SOURCE: Resource America, Inc.

Resource America, Inc.

May 04, 2016 18:05 ET

Resource America, Inc. Reports Operating Results for the First Quarter Ended March 31, 2016

PHILADELPHIA, PA--(Marketwired - May 4, 2016) - Resource America, Inc. (NASDAQ: REXI)

First Quarter 2016 Highlights

  • Adjusted net income attributable to common shareholders of $3.5 million, or $0.17 per common share-diluted (see Schedule I)
  • Closed Opportunity REIT II with a total of $556.0 million raised
  • Increased real estate assets under management by 12% to $4.0 billion since March 31, 2015
  • Book value per common share of $7.13
  • Repurchased 561,134 shares at an average price of $6.19 per share

First Quarter 2016 Results

Resource America, Inc. (NASDAQ: REXI) (the "Company") reported adjusted net income attributable to common shareholders, a non-GAAP measure, of $3.5 million, or $0.17 per common share-diluted, for the three months ended March 31, 2016 as compared to adjusted net income attributable to common shareholders of $2.2 million, or $0.10 per common share-diluted, for the three months ended March 31, 2015. 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 $3.0 million, or $0.15 per common share-diluted, for the three months ended March 31, 2016 as compared to GAAP net income attributable to common shareholders of $1.5 million, or $0.07 per common share-diluted, for the three months ended March 31, 2015.

Assets Under Management

The following table details the Company's gross assets under management by operating segment, which increased by $1.8 billion (9%) from March 31, 2015 to 2016 (in billions):

     
    March 31,
    2016   2015
Financial fund management   $ 17.6   $ 16.3
Real estate     4.0     3.6
Commercial finance     0.8     0.7
    $ 22.4   $ 20.6
             
  Net assets under management (1)   $ 9.5   $ 10.0
             
(1)

  Net assets under management represents the proportionate share of assets managed by the Company after reflecting joint venture arrangements. At March 31, 2016, net assets reflect the Company's 24% interest in CVC Credit Partners, L.P. ("CCP"), the Company's global joint venture, while net assets as of March 31, 2015 reflect the Company's 33% interest in CCP.
     

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, 2015.

Highlights for the First Quarter Ended March 31, 2016 and Recent Developments

REAL ESTATE ASSET MANAGEMENT:ty

Equity Asset Management

Resource Real Estate Opportunity REIT II, Inc. ("Opportunity REIT II"), a public non-traded REIT managed by the Company that specializes in acquiring multifamily rental properties and selected loans, had the following highlights:

  • Raised $43.3 million during the three months ended March 31, 2016 and closed with a total of $556.0 million.
  • Acquired $149.9 million of assets and placed $28.8 million of financing during the three months ended March 31, 2016.
  • Increased total assets to $634.9 million at March 31, 2016.

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 $1.0 billion in total assets at March 31, 2016.

Resource Real Estate Diversified Income Fund ("DIF"), a public closed-end real estate focused investment company managed by the Company, has raised $110.2 million since inception.

On February 16, 2016, Resource Innovation Office REIT, Inc. ("Innovation Office REIT"), a company-sponsored REIT that will focus on acquiring office buildings, commenced an initial public offering of its common stock. Resource Innovation Office Advisor, LLC, a subsidiary of Resource Real Estate, Inc, which is a wholly-owned subsidiary of the Company, will be the external manager.

On April 28, 2016, Resource Apartment REIT III, Inc., ("Apartment REIT III"), a company-sponsored REIT that will focus on acquiring under-performing apartment communities for renovation, commenced an initial public offering of its common stock. Resource Apartment Advisor III, LLC, a subsidiary of Resource Real Estate, Inc, 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, originated $49.1 million in new commercial real estate loans during the three months ended March 31, 2016.

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

  • The Company's real estate operating segment increased its gross assets under management at March 31, 2016 to $4.0 billion, an increase of $437.0 million, or 12%, from March 31, 2015.
  • Real estate revenues increased 13% to $19.2 million for the three months ended March 31, 2016 as compared to $17.0 million for the three months ended March 31, 2015.

FINANCIAL FUND MANAGEMENT:

Credit Asset Management

  • CCP closed Apidos CLO XXIII, Ltd. in January 2016 and CVC Cordatus Loan Fund VI Limited in March 2016.
  • Since its formation, CCP has closed CLOs issuing notes with a total par value of $9.2 billion.

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

  • The Company's financial fund management operating segment increased its gross assets under management at March 31, 2016 to $17.6 billion, an increase of $1.3 billion, or 8%, from March 31, 2015.

CORPORATE:

Share Repurchases

  • The Company repurchased 561,134 of its shares during the first quarter ended March 31, 2016 at an average price of $6.19 per share.

Dividends

  • The Company's Board of Directors authorized a cash dividend of $0.06 per share on the Company's common stock which was paid on April 29, 2016 to holders of record as of the close of business on April 15, 2016. 
  • RSO's Board of Directors declared a cash dividend of $0.42 per share on its common stock for the three months ended March 31, 2016.

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, for 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 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 post-effective amendment relating to securities offered by Innovation Office REIT was declared effective by the SEC on March 7, 2016. A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th Floor, Philadelphia, PA 19103.

A registration statement relating to securities offered by Apartment REIT III was declared effective by the SEC on April 28, 2016. A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th Floor, Philadelphia, PA 19103.

A registration statement relating to securities offered by DIF was declared effective by the SEC on March 11, 2013. 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)  
   
    March 31,
 2016
    December 31,
 2015
 
    (unaudited)        
ASSETS                
  Cash   $ 18,348     $ 24,132  
  Restricted cash     1,044       937  
  Receivables     3,082       3,228  
  Loans and receivables from managed entities and related parties, net     22,427       26,667  
  Investments in real estate, net     15,752       16,022  
  Investment securities, at fair value     44,758       45,672  
  Investments in unconsolidated loan manager     31,512       32,616  
  Investments in unconsolidated entities     21,168       17,553  
  Property and equipment, net     5,061       5,371  
  Deferred tax assets, net     27,653       29,264  
  Other assets     13,781       9,733  
    Total assets   $ 204,586     $ 211,195  
                 
LIABILITIES AND EQUITY                
Liabilities:                
  Accrued expenses and other liabilities   $ 22,502     $ 27,184  
  Payables to managed entities and related parties     2,811       3,145  
  Borrowings     20,597       20,747  
      Total liabilities     45,910       51,076  
                 
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; 35,866,472 and 34,973,987 shares issued (including nonvested restricted stock of 1,778,341 and 1,095,238), respectively     348       339  
  Additional paid-in capital     312,432       311,491  
  Accumulated deficit     (28,783 )     (30,676 )
  Treasury stock, at cost; 15,029,534 and 14,460,024 shares, respectively     (143,204 )     (139,858 )
  Accumulated other comprehensive loss     (4,853 )     (3,533 )
    Total stockholders' equity     135,940       137,763  
  Noncontrolling interests     22,736       22,356  
                   
    Total equity     158,676       160,119  
    Total liabilities and equity   $ 204,586     $ 211,195  
                 
                 
   
RESOURCE AMERICA, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share data)  
(unaudited)  
   
    Three Months Ended  
    March 31,  
    2016     2015  
REVENUES:                
Real estate   $ 19,163     $ 16,966  
Financial fund management     6,729       6,875  
Commercial finance     76       (2 )
  Total revenues     25,968       23,839  
COSTS AND EXPENSES:                
Real estate     11,018       11,499  
Financial fund management     3,680       3,063  
Commercial finance     392       579  
General and administrative     4,883       3,297  
Provision for credit losses     109       402  
Depreciation and amortization     504       457  
  Total expenses     20,586       19,297  
OPERATING INCOME (LOSS)     5,382       4,542  
                 
OTHER INCOME (EXPENSE):                
Gain (loss) on sale of investment securities, net     498       -  
Impairment on investments in available for sale securities     (98 )     -  
Interest expense     (440 )     (421 )
Other income (expense), net     507       314  
      467       (107 )
Income (loss) from continuing operations before taxes     5,849       4,435  
Income tax provision (benefit)     2,446       1,244  
Net income (loss)     3,403       3,191  
Net (income) loss attributable to noncontrolling interests     (366 )     (1,657 )
Net income (loss) attributable to common shareholders   $ 3,037     $ 1,534  
                 
Basic earnings (loss) per share:                
Net income (loss)   $ 0.15     $ 0.07  
Weighted average shares outstanding     20,611       22,965  
                 
Diluted earnings (loss) per share:                
Net income (loss)   $ 0.15     $ 0.07  
Weighted average shares outstanding     20,889       23,239  
                 
Schedule I
 
 
RECONCILIATION OF GAAP NET INCOME (LOSS) 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,
    2016   2015
Net income (loss) attributable to common shareholders - GAAP   $ 3,037   $ 1,534
             
Adjustments, net of tax:            
Loss attributable to commercial finance     242     526
Deferred tax provision     177     151
Adjusted net income attributable to common shareholders   $ 3,456   $ 2,211
             
Adjusted weighted average diluted shares outstanding     20,889     23,239
             
Adjusted net income attributable to common shareholders per common per share-diluted   $ 0.17   $ 0.10
             
(1)

  Adjusted net income attributable to common shareholders presents the Company's operations without the effect of its commercial finance operations and deferred tax provision. 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 March 31, 2016 and 2015 separately from these items. Adjusted net income attributable to common shareholders should not be considered as an alternative to net income (loss) 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 (loss) attributable to common shareholders in the Company's consolidated financial statements to help analyze how the Company's business is performing.
     

Contact Information

  • CONTACT:
    THOMAS C. ELLIOTT
    CHIEF FINANCIAL OFFICER
    RESOURCE AMERICA, INC.
    ONE CRESCENT DRIVE, SUITE 203
    PHILADELPHIA, PA 19112
    (215) 546-5005
    (215) 640-6357 (fax)