NEW YORK, NY -- (Marketwired) -- 08/05/14 -- Resource Capital Corp. (NYSE: RSO)

Highlights

• Adjusted Funds from Operations ("AFFO") of $0.19 and $0.38 per share-diluted (see Schedule I).
   
• Originated $214.0 million in new CRE loans during the three months ended June 30, 2014, with $180.7 million funded. Originated $330.7 million in new CRE loans during the six months ended June 30, 2014, with $288.9 million funded.
   
• GAAP net income allocable to common shares of $0.11 and $0.23 per share-diluted.
   
• Closed a $354 million commercial securitization at a weighted average cost of LIBOR + 129 bps.
   
• Common stock cash dividend of $0.20 and $0.40 per share.
   

Resource Capital Corp. (NYSE: RSO) ("RSO" or the "Company"), a real estate investment trust, or REIT, whose investment strategy focuses on commercial real estate assets, commercial mortgage-backed securities ("CMBS"), commercial finance assets and other investments, reported results for the three and six months ended June 30, 2014.

• AFFO for the three and six months ended June 30, 2014 was $24.0 million, or $0.19 per share-diluted and $49.0 million, or $0.38 per share-diluted, respectively, as compared to $19.6 million, or $0.16 per share-diluted and $40.6 million, or $0.36 per share-diluted for the three and six months ended June 30, 2013, respectively. A reconciliation of GAAP net income to AFFO is set forth in Schedule I of this release.
   
• GAAP net income allocable to common shares for the three and six months ended June 30, 2014 was $14.7 million, or $0.11 per share-diluted and $29.8 million, or $0.23 per share-diluted, respectively, as compared to $6.5 million, or $0.05 per share-diluted and $18.1 million, or $0.16 per share-diluted for the three and six months ended June 30, 2013, respectively.
   

Jonathan Cohen, CEO and President of Resource Capital Corp., commented, "Our Commercial Real Estate loan originations are growing tremendously. This should benefit the organic growth of our company. Our CRE loan portfolio reached $1.0 billion of book value for the first time during the second quarter, and our success in securitizing those loans lets us continue to grow in an accretive way."

Additional highlights:
Commercial Real Estate

• CRE loan portfolio is comprised of approximately 92% senior whole loans as of June 30, 2014, as compared to 88% a year ago.
   
• RSO closed and funded $464.9 million of new whole loans in the last 12 months with a weighted average yield of 5.80%, including origination fees. In addition, RSO funded $19.2 million of previous loan commitments on existing loans.
   
• GAAP book value of CRE loans held for investment has reached a milestone balance of $1.0 billion.
   

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, 2014 (in millions, except percentages):

• On July 30, 2014, RSO closed a $354 million CLO backed by self-originated commercial mortgage loans - its second CLO deal in an eight-month period. The CLO issued $235.3 million of non-recourse, floating-rate notes at a weighted average cost of LIBOR + 129 basis points. RSO retained the subordinate notes and the preferred shares in the transaction.

CMBS

• During the six months ended June 30, 2014, RSO purchased $53.2 million par value of CMBS which were partially financed by 30-day repurchase contracts with a repurchase value of $37.3 million. In addition, RSO purchased $4.3 million, par value, of CMBS, which were financed by RSO's Wells Fargo repurchase facility and were AAA rated by at least one rating agency.
   
• RSO sold $87.2 million, par value, of CMBS, which improved in value by $2.0 million during the quarter.
   

Commercial Finance

The following table summarizes RSO's middle market lending portfolio loan activities and fundings of previous commitments, at par, for the three, six, and 12 months ended June 30, 2014 (in millions, except percentages):

• RSO's bank loan portfolio, including asset-backed securities ("ABS"), corporate bonds, certain loans held for sale and middle market loans, at the end of the second quarter of 2014 was $757.5 million, at amortized cost, with a weighted-average spread of one-month and three-month LIBOR plus 3.81% at June 30, 2014. RSO's bank loan portfolio was substantially match-funded through four CLO issuances.
   
• RSO, through its subsidiary Resource Capital Asset Management, earned $2.8 million of net fees during the six months ended June 30, 2014.
   

Corporate

• RSO issued 4.8 million shares of its 8.625% Series C Cumulative Redeemable Preferred Stock, at a price of $24.2125 per share with a liquidation preference of $25.00 per share, for net proceeds of $116.2 million.
   
• Total revenues increased by $13.0 million, or 60%, and $14.3 million, or 27%, as compared to revenues for the three and six months ended June 30, 2013, respectively.
   

Investment Portfolio

The table below summarizes the amortized cost and net carrying amount of RSO's investment portfolio as of June 30, 2014, 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):

Liquidity

At July 31, 2014, after paying our second quarter 2014 common and preferred stock dividends, our liquidity is derived from three primary sources:

• unrestricted cash and cash equivalents of $156.3 million, restricted cash of $500,000 in margin call accounts and $2.0 million in the form of real estate escrows, reserves and deposits;
   
• capital available for reinvestment in two of our securitizations of $3.9 million, all of which is designated to finance future funding commitments on CRE loans; and
   
• loan principal repayments of $59.6 million that will pay down outstanding CLO note balances as well as interest collections of $4.5 million.
   

In addition, RSO has funds available through three term financing facilities to finance the origination of CRE loans of $250 million and $200 million, respectively, and to finance the purchase of CMBS of $67.8 million.

Capital Allocation

As of June 30, 2014, RSO had allocated its invested equity capital among its targeted asset classes as follows: 68% in CRE assets, 31% in commercial finance assets and 1% in other investments.

Supplemental Information

The following schedules of reconciliations or supplemental information as of June 30, 2014 are included at the end of this release:

• Schedule I - Reconciliation of GAAP Net Income to Funds from Operations ("FFO") and AFFO.
• Schedule II - Book Value Allocable to Common Shareholders Rollforward.
• Schedule III - Securitizations - Distributions and Coverage Test Summary.
• Supplemental Information regarding loan investment statistics, CRE loans and bank loans.

About Resource Capital Corp.

RSO is a real estate investment trust that is primarily focused on originating, holding and managing commercial mortgage loans and other commercial real estate-related debt and equity investments. RSO also makes other commercial finance investments.

RSO is externally managed by Resource Capital Manager, Inc., an indirect wholly-owned subsidiary of Resource America, Inc. (NASDAQ: REXI), an asset management company that specializes in real estate and credit investments.

For more information, please visit RSO's website at www.resourcecapitalcorp.com or contact investor relations at pkamdar@resourcecapitalcorp.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;
• the availability of debt and equity capital to acquire and finance investments;
• 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 the risks expressed 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 FFO and AFFO, Book value allocable to common shareholders rollforward, summary of CDO and CLO performance statistics and supplemental information regarding RSO's CRE loan and bank loan portfolios.

SCHEDULE I

Funds from Operations

The Company evaluates its performance based on several performance measures, including funds from operations, or FFO, and adjusted funds from operations ("AFFO") in addition to net income. The Company computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts 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.

AFFO is a computation made by analysts and investors to measure a real estate company's cash flow generated by operations. The Company calculates AFFO by adding or subtracting from FFO the non-cash impacts of the following: non-cash impairment losses resulting from fair value adjustments on financial instruments, provision for loan losses, equity investment gains and losses, straight-line rental effects, share based compensation, amortization of various deferred items and intangible assets, gains or losses on sales of property that are wholly owned or owned through a joint venture, in addition to the cash impact of capital expenditures that are related to its real estate owned. In addition, the Company adds and subtracts from FFO the cash and non-cash impact of reissuances or extinguishments of debt and sales of property, respectively.

Management believes that FFO and AFFO are appropriate measures of the Company's operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs. Management uses FFO and AFFO as measures of its operating performance, and believes they are also useful to investors, because they facilitate an understanding of the Company's operating performance after adjustment for certain non-cash items, such as real estate depreciation, share-based compensation and various other items required by GAAP, and capital expenditures, that may not necessarily be indicative of current operating performance and that may not accurately compare the Company's operating performance between periods.

While the Company's calculations of AFFO may differ from the methodology used for calculating AFFO by other REITs and its AFFO may not be comparable to AFFO reported by other REITs, the Company also believes that FFO and AFFO may provide the Company and its investors with an additional useful measure to compare its performance with some other REITs. Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to GAAP net income as an indicator of the Company's operating performance or as an alternative to cash flow from operating activities as a measure of its liquidity.

The following table reconciles GAAP net income to FFO and AFFO for the periods presented (unaudited) (in thousands, except share and per share data):

SCHEDULE II

Balance Sheet - Book Value Reconciliation Year to Date

Balance Sheet - Book Value Reconciliation Quarter to Date

SCHEDULE III

Securitizations - Distributions and Coverage Test Summary
The following table sets forth the distributions made and coverage test summaries for each of RSO's securitizations for the periods presented (in thousands):

* The above table does not include Apidos CLO VIII or Whitney CLO I, as these CLOs were previously called and were substantially liquidated.

Loan Investment Statistics

The following table presents information on RSO's impaired loans and related allowances for the periods indicated (based on amortized cost):

The following table presents commercial real estate loan portfolio statistics as of June 30, 2014 (based on par value):

The following table presents bank loan portfolio statistics by industry as of June 30, 2014 (based on par value):

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.