SOURCE: Resource Capital Corp.

Resource Capital Corp.

March 03, 2009 20:00 ET

Resource Capital Corp. Reports Operating Results for Fourth Quarter and Year Ended December 31, 2008

NEW YORK, NY--(Marketwire - March 3, 2009) - Resource Capital Corp. (NYSE: RSO) ("RCC" or the "Company"), a real estate investment trust whose investment strategy focuses on commercial real estate loan assets and, to a lesser extent, commercial finance assets, reported results for the fourth quarter and year ended December 31, 2008.

Financial Summary

--  Adjusted net income, a non-GAAP measure excluding the effect of non-
    cash charges and non-operating capital transactions, of $11.1 million, or
    $0.44 per share for the fourth quarter ended December 31, 2008 as compared
    to $10.7 million, or $0.43 per share-diluted for the fourth quarter ended
    December 31, 2007, an increase of $332,000 (3%).
--  Estimated REIT taxable income, a non-GAAP measure, for the fourth
    quarter and year ended December 31, 2008 of $8.3 million or $0.33 per share-
    diluted and $39.3 million or $1.57 per share-diluted, respectively, as
    compared to $11.4 million or $0.46 per share-diluted and $42.4 million or
    $1.71 per share-diluted for the fourth quarter and year ended December 31,
    2007, respectively, decreases of $3.0 million (27%) and $3.2 million (7%),
    respectively.
--  Dividend distribution of $0.39 per common share, or $9.9 million, for
    the quarter ended December 31, 2008.  RCC paid dividends of $1.60 per
    common share, for total divdends paid of $40.7 million.
--  Economic book value, a non-GAAP measure, was $10.22 per common share
    as of December 31, 2008.
--  GAAP book value was $8.04 per common share as of December 31, 2008.
--  GAAP net loss for the fourth quarter and year ended December 31, 2008
    of $0.29 per share and $0.12 per share, respectively, including provisions
    for loan and lease losses of $18.3 million or $0.74 per share and $46.2
    million or $1.86 per share, respectively, as compared to GAAP net income
    for the fourth quarter and year ended December 31, 2007 of $0.14 per share-
    diluted and $0.36 per share-diluted, respectively, including provisions for
    loan and lease losses of $5.9 million or $0.24 per share-diluted and $6.2
    million or $0.25 per share-diluted, respectively.
--  Paydowns and repayments totaled $198.6 million, which included $80.6
    million on RCC's commercial real estate loan portfolio and $118.0 million
    on RCC's bank loan portfolio for the year ended December 31, 2008.
--  RCC reduced the balance to $17.0 million on the non-recourse
    repurchase facility funding commercial real estate ("CRE") loans as of
    December 31, 2008, with pledged collateral of $42.9 million on this
    facility.
    

Jonathan Cohen, CEO and President of RCC, commented, "Given the global economic circumstances, our real estate portfolio continues to perform well -- this quarter we saw a modest $371,000 increase to our provision for CRE loan losses but otherwise all loans continue to perform. As the corporate credit universe worsened, we determined to take additional provisions for loan losses of $17.5 million on our bank loan portfolio. We look forward to protecting the year-end 2008 GAAP book value of $8.04 and producing a meaningful cash dividend in calendar 2009."

Additional financial results for the fourth quarter and year ended December 31, 2008 and recent developments include:

General

--  RCC's net interest income decreased by $176,000, or (1%) to $13.9
    million for the fourth quarter ended December 31, 2008, as compared to
    $14.1 million for the same period in 2007.  RCC's net interest income
    decreased by $709,000, or (1%) to $54.7 million for the year ended December
    31, 2008, as compared to $55.4 million for the same period in 2007.
    

Commercial Real Estate

--  RCC originated new CRE loans, on a gross basis, of $8.3 million during
    the fourth quarter ended December 31, 2008.  The aggregate net portfolio of
    CRE loans was reduced by $52.1 million to $850.8 million at December 31,
    2008, from $902.9 million at December 31, 2007, not including future
    funding obligations of $2.8 million.
    

The following table summarizes RCC's CRE loan origination activities and future funding obligations, at par, for the three, six and 12 months ended December 31, 2008 (in millions, except percentages):

                                                        Floating   Weighted
                 Three Months  Six Months   12 Months   Weighted   Average
                    Ended        Ended        Ended      Average    Fixed
                 December 31, December 31, December 31,  Spread     Rate
                    2008         2008         2008       (1) (2)    (1)
                 -----------  -----------  -----------  ---------  -------
Whole loans (3)  $       5.5  $      13.8  $      57.1       2.90%    7.75%
Whole loans,
 future funding
 obligations             2.8          2.8          2.8        N/A      N/A
B notes                    -            -            -       2.78%    7.57%
Mezzanine loans            -            -            -       2.62%    8.14%
CMBS                       -            -            -        N/A (4) 5.79%
                 -----------  -----------  -----------
New loans
 production              8.3         16.6         59.9
Payoffs                (18.2)       (52.5)       (63.8)
Principal
 paydowns               (2.2)       (12.3)       (16.8)
Whole loans,
 future funding
 obligations            (2.8)        (2.8)        (2.8)
Sales of CMBS              -            -        (10.0)
                 -----------  -----------  -----------
Net - new loans        (14.9)       (51.0)       (33.5)
Other                   (2.2)        (1.6)        (0.7)
                 -----------  -----------  -----------
New loans, net
 (5)             $     (17.1) $     (52.6) $     (34.2)
                 ===========  ===========  ===========


(1) Reflects rates on our portfolio balance as of December 31, 2008.

(2) Represents the weighted average rate above London Interbank Offered
    Rate ("LIBOR") on loans whose interest rate is based on LIBOR.

(3) Includes fundings of previous commitments on transitional loans of
    $5.5 million for the three months ended December 31, 2008, $13.8
    million for the six months ended December 31, 2008 and $36.3 million
    for the 12 months ended December 31, 2008.  We originated one new loan,
    $20.8 million, during the 12 months ended December 31, 2008.

(4) Weighted average floating rate coupon of 2.67% at December 31, 2008.

(5) The basis of new net loans does not include provisions for losses
    on commercial real estate loans of $371,000 for the three months ended
    December 31, 2008, of $3.1 million for the six months ended December
    31, 2008 and $14.8 million for the 12 months ended December 31, 2008.

Commercial Finance

--  RCC's bank loan portfolio ended the fourth quarter with total
    investments of $937.5 million, at amortized cost, with a weighted-average
    spread of one-month and three-month LIBOR plus 2.38%.  All of RCC's bank
    loan portfolio is match-funded through three collateralized loan obligation
    ("CLO") issuances with a weighted-average cost of three-month LIBOR plus
    0.47%.
--  RCC's commercial finance subsidiary ended the fourth quarter with
    $104.5 million, at cost, in direct financing leases and notes at a weighted-
    average rate of 9.35%.  RCC's leasing portfolio is match-funded through a
    secured term facility, which had a balance of $95.7 million as of December
    31, 2008 and a weighted-average interest rate of 8.97%, which includes the
    cost of interest rate swaps associated with the term facility.
    

Book Value

As of December 31, 2008, RCC's GAAP book value per common share was $8.04. Total stockholders' equity was $203.9 million as of December 31, 2008 as compared to $271.6 million as of December 31, 2007. Total common shares outstanding were 25,344,867 as of December 31, 2008 as compared to 25,103,532 as of December 31, 2007. The net decrease in RCC's stockholder's equity of $67.7 million was substantially the result of increased provisions for loan and lease losses of $46.2 million combined with an increase in interest rate swap liabilities of $13.5 million and a decrease in the value of the marked-to-market securities of $6.7 million.

As of December 31, 2008, RCC's economic book value per common share outstanding, a non-GAAP measure, was $10.22. Economic book value is computed by adding back to GAAP book value any unrealized losses on the Company's investments in CMBS for which it expects to recover full par value at maturity, and on derivatives (cash flow hedges) that are associated with fixed-rate loans which it intends to hold until maturity, in excess of its value at risk, and that have not been adjusted through stockholders' equity for market fluctuations (see Footnote 1 of Schedule III). Economic book value per share is computed by dividing the economic book value by the number of shares outstanding at the end of the period.

Investment Portfolio

The table below summarizes the amortized cost and net carrying amount of RCC's investment portfolio as of December 31, 2008, classified by interest rate type. The following table includes both (i) the amortized cost of RCC's investment portfolio and the related dollar price, which is computed by dividing amortized cost by par amount, and (ii) the net carrying amount of RCC's investment portfolio and the related dollar price, which is computed by dividing the net carrying amount by par amount (in thousands, except percentages):

                                                       Net carrying
                                       Net              amount less
                 Amortized  Dollar   carrying   Dollar   amortized  Dollar
                   cost     price     amount    price      cost     price
                 ---------- ------  ----------  -------  ---------  ------
December 31, 2008
 Floating rate
CMBS-private
 placement       $   32,061  99.99% $   22,641    70.61% $  (9,420) -29.38%
Other ABS             5,665  94.42%         45     0.75%    (5,620) -93.67%
B notes (1)          33,535 100.00%     33,434    99.70%      (101)  -0.30%
Mezzanine loans
 (1)                129,459 100.01%    129,071    99.71%      (388)  -0.30%
Whole loans (1)     431,985  99.71%    430,690    99.41%    (1,295)  -0.30%
Bank loans (2)      937,507  99.51%    582,416(4) 61.57%  (355,091) -37.94%
                 ----------         ----------           ---------
  Total floating
   rate          $1,570,212  99.36% $1,198,297    75.83% $(371,915) -23.53%
                 ==========         ==========           =========
 Fixed rate
CMBS-private
 placement       $   38,397  91.26% $   24,141    57.38% $ (14,256) -33.88%
B notes (1)          55,534 100.11%     55,367    99.81%      (167)  -0.30%
Mezzanine loans
 (1)                 81,274  94.72%     68,378    79.69%   (12,896) -15.03%
Whole loans (1)      87,352  99.52%     87,090    99.23%      (262)  -0.29%
Equipment leases
 and notes (3)      104,465  99.38%    104,015    98.95%      (450)  -0.43%
                 ----------         ----------           ---------
  Total fixed
   rate          $  367,022  97.55% $  338,991    90.10% $ (28,031)  -7.45%
                 ==========         ==========           =========
    Grand total  $1,937,234  99.02% $1,537,288    78.57% $(399,946) -20.45%
                 ==========         ==========           =========


(1) Net carrying amount includes an allowance for loan losses of $15.1
    million at December 31, 2008, allocated as follows: B notes ($0.3
    million), mezzanine loans ($13.3 million) and whole loans ($1.5
    million).

(2) Net carrying amount includes a $28.8 million provision for loan losses
    at December 31, 2008.

(3) Net carrying amount includes a $450,000 provision for lease losses at
    December 31, 2008.

(4) Bank loan portfolio is carried at amortized cost less allowance for
    loan loss and was $908.7 million at December 31, 2008. Amount disclosed
    represents fair value at December 31, 2008.

Liquidity

At February 28, 2009, there were three primary sources for RCC's liquidity:

--  unrestricted cash and cash equivalents of $10.2 million and restricted
    cash of $10.6 million comprised of $7.1 million in margin call accounts and
    $3.5 million related to its leasing portfolio;
--  capital available for reinvestment in its five collateralized debt
    obligation ("CDO") entities of $49.5 million, of which $8.4 million is
    designated to finance future funding commitments on commercial real estate
    loans; and
--  financing available under existing borrowing facilities of $9.3
    million from RCC's three year non-recourse secured financing facility.  RCC
    also has $83.0 million of unused capacity under a three-year non-recourse
    commercial real estate repurchase facility, which, however, requires
    approval of individual repurchase transactions by the repurchase
    counterparty.
    

Capital Allocation

As of December 31, 2008, RCC had allocated its equity capital among its targeted asset classes as follows: 72% in commercial real estate loans, 25% in commercial bank loans and 3% in direct financing leases and notes.

Supplemental Information

The following schedules of reconciliations as of December 31, 2008 are included in this release:

--  Schedule I - Reconciliation of GAAP Net Loss to Adjusted Net Income;
--  Schedule II - Reconciliation of GAAP Net Loss to Estimated REIT
    Taxable Income; and
--  Schedule III - Reconciliation of GAAP Stockholders' Equity to Economic
    Book Value.
    

About Resource Capital Corp.

RCC is a diversified real estate finance company that qualifies as a real estate investment trust, or REIT, for federal income tax purposes. RCC's investment strategy focuses on commercial real estate-related assets, and, to a lesser extent, commercial finance assets. RCC invests in the following asset classes: commercial real estate-related assets such as whole loans, A-notes, B-notes, mezzanine loans and mortgage-related securities and commercial finance assets such as other asset-backed securities, bank loans, equipment leases and notes, trust preferred securities, debt tranches of collateralized debt obligations and private equity investments principally issued by financial institutions.

RCC is externally managed by Resource Capital Manager, Inc., an indirect wholly-owned subsidiary of Resource America, Inc. (NASDAQ: REXI), a specialized asset management company that uses industry specific expertise to generate and administer investment opportunities for its own account and for outside investors in the financial fund management, real estate, and commercial finance sectors.

For more information, please visit RCC's website at www.resourcecapitalcorp.com or contact investor relations at pkamdar@resourceamerica.com

Safe Harbor Statement

Statements made in this release include forward-looking statements, which involve substantial risks and uncertainties. RCC's actual results, performance or achievements could differ materially from those expressed or implied in this release. The risks and uncertainties associated with forward-looking statements contained in this release include those related to:

--  fluctuations in interest rates and related hedging activities;
--  capital markets conditions and the availability of financing;
--  defaults or bankruptcies by borrowers on RCC's loans or on loans
    underlying its investments;
--  adverse market trends which have affected and may continue to affect
    the value of real estate and other assets underlying RCC's investments;
--  increases in financing or administrative costs; and
--  general business and economic conditions that have impaired and may
    continue to impair the credit quality of borrowers and RCC's ability to
    originate loans.
    

For further information concerning these and other risks pertaining to the forward-looking statements contained in this release, and to the general risks to which RCC is subject, see Item 1A, "Risk Factors" included in its annual report on Form 10-K and in other of its public filings with the Securities and Exchange Commission.

RCC cautions you not to place undue reliance on any forward-looking statements contained in this release, which speak only as of the date of this release. All subsequent written and oral forward-looking statements attributable to RCC or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this release. Except to the extent required by applicable law or regulation, RCC undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this filing or to reflect the occurrence of unanticipated events.

The remainder of this release contains RCC's unaudited consolidated balance sheets, consolidated statements of operations and reconciliations of GAAP net loss to adjusted net income, GAAP net loss to estimated REIT taxable income and GAAP stockholders' equity to economic book value and supplemental information regarding RCC's commercial real estate, bank loan and equipment leasing portfolios.

                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
              (in thousands, except share and per share data)



                                                        December 31,
                                                  ------------------------
                                                      2008         2007
                                                  -----------  -----------
ASSETS                                            (Unaudited)
  Cash and cash equivalents                       $    14,583  $     6,029
  Restricted cash                                      60,394      119,482
  Investment securities available-for-sale,
   pledged as collateral, at fair value                36,361       65,464
  Investment securities available-for-sale, at
   fair value                                          10,466            ?
  Loans, pledged as collateral and net of
   allowances of $43.9 million and
   $5.9 million                                     1,712,779    1,766,639
  Direct financing leases and notes, pledged as
   collateral and net of allowance of
   $450,000 and $0 and net of unearned income         104,015       95,030
  Investments in unconsolidated entities                1,548        1,805
  Interest receivable                                   8,440       11,965
  Principal paydown receivables                           950          836
  Other assets                                          4,062        4,898
                                                  -----------  -----------
    Total assets                                  $ 1,953,598  $ 2,072,148
                                                  ===========  ===========
LIABILITIES
  Borrowings                                      $ 1,699,763  $ 1,760,969
  Distribution payable                                  9,942       10,366
  Accrued interest expense                              4,712        7,209
  Derivatives, at fair value                           31,589       18,040
  Accounts payable and other liabilities                3,720        3,958
                                                  -----------  -----------
    Total liabilities                               1,749,726    1,800,542
                                                  -----------  -----------
STOCKHOLDERS' EQUITY
  Preferred stock, par value $0.001:  100,000,000
   shares authorized;
   no shares issued and outstanding                         -            -
  Common stock, par value $0.001:  500,000,000
   shares authorized; 25,344,867 and 25,103,532
   shares issued and outstanding (including
   452,310 and 581,493 unvested restricted
   shares)                                                 26           25
  Additional paid-in capital                          356,103      355,205
  Accumulated other comprehensive loss                (63,140)     (38,323)
  Distributions in excess of earnings                 (89,117)     (45,301)
                                                  -----------  -----------
    Total stockholders' equity                        203,872      271,606
                                                  -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $ 1,953,598  $ 2,072,148
                                                  ===========  ===========






                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
              (in thousands, except share and per share data)



                           Three Months Ended           Years Ended
                              December 31,              December 31,
                        ------------------------  ------------------------
                            2008         2007         2008         2007
                        -----------  -----------  -----------  -----------
                        (Unaudited)  (Unaudited)  (Unaudited)
REVENUES
  Loans                 $    29,014  $    37,292  $   119,042  $   138,078
  Securities                  1,043        4,738        4,444       28,810
  Leases                      2,234        1,886        8,180        7,553
  Interest income
   - other                      497          625        2,675        2,554
                        -----------  -----------  -----------  -----------
  Interest income            32,788       44,541      134,341      176,995
  Interest expense           18,883       30,460       79,619      121,564
                        -----------  -----------  -----------  -----------
     Net interest
      income                 13,905       14,081       54,722       55,431

OPERATING EXPENSES
  Management fees -
   related party              1,477        1,197        6,301        6,554
  Equity compensation -
   related party               (239)         848          540        1,565
  Professional services       1,120          906        3,349        2,911
  Insurance expense             172          115          641          466
  General and
   administrative               729          440        1,848        1,581
  Income tax (benefit)
   expense                     (375)          76         (241)         338
                        -----------  -----------  -----------  -----------
     Total expenses           2,884        3,582       12,438       13,415
                        -----------  -----------  -----------  -----------

NET OPERATING INCOME         11,021       10,499       42,284       42,016
                        -----------  -----------  -----------  -----------

OTHER (EXPENSES)
 REVENUES
  Net realized losses
   on investments                14      (15,434)      (1,637)     (15,098)
  Gain on
   deconsolidation of
   VIE                            -       14,259            -       14,259
  Provision for loan
   and lease losses         (18,332)      (5,885)     (46,160)      (6,211)
  Asset impairments               -            -            -      (26,277)
  Gain on the
   extinguishment of
   debt                           -            -        1,750            -
  Gain on the
   settlement of loan             -            -          574            -
  Other income                   29           91          115          201
                        -----------  -----------  -----------  -----------
     Total other
      expenses              (18,289)      (6,969)     (45,358)     (33,126)
                        -----------  -----------  -----------  -----------

NET (LOSS) INCOME       $    (7,268) $     3,530  $    (3,074) $     8,890
                        ===========  ===========  ===========  ===========

NET (LOSS) INCOME PER
 SHARE - BASIC          $     (0.29) $      0.14  $     (0.12) $      0.36
                        ===========  ===========  ===========  ===========

NET (LOSS) INCOME PER
 SHARE - DILUTED        $     (0.29) $      0.14  $     (0.12) $      0.36
                        ===========  ===========  ===========  ===========

WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING
 - BASIC                 24,869,062   24,555,059   24,757,386   24,610,468
                        ===========  ===========  ===========  ===========

WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING
 - DILUTED               24,869,062   24,772,315   24,757,386   24,860,184
                        ===========  ===========  ===========  ===========

DIVIDENDS DECLARED PER
 SHARE                  $      0.39  $      1.62  $      1.60  $      1.62
                        ===========  ===========  ===========  ===========






SCHEDULE I


                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
    RECONCILIATION OF GAAP NET (LOSS) INCOME TO ADJUSTED NET INCOME (1)
                  (in thousands, except per share data)
                                (Unaudited)



                                    Three Months Ended     Years Ended
                                       December 31,        December 31,
                                    ------------------  ------------------
                                      2008      2007      2008      2007
                                    --------  --------- --------  ---------
Net (loss) income - GAAP            $ (7,268) $   3,530 $ (3,074) $   8,890
Adjustments:
  Provision for loan and lease
   losses (2)                         18,332      5,885   46,160      6,211
  Net realized loss related to
   deconsolidation of VIE (3)              -      1,317        -      1,317
  Asset impairments related to
   VIE's                                   -          -        -     26,277
  Capital losses on the sale of
   available-for-sale securities           -          -    2,000          -
  Gain on the extinguishment of
   debt (4)                                -          -   (1,750)         -
                                    --------  --------- --------  ---------
Adjusted net income, excluding
 non-cash charges (1)               $ 11,064  $  10,732 $ 43,336  $  42,695
                                    ========  ========= ========  =========

Adjusted net income per share -
 diluted, excluding non-cash
 charges                            $   0.44  $    0.43 $   1.75  $    1.72
                                    ========  ========= ========  =========


(1) During 2007, RCC began evaluating its performance based on several
    performance measures, including adjusted net income, in addition to net
    income. Adjusted net income represents net income available to common
    shares, computed in accordance with GAAP, before provision for loan
    and lease losses, gain on the extinguishment of debt and non-operating
    capital items. These items are recorded in accordance with GAAP and
    are typically non-cash or non-operating items that do not impact RCC's
    operating performance or ability to pay a dividend.

    Management views adjusted net income as a useful and appropriate
    supplement to GAAP net income (loss) because it helps management
    evaluate RCC's performance without the effects of certain GAAP
    adjustments that may not have a direct financial impact on RCC's
    current operating performance and dividend paying ability. Management
    uses adjusted net income to evaluate the performance of RCC's
    investment portfolios, ability to manage its expenses and dividend
    paying ability before the impact of non-cash adjustments and
    non-operating capital gain or loss recorded in accordance with GAAP.
    RCC believes this is a useful performance measure for investors to
    evaluate these aspects of RCC's business as well. The most significant
    adjustments RCC excludes in determining adjusted earnings as of
    December 31, 2008 are its provision for loan and lease losses, gain on
    the extinguishment of debt and losses on the sale of available-for-sale
    securities.  At December 31, 2007, RCC also excluded asset impairments
    related to its ABS-RMBS portfolio that was deconsolidated on November
    13, 2007.  Management excludes all such items from its calculation of
    adjusted net income because these items are not charges or losses which
    would impact RCC's current operating performance. However, by excluding
    these significant items, adjusted net income reduces an investor's
    understanding of RCC's operating performance by excluding management's
    expectation of possible future gains or losses from RCC's investment
    portfolio.

    Adjusted net income, as a non-GAAP financial measurement, does not
    purport to be an alternative to GAAP net income (loss), or a measure
    of operating performance or cash flows from operating activities
    determined in accordance with GAAP as a measure of liquidity. Instead,
    adjusted net income should be reviewed in connection with net income
    (loss) and cash flows from operating, investing and financing
    activities in RCC's consolidated financial statements to help
    analyze management's expectation of potential future losses from
    RCC's investment portfolio and other non-cash or capital matters that
    impact its financial results. Adjusted net income and other
    supplemental performance measures are defined in various ways
    throughout the REIT industry. Investors should consider these
    differences when comparing RCC's adjusted net income to these
    other REITs.

(2) Non-cash charges for loan and lease losses.

(3) Net realized loss related to the deconsolidation of a VIE is made up
    of a gain of $14.3 million related to the deconsolidation of Ischus CDO
    II, offset by a $15.6 million adjustment related to the write-down of
    RCC's investment in Ischus CDO II.  The adjustment of RCC's investment
    is calculated as $27.0 million original investment less $10.7 million
    in accumulated distributions less the $0.7 million estimated fair value
    of the investment at the time of deconsolidation.

(4) Gain on the extinguishment of debt for the year ended December 31,
    2008, excludes a gain on the early extinguishment of a loan of $574,000
    as management views this transaction to be in its ordinary course of
    business.






SCHEDULE II


                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                 RECONCILIATION OF GAAP NET (LOSS) INCOME
                   TO ESTIMATED REIT TAXABLE INCOME (1)
                                (Unaudited)


RCC calculates estimated REIT taxable income, which is a non-GAAP financial
measure, according to the requirements of the Internal Revenue Code. The
following table reconciles net income to estimated REIT taxable income for
the periods presented (in thousands, except per share data):



                                    Three Months Ended     Years Ended
                                       December 31,        December 31,
                                    ------------------  ------------------
                                      2008      2007      2008      2007
                                    --------  --------  --------  --------
Net (loss) income - GAAP            $ (7,268) $  3,530  $ (3,074) $  8,890
Adjustments:
  Share-based compensation to
   related parties                      (891)      225    (1,620)     (500)
  Capital loss carryover
   (utilization)/losses from
   the sale of securities                  -       (49)    2,000       (49)
  Net unrealized loss on the
   deconsolidation of VIE                  -     1,317         -     1,317
  Asset impairments related to
   VIE's                                   -         -         -    26,277
  Provisions for loan and lease
   losses unrealized                     371     3,153    14,817     3,153
  Net book to tax adjustments for
   the Company's taxable foreign
   REIT subsidiaries                  15,844     3,265    27,115     3,432
  Other net book to tax
   adjustments                           288       (82)       16      (110)
                                    --------  --------  --------  --------
Estimated REIT taxable income       $  8,344  $ 11,359  $ 39,254  $ 42,410
                                    ========  ========  ========  ========

Amounts per share - diluted (2)     $   0.33  $   0.46  $   1.57  $   1.71
                                    ========  ========  ========  ========


(1) RCC believes that a presentation of estimated REIT taxable income
    provides useful information to investors regarding its financial
    condition and results of income as this measurement is used to
    determine the amount of dividends that RCC is required to declare to
    its stockholders in order to maintain its status as a REIT for federal
    income tax purposes.  Since RCC, as a REIT, expects to make
    distributions based on taxable income, RCC expects that its
    distributions may at times be more or less than its reported income.
    Total taxable income is the aggregate amount of taxable income
    generated by RCC and by its domestic and foreign taxable REIT
    subsidiaries. Estimated REIT taxable income excludes the undistributed
    taxable income of RCC's domestic taxable REIT subsidiary, if any such
    income exists, which is not included in REIT taxable income until
    distributed to RCC.  There is no requirement that RCC's domestic
    taxable REIT subsidiary distribute its income to RCC. Estimated REIT
    taxable income, however, includes the taxable income of RCC's foreign
    taxable REIT subsidiaries because RCC generally will be required to
    recognize and report their taxable income on a current basis. Because
    not all companies use identical calculations, this presentation of
    estimated REIT taxable income may not be comparable to other
    similarly-titled measures of other companies.

(2) Denominator for the three months and year ended December 31, 2008
    includes 263,392 and 253,975 shares, respectively of dilutive shares
    that were not included in the calculation of GAAP earnings per share
    because the effect would have been anti-dilutive due to RCC's net loss
    for the three months and year ended December 31, 2008. The dilutive
    shares relate to restricted stock that has not yet vested at December
    31, 2008.






SCHEDULE III


                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP STOCKHOLDERS' EQUITY TO ECONOMIC BOOK VALUE (1) (2)
                  (in thousands, except per share data)
                                (Unaudited)



                                                       As of December 31,
                                                        2008        2007
                                                     ----------  ----------
Stockholders' equity - GAAP                          $  203,872  $  271,606
Add:
  Unrealized losses - CMBS portfolio                     23,676      17,810
  Unrealized losses recognized in excess of value
   at risk - interest rate swaps                         31,589      18,040
                                                     ----------  ----------
Economic book value                                  $  259,137  $  307,456
                                                     ==========  ==========
Shares outstanding                                       25,345      25,104
                                                     ----------  ----------
Economic book value per share                        $    10.22  $    12.25
                                                     ==========  ==========


(1) Management views economic book value, a non-GAAP measure, as a useful
    and appropriate supplement to GAAP stockholders' equity and book value
    per share.  The measure serves as an additional measure of RCC's value
    because it facilitates evaluation of us without the effects of
    unrealized losses on investments for which we expect to recover full
    par value at maturity and on interest rate swaps, which we intend to
    hold to maturity, in excess of RCC's value at risk.  Unrealized losses
    recognized in RCC's financial statements, prepared in accordance with
    GAAP, that are in excess of RCC's maximum value at risk are added back
    to stockholders' equity in arriving at economic book value. Economic
    book value should be reviewed in connection with GAAP stockholders'
    equity as set forth in RCC's consolidated balance sheets, to help
    analyze RCC's value to investors. Economic book value is defined in
    various ways throughout the REIT industry.  Investors should consider
    these differences when comparing RCC's economic book value to that of
    other REITs.

(2) RCC adds back unrealized losses on interest rate swaps (cash flow
    hedges) that are associated with fixed-rate loans that have not been
    fair-valued through stockholders' equity.






                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                         SUPPLEMENTAL INFORMATION
                              (in thousands)
                                (Unaudited)

Loans and Leasing Investment Statistics

   The following table presents information on RCC's non-performing loans
and leases and related allowances as of December 31, 2008 and 2007 (based
on amortized cost):



                                                        As of December 31,
                                                        ------------------
                                                          2008      2007
                                                        --------  --------
Non-performing:
  Loans and leases                                      $ 23,938  $  4,267
  Non-performing as a percentage of total loans and
   leases                                                    1.3%      0.2%

Allowance for loan and lease losses:
  Specific provision                                    $ 18,929  $  1,990
  General provision                                       25,388     3,928
                                                        --------  --------
  Total allowance for loans and leases                  $ 44,317  $  5,918
                                                        ========  ========
  Allowance as a percentage of total loans and leases        2.4%      0.3%






                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
               SUPPLEMENTAL INFORMATION, A NON-GAAP MEASURE
                                (Unaudited)

   The following table presents commercial real estate loan portfolio
statistics as of December 31, 2008 (based on par value):




Security type
  Whole loans                                                         64.5%
  Mezzanine loans                                                     24.5%
  B Notes                                                             11.0%
                                                                     -----
    Total                                                            100.0%
                                                                     =====

Collateral type
  Multifamily                                                         31.1%
  Hotel                                                               27.4%
  Office                                                              22.5%
  Retail                                                              13.6%
  Condo                                                                1.0%
  Flex                                                                 0.9%
  Self-storage                                                         0.8%
  Other                                                                2.7%
                                                                     -----
    Total                                                            100.0%
                                                                     =====

Collateral location
  Southern California                                                 22.1%
  Northern California                                                 17.0%
  New York                                                            11.4%
  Arizona                                                              8.5%
  Texas                                                                5.1%
  Florida                                                              4.7%
  Tennessee                                                            4.0%
  Washington                                                           3.8%
  Colorado                                                             3.8%
  Other                                                               19.6%
                                                                     -----
    Total                                                            100.0%
                                                                     =====






                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
              SUPPLEMENTAL INFORMATION, A NON-GAAP MEASURE
                                (Unaudited)


   The following table presents bank loan portfolio statistics by industry
as of December 31, 2008 (based on par value):

Industry type
  Healthcare, education and childcare                                 11.1%
  Diversified/conglomerate service                                     9.1%
  Chemicals, plastics and rubber                                       6.1%
  Printing and publishing                                              5.9%
  Broadcasting and entertainment                                       5.4%
  Retail stores                                                        5.1%
  Leisure, amusement, motion pictures, entertainment                   3.9%
  Hotels, motels, inns and gaming                                      3.9%
  Finance                                                              3.8%
  Automobiles                                                          3.7%
  Utilities                                                            3.6%
  Personal, food and miscellaneous services                            3.6%
  Other                                                               34.8%
                                                                     -----
    Total                                                            100.0%
                                                                     =====


   The following chart describes equipment leases and notes by industry as
of December 31, 2008 (based on par value):

Industry type
  Services                                                            50.9%
  Retail trade                                                        10.8%
  Transportation, communications, electric, gas and sanitary
   services                                                           10.2%
  Manufacturing                                                        6.1%
  Construction                                                         4.4%
  Wholesale trade                                                      3.9%
  Finance, insurance and real estate                                   3.4%
  Agriculture, forestry and fishing                                    3.3%
  Other                                                                7.0%
                                                                     -----
    Total                                                            100.0%
                                                                     =====

Contact Information

  • Contact:
    David J. Bryant
    Chief Financial Officer
    Resource Capital Corp.
    1845 Walnut Street, 10th Floor
    Philadelphia, PA 19103
    215/546-5005
    215/546-5388 (fax)