-- Capital Fundraising. In December 2009, Resource Real Estate Holdings,
Inc. ("Resource Real Estate") closed its real estate opportunity fund,
which focuses on acquiring discounted real estate assets and related
debt, having raised $41.4 million.
-- 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 third amendment to the originally filed registration statement.
-- Debt Reduction. As of March 31, 2010, the Company reduced its total
consolidated borrowings outstanding to $144.5 million from
$191.4 million as of September 30, 2009, a decrease of $46.9 million
(25%). At March 31, 2010, borrowings include $96.5 million of
borrowings under a non-recourse credit facility at LEAF, $17.6 million
of corporate revolving debt, $13.5 million of senior notes, net of a
discount, and $16.9 million of other debt, of which $13.5 million is
in mortgage debt secured by the underlying properties.
-- Adjusted Revenues and Adjusted Operating (Loss) Income -- Non-GAAP
Measures. For the second fiscal quarter and six months ended March
31, 2010, the Company reported adjusted revenues of $19.4 million and
$42.2 million, respectively, as compared to $25.9 million and
$59.1 million for the second fiscal quarter and six months ended March
31, 2009, respectively. For the second fiscal quarter and six months
ended March 31, 2010, the Company reported an adjusted operating loss
of $1.9 million and $55,000, respectively, as compared to adjusted
operating income of $2.7 million and $7.8 million for the second fiscal
quarter and six months ended March 31, 2009, respectively. Adjusted
revenues and adjusted operating (loss) income excludes $29,000 and
$2.6 million of pre-tax fair value gains for the second fiscal quarter
and six months ended March 31, 2010, respectively, as compared to
$1.2 million of pre-tax fair value gains and $37,000 of losses for the
second fiscal quarter and six months ended March 31, 2009,
respectively. A reconciliation of the Company's total GAAP revenues
and GAAP operating (loss) income to adjusted revenues and adjusted
operating (loss) income is included in Schedule I to this release.
Assets Under Management
The following table details the Company's assets under management by
operating segment, which decreased by $3.6 billion (22%) from March 31,
2009 to March 31, 2010:
At March 31,
----------------------------------
2010 2009
---------------- ----------------
Financial fund management $ 10.3 billion $ 13.5 billion
Real estate 1.7 billion 1.7 billion
Commercial finance 1.1 billion 1.5 billion
---------------- ----------------
$ 13.1 billion $ 16.7 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, 2009.
Book Value
As of March 31, 2010, the Company's GAAP book value per common share was
$7.95 per share. Total stockholders' equity was $144.9 million as of March
31, 2010 as compared to $128.8 million as of March 31, 2009. Total common
shares outstanding were 18,223,993 as of March 31, 2010 as compared to
17,900,293 as of March 31, 2009.
Other Highlights for the Second Fiscal Quarter Ended March 31, 2010 and
Recent Developments
-- In April 2010, Resource Real Estate purchased three loans on behalf
of RCC from the U.S. Department of Housing and Urban Development for
approximately $44.2 million in partnership with an existing joint
venture partner. These loans are secured by multifamily rental
properties located in Atlanta Georgia, Cleveland Ohio and Prince
George County Maryland. In connection with the purchase of these
three loans, the Company received a $440,000 debt acquisition fee and
will receive asset management and property management fees going
forward.
-- Resource Real Estate completed fundraising for Resource Real Estate
Opportunity Fund L.P., ("RREI Opportunity Fund") a real estate
partnership focused on investing in discounted real estate and related
debt, having raised $41.4 million.
-- RREI Opportunity Fund acquired (i) a 296 unit multifamily rental
property in Houston, Texas in January 2010, (ii) a 378 unit multifamily
rental property in Memphis, Tennessee in March 2010, (iii) a 348 unit
multifamily rental property in Houston, Texas in March 2010 and (iv)
a 307 unit multifamily rental property in Houston, Texas in March 2010.
In April 2010, RREI Opportunity Fund entered into contracts to sell 43
of the 49 condominium units in Kansas City, Missouri that it acquired
in June 2009.
-- Resource Real Estate Management, Inc., the Company's property
management subsidiary, increased the apartment units it manages to
14,456 units at 54 properties as of March 31, 2010 from 13,127 units
at 50 properties as of December 31, 2009.
-- In January 2010, Resource Real Estate received net proceeds of $811,000
in full satisfaction of a subordinate note that it held on a retail
property located in Minnesota. As a result of this sale, this
previously consolidated entity was deconsolidated, thus further
reducing the Company's debt by $1.0 million.
-- Resource Real Estate received $238,000 and recorded a gain of $106,000
from the sale of an asset in one of its managed funds in which it owns
an equity investment.
-- In April 2010, Resource Real Estate sold its 10% equity interests in
two joint ventures that owned properties in Savannah, Georgia for
$761,000.
-- The Company reduced its borrowings to $144.5 million at March 31, 2010,
a decrease of $46.9 million from September 30, 2009. This decrease
primarily reflects a $40.0 million reduction in borrowings on LEAF's
revolving warehouse credit facility and a $9.5 million reduction of the
Company's two corporate revolving lines of credit.
-- The Company's Board of Directors authorized the payment on April 30,
2010 of a $0.03 cash dividend per share on the Company's common stock
to holders of record as of the close of business on March 31, 2010.
-- RCC paid a cash dividend of $0.25 per common share for its first
quarter ended March 31, 2010.
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 real estate, commercial finance 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.
A registration statement relating to the securities to be offered by
Resource Real Estate Opportunity REIT, Inc. has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the
time the registration statement becomes effective. A written prospectus
may be obtained by contacting Chadwick Securities, Inc., 1845 Walnut
Street, 10th Floor, Philadelphia, PA 19103.
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 reconciliation of GAAP revenues to adjusted
revenues and reconciliation of GAAP operating (loss) income to adjusted
operating (loss) income.
RESOURCE AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, September 30,
2010 2009
------------ ------------
(unaudited) (as revised)
ASSETS
Cash $ 7,324 $ 26,197
Restricted cash 2,547 2,741
Receivables 2,245 1,358
Receivables from managed entities and related
parties, net 60,362 55,047
Investments in commercial finance - held for
investment, net 749 2,429
Investments in commercial finance - held for
sale, net 102,642 142,701
Investments in real estate, net 27,818 27,313
Investment securities available-for-sale, at
fair value 23,540 19,500
Investments in unconsolidated entities 14,528 16,241
Property and equipment, net 10,332 13,435
Deferred tax assets 43,055 45,656
Goodwill 7,969 7,969
Intangible assets, net 3,239 3,637
Other assets 16,514 11,616
------------ ------------
Total assets $ 322,864 $ 375,840
============ ============
LIABILITIES AND EQUITY
Liabilities:
Accrued expenses and other liabilities $ 31,883 $ 40,986
Payables to managed entities and related
parties 197 1,284
Borrowings 144,473 191,383
Deferred tax liabilities 2,046 2,046
------------ ------------
Total liabilities 178,599 235,699
------------ ------------
Commitments and contingencies
Equity:
Preferred stock, $1.00 par value, 1,000,000
shares authorized; none outstanding - -
Common stock, $.01 par value, 49,000,000 shares
authorized; 28,162,141 and 27,757,849 shares
issued, respectively (including nonvested
restricted stock of 783,698 and 552,461,
respectively) 274 272
Additional paid-in capital 280,183 277,944
Accumulated deficit (23,820) (22,471)
Treasury stock, at cost; 9,154,450 and
9,213,665 shares, respectively (99,722) (100,367)
Accumulated other comprehensive loss (11,972) (15,560)
------------ ------------
Total stockholders' equity 144,943 139,818
Noncontrolling interests (678) 323
------------ ------------
Total equity 144,265 140,141
------------ ------------
Total liabilities and equity $ 322,864 $ 375,840
============ ============
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
-------------------------- --------------------------
2010 2009 2010 2009
------------ ------------ ------------ ------------
REVENUES: (as revised) (as revised)
Real estate $ 5,770 $ 5,173 $ 12,717 $ 12,063
Commercial finance 7,409 13,335 16,232 28,486
Financial fund
management 6,221 8,611 15,873 18,530
------------ ------------ ------------ ------------
19,400 27,119 44,822 59,079
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Real estate 5,516 5,370 10,243 11,288
Commercial finance 4,731 6,774 9,306 14,223
Financial fund
management 4,700 5,082 9,404 10,810
General and
administrative 2,768 3,670 6,200 7,678
(Gain) loss on sale
of leases and
loans (31) (86) 551 (319)
Provision for
credit losses 1,210 853 1,986 4,597
Depreciation and
amortization 2,382 1,535 4,588 3,082
------------ ------------ ------------ ------------
21,276 23,198 42,278 51,359
------------ ------------ ------------ ------------
OPERATING (LOSS)
INCOME (1,876) 3,921 2,544 7,720
------------ ------------ ------------ ------------
OTHER (EXPENSE)
INCOME:
Total other-than-
temporary impairment
losses on
investment
securities (297) (3,039) (297) (7,962)
Portion recognized
in other
comprehensive loss - - - -
------------ ------------ ------------ ------------
Net other-than-
temporary impairment
losses recognized
in earnings (297) (3,039) (297) (7,962)
Loss on sale of
loans and
investment
securities, net (424) (11,588) (424) (11,588)
Interest expense (3,871) (5,924) (7,688) (14,323)
Other income, net 637 544 1,207 2,243
------------ ------------ ------------ ------------
(3,955) (20,007) (7,202) (31,630)
------------ ------------ ------------ ------------
Loss from continuing
operations before
taxes (5,831) (16,086) (4,658) (23,910)
Income tax benefit (3,986) (3,460) (3,401) (7,606)
------------ ------------ ------------ ------------
Loss from continuing
operations (1,845) (12,626) (1,257) (16,304)
Loss from
discontinued
operations, net of
tax (2) (163) (2) (88)
------------ ------------ ------------ ------------
Net loss (1,847) (12,789) (1,259) (16,392)
Add: Net loss
attributable to
noncontrolling
interests 615 1,156 998 1,539
------------ ------------ ------------ ------------
Net loss
attributable to
common
shareholders $ (1,232) $ (11,633) $ (261) $ (14,853)
============ ============ ============ ============
Basic loss per
share attributable
to common
shareholders:
Continuing
operations $ (0.06) $ (0.62) $ (0.01) $ (0.80)
Discontinued
operations - (0.01) - (0.01)
------------ ------------ ------------ ------------
Net loss $ (0.06) $ (0.63) $ (0.01) $ (0.81)
============ ============ ============ ============
Weighted average
shares outstanding 19,089 18,468 18,888 18,374
============ ============ ============ ============
Diluted loss per
share attributable
to common
shareholders:
Continuing
operations $ (0.06) $ (0.62) $ (0.01) $ (0.80)
Discontinued
operations - (0.01) - (0.01)
------------ ------------ ------------ ------------
Net loss $ (0.06) $ (0.63) $ (0.01) $ (0.81)
============ ============ ============ ============
Weighted average
shares outstanding 19,089 18,468 18,888 18,374
============ ============ ============ ============
Dividends declared
per common share $ 0.03 $ 0.07 $ 0.06 $ 0.14
Amounts attributable
to common
shareholders:
Loss from continuing
operations, net of
tax $ (1,230) $ (11,470) $ (259) $ (14,765)
Discontinued
operations, net of
tax (2) (163) (2) (88)
------------ ------------ ------------ ------------
Net loss $ (1,232) $ (11,633) $ (261) $ (14,853)
============ ============ ============ ============
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
March 31,
--------------------
2010 2009
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,259) $ (16,392)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Net other-than-temporary impairment losses
recognized in earnings 297 7,962
Depreciation and amortization 6,721 4,156
Provision for credit losses 1,986 4,597
Equity in earnings of unconsolidated entities (3,441) (199)
Distributions from unconsolidated entities 2,701 3,053
Loss (gain) on sale of leases and loans 551 (319)
Loss on sale of loans and investment securities, net 436 11,548
Gain on sale of assets (287) (688)
Deferred income tax provision (benefit) 33 (14,520)
Equity-based compensation issued 2,014 2,775
Equity-based compensation received (375) (98)
Decrease in commercial finance investments -
held for sale 37,182 4,390
Changes in operating assets and liabilities (19,667) (4,494)
--------- ---------
Net cash provided by operating activities 26,892 1,771
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (236) (184)
Payments received on real estate loans and real
estate 2,885 10,036
Investments in real estate (1,512) (2,232)
Purchase of commercial finance assets - held for
investment - (41,942)
Payments received on commercial finance assets - held
for investment - 33,643
Purchase of loans and investments (1,011) (19,036)
Proceeds from sale of loans and investments 1,510 13,275
Principal payments received on loans 333 3,975
Other (1,374) (1,394)
--------- ---------
Net cash provided by (used in) investing activities 595 (3,859)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings 71,001 263,714
Principal payments on borrowings (116,525) (258,054)
Dividends paid (1,088) (2,480)
Decrease in restricted cash 194 9,326
Repurchase of subsidiary stock held by a
noncontrolling stockholder - (264)
Other 58 (69)
--------- ---------
Net cash (used in) provided by financing activities (46,360) 12,173
--------- ---------
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities - (8)
Financing activities - (77)
--------- ---------
Net cash used in discontinued operations - (85)
--------- ---------
(Decrease) increase in cash (18,873) 10,000
Cash at beginning of year 26,197 14,910
--------- ---------
Cash at end of period $ 7,324 $ 24,910
========= =========
SCHEDULE I
RECONCILIATION OF GAAP REVENUES TO ADJUSTED REVENUES
AND RECONCILIATION OF GAAP OPERATING (LOSS) INCOME
TO ADJUSTED OPERATING (LOSS) INCOME
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
------------------ -------------------
2010 2009 2010 2009
-------- -------- -------- ---------
Revenues
Real estate $ 5,770 $ 5,173 $ 12,717 $ 12,063
Commercial finance 7,409 13,335 16,232 28,486
Financial fund management 6,221 8,611 15,873 18,530
-------- -------- -------- ---------
Total revenues - GAAP 19,400 27,119 44,822 59,079
Adjustments:
Fair value adjustments (1) (29) (1,181) (2,599) 37
-------- -------- -------- ---------
Adjusted revenues (2) $ 19,371 $ 25,938 $ 42,223 $ 59,116
======== ======== ======== =========
Operating (loss) income - GAAP $ (1,876) $ 3,921 $ 2,544 $ 7,720
Adjustments:
Fair value adjustments (1) (29) (1,181) (2,599) 37
-------- -------- -------- ---------
Adjusted operating (loss) income
(2) $ (1,905) $ 2,740 $ (55) $ 7,757
======== ======== ======== =========
(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 since they exclude
fair value adjustments related to current credit market conditions
and are not indicative of the Company's current operating
performance.
Contact Information: CONTACT: THOMAS C. ELLIOTT CHIEF FINANCIAL OFFICER RESOURCE AMERICA, INC. ONE CRESCENT DRIVE, SUITE 203 PHILADELPHIA, PA 19112 215/546-5005 215/546-4785 (fax)