Resource America, Inc. Reports Operating Results for the First Quarter Ended March 31, 2014

PHILADELPHIA, PA--(Marketwired - May 8, 2014) - Resource America, Inc. (NASDAQ: REXI)

First Quarter 2014 Highlights

• Adjusted net income attributable to common shareholders of $2.3 million (see Schedule I)
• Stand-alone operating income of $2.1 million as compared to $529,000 for the prior year period
• Increased gross assets under management by 16% to $17.8 billion since March 31, 2013
• Book value per common share of $7.83

First Quarter 2014 Results

Resource America, Inc. (NASDAQ: REXI) (the "Company") reported adjusted net income attributable to common shareholders, a non-GAAP measure, of $2.3 million, or $0.11 per common share-diluted for the three months ended March 31, 2014 as compared to adjusted net income attributable to common shareholders of $2.4 million, or $0.11 per common share-diluted for the three months ended March 31, 2013. A reconciliation of the Company's reported GAAP net income attributable to common shareholders to adjusted net income attributable to common shareholders, a non-GAAP measure, is included as Schedule I to this release.

The Company reported GAAP net income attributable to common shareholders of $990,000, or $0.04 per common share-diluted, for the three months ended March 31, 2014 as compared to GAAP net income attributable to common shareholders of $496,000, or $0.02 per common share-diluted, for the three months ended March 31, 2013. 

Assets Under Management

The following table details the Company's gross assets under management by operating segment, which increased by $2.5 billion (16%) from March 31, 2013 to 2014 (in billions):

			March 31,
			2014			2013
Financial fund management			$	14.6		$	13.0
Real estate				2.6			1.8
Commercial finance				0.6			0.5
			$	17.8		$	15.3
	Net assets under management (1)		$	8.3		$	6.8

(1)	Net assets under management represents the proportionate share of assets managed by the Company after reflecting joint venture arrangements.

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 year ended December 31, 2013.

Highlights for the First Quarter Ended March 31, 2014 and Recent Developments

REAL ESTATE ASSET MANAGEMENT:

Equity Asset Management

Resource Real Estate Opportunity REIT, Inc ("Opportunity REIT I"), a public non-traded real estate investment trust ("REIT") managed by the Company, which specializes in acquiring and managing distressed real estate assets, had the following highlights:

• Increased total assets to $824.1 million at March 31, 2014, an increase of $594.1 million, or 258%, from $230.0 million at March 31, 2013.
• In January 2014, acquired joint venture interests in 10 multifamily assets totaling 2,513 units and two office properties that contain 75,518 rentable square feet for $51.2 million. In March 2014, acquired the remaining ownership interest for one of the multifamily assets for $7.5 million. Including these acquisitions, Opportunity REIT I acquired $165.9 million of total assets during the quarter.

During the three months ended March 31, 2014, Resource Real Estate, the Company's real estate operating segment, placed financing of $115.0 million on properties and disposed of two properties for $82.9 million.

On February 6, 2014, Resource Real Estate Opportunity REIT II, Inc. ("Opportunity REIT II") commenced its initial public offering of common stock and will focus on acquiring under-performing multifamily rental properties, distressed real estate and performing loans. Opportunity REIT II is offering up to $1 billion in common stock at a maximum price of $10 per share. Resource Real Estate will be the external manager.

Debt Asset Management

Resource Capital Corp. ("RSO"), a publicly-traded REIT managed by the Company which focuses on commercial real estate assets, had the following highlights:

• During the quarter, raised $15.8 million in equity capital through its preferred equity programs. Since March 31, 2014, raised an additional $14.0 million in equity capital, including $3.3 million from its DRIP program.
• Originated $111.6 million of commercial real estate whole loans during the three months ended March 31, 2014.

The following additional highlights contributed to the Company's real estate asset management operations:

• The Company's real estate operating segment increased its assets under management at March 31, 2014 to $2.6 billion, an increase of $796.5 million, or 44%, from March 31, 2013.
• Real estate revenues increased 17% to $13.3 million, for the three months ended March 31, 2014 as compared to $11.3 million for the three months ended March 31, 2013, respectively. 

FINANCIAL FUND MANAGEMENT:

Credit Asset Management

CVC Credit Partners, L.P. ("CCP"), the Company's global joint venture, closed Apidos CLO XVI, Ltd. (issuing notes with a par value of $600.0 million) in January 2014 and Apidos CLO XVII, Ltd. (issuing notes with a par value of $500.0 million) and CVC Cordatus Loan Fund III Limited (issuing notes with a par value of EUR 436.0 million) in May 2014. Since creating this joint venture in April 2012, CCP has closed nine collateralized loan obligation issuers (issuing notes with a total par value of $4.6 billion) and expects to receive approximately $21.4 million in fees on an annual run rate basis. The Company has a 33% interest in this joint venture.

The following additional highlight contributed to the Company's financial fund asset management operations:

The Company's financial fund management operating segment increased its assets under management at March 31, 2014 to $14.6 billion, an increase of $1.6 billion, or 12%, from March 31, 2013.

CORPORATE/OTHER:

Corporate Credit Facility Modification

• In April 2014, the Company increased its revolving credit facility with TD Bank, N.A. to $11.5 million and extended the maturity from December 2014 to December 2017.

Dividends

• The Company's Board of Directors authorized a cash dividend of $0.05 per share on the Company's common stock and payment on April 30, 2014 to holders of record as of the close of business on April 16, 2014. 
• RSO's Board of Directors declared a cash dividend of $0.20 per common share for its quarter ended March 31, 2014.

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, its joint ventures, and for outside investors in the real estate, financial fund management and commercial finance 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, or SEC. 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 SEC. 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 Opportunity REIT II was declared effective by the SEC on February 6, 2014. A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th 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, consolidating statements of operations and reconciliation of GAAP net income attributable to common shareholders to adjusted net income attributable to common shareholders.

RESOURCE AMERICA, INC
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
					March 31,  2014				December 31,  2013
					(unaudited)
ASSETS
	Cash				$	17,210			$	19,853
	Restricted cash					627				571
	Receivables					572				541
	Loans and receivables from managed entities and related parties, net					34,506				30,923
	Investments in real estate, net					17,167				17,696
	Investment securities, at fair value					9,100				7,839
	Investments in unconsolidated loan manager					38,181				37,821
	Investments in unconsolidated entities					13,609				14,342
	Assets of consolidated variable interest entity ("VIE") - RSO:
		Cash and cash equivalents (including restricted cash)				282,638				325,579
		Investments, at fair value				243,538				226,764
		Loans				1,618,060				1,397,458
		Investments in real estate and unconsolidated entities				117,280				124,193
		Other assets				79,819				76,467
			Total assets of consolidated VIE - RSO			2,341,335				2,150,461
	Property and equipment, net					5,566				5,844
	Deferred tax assets, net					26,587				27,769
	Other assets					5,431				4,791
		Total assets			$	2,509,891			$	2,318,451
LIABILITIES AND EQUITY
Liabilities:
	Accrued expenses and other liabilities				$	22,698			$	22,134
	Payables to managed entities and related parties					3,112				3,110
	Borrowings					20,501				20,619
	Liabilities of consolidated VIE - RSO:
		Borrowings				1,502,266				1,320,015
		Other liabilities				56,934				55,247
		Total liabilities of consolidated VIE - RSO				1,559,200				1,375,262
			Total liabilities			1,605,511				1,421,125
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;30,807,746 and 30,378,339 shares issued (including nonvested restricted stock of 689,904 and 400,194), respectively					301				299
	Additional paid-in capital					288,958				288,555
	Accumulated deficit					(26,023	)			(26,025	)
	Treasury stock, at cost; 10,440,319 and 10,434,436 shares, respectively					(107,905	)			(107,874	)
	Accumulated other comprehensive loss					(1,164	)			(1,231	)
		Total stockholders' equity				154,167				153,724
	Noncontrolling interests					221				238
	Noncontrolling interests attributable to RSO					749,992				743,364
		Total equity				904,380				897,326
					$	2,509,891			$	2,318,451

RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
			Three Months Ended
			March 31,
			2014				2013
REVENUES:
Real estate (includes revenues of $2,683 and $2,288 related to RSO)			$	13,275			$	11,340
Financial fund management (includes revenues of $207 and $381 related to RSO)				7,075				4,287
Commercial finance (includes no revenue related to RSO)				(99	)			(178	)
				20,251				15,449
Revenues from consolidated VIE - RSO				31,931				30,578
Elimination of consolidated VIE revenues attributed to operating segments				(2,880	)			(2,700	)
	Total revenues			49,302				43,327
COSTS AND EXPENSES:
Real estate				8,875				9,440
Financial fund management				4,389				2,528
Commercial finance				103				45
General and administrative				3,154				2,153
Provision for credit losses				1,208				338
Depreciation and amortization				451				416
				18,180				14,920
Expenses from consolidated VIE - RSO				13,124				16,188
Elimination of consolidated VIE expenses attributed to operating segments				(2,819	)			(2,654	)
	Total expenses			28,485				28,454
OPERATING INCOME				20,817				14,873
OTHER INCOME (EXPENSE):
Other-than-temporary impairment on investments				--				(214	)
Interest expense				(483	)			(494	)
Other income (expense), net				165				189
				(318	)			(519	)
Other expense, net, from consolidated VIE - RSO				(1,331	)			--
Elimination of consolidated VIE other income attributed to operating segments				18				31
				(1,631	)			(488	)
Income from continuing operations before taxes				19,186				14,385
Income tax provision (benefit)				1,069				(146	)
Income tax provision - RSO				16				1,762
Income from continuing operations				18,101				12,769
Loss from discontinued operations, net of tax				--				(2	)
Net income				18,101				12,767
Net loss attributable to noncontrolling interests				40				43
Net income attributable to noncontrolling interests of consolidated VIE - RSO				(17,151	)			(12,314	)
Net income attributable to common shareholders			$	990			$	496
Amounts attributable to common shareholders:
Income from continuing operations			$	990			$	498
Discontinued operations				--				(2	)
Net income			$	990			$	496
Basic earnings per share:
Continuing operations			$	0.05			$	0.02
Discontinued operations				--				--
Net income			$	0.05			$	0.02
Weighted average shares outstanding				20,252				20,124
Diluted earnings per share:
Continuing operations			$	0.04			$	0.02
Discontinued operations				--				--
Net income			$	0.04			$	0.02
Weighted average shares outstanding				22,027				21,815

RESOURCE AMERICA, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)

 The following table presents the consolidating statement of operations for the first quarter ended March 31, 2014:

		RAI				RSO				Eliminations				Consolidated
REVENUES:
Real estate		$	13,275			$	--			$	--			$	13,275
Financial fund management			7,075				--				--				7,075
Commercial finance			(99	)			--				--				(99	)
			20,251				--				--				20,251
Revenues from consolidated VIE - RSO			--				31,931				--				31,931
Elimination of consolidated VIE revenues attributed to operating segments			--				--				(2,880	)			(2,880	)
Total revenues			20,251				31,931				(2,880	)			49,302
COSTS AND EXPENSES:
Real estate			8,875				--				--				8,875
Financial fund management			4,389				--				--				4,389
Commercial finance			103				--				--				103
General and administrative			3,154				--				--				3,154
Provision for credit losses			1,208				--				--				1,208
Depreciation and amortization			451				--				--				451
			18,180				--				--				18,180
Expenses from consolidated VIE - RSO			--				13,140				(16	)			13,124
Elimination of consolidated VIE expenses attributed to operating segments			--				--				(2,819	)			(2,819	)
Total expenses			18,180				13,140				(2,835	)			28,485
OPERATING INCOME			2,071				18,791				(45	)			20,817
OTHER INCOME (EXPENSE):
Interest expense			(483	)			--				--				(483	)
Other income, net			737				--				(572	)			165
Other expense, net, from consolidated VIE - RSO			--				(1,331	)			--				(1,331	)
Elimination of consolidated VIE other income, net			--				--				18				18
			254				(1,331	)			(554	)			(1,631	)
Income from continuing operations before taxes			2,325				17,460				(599	)			19,186
Income tax provision			1,069				--				16				1,085
Net income			1,256				17,460				(615	)			18,101
Net loss attributable to noncontrolling interests			40				--				--				40
Net income attributable to noncontrolling interests - RSO			--				(2,344	)			(14,807	)			(17,151	)
Net income attributable to common shareholders		$	1,296			$	15,116			$	(15,422	)		$	990

RESOURCE AMERICA, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)

 The following table presents the consolidating statement of operations for the first quarter ended March 31, 2013:

		RAI				RSO				Eliminations				Consolidated
REVENUES:
Real estate		$	11,340			$	--			$	--			$	11,340
Financial fund management			4,287				--				--				4,287
Commercial finance			(178	)			--				--				(178	)
			15,449				--				--				15,449
Revenues from consolidated VIE - RSO			--				30,578				--				30,578
Elimination of consolidated VIE revenues attributed to operating segments			--				--				(2,700	)			(2,700	)
Total revenues			15,449				30,578				(2,700	)			43,327
COSTS AND EXPENSES:
Real estate			9,440				--				--				9,440
Financial fund management			2,528				--				--				2,528
Commercial finance			45				--				--				45
General and administrative			2,153				--				--				2,153
Provision for credit losses			338				--				--				338
Depreciation and amortization			416				--				--				416
			14,920				--				--				14,920
Expenses from consolidated VIE - RSO			--				17,950				(1,762	)			16,188
Elimination of consolidated VIE expenses attributed to operating segments			--				--				(2,654	)			(2,654	)
Total expenses			14,920				17,950				(4,416	)			28,454
OPERATING INCOME			529				12,628				1,716				14,873
OTHER INCOME (EXPENSE):
Other-than-temporary impairment on investments			(214	)			--				--				(214	)
Interest expense			(494	)			--				--				(494	)
Other income, net			745				--				(556	)			189
Elimination of consolidated VIE other income, net			--				--				31				31
			37				--				(525	)			(488	)
Income from continuing operations before taxes			566				12,628				1,191				14,385
Income tax (benefit) provision			(146	)			--				1,762				1,616
Income from continuing operations			712				12,628				(571	)			12,769
Loss from discontinued operations, net of tax			(2	)			--				--				(2	)
Net income			710				12,628				(571	)			12,767
Net loss attributable to noncontrolling interests - RAI			43				--				--				43
Net income attributable to noncontrolling interests - RSO			--				(1,102	)			(11,212	)			(12,314	)
Net income attributable to common shareholders		$	753			$	11,526			$	(11,783	)		$	496
Amounts attributable to common shareholders:
Income from continuing operations		$	755			$	11,526			$	(11,783	)		$	498
Discontinued operations			(2	)			--				--				(2	)
Net income		$	753			$	11,526			$	(11,783	)		$	496

Schedule I

RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO
ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS (1)
(in thousands, except per share data)
(unaudited)
		Three Months Ended
		March 31,
		2014			2013
Net income attributable to common shareholders - GAAP		$	990		$	496
Adjustments, net of tax:
Income, net of eliminations, attributable to consolidation of RSO			306			257
Loss attributable to commercial finance			863			1,873		(2)
Deferred tax provision (benefit)			161			(225	)
Adjusted net income attributable to common shareholders		$	2,320		$	2,401
Weighted average diluted shares outstanding			22,027			21,815
Adjusted net income attributable to common shareholders per common per share-diluted		$	0.11		$	0.11

(1)	Adjusted net income attributable to common shareholders presents the Company's operations prior to the consolidation of RSO and without the effect of its commercial finance operations and deferred tax provision (benefit). The Company believes that this provides useful information to investors since it allows investors to evaluate the Company's progress, excluding the impact of the RSO consolidation, in both its real estate and financial fund management segments for the three months ended March 31, 2014 and 2013 separately from its commercial finance operations and deferred tax provision (benefit). Adjusted net income attributable to common shareholders should not be considered as an alternative to net 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 income attributable to common shareholders in the Company's consolidated financial statements to help analyze how the Company's business is performing.
(2)	Utilizes a full year continuing income tax rate of 39%.