SOURCE: Resource Capital Corp.

Resource Capital Corp.

February 25, 2014 19:30 ET

Resource Capital Corp. Reports Results for Three Months and Year Ended December 31, 2013

NEW YORK, NY--(Marketwired - Feb 25, 2014) - Resource Capital Corp. (NYSE: RSO)

Highlights

  • Adjusted Funds from Operations ("AFFO") of $0.14 and $0.74 per share-diluted (see Schedule I).

  • Closed $307.8 million commercial real estate ("CRE") securitization on December 23, 2013 and retained subordinated notes and equity of $46.9 million and expect to earn a return on invested equity of 20%.

  • CRE loan originations of $97.4 million and $344.3 million.

  • Completed $115.0 million 6.0% convertible senior notes offering on October 17, 2013 and received net proceeds of approximately $111.1 million after payment of offering costs.

  • GAAP net income allocable to common shares of $(0.01) and $0.33 per share-diluted.

  • Common stock cash dividend of $0.20 and $0.80 per share.

Resource Capital Corp. (NYSE: RSO) ("RSO" or the "Company"), a real estate investment trust, or REIT, whose investment strategy focuses on commercial real estate assets, commercial mortgage-backed securities ("CMBS"), commercial finance assets and other investments, reported results for the three months and year ended December 31, 2013.

  • AFFO for the three months and year ended December 31, 2013 was $17.2 million, or $0.14 per share-diluted, and $88.6 million, or $0.74 per share-diluted, respectively. A reconciliation of GAAP net income to AFFO is set forth in Schedule I of this release.

  • GAAP net loss allocable to common shares for the three months was $948,000, or $(0.01) per share-diluted and GAAP net income allocable to common shares for the year ended December 31, 2013 was $39.2 million, or $0.33 per share-diluted, as compared to net income of $14.1 million, or $0.14 per share-diluted and $63.2 million, or $0.71 per share-diluted for the three months and year ended December 31, 2012, respectively. Included in net (loss) income for the three months and year ended December 31, 2013, was the combined effect of liquidation and deconsolidation of Whitney CLO I and Apidos CLO VIII, respectively. We incurred non-cash charges of approximately $16.0 million from accelerated amortization of notes issued at discounts and deferred costs for the three months ended December 31, 2013 and $18.5 million for these same accelerated items for the year ended December 31, 2013.

Jonathan Cohen, CEO and President of Resource Capital Corp., commented, "Our overall 2013 performance was negatively impacted by the faster than anticipated paydown of our corporate loan portfolio. However, we are already putting cash to work in new investments and expect to further increase our investments in commercial real estate loans, middle market corporate loans and other investments. As we do so, we expect Adjusted Funds from Operations to increase throughout 2014. We have a very strong balance sheet, excellent liquidity and access to capital and growing origination platforms that are generating high quality investments with attractive returns."

Additional highlights:

Commercial Real Estate

  • CRE loan portfolio is comprised of approximately 90% senior whole loans as of December 31, 2013, as compared to 85% a year ago.
  • RSO closed $324.8 million of new whole loans in the last 12 months with a weighted average yield of 6.51%, including origination fees. In addition, RSO funded $19.5 million of previous loan commitments on existing loans. 

The following table summarizes RSO's CRE loan activities and fundings of previous commitments, at par, for the three months and year ended December 31, 2013 (in millions, except percentages):

                         
    Three Months Ended December 31, 2013     Year Ended December 31, 2013     Floating Weighted Average Spread (1) (2)     Weighted Average Fixed Rate  
                             
New whole loans production (3)   $ 97.4     $ 344.3     5.70 %   - %
Payoffs (4)     (12.6 )     (104.0 )            
Sales     -       (63.9 )            
Principal paydowns     (0.1 )     (15.8 )            
Loans, net (5)   $ 84.7       160.6              
                             
(1)   Represents the weighted average rate above the one-month London Interbank Offered Rate ("LIBOR") on loans whose interest rate is based on LIBOR as of December 31, 2013. Of these loans, $282.4 million have LIBOR floors with a weighted average floor of 0.44%.
(2)   Reflects rates on RSO's portfolio balance as of December 31, 2013.
(3)   Whole loan production includes the funding of previous commitments of $5.2 million and $19.5 million for the three months and year ended December 31, 2013, respectively.
(4)   CRE loan payoffs and extensions resulted in $7,000 and $1.4 million in extension and exit fees during the three months and year ended December 31, 2013, respectively.
(5)   The basis of net new loans does not include provisions for losses on legacy CRE loans of $669,000 and $2.7 million for the three months and year ended December 31, 2013, respectively.
     
     

CMBS

  • During the year ended December 31, 2013, RSO acquired $42.6 million, par value, of CMBS, which were financed by RSO's Wells Fargo repurchase facility and were AAA rated by at least one rating agency. In addition, RSO acquired $48.8 million, par value, of CMBS which were partially financed by alternate 30-day repurchase contracts with a repurchase value of $33.7 million. Also, during the year ended December 31, 2013, RSO acquired $43.9 million, par value, of CMBS, which were not financed with debt.

Commercial Finance - Syndicated Bank Loans

  • RSO's bank loan portfolio, including asset-backed securities ("ABS"), corporate bonds and certain loans held for sale, at the end of the fourth quarter of 2013 was $580.0 million, at amortized cost, with a weighted-average spread of one-month and three-month LIBOR plus 3.12% at December 31, 2013. RSO's bank loan portfolio was nearly 100% match-funded through three collateralized loan obligation ("CLO") issuances.

  • During the year ended December 31, 2013, RSO bought bank loans, primarily through reinvestment of its existing CLOs, with a par value of $393.2 million, at a net discount of $3.3 million. These purchased loans have an aggregate weighted average unlevered annual yield of approximately 4.2%.

  • RSO, through its subsidiary Resource Capital Asset Management, earned $5.3 million of net fees during the year ended December 31, 2013.

Corporate

  • RSO also sold 256,000 and 2.4 million shares of its 8.25% Series B cumulative Preferred Stock at a weighted average price of $22.61 and $24.56, with a liquidation preference of $25.00, per share, for net proceeds of $5.7 million and $56.7 million for the three months and year ended December 31, 2013, respectively, pursuant to an at-the-market program.

Investment Portfolio

The table below summarizes the amortized cost and net carrying amount of RSO's investment portfolio as of December 31, 2013, classified by interest rate and by asset type. The following table includes both (i) the amortized cost of RSO'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 RSO's investment portfolio and the related dollar price, which is computed by dividing the net carrying amount by par amount (in thousands, except percentages):

    Amortized
cost
  Dollar price     Net carrying
 amount
  Dollar price     Net carrying
amount less amortized cost
    Dollar price  
December 31, 2013                                
Floating rate                                
RMBS   $ 1,919   20.76 %   $ 451   4.88 %   $ (1,468 )   (15.88 )%
CMBS-private placement     27,138   92.39 %     16,496   56.16 %     (10,642 )   (36.23 )%
Structured notes     8,057   34.49 %     11,107   47.55 %     3,050     13.06 %
Mezzanine loans (1)     12,455   98.97 %     12,455   98.97 %     -     - %
Whole loans (1)     745,789   99.56 %     736,106   98.27 %     (9,683 )   (1.29 )%
Bank loans (2)     544,923   99.27 %     541,532   98.65 %     (3,391 )   (0.62 )%
Middle market loans     10,250   100.00 %     10,250   100.00 %     -     - %
Loans held for sale (3)     6,850   94.82 %     6,850   94.82 %     -     - %
ABS Securities     25,406   91.39 %     26,656   95.88 %     1,250     4.50 %
Corporate Bonds     2,517   29.32 %     2,463   28.69 %     (54 )   (0.63 )%
Total floating rate     1,385,304   96.71 %     1,364,366   95.25 %     (20,938 )   (1.46 )%
Fixed rate                                      
CMBS-private placement     158,040   77.87 %     164,222   80.91 %     6,182     3.04 %
CMBS-linked transactions     35,736   106.07 %     30,066   89.24 %     (5,670 )   (16.83 )%
B notes (1)     16,205   99.49 %     16,031   98.42 %     (174 )   (1.07 )%
Mezzanine loans (1)     51,862   100.06 %     51,303   98.98 %     (559 )   (1.08 )%
Residential mortgage loans     1,849   66.27 %     1,849   66.27 %     -     - %
Loans held for sale (3)     15,066   100.00 %     15,066   100.00 %     -     - %
Loans receivable-related party     6,966   100.00 %     6,966   100.00 %     -     - %
Total fixed rate     285,724   86.69 %     285,503   86.62 %     (221 )   (0.07 )%
Other (non-interest bearing)                                      
Investment in real estate     29,778   100.00 %     29,778   100.00 %     -     - %
Property available-for-sale     25,346   100.00 %     25,346   100.00 %     -     - %
Investment in unconsolidated entities     74,438   100.00 %     74,438   100.00 %     -     - %
  Total other     129,562   100.00 %     129,562   100.00 %     -     - %
    Grand total   $ 1,800,590   95.19 %   $ 1,779,431   94.07 %   $ (21,159 )   (1.12 )%
     
(1)   Net carrying amount includes an allowance for loan losses of $10.4 million at December 31, 2013, allocated as follows: B notes $174,000, mezzanine loans $559,000 and whole loans $9.7 million.
(2)   Net carrying amount includes allowance for loan losses of $3.4 million at December 31, 2013.
(3)   Loans held for sale are carried at the lower of cost or fair market value. Amortized cost is equal to fair value.
     
     

Liquidity

At January 31, 2014, after paying RSO's fourth quarter 2013 common and preferred stock dividends, RSO's liquidity is derived from three primary sources:

  • unrestricted cash and cash equivalents of $199.2 million, restricted cash of $500,000 in margin call accounts and $998,000 in the form of real estate escrows, reserves and deposits;

  • capital available for reinvestment in its eight securitizations of $40.5 million, of which $6.4 million is designated to finance future funding commitments on CRE loans; and

  • loan principal repayments that will pay down outstanding CLO notes of $18.9 million and $5.0 million in interest collections.

In addition, RSO has funds available through three term financing facilities to finance the origination of CRE loans of $207.6 million and $200.0 million, respectively, and to finance the purchase of CMBS of $45.7 million.

Capital Allocation

As of December 31, 2013, RSO had allocated its invested equity capital among its targeted asset classes as follows: 83% in CRE assets, 15% in commercial finance assets and 2% in other investments.

Supplemental Information

The following schedules of reconciliations or supplemental information as of December 31, 2013 are included at the end of this release:

  • Schedule I - Reconciliation of GAAP Net Income to Funds from Operations ("FFO") and AFFO.
  • Schedule II - Book Value Allocable to Common Shareholders Rollforward.
  • Schedule III - Securitizations - Distributions and Coverage Test Summary.
  • Supplemental Information regarding loan investment statistics, CRE loans and bank loans.

About Resource Capital Corp.

RSO is a real estate investment trust that is primarily focused on originating, holding and managing commercial mortgage loans and other commercial real estate-related debt and equity investments. The Company also makes other commercial finance investments.

RSO is externally managed by Resource Capital Manager, Inc., an indirect wholly-owned subsidiary of Resource America, Inc. (NASDAQ: REXI), an asset management company that specializes in real estate and credit investments. The Company's objective is to be best in class among asset managers in the real estate and credit sectors as measured by returns to investors and the quality of the funds and businesses it manages. Resource America's investments emphasize consistent value and long-term returns with an income orientation.

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

Safe Harbor Statement

Statements made in this release may include forward-looking statements, which involve substantial risks and uncertainties. RSO'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;
  • the availability of debt and equity capital to acquire and finance investments;
  • defaults or bankruptcies by borrowers on RSO'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 RSO'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 RSO'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 RSO is subject, see Item 1A, "Risk Factors" included in its Annual Report on Form 10-K and the risks expressed in other of its public filings with the Securities and Exchange Commission.

RSO 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 RSO 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, RSO 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 RSO's unaudited consolidated balance sheets, unaudited consolidated statements of income, reconciliation of GAAP net income to FFO and AFFO, Book value allocable to common shareholders rollforward, summary of CDO and CLO performance statistics and supplemental information regarding RSO's CRE loan and bank loan portfolios.

   
RESOURCE CAPITAL CORP. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(in thousands, except share and per share data)  
   
    December 31,
2013
    December 31,
2012
 
    (unaudited)        
ASSETS (1)                
  Cash and cash equivalents   $ 262,270     $ 85,278  
  Restricted cash     63,309       94,112  
  Investment securities, trading     11,558       24,843  
  Investment securities available-for-sale, pledged as collateral, at fair value     162,608       195,200  
  Investment securities available-for-sale, at fair value     47,229       36,390  
  Linked transactions, net at fair value     30,066       6,835  
  Loans held for sale     21,916       48,894  
  Property available-for-sale     25,346       -  
  Investment in real estate     29,778       75,386  
  Loans, pledged as collateral and net of allowances of $13.8 million and $17.7 million     1,369,526       1,793,780  
  Loans receivable-related party     6,966       8,324  
  Investments in unconsolidated entities     74,438       45,413  
  Interest receivable     8,965       7,763  
  Deferred tax asset     5,212       2,766  
  Principal paydown receivable     6,821       25,570  
  Intangible assets     11,822       13,192  
  Prepaid expenses     2,871       10,396  
  Other assets     10,726       4,109  
    Total assets   $ 2,151,427     $ 2,478,251  
LIABILITIES (2)                
  Borrowings   $ 1,319,810     $ 1,785,600  
  Distribution payable     27,023       21,655  
  Accrued interest expense     1,693       2,918  
  Derivatives, at fair value     10,586       14,687  
  Accrued tax liability     1,629       13,641  
  Deferred tax liability     4,112       8,376  
  Accounts payable and other liabilities     12,650       18,029  
    Total liabilities     1,377,503       1,864,906  
STOCKHOLDERS' EQUITY                
  Preferred stock, par value $0.001: 100,000,000 shares authorized 8.50% Series A cumulative redeemable preferred shares, liquidation preference $25.00 per share, 680,952 and 676,373 shares issued and outstanding     1       1  
  Preferred stock, par value $0.001: 100,000,000 shares authorized 8.25% Series B cumulative redeemable preferred shares, liquidation preference $25.00 per share 3,485,078 and 1,126,898 shares issued and outstanding     3       1  
  Common stock, par value $0.001: 500,000,000 shares authorized; 127,918,927 and 105,118,093 shares issued and outstanding (including 3,112,595 and 3,308,343 unvested restricted shares)     128       105  
  Additional paid-in capital     1,042,480       836,053  
  Accumulated other comprehensive loss     (14,043 )     (27,078 )
  Distributions in excess of earnings     (254,645 )     (195,737 )
    Total stockholders' equity     773,924       613,345  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 2,151,427     $ 2,478,251  

 

 
 
 
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Continued)
(in thousands, except share and per share data)
 
    December 31,
2013
  December 31,
2012
    (unaudited)    
(1) Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets (a)above:            
  Restricted cash   $ 61,372   $ 90,108
  Investment securities available-for-sale, pledged as collateral, at fair value     105,846     135,566
  Loans held for sale     2,376     14,894
  Property available-for-sale     -     -
  Loans, pledged as collateral and net of allowances of $8.8 million and $15.2 million     1,219,569     1,678,719
  Interest receivable     5,627     5,986
  Prepaid expenses     247     328
  Principal paydown receivable     6,821     25,570
  Other assets     -     333
  Total assets of consolidated VIEs   $ 1,401,858   $ 1,951,504
             
(2) Liabilities of consolidated VIEs included in the total liabilities above (b):            
  Borrowings   $ 1,070,339   $ 1,614,882
  Accrued interest expense     918     2,666
  Derivatives, at fair value     10,191     14,078
  Accounts payable and other liabilities     1,604     698
  Total liabilities of consolidated VIEs   $ 1,083,052   $ 1,632,324
               

(a) Assets of each of the consolidated VIEs may only be used to settle the obligations of each respective VIE.
(b) The creditors of the Company's VIEs have no recourse to the general credit of the Company.

   
   
   
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,  
    2013     2012     2013     2012  
    (unaudited)     (unaudited)        
REVENUES                                
  Interest income:                                
    Loans   $ 21,085     $ 38,273     $ 99,455     $ 109,030  
    Securities     3,360       3,776       14,309       14,296  
    Interest income - other     1,032       1,800       4,212       10,004  
      Total interest income     25,477       43,849       117,976       133,330  
  Interest expense     26,949       17,332       61,010       42,792  
      Net interest income     (1,472 )     26,517       56,966       90,538  
  Rental income     4,048       4,821       19,923       11,463  
  Dividend income     17       18       273       69  
  Equity in net earnings (losses) of unconsolidated subsidiaries     1,837       (1,240 )     949       (2,709 )
  Fee income     1,893       1,540       6,075       7,068  
  Net realized gain on sales of investment securities available-for-sale and loans     7,631       1,958       10,986       4,106  
  Net realized and unrealized gain (loss) on investment securities, trading     540       (915 )     (324 )     12,435  
  Unrealized gain (loss) and net interest income on linked transactions, net     502       342       (3,841 )     728  
    Total revenues     14,996       33,041       91,007       123,698  
                                 
OPERATING EXPENSES                                
  Management fees - related party     3,214       5,000       14,220       18,512  
  Equity compensation - related party     2,606       1,224       10,472       4,636  
  Rental operating expense     2,978       3,590       14,062       8,046  
  General and administrative     7,349       3,356       16,110       9,773  
  Depreciation and amortization     814       1,911       3,855       5,885  
  Income tax (benefit) expense     (5,262 )     7,624       (1,041 )     14,602  
  Net impairment losses recognized in earnings     52       -       863       180  
  Provision for loan losses     2,479       9,017       3,020       16,818  
    Total operating expenses     14,230       31,722       61,561       78,452  
      766       1,319       29,446       45,246  
OTHER REVENUE                                
  Gain on consolidation     -       2,498       -       2,498  
  Gain on the extinguishment of debt     -       11,235       -       16,699  
  Gain on the sale of real estate     9       -       16,616       -  
  Other income     391       -       391       -  
    Total other revenue     400       13,733       17,007       19,197  
NET INCOME     1,166       15,052       46,453       64,443  
  Net income allocated to preferred shares     (2,114 )     (911 )     (7,221 )     (1,244 )
NET (LOSS) INCOME ALLOCABLE TO COMMON SHARES   $ (948 )   $ 14,141     $ 39,232     $ 63,199  
NET (LOSS) INCOME PER COMMON SHARE - BASIC   $ (0.01 )   $ 0.14     $ 0.33     $ 0.71  
NET (LOSS) INCOME PER COMMON SHARE - DILUTED   $ (0.01 )   $ 0.14     $ 0.33     $ 0.71  
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC     124,435,700       99,773,470       118,478,672       88,410,272  
WEIGHTED AVERAGE NUMBER OFCOMMON SHARES OUTSTANDING - DILUTED     124,435,700       100,958,978       120,038,973       89,284,488  

SCHEDULE I

 
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO FFO and AFFO
(in thousands, except per share data)
(unaudited)
 

Funds from Operations

We evaluate our performance based on several performance measures, including funds from operations, or FFO, and adjusted funds from operations, or AFFO, in addition to net income. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts as net income (computed in accordance with GAAP), excluding gains or losses on the sale of depreciable real estate, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization, and after adjustments for unconsolidated/uncombined partnerships and joint ventures.

AFFO is a computation made by analysts and investors to measure a real estate company's cash flow generated by operations. We calculate AFFO by adding or subtracting from FFO the non-cash impacts of the following: non-cash impairment losses resulting from fair value adjustments on financial instruments, provision for loan losses, equity investment gains and losses, straight-line rental effects, share based compensation, amortization of various deferred items and intangible assets, gains on sales of property that are wholly owned or through a joint venture in addition to the cash impact of capital expenditures that are related to our real estate owned. In addition, we calculate AFFO by adding and subtracting from FFO the cash impacts of the following: extinguishment of debt, sales of property and capital expenditures.

Management believes that FFO and AFFO are appropriate measures of our operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs. Management uses FFO and AFFO as measures of our operating performance, and believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash items, such as real estate depreciation, share-based compensation and various other items required by GAAP, and capital expenditures, that may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods.

While our calculations of AFFO may differ from the methodology used for calculating AFFO by other REITs and our AFFO may not be comparable to AFFO reported by other REITs, we also believe that FFO and AFFO may provide us and our investors with an additional useful measure to compare our performance with some other REITs. Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to GAAP net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

The following table reconciles GAAP net income to FFO and AFFO for the periods presented (unaudited) (in thousands, except per share data):

             
    Three Months Ended     Years Ended  
    December 31,     December 31,  
    2013     2012     2013     2012  
Net (loss) income allocable to common shares - GAAP   $ (948 )   $ 14,141     $ 39,232     $ 63,199  
Adjustments:                                
  Real estate depreciation and amortization     381       661       2,122       2,686  
  Gains on sale of property (1)     (333 )     (224 )     (14,588 )     (1,664 )
FFO     (900 )     14,578       26,766       64,221  
Adjustments:                                
Non-cash items:                                
  Adjust for impact of imputed interest on VIE accounting     899       (3,049 )     899       (3,049 )
  (Benefit) provision for loan losses     (1,186 )     7,900       (3,325 )     12,408  
  Amortization of deferred costs (non real estate) and intangible assets     1,151       3,140       6,060       8,896  
  Equity investment (earnings) losses     (195 )     956       183       3,256  
  Share-based compensation     2,605       1,224       10,472       4,636  
  Impairment losses     52       -       863       180  
  Unrealized loss on CMBS marks - linked transactions     195       -       6,018       -  
  Straight-line rental adjustments     (6 )     1       (12 )     15  
  Add-back interest related to Whitney note discount amortization     -       -       2,549       -  
  Loss on liquidation and deconsolidation of Apidos VIII     16,036       -       16,036       -  
  Gain on the extinguishment of debt     -       (11,235 )     -       (13,070 )
  Incentive Management Fee adjustment related to extinguishment of debt     -       2,614       -       2,614  
REIT tax planning adjustments     (2,189 )     6,810       890       6,810  
Cash items:                                
  Gain on sale of property (1)     333       224       14,588       1,664  
  Gain on the extinguishment of debt     561       7       7,810       670  
  Capital expenditures     (140 )     (826 )     (1,149 )     (3,081 )
AFFO   $ 17,216     $ 22,344     $ 88,648     $ 86,170  
                                 
Weighted average common shares - diluted     124,436       100,959       120,039       89,284  
                                 
AFFO per common share - diluted   $ 0.14     $ 0.22     $ 0.74     $ 0.97  
                                 
(1) Amounts represent gains/losses on sales of joint venture real estate interests that were recorded by RSO on an equity basis. Amounts for the year ended December 31, 2013, also include net gain on sale of property of $16.6 million after deducting incentive management fees paid to our manager, Resource Capital Manager, Inc., a subsidiary of Resource America, Inc., of $1.9 million.
   
   
   

SCHEDULE II

RESOURCE CAPITAL CORP. AND SUBSIDIARIES  
BOOK VALUE ALLOCABLE TO COMMON SHAREHOLDERS ROLLFORWARD  
(dollars in thousands, except per share data)  
(unaudited)  
    Amount     Per Share  
Book value at December 31, 2012, allocable to common shareholders (1)   $ 570,893     $ 5.61  
Net income allocable to common shareholders     39,232       0.32  
                 
Change in other comprehensive income:                
  Available for sale securities     8,399       0.07  
  Derivatives     4,440       0.04  
  Foreign currency conversion     196       -  
Discount on 6.0% convertible senior notes (2)     4,851       0.04  
Common dividends     (98,016 )     (0.80 )
Proceeds/Accretion from additional shares issued during the year (3)     144,686       0.13  
Total net increases     103,788       (0.20 )
Book value at December 31, 2013, allocable to common shareholders (1)(4)   $ 674,681     $ 5.41  
   
(1) Per share calculations exclude unvested restricted stock, as disclosed on the consolidated balance sheets, of 3.3 million and 3.1 million shares as of December 31, 2012 and December 31, 2013, respectively.
(2) The discount on the 6.0% convertible senior notes reflects the difference between the stated value of the debt and the fair value of the notes as if they were issued without a conversion feature and at a higher rate of interest that we estimate would have been applicable without the conversion feature. The discount will be amortized on a straight-line basis as additional interest expense through maturity on December 1, 2018.
(3) Includes issuance of common shares from a common stock offering of 18.7 million shares, our dividend reinvestment plan of 3.1 million shares, and 934,000 combined incentive management fee shares issued to the Manager and vesting of shares of restricted stock.
(4) Book value is calculated as total stockholder's equity of $773.9 million less preferred stock equity of $99.2 million.
   
   
   

SCHEDULE III

RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUMMARY OF CDO AND CLO PERFORMANCE STATISTICS
(in thousands)
(unaudited)
 

Securitizations - Distributions and Coverage Test Summary

The following table sets forth the distributions made and coverage test summaries for each of RSO's securitizations for the periods presented (in thousands):

           
  Cash Distributions   Annualized Interest Coverage Cushion   Overcollateralization Cushion
  Year Ended   As of   As of   As of Initial
  December 31,   December 31,   December 31,   Measurement
Name 2013 (1)   2012 (1)   2013 (2) (3)   2013 (4)   Date
  (actual)   (actual)            
Apidos CDO I (5) $ 4,615   $ 7,971   $ 1,583   $ 13,252   $ 17,136
Apidos CDO III (6) $ 6,495   $ 8,742   $ 2,385   $ 9,700   $ 11,269
Apidos Cinco CDO (7) $ 12,058   $ 11,109   $ 5,451   $ 19,639   $ 17,774
Apidos CLO VIII (8) $ 20,021   $ 2,992     N/A     N/A     N/A
Whitney CLO I (9) $ 13,470   $ 802     N/A     N/A     N/A
RREF 2006-1 (10) $ 36,828   $ 15,050   $ 5,675   $ 67,512   $ 24,941
RREF 2007-1 (11) $ 10,880   $ 13,226   $ 7,418   $ 43,803   $ 26,032
   
(1) Distributions on retained equity interests in securitizations (comprised of note investments and preference share ownership) and principal paydowns on notes owned; RREF 2006-1 includes $28.1 million and $2.3 million of paydowns for the years ended December 31, 2013, and 2012, respectively.
(2) Interest coverage includes annualized amounts based on the most recent trustee statements.
(3) Interest coverage cushion represents the amount by which annualized interest income expected exceeds the annualized amount payable on all classes of securitization notes senior to RSO's preference shares.
(4) Overcollateralization cushion represents the amount by which the collateral held by the securitization issuer exceeds the maximum amount required.
(5) Apidos CDO I's reinvestment period expired in July 2011.
(6) Apidos CDO III's reinvestment period expired in June 2012.
(7) Apidos Cinco CDO's reinvestment period ends in May 2014.
(8) Distributions from Apidos CLO VIII, include $1.3 million and $752,000 in collateral management fees for the years ended December 31, 2013 and 2012, respectively. RSO's contribution of $15.0 million represents 43% of the subordinated debt.Apidos CLO VIII's non-call period ended on October 17, 2013, at which time all assets were liquidated and all outstanding notes were paid off.
(9) Whitney CLO I was acquired in October 2012. Distributions from Whitney CLO I include $442,000 and $236,000 of collateral management fees for the years ended December 31, 2013 and 2012, respectively. RSO held 68.3% of the outstanding preference shares before Whitney CLO I was called and substantially liquidated in September 2013.
(10) RREF 2006-1's reinvestment period expired in September 2011.
(11) RREF 2007-1's reinvestment period expired in June 2012.
 
 
 
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(in thousands, except percentages)
 

Loan Investment Statistics

The following table presents information on RSO's impaired loans and related allowances for the periods indicated (based on amortized cost):

    December 31,     December 31,  
    2013     2012  
Allowance for loan losses:                
Specific allowance:                
  Commercial real estate loans   $ 4,572     $ 2,142  
  Bank loans     2,621       3,236  
Total specific allowance     7,193       5,378  
General allowance:                
  Commercial real estate loans     5,844       5,844  
  Bank loans     770       6,469  
Total general allowance     6,614       12,313  
Total allowance for loans   $ 13,807     $ 17,691  
Allowance as a percentage of total loans     1.0 %     0.9 %
                 
Loans held for sale:                
  Commercial real estate   $ -     $ 34,000  
  Bank loans     6,850       14,894  
  Residential mortgage loans     15,066       -  
Total loans held for sale (1)   $ 21,916     $ 48,894  
   
(1) Loans held for sale are presented at the lower of cost or fair value.
 
 
 
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(unaudited)
 

The following table presents commercial real estate loan portfolio statistics as of December 31, 2013 (based on par value):

     
Security type:    
Whole loans 90.3 %
Mezzanine loans 7.8 %
B Notes 1.9 %
Total 100.0 %
     
Collateral type:    
Multifamily 38.4 %
Retail 19.0 %
Hotel 18.3 %
Office 15.5 %
Mixed Use 3.9 %
Industrial 1.7 %
Other 3.2 %
Total 100.0 %
     
Collateral location:    
Southern California 28.7 %
Northern California 10.3 %
Texas 14.6 %
Arizona 6.4 %
Florida 4.5 %
Washington 3.6 %
Minnesota 3.5 %
Nevada 3.0 %
Utah 3.0 %
Other 22.4 %
Total 100.0 %
 
 
 
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(unaudited)
 

The following table presents bank loan portfolio statistics by industry as of December 31, 2013 (based on par value):

     
Industry type:    
Healthcare, education and childcare 15.8 %
Diversified/conglomerate service 12.2 %
Chemicals, plastics and rubber 7.3 %
Automobile 6.7 %
Broadcasting and entertainment 5.9 %
Retail Stores 5.4 %
CDO 4.7 %
Electronics 3.6 %
Oil and Gas 3.4 %
Leisure, amusement, motion pictures, entertainment 3.3 %
Personal, food and miscellaneous services 3.1 %
Aerospace and Defense 2.8 %
Telecommunications 2.6 %
Personal Transportation 2.6 %
Finance 2.0 %
Other 18.6 %
Total 100.0 %

Contact Information

  • CONTACT:
    DAVID J. BRYANT
    CHIEF FINANCIAL OFFICER
    RESOURCE CAPITAL CORP.
    712 Fifth Ave, 12
    THFloor
    New York, NY 10019
    212-506-3870