-- Resource Capital Corp. Follow-On Offering.
-- Resource Capital Corp. (NYSE : RSO ) ("RCC"), a real estate
investment trust, for which the Company is the external manager
and a shareholder, announced that it has priced a public offering
of 10 million shares of its common stock at a price of $4.50 per
share. The underwriters have been granted an over-allotment
option for an additional 1.5 million shares of common stock. RCC
expects to receive net proceeds, after underwriting discounts but
before expenses, of $48.9 million, including the over-allotment.
-- Capital Fundraising.
-- The Company continued to see strong demand within this channel,
resulting in the completion of both Resource Real Estate
Investors 7, L.P. ("RREI 7") in September 2009 ($32.5 million
raised) and LEAF Equipment Finance Fund 4, L.P. ("LEAF 4") in
October 2009 ($125.7 million raised). In addition, Resource Real
Estate Holdings, Inc. ("Resource Real Estate") has raised
$37.3 million through its real estate opportunity fund which is
focused on acquiring discounted real estate assets. The Company
has raised a total of $180.2 million of investment funds during
fiscal 2009 for funds sponsored and managed primarily by Resource
Real Estate and LEAF Financial Corp. ("LEAF").
-- Resource Real Estate filed a $750.0 million registration statement
with the Securities and Exchange Commission on July 7, 2009 for
Resource Real Estate Opportunity REIT, Inc. of which Resource
Real Estate will be the external manager. Resource Real Estate
recently filed a second amendment to the originally filed
registration statement.
-- Debt Refinancing. On October 6, 2009, the Company completed a private
placement offering of senior notes. In connection with this offering,
the Company refinanced its line of credit with TD Bank, principally
extending the maturity an additional year to October 2011, reducing the
interest rate on borrowings to a floor of between 7.0% and 7.5% (varies
depending on type of borrowing) from 10% and reducing the required
monthly principal payments from $850,000 per month to $150,000.
-- Debt Reduction. As of September 30, 2009, the Company reduced its
consolidated borrowings outstanding by $362.7 million, or 65%, to
$191.4 million from $554.1 million at September 30, 2008. Borrowings
at September 30, 2009 include a $136.5 million non-recourse revolving
credit facility at LEAF and $54.9 million of other debt, of which,
$14.7 million is in mortgage debt secured by the underlying properties.
-- Adjusted Revenues and Adjusted Operating Income - Non-GAAP Measures.
For the fourth fiscal quarter and fiscal year ended September 30, 2009,
the Company reported adjusted revenues of $26.6 million and
$108.4 million, respectively, as compared to $38.0 million and
$179.4 million for the fourth fiscal quarter and fiscal year ended
September 30, 2008, respectively. For the fourth fiscal quarter and
fiscal year ended September 30, 2009, the Company reported adjusted
operating income of $3.4 million and $10.8 million, respectively, as
compared to adjusted operating income of $2.5 million and $55.0 million
for the fourth fiscal quarter and fiscal year ended September 30, 2008,
respectively. Adjusted revenues and adjusted operating income include
$492,000 and $266,000 of pre-tax fair value adjustments on equity
investments for the fourth fiscal quarter and fiscal year ended
September 30, 2009, respectively, as compared to adjustments of
$6.0 million and $23.5 million for fourth fiscal quarter and fiscal
year ended September 30, 2008, respectively. A reconciliation of the
Company's total GAAP revenues and GAAP operating income (loss) to
adjusted revenues and adjusted operating income is included as
Schedule II to this release.
Assets Under Management
The following table sets forth information relating to our assets under
management by operating segment, which decreased by $4.3 billion (24%) from
September 30, 2008 to September 30, 2009:
At September 30,
------------------------------
2009 2008
-------------- --------------
Financial fund management $ 10.6 billion $ 14.7 billion
Real estate 1.7 billion 1.7 billion
Commercial finance 1.4 billion 1.6 billion
-------------- --------------
$ 13.7 billion $ 18.0 billion
============== ==============
A description of how the Company calculates assets under management is set
forth in Item 1 of the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 2008.
Book Value
As of September 30, 2009, the Company's book value per common share was
$7.77. Total stockholders' equity was $139.8 million as of September 30,
2009 as compared to $143.7 million as of September 30, 2008. Total common
shares outstanding were 17,991,723 as of September 30, 2009 as compared to
17,595,934 as of September 30, 2008.
Highlights for the Fourth Fiscal Quarter and Fiscal Year Ended September
30, 2009 and Recent Developments
-- The Company has reduced its total borrowings to $191.4 million at
September 30, 2009, a decrease of $362.7 million from September 30, 2008.
-- The Company issued $18.8 million of senior notes in a private
placement to institutional investors in September and October, 2009. The
proceeds were primarily used to reduce the Company's corporate borrowings.
Accordingly, the Company has reduced its recourse corporate borrowings,
excluding the senior notes, by $23.0 million to $28.7 million at September
30, 2009 from $51.7 million at September 30, 2008 and further reduced it by
$7.3 million to $21.4 million as of December 7, 2009.
-- Resource Real Estate continued fundraising for Resource Real Estate
Opportunity Fund, L.P. ("RREI Opportunity Fund"), a $40.0 million offering
that invests in discounted real estate. The Company has raised
approximately $37.3 million as of December 4, 2009 and anticipates closing
this fund by December 31, 2009.
-- Resource Real Estate increased the apartment and condominium units it
manages or whose management it supervises to 16,724 at September 30, 2009
from 15,758 at September 30, 2008. This includes a portfolio of 49
multifamily properties representing 12,794 apartment units managed by
Resource Real Estate Management, Inc. ("Resource Residential"), the
Company's property management subsidiary.
-- RREI Opportunity Fund acquired and will manage a 568 unit multifamily
rental property in Memphis, Tennessee, and financed the acquisition of the
property with a $13.0 million loan, of which the fund has a 30%
participation interest. The fund also acquired ownership of 49 condominium
units in an upscale condominium development in Kansas City, Missouri, by
foreclosing on the first mortgage on the property that it acquired.
-- LEAF completed in October 2009 the offering of its fourth public
investment partnership, LEAF 4, which raised a record amount of $125.7
million.
-- Financial fund management revenues increased 63% to $7.9 million for
the fourth fiscal quarter ended September 30, 2009 as compared to $4.9
million for the fourth fiscal quarter ended September 30, 2008.
-- The Company's Board of Directors authorized the payment of a cash
dividend paid on October 15, 2009 in the amount of $0.03 per share on the
Company's common stock to all holders of record at the close of business on
September 15, 2009.
-- RCC paid a cash dividend of $0.30 per common share for its third
quarter ended September 30, 2009.
-- The Company generated $32.8 million of cash from operating activities
of continuing operations as adjusted for the fiscal year ended September
30, 2009. A reconciliation of net cash (used in) provided by operating
activities of continuing operations to net cash provided by operating
activities of continuing operations as adjusted, a non-GAAP measure, is
included as Schedule III to this release.
Resource America, Inc. is a specialized asset management company that uses
industry specific expertise to evaluate, originate, service and manage
investment opportunities for its own account and for outside investors in
the commercial finance, real estate and financial fund management sectors.
For more information, please visit our website at www.resourceamerica.com
or contact investor relations at pkamdar@resourceamerica.com.
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 and its other reports filed with the Securities and
Exchange Commission. For information pertaining to risks relating to these
forward-looking statements, reference is made to the section "Risk Factors"
contained in Item 1A of the Company's Annual Report on Form 10-K. The
Company undertakes no obligation to update or revise any forward-looking
statements to reflect new or changing information or events except as may
be required by law.
This press release shall not constitute an offer to sell or a solicitation
of an offer to buy any of the securities described herein, nor shall there
be any sale of these securities in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or jurisdiction.
The remainder of this release contains the Company's unaudited consolidated
balance sheets, consolidated statements of operations, consolidated
statements of cash flows, and reconciliations of GAAP income (loss) from
continuing operations to adjusted income from continuing operations, GAAP
revenue to adjusted revenue and GAAP operating income (loss) to adjusted
operating income and net cash (used in) provided by operating activities of
continuing operations to net cash provided by operating activities of
continuing operations as adjusted.
RESOURCE AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30,
------------------------
2009 2008
----------- -----------
(unaudited)
ASSETS
Cash $ 26,197 $ 14,910
Restricted cash 2,741 23,689
Receivables 1,358 2,014
Receivables from managed entities and related
parties, net 55,047 35,674
Loans sold, not settled, at fair value - 662
Loans held for investment, net - 219,664
Investments in commercial finance - held for
investment, net 2,429 182,315
Investments in commercial finance - held for
sale, net 142,701 110,773
Investments in real estate, net 27,313 37,972
Investment securities available-for-sale, at
fair value 19,500 22,746
Investments in unconsolidated entities 16,241 18,523
Property and equipment, net 13,435 16,886
Deferred tax assets 45,656 44,467
Goodwill 7,969 7,969
Intangible assets, net 3,637 4,329
Other assets 11,616 15,764
----------- -----------
Total assets $ 375,840 $ 758,357
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accrued expenses and other liabilities $ 40,986 $ 56,309
Payables to managed entities and related
parties 1,284 586
Borrowings 191,383 554,059
Deferred tax liabilities 2,046 1,060
Minority interests 323 2,610
----------- -----------
Total liabilities 236,022 614,624
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1.00 par value, 1,000,000
shares authorized; none outstanding - -
Common stock, $.01 par value, 49,000,000 shares
authorized; 27,757,849 and 27,421,552 shares
issued, respectively (including nonvested
restricted stock of 552,461 and 513,386,
respectively) 272 269
Additional paid-in capital 277,944 269,689
Accumulated deficit (22,471) (3,980)
Treasury stock, at cost; 9,213,665 and
9,312,232 shares, respectively (100,367) (101,440)
Accumulated other comprehensive loss (15,560) (20,805)
----------- -----------
Total stockholders' equity 139,818 143,733
----------- -----------
$ 375,840 $ 758,357
=========== ===========
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Years Ended
September 30, September 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
(unaudited) (unaudited)
REVENUES:
Commercial finance $ 10,043 $ 14,449 $ 49,395 $ 96,881
Real estate 8,156 12,729 25,417 31,519
Financial fund
management 7,930 4,874 33,344 27,536
----------- ----------- ----------- -----------
26,129 32,052 108,156 155,936
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Commercial finance 5,115 10,528 25,179 42,741
Real estate 4,929 6,138 22,038 22,602
Financial fund
management 4,936 7,717 20,468 27,737
General and
administrative 3,320 4,911 14,369 16,080
Provision for credit
losses 2,959 4,857 8,604 10,627
Depreciation and
amortization 1,941 1,409 6,922 4,660
----------- ----------- ----------- -----------
23,200 35,560 97,580 124,447
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) 2,929 (3,508) 10,576 31,489
----------- ----------- ----------- -----------
OTHER (EXPENSE) INCOME:
Impairment losses on
investment securities (577) - (9,827) -
Recognized in other
comprehensive loss - - 1,288 -
----------- ----------- ----------- -----------
Net impairment loss
recognized in earnings (577) (6,344) (8,539) (14,467)
----------- ----------- ----------- -----------
Interest expense (3,242) (8,218) (20,199) (47,266)
Minority interest
income, net 77 4,920 1,603 4,243
Loss on sale of loans
and investment
securities, net - - (11,588) (17,674)
Other (expense) income,
net (68) (155) 3,156 3,036
----------- ----------- ----------- -----------
(3,810) (9,797) (35,567) (72,128)
----------- ----------- ----------- -----------
Income (loss) from
continuing operations
before taxes (881) (13,305) (24,991) (40,639)
Benefit for income
taxes (1,285) (5,035) (10,504) (15,695)
----------- ----------- ----------- -----------
Income (loss) from
continuing operations 404 (8,270) (14,487) (24,944)
Loss from discontinued
operations, net of tax (278) (954) (444) (1,299)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 126 $ (9,224) $ (14,931) $ (26,243)
=========== =========== =========== ===========
Basic income (loss)
earnings per common
share:
Continuing operations $ 0.02 $ (0.47) $ (0.81) $ (1.42)
Discontinued operations (0.01) (0.05) (0.03) (0.08)
----------- ----------- ----------- -----------
Net income (loss) $ 0.01 $ (0.52) $ (0.84) $ (1.50)
=========== =========== =========== ===========
Weighted average shares
outstanding 17,973 17,591 17,835 17,518
=========== =========== =========== ===========
Diluted income (loss)
earnings per common
share:
Continuing operations $ 0.02 $ (0.47) $ (0.81) $ (1.42)
Discontinued operations (0.01) (0.05) (0.03) (0.08)
----------- ----------- ----------- -----------
Net income (loss) $ 0.01 $ (0.52) $ (0.84) $ (1.50)
=========== =========== =========== ===========
Weighted average shares
outstanding 18,605 17,591 17,835 17,518
=========== =========== =========== ===========
Dividends declared per
common share $ 0.03 $ 0.07 $ 0.20 $ 0.28
=========== =========== =========== ===========
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended September 30,
--------------------------
2009 2008
------------ ------------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (14,931) $ (26,243)
Adjustments to reconcile net (loss) income to
net cash (used in) provided by operating
activities:
Loss on sale of loans and investment
securities, net 11,588 17,674
Impairment charges on investment securities
available-for-sale 8,539 14,467
Depreciation and amortization 8,876 6,024
Provision for credit losses 8,604 10,627
Minority interest income (1,603) (4,243)
Equity in (earnings) losses of unconsolidated
entities (1,279) 15,656
Distributions from unconsolidated entities 6,128 15,647
Gain on sale of investments in commercial
finance assets (628) (1,956)
Gain on sale of assets (1,041) (9,488)
Loss on sale of investment securities
available-for-sale 399 -
Deferred income tax benefits (13,249) (16,031)
Non-cash compensation on long-term incentive
plans 4,651 5,572
Non-cash compensation issued 3 136
Non-cash compensation received (867) 159
(Increase) decrease in commercial finance
investments (37,330) 65,297
Changes in operating assets and liabilities (19,016) (18,002)
------------ ------------
Net cash (used in) provided by operating
activities of continuing operations (41,156) 75,296
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (335) (6,401)
Payments received on real estate loans and real
estate 10,052 23,182
Investments in real estate (4,694) (9,802)
Purchase of commercial finance assets held for
investment (41,942) (111,700)
Payments received on commercial finance assets
held for investment 46,246 74,332
Purchase of loans and investment securities (19,290) (251,585)
Proceeds from sale of loans and investment
securities 5,367 40,360
Principal payments received on loans 4,061 13,931
Net cash paid for acquisitions - (8,022)
Other (477) (17,050)
------------ ------------
Net cash used in investing activities of
continuing operations (1,012) (252,755)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings 438,897 930,731
Principal payments on borrowings (395,905) (715,914)
Repayment from managed entity on RCC lease
portfolio purchase 4,500 -
Dividends paid (3,560) (4,908)
Decrease (increase) in restricted cash 10,297 (31,194)
Proceeds from issuance of stock 3 182
Purchase of treasury stock (264) (237)
Other (71) 315
------------ ------------
Net cash provided by financing activities of
continuing operations 53,897 178,975
------------ ------------
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities (2) (494)
Financing activities (440) (736)
------------ ------------
Net cash used in discontinued operations (442) (1,230)
------------ ------------
Increase in cash 11,287 286
Cash, beginning of year 14,910 14,624
------------ ------------
Cash, end of year $ 26,197 $ 14,910
============ ============
This press release contains supplemental financial information determined
by methods other than in accordance with Accounting Principles Generally
Accepted in the United States of America ("GAAP"). The Company's
management uses these non-GAAP measures in its analysis of the exclusion of
certain adjustments recorded in the three months and fiscal year ended
September 30, 2009. Management believes the presentation of these
financial measures excluding the impact of these items provides useful
supplemental information that is essential to a proper understanding of the
financial results of the Company. These disclosures should not be viewed
as a substitute for results determined in accordance with GAAP, nor are
they necessarily comparable to non-GAAP performance measures that may be
presented by other companies.
SCHEDULE I
RECONCILIATION OF GAAP INCOME (LOSS) FROM CONTINUING OPERATIONS
TO ADJUSTED INCOME FROM CONTINUING OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Years Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Income (loss) from continuing
operations - GAAP $ 404 $ (8,270) $ (14,487) $ (24,944)
Adjustments, net of tax:
Partnership level adjustments
(1) 325 4,260 852 15,811
Impairment charges on
investments 313 1,472 4,234 4,190
Loan reserves 1,165 - 2,074 -
Loss on sales of loans - 182 7,600 11,415
Severance costs 22 1,088 1,217 1,078
RCC incentive stock - (32) 782 1,510
Deferred tax asset (946) - (946) -
Other 225 1,839 835 2,464
--------- --------- --------- ---------
Adjusted income from continuing
operations (2) $ 1,508 $ 539 $ 2,161 $ 11,524
========= ========= ========= =========
Adjusted weighted average
diluted shares outstanding (3) 18,605 18,562 18,497 18,553
========= ========= ========= =========
Adjusted income from continuing
operations per common
share-diluted $ 0.08 $ 0.03 $ 0.12 $ 0.62
========= ========= ========= =========
(1) Primarily includes mark-to-market adjustments on investments in
partnerships that the Company manages.
(2) During the fiscal years ended September 30, 2009 and 2008, in
connection with substantial volatility and reduction in liquidity in
the global credit markets, the Company recorded several significant
adjustments that it believes do not directly impact its continuing
operations. For comparability purposes, the Company is presenting
adjusted income from continuing operations because it facilitates the
evaluation of the Company's underlying operating performance without
the effect of adjustments that do not directly relate to that
performance. Adjusted income from continuing operations should not
be considered as an alternative to income (loss) from continuing
operations (computed in accordance with GAAP). Instead, adjusted
income from continuing operations should be reviewed in connection
with income (loss) from continuing operations in the Company's
consolidated financial statements, to help analyze how the
Company's business is performing.
(3) Dilutive shares used in the calculation of adjusted income from
continuing operations per common share-diluted includes an
additional 662,000 shares for the fiscal year ended September 30, 2009,
and 971,000 and 1.0 million shares for the three months and fiscal year
ended September 30, 2008, respectively, which were not used in the
calculation of income (loss) from continuing operations per common
share-diluted.
SCHEDULE II
RECONCILIATION OF GAAP REVENUE TO ADJUSTED REVENUE AND RECONCILIATION
OF GAAP OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME
(in thousands)
(unaudited)
Three Months Ended Years Ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
--------- -------- --------- ---------
Revenues
Commercial finance $ 10,043 $ 14,449 $ 49,395 $ 96,881
Real estate 8,156 12,729 25,417 31,519
Financial fund management 7,930 4,874 33,344 27,536
--------- -------- --------- ---------
Total revenues - GAAP 26,129 32,052 108,156 155,936
Adjustments:
Fair value adjustments (1) 492 5,982 266 23,483
--------- -------- --------- ---------
Adjusted revenues (2) $ 26,621 $ 38,034 $ 108,422 $ 179,419
========= ======== ========= =========
Operating income (loss) - GAAP $ 2,929 $ (3,508) $ 10,576 $ 31,489
Adjustments:
Fair value adjustments (1) 492 5,982 266 23,483
--------- -------- --------- ---------
Adjusted operating income (2) $ 3,421 $ 2,474 $ 10,842 $ 54,972
========= ======== ========= =========
(1) Reflects pre-tax fair value adjustments on investments reported under
the equity method of accounting.
(2) Management of the Company views adjusted revenues and adjusted
operating income, both non-GAAP measures, as useful and appropriate
supplements to revenues and operating income (loss) since they exclude
fair value adjustments related to current credit market conditions and
are not indicative of the Company's current operating performance.
SCHEDULE III
RECONCILIATION OF NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
OF CONTINUING OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES
OF CONTINUING OPERATIONS AS ADJUSTED
(in thousands)
(unaudited)
Net cash provided by operating activities of continuing operations as
adjusted was $32.8 million for the fiscal year ended September 30, 2009, an
increase of $1.9 million as compared to net cash provided by operating
activities of $30.9 million for the fiscal year ended September 30, 2008.
The following reconciles net cash (used in) provided by operating
activities of continuing operations to net cash provided by operating
activities of continuing operations as adjusted (in thousands):
Years Ended
September 30,
--------------------
2009 2008
--------- ---------
Net cash (used in) provided by operating activities
of continuing operations - GAAP $ (41,156) $ 75,296
Adjustments:
Increase (decrease) in commercial finance
investments held for sale 37,330 (65,297)
Changes in operating assets and liabilities 19,016 18,002
Proceeds from sales of investments 17,651 2,933
--------- ---------
Net cash provided by operating activities of
continuing operations as adjusted (1) $ 32,841 $ 30,934
========= =========
(1) Management of the Company believes net cash provided by operating
activities of continuing operations as adjusted is a useful and
appropriate supplement to GAAP net cash (used in) provided by operating
activities of continuing operations since it reflects how management
views its liquidity and working capital requirements.
Contact Information: Contact: Steven Kessler Chief Financial Officer Resource America, Inc. One Crescent Drive, Suite 203 Philadelphia, PA 19112 215/546-5005 215/640-6354 (fax)