SOURCE: Resource America, Inc.

Resource America, Inc.

August 07, 2013 18:00 ET

Resource America, Inc. Reports Operating Results for the Third Fiscal Quarter Ended June 30, 2013

PHILADELPHIA, PA--(Marketwired - Aug 7, 2013) - Resource America, Inc. (NASDAQ: REXI) (the "Company") reported adjusted income from continuing operations attributable to common shareholders, net of tax, a non-GAAP measure, of $3.2 million, or $0.15 per common share-diluted, and $8.5 million, or $0.39 per common share-diluted, for the third fiscal quarter and nine months ended June 30, 2013 as compared to an adjusted loss from continuing operations attributable to common shareholders, net of tax, of $496,000, or $0.03 per common share-diluted, and $8.0 million, or $0.41 per common share-diluted, for the third fiscal quarter and nine months ended June 30, 2012. A reconciliation of the Company's reported GAAP income (loss) from continuing operations before taxes to adjusted income (loss) from continuing operations attributable to common shareholders, net of tax, a non-GAAP measure, is included as Schedule I to this release.

The Company reported GAAP net income attributable to common shareholders of $1.5 million, or $0.07 per common share-diluted, and $819,000, or $0.04 per common share-diluted, for the third fiscal quarter and nine months ended June 30, 2013 as compared to GAAP net income attributable to common shareholders of $30.2 million, or $1.44 per common share-diluted, and $28.1 million, or $1.37 per common share-diluted, for the third fiscal quarter and nine months ended June 30, 2012. Included in GAAP net income attributable to common shareholders for the third fiscal quarter and nine months ended June 30, 2012, was a $34.5 million and $40.0 million gain, net of tax, respectively, on the deconsolidation and sale of the Company's credit loan manager and commercial finance subsidiary.

Jonathan Cohen, CEO and President, commented, "We are pleased with the solid results of our third fiscal quarter and our current position. During the quarter we increased assets under management to $16.1 billion from $15.0 billion a year ago. In our Real Estate Asset Management businesses, we raised a record $209 million of capital. In our Credit Asset Management businesses, CVC Credit Partners -- our joint venture with CVC Capital -- closed a $456 million listed fund (LSE: CCPE) (LSE: CCPG) as well as another $523 million CLO. We continue to work to grow and expand our existing businesses and to add new products to fuel additional growth, such as our Real Estate Diversified Income Fund, our first mutual fund product which launched at the very end of the second quarter. With increasing AUM, positive operating earnings, great products and a strong balance sheet we think we are in a very good position looking forward."

Assets Under Management

The following table details the Company's assets under management by operating segment, which increased by $1.1 billion (7%) from June 30, 2012 to June 30, 2013:

         
    June 30,   June 30,
    2013   2012
Financial fund management   $ 13.6 billion   $ 12.7 billion
Real estate     1.9 billion     1.7 billion
Commercial finance     0.6 billion     0.6 billion
    $ 16.1 billion   $ 15.0 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, 2012.

Highlights for the Third Fiscal Quarter Ended June 30, 2013 and Recent Developments

REAL ESTATE ASSET MANAGEMENT:

Equity Asset Management
Resource Real Estate Opportunity REIT, Inc, a public non-traded REIT managed by the Company, specializing in acquiring and managing distressed real estate assets, had the following highlights:

  • Raised a record $74.2 million during the third fiscal quarter ended June 30, 2013. Subsequent to quarter end, raised a record $33.0 million in total equity capital for the month ended July 31, 2013.
  • Increased total assets to $288.8 million at June 30, 2013, an increase of $155.4 million, or 116%, from June 30, 2012. Highlights for the third fiscal quarter ended June 30, 2013:
    • Acquired three multifamily rental apartment properties totaling $45.8 million located in Hoover, AL, Spring, TX and Winter Park, FL.
    • Sold one multifamily rental apartment property in Birmingham, AL for $10.3 million.
  • In July 2013, entered into an agreement to acquire 10 multifamily assets totaling 2,513 units and two office properties that contain 75,518 rentable square feet for $52.7 million.

Debt Asset Management
Resource Capital Corp. ("RSO"), a publicly traded REIT managed by the Company, focusing on commercial real estate assets, had the following highlights:

  • Raised $134.6 million in equity capital, including $114.6 million, net of underwriting discounts and expenses, in connection with the April 2013 public offering of 18.7 million shares of its common stock at a price of $6.33 per share.
  • Increased total equity capital managed, including preferred equity, at June 30, 2013 to $821.9 million, an increase of $293.8 million, or 56%, from June 30, 2012.
  • Closed $91.3 million of new whole loans during the three months ended June 30, 2013.

The following additional highlights contributed to our real estate asset management operations:

  • Resource Real Estate Management, Inc., the Company's property management subsidiary, increased the apartment units it manages to 19,010 units (at 65 properties) as of June 30, 2013 from 17,897 units (at 61 properties) as of June 30, 2012.
  • The Company's real estate operating segment increased its assets under management at June 30, 2013 to $1.9 billion, an increase of $193.0 million, or 11%, from June 30, 2012.
  • Real estate revenues increased 11% and 25% to $12.2 million and $36.6 million for the third fiscal quarter and nine months ended June 30, 2013, respectively, as compared to $10.9 million and $29.3 million for the third fiscal quarter and nine months ended June 30, 2012, respectively.

FINANCIAL FUND MANAGEMENT:

Credit Asset Management
CVC Credit Partners, L.P. ("CCP"), the Company's global joint venture with CVC Capital Partners SICAV-FIS, S.A. ("CVC") completed the following transactions:

  • Closed Apidos CLO XII (par value $523.0 million) and Apidos CLO XIV (par value $617.0 million) in April and July 2013, respectively. In connection with these Collateralized Loan Obligations, CCP expects to receive approximately $5.2 million annually in asset management fees in the future.
  • In June 2013, completed a public offering of CVC Credit Partners European Opportunities Limited, an investment vehicle providing investors access to the sub-investment grade European debt markets. The offering raised Euro 174.7 million and Sterling 150.8 million before transaction fees and expenses. Euro denominated shares will trade under the symbol "CCPE" and Sterling denominated shares will trade under the symbol "CCPG", both on the London Stock Exchange.

The following additional highlight contributed to our financial fund asset management operations:

  • The Company's financial fund management operating segment increased its assets under management at June 30, 2013 to $13.6 billion, an increase of $0.9 billion, or 7%, from June 30, 2012.

CORPORATE/OTHER:

Dividends

  • The Company's Board of Directors authorized the payment on July 31, 2013 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 July 19, 2013.
  • RSO's Board of Directors declared a cash dividend of $0.20 per common share for its second fiscal quarter ended June 30, 2013.

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, financial fund management and commercial finance sectors as well as our joint ventures.

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 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 and consolidated statements of cash flows and reconciliation of GAAP income (loss) from continuing operations before taxes to adjusted income (loss) from continuing operations attributable to common shareholders, net of tax.

   
RESOURCE AMERICA, INC.  
CONSOLIDATED BALANCE SHEETS  
(in thousands, except share data)  
   
    June 30,
2013
    September 30,
2012
 
    (unaudited)        
ASSETS                
  Cash   $ 12,173     $ 19,393  
  Restricted cash     561       642  
  Receivables     1,069       3,554  
  Receivables from managed entities and related parties, net     32,433       41,051  
  Investments in real estate, net     17,016       19,149  
  Investment securities, at fair value     31,151       22,532  
  Investments in unconsolidated loan manager     37,326       36,356  
  Investments in unconsolidated entities     13,518       12,993  
  Property and equipment, net     2,496       2,732  
  Deferred tax assets, net     37,292       34,565  
  Other assets     6,257       3,776  
    Total assets   $ 191,292     $ 196,743  
                 
LIABILITIES AND EQUITY                
Liabilities:                
  Accrued expenses and other liabilities   $ 18,827     $ 23,042  
  Payables to managed entities and related parties     3,251       4,380  
  Borrowings     22,062       23,020  
    Total liabilities     44,140       50,442  
                 
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; 30,330,554 and 29,866,664 shares issued (including nonvested restricted stock of 422,013 and 403,195), respectively     299       294  
  Additional paid-in capital     287,907       285,844  
  Accumulated deficit     (26,076 )     (24,508 )
  Treasury stock, at cost; 9,910,144 and 9,756,955 shares, respectively     (103,392 )     (102,457 )
  Accumulated other comprehensive loss     (11,764 )     (13,080 )
    Total stockholders' equity     146,974       146,093  
  Noncontrolling interests     178       208  
    Total equity     147,152       146,301  
    $ 191,292     $ 196,743  
                 
                 
                 
RESOURCE AMERICA, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share data)  
(unaudited)  
   
    Three Months Ended     Nine Months Ended  
    June 30,     June 30,  
    2013     2012     2013     2012  
REVENUES:                                
Real estate   $ 12,153     $ 10,921     $ 36,647     $ 29,303  
Financial fund management     2,445       2,991       9,407       15,874  
Commercial finance     (35 )     (128 )     (337 )     2,051  
      14,563       13,784       45,717       47,228  
COSTS AND EXPENSES:                                
Real estate     8,896       7,386       26,334       21,985  
Financial fund management     1,694       2,994       5,239       13,177  
Commercial finance     (219 )     118       (223 )     2,311  
Restructuring expenses     -       -       -       365  
General and administrative     2,153       2,567       6,566       7,930  
Gain on sale of leases and loans     -       -       -       (37 )
Provision for credit losses     1,647       5,698       7,137       10,910  
Depreciation and amortization     489       528       1,397       3,124  
      14,660       19,291       46,450       59,765  
OPERATING LOSS     (97 )     (5,507 )     (733 )     (12,537 )
                                 
OTHER INCOME (EXPENSE):                                
Gain on deconsolidation and sale of subsidiaries     -       54,682       -       63,431  
Loss on extinguishment of debt     -       -       -       (2,190 )
Gain on sale of investment securities, net     -       -       -       63  
Other-than-temporary impairment on investments             -       (214 )     (74 )
Interest expense     (501 )     (578 )     (1,517 )     (4,197 )
Other income, net     635       362       1,963       1,546  
      134       54,466       232       58,579  
Income (loss) from continuing operations before taxes     37       48,959       (501 )     46,042  
Income tax (benefit) provision     (1,511 )     18,665       (1,898 )     17,496  
Income from continuing operations     1,548       30,294       1,397       28,546  
Loss from discontinued operations, net of tax     -       (14 )     (8 )     (50 )
Net income     1,548       30,280       1,389       28,496  
Net income attributable to noncontrolling interests     (26 )     (45 )     (570 )     (384 )
Net income attributable to common shareholders   $ 1,522     $ 30,235     $ 819     $ 28,112  
                                 
Amounts attributable to common shareholders:                                
Income from continuing operations   $ 1,522     $ 30,249     $ 827     $ 28,162  
Discontinued operations     -       (14 )     (8 )     (50 )
Net income   $ 1,522     $ 30,235     $ 819     $ 28,112  
                                 
Basic earnings per share:                                
Continuing operations   $ 0.07     $ 1.53     $ 0.04     $ 1.43  
Discontinued operations     -       -       -       -  
Net income   $ 0.07     $ 1.53     $ 0.04     $ 1.43  
Weighted average shares outstanding     20,297       19,815       20,165       19,618  
                                 
Diluted earnings per share:                                
Continuing operations   $ 0.07     $ 1.44     $ 0.04     $ 1.37  
Discontinued operations     -       -       -       -  
Net income   $ 0.07     $ 1.44     $ 0.04     $ 1.37  
Weighted average shares outstanding     22,106       21,036       21,706       20,464  
                                 
                                 
                                 
RESOURCE AMERICA, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(in thousands)  
(unaudited)  
    Nine Months Ended  
    June 30,  
    2013     2012  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net income   $ 1,389     $ 28,496  
Adjustments to reconcile net income to net cash used in operating activities:                
  Depreciation and amortization     1,546       4,280  
  Provision for credit losses     7,137       10,910  
  Other-than-temporary impairment on investments     214       74  
  Unrealized gain on trading securities     (666 )     (175 )
  Equity in earnings of unconsolidated entities     (2,345 )     (501 )
  Distributions from unconsolidated entities     2,577       2,741  
  Gain on sale of leases and loans     -       (37 )
  Gain on sale of investment securities, net     (2,023 )     (79 )
  Gain on sale of assets     (2,454 )     -  
  Gain on sale and deconsolidation of subsidiaries     -       (63,431 )
  Loss on extinguishment of debt     -       2,190  
  Deferred income tax (benefit) provision     (1,898 )     17,323  
  Equity-based compensation issued     815       1,059  
  Equity-based compensation received     (860 )     (153 )
Trading securities purchases and sales, net     (2,446 )     (3,470 )
Loss from discontinued operations     8       50  
Changes in operating assets and liabilities     (2,659 )     (4,047 )
Net cash used in operating activities     (1,665 )     (4,770 )
CASH FLOWS FROM INVESTING ACTIVITIES:                
Capital expenditures     (554 )     (147 )
Payments received on real estate loans and real estate     2,761       1,580  
Investments in real estate and unconsolidated real estate entities     (2,009 )     (1,108 )
Purchase of commercial finance assets     -       (18,483 )
Principal payments received on leases and loans     -       9,041  
Cash divested on deconsolidation of LEAF     -       (2,284 )
Proceeds from sale of Apidos, net of transaction costs and cash divested on deconsolidation     -       17,864  
Purchase of investments     (2,845 )     (600 )
Proceeds from sale of loans and investments     -       262  
Net cash (used in) provided by investing activities     (2,647 )     6,125  
CASH FLOWS FROM FINANCING ACTIVITIES:                
Increase in borrowings     2,000       128,845  
Principal payments on borrowings     (2,472 )     (129,333 )
Dividends paid     (1,776 )     (1,720 )
Proceeds from issuance of common stock     1,253       1,056  
Repurchase of common stock     (1,132 )     (955 )
Preferred stock dividends paid by LEAF to RSO     -       (188 )
Decrease (increase) in restricted cash     81       (647 )
Other     -       (2,275 )
Net cash used in financing activities     (2,046 )     (5,217 )
CASH FLOWS FROM DISCONTINUED OPERATIONS:                
Operating activities     (862 )     (924 )
Net cash used in discontinued operations     (862 )     (924 )
                 
Decrease in cash     (7,220 )     (4,786 )
Cash, beginning of year     19,393       24,455  
Cash, end of period   $ 12,173     $ 19,669  
                 
                 
                 
Schedule I  
   
RECONCILIATION OF GAAP INCOME (LOSS) FROM CONTINUING  
OPERATIONS BEFORE TAXES TO ADJUSTED INCOME (LOSS) FROM  
CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS, NET OF TAX (1)  
(in thousands, except per share data)  
(unaudited)  
   
    Three Months Ended     Nine Months Ended  
    June 30,     June 30,  
    2013     2012     2013     2012  
Income (loss) from continuing operations before taxes - GAAP   $ 37     $ 48,959     $ (501 )   $ 46,042  
Income attributable to noncontrolling interests - pre-tax     (54 )     (45 )     (876 )     (255 )
(Loss) income from continuing operations attributable to common shareholders - pre-tax     (17 )     48,914       (1,377 )     45,787  
                                 
Commercial finance adjustments, pre-tax:                                
Loss from operations     1,611       5,899       9,269       5,415  
Noncontrolling interests     -       -       -       223  
Commercial finance operations     1,611       5,899       9,269       5,638  
                                 
Gain on sale of subsidiaries, pre-tax:     -       (54,682 )     -       (63,431 )
                                 
Adjusted income (loss) from continuing operations attributable to common shareholders - pre-tax     1,594       131       7,892       (12,006 )
Income tax (benefit) provision (2)     (1,622 )     627       (574 )     (3,982 )
Adjusted income (loss) from continuing operations attributable to common shareholders, net of tax   $ 3,216     $ (496 )   $ 8,466     $ (8,024 )
                                 
Adjusted weighted average diluted shares outstanding     22,106       19,815       21,706       19,618  
                                 
Adjusted income (loss) from continuing operations attributable to common shareholders, net of tax, per common per share-diluted   $ 0.15     $ (0.03 )   $ 0.39     $ (0.41 )
                                 
                                 
1.   Adjusted income (loss) from continuing operations attributable to common shareholders, net of tax, presents the Company's operations without the effect of its commercial finance operations and gain on the sale of subsidiaries. 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 and nine months ended June 30, 2013 and 2012 separately from its commercial finance operations and gains realized on the sale of subsidiaries. Adjusted income (loss) from continuing operations attributable to common shareholders, net of tax, should not be considered as an alternative to income (loss) from continuing operations before taxes (computed in accordance with GAAP). Instead, adjusted income (loss) from continuing operations attributable to common shareholders, net of tax, should be reviewed in connection with income (loss) from continuing operations before taxes in the Company's consolidated financial statements, to help analyze how the Company's business is performing.
     
2.   Income tax (benefit) provision is calculated using the Company's tax rate for the period, excluding one-time tax adjustments.
     

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)