, at amortized cost, with a
weighted-average spread of one-month and three-month LIBOR plus 3.06%
at September 30, 2011. RSO's bank loan portfolio is now match-funded
through four collateralized loan obligation ("CLO") issuances.
Apidos CLO VIII ("CLO VIII")
-- RSO's fourth CLO, CLO VIII, closed on October 13, 2011 with $317.6
million of notes issued at a weighted average cost of three-month
LIBOR plus 1.83% at the date of closing. RSO retained an investment of
$15.0 million of an aggregate total of $34.7 million of subordinated
notes in CLO VIII. Apidos Capital Management, a subsidiary of Resource
America, Inc., will manage CLO VIII and RSO's investment in the
structure.
-- During the three and nine months ended September 30, 2011, RSO bought
bank loans through its four CLOs with a par value of $291.0 million
and $591.5 million, respectively, at a significant net discount of
$11.4 million and $14.1 million, respectively. These purchased loans
had an aggregate weighted average annual yield of approximately 4.27%.
-- RSO, through its subsidiary Resource Capital Asset Management, earned
$5.9 million of net fees from February 24, 2011, the date of
acquisition, through September 30, 2011.
Book Value
As of September 30, 2011, RSO's book value per common share was $5.66. Total stockholders' equity was $433.3 million as of September 30, 2011 as compared to $348.3 million as of December 31, 2010. Total common shares outstanding were 76,590,035 as of September 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 September 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
Net amount less
Amortized Dollar carrying Dollar amortized Dollar
cost (3) price amount price cost price
---------- ------ ---------- ------ ----------- ------
September 30, 2011
------------------
Floating rate
------------------
RMBS $ 7,105 19.77% $ 6,219 17.31% $ (886) -2.46%
CMBS-private
placement 29,816 100.0% 9,460 31.73% (20,356) -68.27%
Structured notes 24,039 38.99% 28,084 45.56% 4,045 6.57%
Other ABS - -% 23 0.28% 23 0.28%
Mezzanine loans
(1) 63,903 99.97% 62,844 98.31% (1,059) -1.66%
Whole loans (1) 504,849 99.82% 482,766 95.46% (22,083) -4.36%
Bank loans (2) 1,072,530 97.39% 1,026,672 93.22% (45,858) -4.17%
Loans held for
sale (3) 479 96.77% 479 96.77% - -%
ABS held-to-
maturity (4) 31,214 91.10% 25,609 74.74% (5,605) -16.36%
---------- ---------- -----------
Total floating
rate 1,733,935 94.15% 1,642,156 89.17% (91,779) -4.98%
---------- ---------- -----------
Fixed rate
------------------
CMBS - private
placement 107,187 67.08% 99,908 62.52% (7,279) -4.56%
B notes (1) 16,463 99.10% 16,190 97.45% (273) -1.65%
Mezzanine loans
(1) 13,987 100.37% 12,288 88.17% (1,699) -12.20%
Whole loans (1) 10,902 98.71% 10,904 98.73% 2 .02%
Loans held for
sale 12,964 100.00% 12,964 100.00% - -%
Preferred stock
and warrants 36,741 100.00% 36,741 100.00% - -%
---------- ---------- -----------
Total fixed rate 198,244 78.95% 188,995 75.27% (9,249) -3.68%
---------- ---------- -----------
Grand total $1,932,179 92.33% $1,831,151 87.51% $ (101,028) -4.82%
========== ========== ===========
(1) Net carrying amount includes an allowance for loan losses of $25.1
million at September 30, 2011, allocated as follows: B notes ($273,000),
mezzanine loans ($2.7 million) and whole loans ($22.1 million).
(2) The bank loan portfolio is carried at amortized cost less allowance for
loan loss and was $1,069.0 million at September 30, 2011. The amount
disclosed represents net realizable value at September 30, 2011, which
includes a $3.5 million allowance for loan losses at September 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 September 30, 2011, RSO's liquidity of $177.4 million consisted of three primary sources:
-- unrestricted cash and cash equivalents of $28.9 million, restricted
cash of $1.5 million in margin call accounts and $2.5 million in the
form of real estate escrows, reserves and deposits;
-- capital available for reinvestment in its five CDO entities of $129.3
million, of which $1.6 million is designated to finance future funding
commitments on CRE loans; and
-- restricted cash available for investment in its newly-formed CLO of
$15.2 million.
Capital Allocation
As of September 30, 2011, RSO had allocated its invested equity capital among its targeted asset classes as follows: 65% in CRE investments, 30% in commercial finance and 5% in other investments.
Supplemental Information
The following schedules of reconciliations or supplemental information as of September 30, 2011 are included at the end of this release:
-- Schedule I - Reconciliation of GAAP Net Income to Funds from
Operations.
-- 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 funds from operations, 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)
September 30, December 31,
2011 2010
------------- -------------
(unaudited)
ASSETS
Cash and cash equivalents $ 28,897 $ 29,488
Restricted cash 148,515 168,192
Investment securities, trading 34,303 17,723
Investment securities available-for-sale,
pledged as collateral, at fair value 104,136 57,998
Investment securities available-for-sale, at
fair value 41,996 5,962
Investment securities held-to-maturity,
pledged as collateral 31,214 29,036
Property available-for-sale 4,074 4,444
Investments in real estate 48,292 -
Loans, pledged as collateral and net of
allowances of $28.6 million and $34.2
million 1,654,020 1,443,271
Loans held for sale 13,443 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 16,494 9,927
Investments in unconsolidated entities 6,693 6,791
Dividend reinvestment plan proceeds
receivable - 10,000
Interest receivable 6,652 6,330
Deferred tax asset 4,833 4,401
Intangible assets 21,232 -
Other assets 5,449 2,432
------------- -------------
Total assets $ 2,170,243 $ 1,934,200
============= =============
LIABILITIES
Borrowings $ 1,549,674 $ 1,543,251
Unsettled loan purchases 130,054 -
Distribution payable 19,157 14,555
Accrued interest expense 1,518 1,618
Derivatives, at fair value 16,218 13,292
Deferred tax liability 10,192 9,798
Accounts payable and other liabilities 10,166 3,360
------------- -------------
Total liabilities 1,736,979 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; 76,590,035 and
58,183,425 shares issues and outstanding
(including 1,428,931 and 534,957 unvested
restricted shares) 77 58
Additional paid-in capital 642,424 528,373
Accumulated other comprehensive loss (45,041) (33,918)
Distributions in excess of earnings (164,196) (146,187)
------------- -------------
Total stockholders' equity 433,264 348,326
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,170,243 $ 1,934,200
============= =============
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
REVENUES
Interest income:
Loans $ 18,863 $ 19,597 $ 60,704 $ 57,085
Securities 3,383 3,136 9,098 8,905
Leases - 4,614 - 6,777
Interest income -
other 3,899 1,902 6,834 2,651
----------- ----------- ----------- -----------
Total interest
income 26,145 29,249 76,636 75,418
Interest expense 7,175 10,089 21,170 26,955
----------- ----------- ----------- -----------
Net interest
income 18,970 19,160 55,466 48,463
Rental income 1,592 - 1,772 -
Dividend income 926 - 2,453 -
Fee income 1,960 - 5,859 -
----------- ----------- ----------- -----------
Total revenues 23,448 19,160 65,550 48,463
----------- ----------- ----------- -----------
OPERATING EXPENSES
Management fees -
related party 3,136 4,405 8,622 9,845
Equity compensation -
related party 316 544 1,399 1,463
Professional services 624 491 2,532 2,186
Insurance 161 184 497 576
Rental operating
expense 1,057 - 1,369 -
General and
administrative 1,281 721 3,220 2,232
Depreciation on
operating leases - 1,658 - 2,343
Depreciation and
amortization 1,856 - 2,865 -
Income tax expense 1,289 4,068 4,269 5,305
----------- ----------- ----------- -----------
Total expenses 9,720 12,071 24,773 23,950
----------- ----------- ----------- -----------
13,728 7,089 40,777 24,513
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Net impairment losses
recognized in
earnings - (4,456) (4,649) (10,514)
Net realized gain on
investment securities
available-for-sale and
loans 591 1,171 4,443 1,507
Net realized and
unrealized (loss)
gain on
investment securities,
trading (1,861) 7,215 1,418 9,743
Provision for loan and
lease losses (1,198) (3,095) (7,917) (26,363)
Gain on the
extinguishment of
debt 3,875 6,250 3,875 29,285
Other (expense) income (191) (121) (642) 650
----------- ----------- ----------- -----------
Total other income
(expense) 1,216 6,964 (3,472) 4,308
----------- ----------- ----------- -----------
NET INCOME $ 14,944 $ 14,053 $ 37,305 $ 28,821
=========== =========== =========== ===========
NET INCOME PER SHARE -
BASIC $ 0.20 $ 0.27 $ 0.55 $ 0.64
=========== =========== =========== ===========
NET INCOME PER SHARE -
DILUTED $ 0.20 $ 0.27 $ 0.54 $ 0.64
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING -
BASIC 73,761,028 52,273,307 68,254,639 44,947,256
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING -
DILUTED 74,283,893 52,578,884 68,613,363 45,203,521
=========== =========== =========== ===========
DIVIDENDS DECLARED PER
SHARE $ 0.25 $ 0.25 $ 0.75 $ 0.75
=========== =========== =========== ===========
SCHEDULE I
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO FUNDS FROM OPERATIONS ("FFO") (1)
(in thousands, except per share data)
(Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
2011 (3) 2011 (3)
-------------- --------------
Net income - GAAP $ 14,944 $ 37,305
Adjustments:
Real estate depreciation and amortization 1,272 1,493
Impairment charges on repossessed real
estate assets (2) - 1,449
-------------- --------------
Funds from operations $ 16,216 $ 40,247
============== ==============
Weighted average shares - diluted 74,284 68,613
FFO per share - diluted $ 0.22 $ 0.59
============== ==============
(1) RSO now evaluates its performance based on several performance measures,
including Funds from Operations "FFO", in addition to net income and
estimated REIT taxable income. We compute FFO in accordance with the
standards established by the National Association of Real Estate
Investment Trusts ("NAREIT") 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.
Management believes that FFO, a non-GAAP measure, is an appropriate
measure of the Company's operating performance in that it is frequently
used by analysts, investors and other parties in the evaluation of
REITs. Management uses FFO as a performance measure in that it has
operating real estate on its balance sheet as of the period ended
September 30, 2011. FFO is not intended to be an indication of our cash
flow from operating activities (determined in accordance with GAAP) nor
is it entirely indicative of funding our cash needs, including our
ability to make cash distributions.
(2) Amount represents impairment charges recorded by the Company in
connection with real estate debt converted to equity.
(3) Comparative FFO data is not provided since the Company did not own
depreciable real property during the comparable periods in 2010.
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 Nine Months Ended
September 30, September 30,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Net income - GAAP $ 14,944 $ 14,053 $ 37,305 $ 28,821
Taxable REIT subsidiary's loss (1,575) (5,141) (5,110) (6,611)
--------- --------- --------- ---------
Adjusted net income 13,369 8,912 32,195 22,210
Adjustments:
Share-based compensation to
related parties (300) (473) (387) (587)
Provision for loan and lease
losses unrealized 410 3,265 5,623 27,294
Asset impairments - 4,456 4,649 10,514
Equity in income of real
estate joint venture (2,316) (2,661) (13,168) (7,552)
Investments in real estate 1,132 - 1,132 -
Deferral of extinguishment of
debt income - 8,307 - -
Net book to tax adjustments
for our taxable
foreign REIT subsidiaries (5,810) (10,090) (8,530) (16,207)
Capital loss carry-over
utilization/capital losses
from the sale of available-
for-sale securities (1,139) (1,181) (4,655) (1,181)
Subpart F income limitation
(2) - - - -
Other net book to tax
adjustments (94) (126) (99) (1,397)
--------- --------- --------- ---------
Estimated REIT taxable income $ 5,252 $ 10,409 $ 16,760 $ 33,094
========= ========= ========= =========
Amounts per share - diluted $ 0.07 $ 0.20 $ 0.24 $ 0.73
========= ========= ========= =========
(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
------------------ ---------- ---------------------
Nine
Year Months As of
Ended Ended September As of As of
December September 30, September Initial
31, 30, 2011 (2) 30, Measurement
Name CDO Type 2010 (1) 2011 (1) (3) 2011 (4) Date
--------------- -------- -------- --------- ---------- --------- -----------
(actual) (actual)
Apidos CDO I CLO $ 7,695 $ 6,875 $ 9,458 $ 14,397 $ 17,136
Apidos CDO III CLO $ 6,552 $ 5,903 $ 3,598 $ 9,319 $ 11,269
Apidos Cinco
CDO CLO $ 7,792 $ 7,321 $ 5,397 $ 22,440 $ 17,774
RREF 2006-1 CRE CDO $ 8,929 $ 6,900 $ 12,145 $ 59,205 $ 24,941
RREF 2007-1 CRE CDO $ 15,068 $ 8,241 $ 8,480 $ 41,207 $ 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):
September 30, December 31,
2011 2010
------------- -------------
Allowance for loan and lease receivable
losses:
Specific allowance:
Commercial real estate loans $ 16,210 $ 20,844
Bank loans 166 112
------------- -------------
Total specific allowance (1) 16,376 20,956
------------- -------------
General allowance:
Commercial real estate loans 8,902 10,773
Bank loans 3,336 2,504
Lease receivables - 70
------------- -------------
Total general allowance 12,238 13,347
------------- -------------
Total allowance for loans and leases $ 28,614 $ 34,303
============= =============
Allowance as a percentage of total loans and
lease receivables 1.7% 2.1%
Loans held for sale:
Commercial Real Estate Loans:
Commercial real estate loans at cost $ 14,405 $ 39,187
Commercial real estate loans provision (1,441) (14,621)
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Commercial real estate loans held for
sale 12,964 24,566
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Bank Loans:
Bank loans at cost $ 495 $ 5,172
Bank loans provision (16) (1,145)
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Bank loans held for sale 479 4,027
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Loans held for sale $ 13,443 $ 28,593
============= =============
(1) Includes allowances on the following specifically reserved 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 March 31, 2011.
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Unaudited)
The following table presents commercial real estate loan portfolio statistics as of September 30, 2011 (based on par value):
Security type:
Whole loans 82.6%
Mezzanine loans 12.4%
B Notes 5.0%
-----------
Total 100.0%
===========
Collateral type:
Multifamily 38.0%
Hotel 30.0%
Retail 14.2%
Office 9.9%
Flex 1.1%
Self-storage 1.0%
Other 5.8%
-----------
Total 100.0%
===========
Collateral location:
Southern California 28.6%
Northern California 13.8%
Arizona 9.2%
Florida 8.2%
Texas 6.1%
Washington 4.9%
Colorado 4.7%
New York 3.2%
Other 21.3%
-----------
Total 100.0%
===========
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Unaudited)
The following table presents bank loan portfolio statistics by industry as of September 30, 2011 (based on par value):
Industry type:
Healthcare, education and childcare 13.4%
Diversified/conglomerate service 8.4%
Broadcasting and entertainment 7.6%
Automobile 6.4%
Hotels, motels, inns and gaming 5.8%
Chemicals, plastics and rubber 5.6%
Telecommunications 5.2%
Retail stores 4.4%
Printing and publishing 4.1%
Electronics 3.8%
Leisure, amusement, motion pictures,
entertainment 3.4%
Personal, food and miscellaneous
services 3.2%
Personal transportation 3.1%
CDO 3.0%
Other 22.6%
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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.
