At December At December
31, 2010 31, 2009
-------------- --------------
Financial fund management $ 9.7 billion $ 10.4 billion
Real estate 1.5 billion 1.7 billion
Commercial finance 0.8 billion 1.2 billion
-------------- --------------
$ 12.0 billion $ 13.3 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, 2010.
Book Value
As of December 31, 2010, the Company's book value per common share was
$7.31 per share. Total stockholders' equity was $134.0 million as of
December 31, 2010 as compared to $142.3 million as of December 31, 2009.
Total common shares outstanding were 18,320,863 as of December 31, 2010 as
compared to 18,036,643 as of December 31, 2009.
Highlights for the First Fiscal Quarter Ended December 31, 2010 and Recent
Developments
LEASING:
-- In January 2011, LEAF raised or obtained commitments for up to
approximately $236 million of equity and debt capital to expand its
leasing platform through its new lease origination and servicing
subsidiary, LEAF Commercial Capital, Inc. ("LEAF Commercial"). LEAF
Commercial is a joint venture among LEAF, Resource Capital Corp. ("RCC")
and Guggenheim Securities, LLC ("Guggenheim"). RCC and Guggenheim
committed to investing up to $44 million of capital in the form of
preferred stock and subordinated debt into LEAF Commercial. In
addition, Guggenheim has arranged a new financing facility for LEAF
Commercial of up to $192 million in revolving senior debt to fund new
originations.
-- Securitizations: Since May 2010, LEAF has completed five securitization
transactions totaling $700 million on behalf of affiliates for which it
manages leasing portfolios. These transactions have been term funded
through the issuance of contract-backed notes and LEAF will continue to
service these securitization pools.
REAL ESTATE:
-- Fundraising: Resource Real Estate ("RRE"), the Company's real estate
operating segment, has sponsored and is the external manager of Resource
Real Estate Opportunity REIT, Inc. ("RRE Opportunity REIT"), which is a
public real estate program. Through February 1, 2011, RRE Opportunity
REIT has raised approximately $27.7 million and has made the acquisition
described below.
-- Acquisitions:
- In December 2010, RRE purchased through RRE Opportunity REIT, a loan
secured by a first lien mortgage on a multifamily rental property in
Birmingham, Alabama for $6.3 million. In connection with this
purchase, the Company received $126,000 in acquisition fees and will
receive asset management and property management fees in the future.
- In October 2010, RRE purchased a loan through RCC for $8.1 million
with an existing joint venture partner. The loan is secured by two
multifamily rental properties located in Decatur, Georgia. In
connection with this purchase, the Company received $82,000 in
acquisition fees and will receive asset management and property
management fees in the future.
-- Property Management: Resource Real Estate Management, Inc., the
Company's property management subsidiary, increased the apartment units
it manages to 14,128 units at 51 properties as of December 31, 2010 from
13,127 units at 50 properties as of December 31, 2009.
FINANCIAL FUND MANAGEMENT:
-- Sale of Management Agreement/Equity: In December 2010, the Company's
subsidiary, Resource Europe Management Limited ("REM"), completed the
sale and assignment of REM's rights, title and interest in the
management agreement for Resource Europe CLO I B.V. ("REM I"), a EUR 300
million collateralized loan obligation. In connection with the sale and
assignment of the management agreement, Resource Financial Fund
Management, Inc., the Company's structured finance operating segment
("RFFM"), sold its equity interest in REM I. The aggregate purchase
price of the assets sold by REM and RFFM was approximately
$11.1 million, net of transaction costs, and as a result of this
transaction, the Company recorded a net gain of $5.1 million.
-- Additional Management Engagement: In November 2010, a subsidiary of
RFFM was awarded the management contract for an existing $255 million
third-party collateralized debt obligation issuer for which it will
receive future management fees.
CORPORATE:
-- Decreased Borrowings: As of December 31, 2010, the Company reduced its
consolidated borrowings outstanding by $108.4 million, or 62%, to $65.6
million from $174.0 million at December 31, 2009. This decrease
primarily reflects the repayment and termination of the commercial
finance credit facility, which had a $124.9 million balance at December
31, 2009. At December 31, 2010, borrowings include $21.8 million in
non-recourse short-term bridge financing for its commercial finance
operations, $12.8 million of corporate revolving debt, $14.8 million of
senior notes (net of a discount) and $16.2 million of other debt (of
which $13.4 million is in mortgage debt secured by the underlying
properties).
-- Share Repurchase Plan: The Company's Board of Directors authorized a new
share repurchase plan on December 17, 2010 under which the Company may
buy up to $20.0 million of its outstanding common stock, replacing a
share repurchase plan that had been approved by the Board in July 2007.
-- Dividends: The Company's Board of Directors authorized the payment on
January 31, 2011 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 January
21, 2011. RCC, its externally managed REIT, declared a cash dividend of
$0.25 per common share for its fourth quarter ended December 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 and in
other of its public filings with the Securities and Exchange Commission.
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 securities offered by RRE Opportunity
REIT was declared effective by the SEC on June 16, 2010. A written
prospectus relating to these securities 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 net (loss) income
attributable to common shareholders to adjusted net income attributable to
common shareholders.
RESOURCE AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31, September 30,
2010 2010
----------- -----------
(unaudited)
ASSETS
Cash $ 14,530 $ 11,243
Restricted cash 5,401 12,018
Receivables 622 1,671
Receivables from managed entities and related
parties, net 62,016 66,416
Investments in commercial finance, net 22,286 12,176
Investments in real estate, net 27,462 27,114
Investment securities, at fair value 21,716 22,358
Investments in unconsolidated entities 14,387 13,825
Property and equipment, net 9,364 9,984
Deferred tax assets 42,010 43,703
Goodwill 7,969 7,969
Other assets 5,411 5,776
----------- -----------
Total assets $ 233,174 $ 234,253
=========== ===========
LIABILITIES AND EQUITY
Liabilities:
Accrued expenses and other liabilities $ 35,661 $ 38,492
Payables to managed entities and related
parties 952 156
Borrowings 65,640 66,110
Deferred tax liabilities 411 411
----------- -----------
Total liabilities 102,664 105,169
----------- -----------
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; 28,171,720 and 28,167,909 shares
issued, respectively (including nonvested
restricted stock of 732,308 and 741,086,
respectively) 274 274
Additional paid-in capital 282,062 281,378
Accumulated deficit (38,676) (37,558)
Treasury stock, at cost; 9,118,549 and
9,125,253 shares, respectively (99,245) (99,330)
Accumulated other comprehensive loss (10,431) (12,807)
----------- -----------
Total stockholders' equity 133,984 131,957
Noncontrolling interests (3,474) (2,873)
----------- -----------
Total equity 130,510 129,084
----------- -----------
$ 233,174 $ 234,253
=========== ===========
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
December 31,
--------------------
2010 2009
--------- ---------
REVENUES
Real estate $ 6,874 $ 6,947
Commercial finance 1,476 8,823
Financial fund management 8,330 9,652
--------- ---------
16,680 25,422
--------- ---------
COSTS AND EXPENSES
Real estate 5,461 4,727
Commercial finance 4,273 4,575
Financial fund management 6,720 4,704
General and administrative 3,116 3,432
(Gain) loss on sale of leases and loans (11) 582
Provision for credit losses 1,606 776
Depreciation and amortization 1,125 2,206
--------- ---------
22,290 21,002
--------- ---------
OPERATING (LOSS) INCOME (5,610) 4,420
--------- ---------
OTHER INCOME (EXPENSE)
Gain on the sale of assets 6,520 -
Loss on sale of investment securities, net (1,470) -
Interest expense (2,369) (3,817)
Other income, net 1,095 570
--------- ---------
3,776 (3,247)
--------- ---------
(Loss) income from operations before taxes (1,834) 1,173
Income tax (benefit) provision (642) 585
--------- ---------
Net (loss) income (1,192) 588
Add: Net loss attributable to noncontrolling
interests 625 383
--------- ---------
Net (loss) income attributable to common shareholders $ (567) $ 971
========= =========
Basic (loss) income per share attributable to common
shareholders:
Net (loss) income $ (0.03) $ 0.05
========= =========
Weighted average shares outstanding 19,076 18,689
========= =========
Diluted (loss) income per share attributable to
common shareholders:
Net (loss) income $ (0.03) $ 0.05
========= =========
Weighted average shares outstanding 19,076 18,962
========= =========
Dividends declared per common share $ 0.03 $ 0.03
========= =========
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
December 31,
--------------------
2010 2009
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (1,192) $ 588
Adjustments to reconcile net (loss) income to net
cash used in operating activities:
Depreciation and amortization 1,911 3,173
Provision for credit losses 1,606 776
Equity in earnings of unconsolidated entities (1,427) (3,405)
Distributions from unconsolidated entities 663 1,261
(Gain) loss on sale of leases and loans (11) 582
Loss on sale of loans and investment securities,
net 1,470 -
Gain on resolution of assets (9) (244)
Gain on sale of management contract (6,520) -
Deferred income tax benefit 422 34
Equity-based compensation issued 781 1,120
Equity-based compensation received (57) (375)
Decrease in commercial finance investments - 8,386
Changes in operating assets and liabilities (611) (13,049)
--------- ---------
Net cash used in operating activities (2,974) (1,153)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (38) (118)
Investments in unconsolidated real estate entities (283) -
Purchase of commercial finance assets (10,690) -
Proceeds from sale of management contract 9,095 -
Purchase of loans and investments - (1,640)
Proceeds from sale of loans and investment securities 2,946 2,274
--------- ---------
Net cash provided by investing activities 1,030 516
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings 1,000 45,701
Principal payments on borrowings (1,908) (62,326)
Dividends paid (551) (540)
Decrease (increase) in debt financing costs 73 (496)
Decrease in restricted cash 6,617 510
--------- ---------
Net cash provided by (used in) financing activities 5,231 (17,151)
--------- ---------
Increase (decrease) in cash 3,287 (17,788)
Cash at beginning of year 11,243 26,197
--------- ---------
Cash at end of period $ 14,530 $ 8,409
========= =========
SCHEDULE I
RECONCILIATION OF GAAP NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
SHAREHOLDERS TO ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON
SHAREHOLDERS (1)
(in thousands, except per share data)
(unaudited)
Three Months Ended
December 31,
-------------------
2010 2009
-------- ---------
Net (loss) income attributable to common
shareholders - GAAP $ (567) $ 971
Adjustments, net of tax:
Loss from commercial finance operations (2) 1,735 67
Deferred tax assets 422 92
-------- ---------
Adjusted net income attributable to common shareholders $ 1,590 $ 1,130
======== =========
Adjusted weighted average diluted shares outstanding (3) 20,313 18,962
======== =========
Adjusted net income attributable to common shareholders
per common share-diluted $ 0.08 $ 0.06
======== =========
(1) Adjusted net income attributable to common shareholders presents the
Company's operations without the effect of its commercial finance
operations. The Company believes that this provides useful information
to investors since it allows investors to evaluate the Company's
progress in both its real estate and financial fund management segments
for the three months ended December 31, 2010 and 2009 separately from
its commercial finance operations, which have been severely impacted by
a reduction in liquidity and lack of availability of credit. Adjusted
net income attributable to common shareholders should not be considered
as an alternative to net (loss) income attributable to common
shareholders (computed in accordance with GAAP). Instead, adjusted net
income attributable to common shareholders should be reviewed in
connection with net (loss) income attributable to common shareholders
in the Company's consolidated financial statements, to help analyze how
the Company's business is performing.
(2) Loss from commercial finance operations consists of revenues and
expenses from commercial finance operations (including gains or losses
from the sale of leases and loans, provision for credit losses and
depreciation and amortization) net of applicable tax benefits and
non-controlling interests.
(3) Dilutive shares used in the calculation of adjusted net income
attributable to common shareholders per common share-diluted includes
an additional 1.2 million shares for the three months ended December
31, 2010 which were anti-dilutive for the period and, as such, were not
used in the calculation of GAAP net loss attributable to common
shareholders per common share-diluted.
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)