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Resource Capital Corp. Reports Operating Results for Third Quarter Ended September 30, 2008 NEW YORK, NY--(MARKET WIRE)--Nov 5, 2008 -- Resource Capital Corp. (NYSE:RSO - News) ("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 third
quarter ended
September 30, 2008. Financial Summary
-- Estimated REIT taxable income, a non-GAAP measure, for the three and
nine months ended September 30, 2008 was $9.4 million or $0.38 per share-
diluted and $30.9 million or $1.24 per share-diluted, respectively, as
compared to $10.9 million or $0.44 per share-diluted and $31.1 million or
$1.25 per share-diluted for the three and nine months ended September 30,
2007, respectively, decreases of $1.5 million (14%) and $141,000 (1%),
respectively.
-- 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-diluted for the quarter ended September 30, 2008 as
compared to $11.9 million, or $0.48 per share-diluted for the quarter ended
September 30, 2007, a decrease of $857,000 (7%).
-- RCC announced a dividend distribution of $0.39 per common share for
the quarter ended September 30, 2008, $9.9 million in the aggregate, which
was paid on October 28, 2008 to stockholders of record as of October 6,
2008.
-- Economic book value, a non-GAAP measure, was $10.92 per common share
as of September 30, 2008.
-- GAAP book value was $9.45 per common share as of September 30, 2008.
-- GAAP net income of $0.17 per share-diluted, including non-cash charges
for loan and lease losses of $27.8 million, or $1.12 per share-diluted, for
the nine months ended September 30, 2008. GAAP net income of $0.00 per
share-diluted, including non-cash charges for loan and lease losses of
$11.0 million, or $0.44 per share-diluted, for the three months ended
September 30, 2008.
-- Paydowns totaled $64.7 million, which included $44.4 million on RCC's
commercial real estate loan portfolio and $20.3 million on RCC's bank loan
portfolio for the quarter ended September 30, 2008.
-- As of October 31, 2008, short-term repurchase agreement borrowings
were down to $180,000 from $4.6 million as of June 30, 2008.
Jonathan Cohen, CEO and President of RCC, commented, "The credit quality of our loan portfolio appears to be generally weathering the storm and we are pleased with its performance. We have increased our general reserves, primarily in our bank loan portfolio and took a specific reserve against one loan in our commercial real estate loan portfolio, which prepaid after the end of the quarter at a modest discount -- we were willing to accept this deal to buy other investments in the future at more substantial discounts. As a result of $44.4 million in commercial real estate prepayments during the quarter, we are able to shift loans from our CRE term facility into our CDO structures, utilizing the favorable liabilities in those structures, and simultaneously improving liquidity and de-levering our balance sheet by paying down the CRE term facility. As these prepayments continue to occur, we intend to reinvest at very attractive spreads, look at opportunities to buy our debt at a significant discount and our stock in the market, and generally increase the liquidity of our Company. We also worked hard to eliminate all but $180,000 of short term recourse liabilities." The following schedules of reconciliations as of September 30, 2008 are included in this release:
-- Schedule I - Reconciliation of GAAP Net Income to Adjusted Net Income;
-- Schedule II - Reconciliation of GAAP Net Income to Estimated REIT
Taxable Income; and
-- Schedule III - Reconciliation of GAAP Stockholders' Equity to Economic
Book Value.Additional financial results for the third quarter ended September 30, 2008 and recent developments include: General
-- RCC's net interest income decreased by $877,000, or (6%) to $13.6
million for the third quarter ended September 30, 2008, as compared to
$14.5 million for the same period in 2007.Commercial Real Estate
-- RCC originated new commercial real estate ("CRE") loans, on a gross
basis, of $8.3 million during the third quarter ended September 30, 2008.
The aggregate net portfolio of CRE loans was reduced by $65.5 million to
$864.9 million at September 30, 2008, from $930.4 million at September 30,
2007, not including future funding obligations of $8.8 million.The following table summarizes RCC's CRE loan origination activities and future funding obligations, at par, for the three, nine and 12 months ended September 30, 2008 (in millions, except percentages):
Three Nine Floating
Months Months 12 Months Weighted Weighted
Ended Ended Ended Average Average
September September September Spread Fixed
30, 2008 30, 2008 30, 2008 (1) Rate (1)
--------- --------- --------- -------- --------
Whole loans $ 8.3 $ 51.6 $ 113.1 2.88% 7.71%
Whole loans, future
funding obligations - - 8.8 N/A N/A
B notes - - - 2.78% 7.57%
Mezzanine loans - - - 2.62% 8.15%
CMBS - - - N/A (2) 5.96%
--------- --------- ---------
New loans production 8.3 51.6 121.9
Payoffs (34.3) (45.7) (120.5)
Principal paydowns (10.1) (14.6) (16.1)
Whole loans, future
funding obligations - - (8.8)
Sales of CMBS - (10.0) (10.0)
--------- --------- ---------
Net - new loans (36.1) (18.7) (33.5)
Other 0.6 1.6 5.3
--------- --------- ---------
New loans, net (3) $ (35.5) $ (17.1) $ (28.2)
========= ========= =========
(1) Reflects rates on our portfolio balance as of September 30, 2008.
(2) Weighted average floating rate coupon of 3.96% at September 30, 2008.
(3) The basis of new net loans does not include provisions for losses on
commercial real estate loans of $2.8 million for the three months ended
September 30, 2008, of $14.4 million for the nine months ended
September 30, 2008 and $17.6 million for the 12 months ended September
30, 2008.Commercial Finance
-- RCC's bank loan portfolio ended the third quarter with total
investments of $936.9 million, at amortized cost, with a weighted-average
spread of one-month and three-month LIBOR plus 2.28%. 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 third quarter with
$106.2 million, at cost, in direct financing leases and notes at a weighted-
average rate of 9.30%. RCC's leasing portfolio is fully match-funded
through a secured term facility, which had a balance of $99.9 million as of
September 30, 2008 and a weighted-average interest rate of 5.06%.Book Value As of September 30, 2008, RCC's GAAP book value per common share was $9.45. Total stockholders' equity was $239.1 million as of September 30, 2008 as compared to $271.6 million as of December 31, 2007. Total common shares outstanding were 25,296,164 as of September 30, 2008 as compared to 25,103,532 as of December 31, 2007. As of September 30, 2008, RCC's economic book value per common share outstanding, a non-GAAP measure, was $10.92. 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 the RCC's investment portfolio as of September 30, 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
amount
Net less
Amortized Dollar carrying Dollar amortized Dollar
cost price amount price cost price
---------- ------ ---------- ------ --------- ------
September 30, 2008
Floating rate
CMBS - private
placement $ 32,130 99.98% $ 23,482 73.07% $ (8,648) -26.91%
Other ABS 5,665 94.42% - 0.00% (5,665) -94.42%
B notes (1) 22,037 100.01% 21,982 99.76% (55) -0.25%
Mezzanine loans
(1) 129,600 100.02% 129,276 99.77% (324) -0.25%
Whole loans (1) 450,425 99.63% 446,450 98.75% (3,975) -0.88%
Bank loans (2) 936,942 99.47% 788,356 (4) 83.69% (148,586) -15.78%
---------- ---------- ---------
Total floating
rate $1,576,799 99.56% $1,409,546 89.00% $(167,253) -10.56%
========== ========== =========
Fixed rate
CMBS - private
placement $ 38,288 91.00% $ 22,739 54.05% $ (15,549) -36.95%
B notes (1) 67,168 100.11% 67,000 99.86% (168) -0.25%
Mezzanine loans
(1) 81,254 94.69% 68,393 79.70% (12,861) -14.99%
Whole loans (1) 85,808 99.44% 85,593 99.19% (215) -0.25%
Equipment leases
and notes (3) 106,196 100.02% 105,466 99.33% (730) -0.69%
---------- ---------- ---------
Total fixed rate $ 378,714 97.74% $ 349,191 90.12% $ (29,523) -7.62%
========== ========== =========
Grand total $1,955,513 99.20% $1,758,737 89.22% $(196,776) -9.98%
========== ========== =========
(1) Net carrying amount includes an allowance for loan losses of $17.6
million at September 30, 2008, allocated as follows: B notes (0.2
million), mezzanine loans ($13.2 million) and whole loans ($4.2
million).
(2) Net carrying amount includes a $12.4 million allowance for loan losses
at September 30, 2008.
(3) Net carrying amount includes a $730,000 allowance for lease losses at
September 30, 2008.
(4) Bank loan portfolio is carried at amortized cost less allowance for
loan loss and was $924.5 million at September 30, 2008. Amount
disclosed in the table represents fair value at September 30, 2008.
At October 31, 2008, RCC's liquidity consists of three primary sources:
-- unrestricted cash and cash equivalents of $2.8 million and restricted
cash of $11.2 million comprised of $5.3 million in margin call accounts and
$5.9 million related to its leasing portfolio;
-- capital available for reinvestment in its five collateralized debt
obligation ("CDO") entities of $74.1 million, which is made up of $59.5
million of restricted cash and $14.6 million available to finance future
funding commitments on commercial real estate loans; and
-- financing available under existing borrowing facilities of $10.1
million, comprised of $0.1 million of available cash from RCC's three year
non-recourse secured financing facility and $10.0 million of unused
capacity under its unsecured revolving credit facility. RCC also has $40.5
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 September 30, 2008, RCC had allocated its equity capital among its targeted asset classes as follows: 73% in commercial real estate loans, 25% in commercial bank loans and 2% in direct financing leases and notes. 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. (NasdaqGS:REXI - News), 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 may 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 would 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 income to adjusted net income, GAAP net income 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 data)
September 30, December 31,
2008 2007
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 12,110 $ 6,029
Restricted cash 74,607 119,482
Investment securities available-for-sale,
pledged as collateral, at fair value 46,221 65,464
Loans, pledged as collateral and net of
allowances of $30.0 million and $5.9
million 1,743,208 1,766,639
Direct financing leases and notes, pledged
as collateral and net of allowances of $0.7
million and $0.3 million and net of
unearned income 105,466 95,030
Investments in unconsolidated entities 1,548 1,805
Interest receivable 8,635 11,965
Principal paydown receivables 5,920 836
Other assets 5,230 4,898
------------ ------------
Total assets $ 2,002,945 $ 2,072,148
============ ============
LIABILITIES
Borrowings $ 1,732,384 $ 1,760,969
Distribution payable 9,928 10,366
Accrued interest expense 4,640 7,209
Derivatives, at fair value 12,885 18,040
Accounts payable and other liabilities 4,007 3,958
------------ ------------
Total liabilities 1,763,844 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; 25,296,164 and
25,103,532 shares issued and outstanding
(including 475,230 and 581,493 unvested
restricted shares) 25 25
Additional paid-in capital 356,104 355,205
Accumulated other comprehensive loss (45,121) (38,323)
Distributions in excess of earnings (71,907) (45,301)
------------ ------------
Total stockholders' equity 239,101 271,606
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,002,945 $ 2,072,148
============ ============
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
REVENUES
Loans $ 28,903 $ 37,398 $ 90,028 $ 100,786
Securities 1,062 8,768 3,401 24,072
Leases 1,995 1,856 5,946 5,667
Interest income - other 352 769 2,178 2,080
---------- ---------- ---------- ----------
Interest income 32,312 48,791 101,553 132,605
Interest expense 18,664 34,266 60,736 91,255
---------- ---------- ---------- ----------
Net interest income 13,648 14,525 40,817 41,350
OPERATING EXPENSES
Management fees - related
party 1,915 1,298 4,824 5,357
Equity compensation -
related party 157 94 779 717
Professional services 773 772 2,229 2,005
Insurance expenses 171 116 469 351
General and
administrative 421 405 1,119 1,141
Income tax expense (33) 91 134 262
---------- ---------- ---------- ----------
Total expenses 3,404 2,776 9,554 9,833
---------- ---------- ---------- ----------
NET OPERATING INCOME 10,244 11,749 31,263 31,517
---------- ---------- ---------- ----------
OTHER EXPENSE
Net realized gains
(losses) on investments 242 158 (1,651) 513
Asset impairments - (25,490) - (26,277)
Other income 27 37 86 110
Provision for loan and
lease loss (10,999) (369) (27,828) (503)
Gain on the
extinguishment of debt
and loan 574 - 2,324 -
---------- ---------- ---------- ----------
Total other expenses (10,156) (25,664) (27,069) (26,157)
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 88 $ (13,915) $ 4,194 $ 5,360
========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE
- BASIC $ 0.00 $ (0.56) $ 0.17 $ 0.22
========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE
- DILUTED $ 0.00 $ (0.56) $ 0.17 $ 0.22
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC 24,814,789 24,807,162 24,719,889 24,650,313
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING -
DILUTED 25,054,296 24,807,162 24,889,965 24,910,848
========== ========== ========== ==========
DIVIDENDS DECLARED PER
SHARE $ 0.39 $ 0.41 $ 1.21 $ 1.21
========== ========== ========== ==========
SCHEDULE I
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME (1)
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
2008 2007 2008 2007
---------- --------- --------- ----------
Net income (loss) - GAAP $ 88 $ (13,915) $ 4,194 $ 5,360
Adjustments:
Provision for loan and lease
losses (2) 10,999 369 27,828 503
Asset impairments related to
ABS-RMBS Portfolio - 25,490 - 26,277
Capital losses on the sale
of available-for-sale
securities - - 2,000 -
Gain on the extinguishment
of debt (3) - - (1,750) -
---------- --------- --------- ----------
Adjusted net income, excluding
non-cash charges and
non-operating capital
transactions $ 11,087 $ 11,944 $ 32,272 $ 32,140
========== ========= ========= ==========
Adjusted net income per share
- diluted, excluding non-cash
charges and non-operating
capital transactions $ 0.44 $ 0.48 $ 1.30 $ 1.29
========== ========= ========= ==========
(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
September 30, 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 September 30, 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) Gain on the extinguishment of debt for the three and nine months ended
September 30, 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 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 Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net income (loss) - GAAP $ 88 $ (13,915) $ 4,194 $ 5,360
Adjustments:
Share-based compensation to
related parties (190) (385) (729) (725)
Incentive management fee
expense to related parties
paid in shares - (417) - -
Capital loss carryover
(utilization)/losses from
the sale of securities - - 2,000 -
Provisions for loan and
lease losses unrealized 2,761 - 14,446 -
Net book to tax adjustments
for the Company's taxable
foreign REIT subsidiaries 7,034 - 11,271 -
Addback of GAAP loss reserve - 25,490 - 26,277
Other net book to tax
adjustments (281) 90 (272) 139
--------- --------- --------- ---------
Estimated REIT taxable income $ 9,412 $ 10,863 $ 30,910 $ 31,051
========= ========= ========= =========
Amounts per share - diluted $ 0.38 $ 0.44 $ 1.24 $ 1.25
========= ========= ========= =========
(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.
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
September 30,
2008
---------------
Stockholders' equity - GAAP $ 239,101
Add:
Unrealized losses - CMBS portfolio 24,197
Unrealized losses recognized in excess of value at risk
- interest rate swaps 12,885
---------------
Economic book value $ 276,183
===============
Shares outstanding as of September 30, 2008 25,296
---------------
Economic book value per share $ 10.92
===============
(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 September 30, 2008 and 2007 (based on par value):
As of September 30,
--------------------
2008 2007
--------- ---------
Non-performing:
Loans and leases $ 18,668 $ 1,267
Non-performing as a percentage of total loans and
leases 1.0% 0.1%
Allowance for loan and lease losses:
Specific provision $ 19,728 $ 196
General provision 11,029 130
--------- ---------
Total allowance for loan and leases $ 30,757 $ 326
========= =========
Allowance as a percentage of total loans and
leases 1.6% 0.0%
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION, A NON-GAAP MEASURE
(Unaudited)The following table presents commercial real estate loan portfolio statistics as of September 30, 2008 (based on par value):
Security type
Whole loans 65.2%
Mezzanine loans 24.0%
B Notes 10.8%
-----------
Total 100.0%
===========
Collateral type
Multifamily 32.9%
Hotel 26.6%
Office 22.0%
Retail 13.2%
Condo 1.2%
Flex 0.8%
Self-storage 0.8%
Other 2.5%
-----------
Total 100.0%
===========
Collateral location
Southern California 24.2%
Northern California 16.6%
New York 11.2%
Arizona 8.2%
Texas 4.9%
Florida 4.6%
Tennessee 3.9%
Washington 3.7%
Colorado 3.7%
Other 19.0%
-----------
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 September 30, 2008 (based on par value):
Industry type
Healthcare, education and childcare 11.0%
Diversified/conglomerate service 9.0%
Printing and publishing 5.9%
Chemicals, plastics and rubber 5.9%
Broadcasting and entertainment 5.6%
Retail stores 5.2%
Leisure, amusement, motion pictures,
entertainment 3.9%
Hotels, motels, inns and gaming 3.8%
Automobile 3.8%
Utilities 3.6%
Finance 3.6%
Personal, food and miscellaneous services 3.5%
Other 35.2%
-----------
Total 100.0%
===========The following chart describes equipment leases and notes by industry as of September 30, 2008 (based on par value):
Industry type
Services 49.0%
Retail trade 10.8%
Transportation, communications, electric,
gas and sanitary services 10.5%
Agriculture, forestry and fishing 7.9%
Manufacturing 5.9%
Construction 4.5%
Finance, insurance and real estate 3.8%
Wholesale trade 3.7%
Other 3.9%
-----------
Total 100.0%
===========Contact: 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)
Source: Resource Capital Corp.
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