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Resource Capital Corp. Announces Third Quarter 2007 Operating Results
NEW YORK, NY, Nov 08, 2007 (MARKET WIRE via COMTEX News Network) -- 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 third quarter ended September 30, 2007.

Financial Summary

  • REIT taxable income, a non-GAAP measure, of $0.44 per share-diluted for the quarter ended September 30, 2007.
  • Dividend distribution of $0.41 per share, up 11% from the prior year quarter and unchanged from the second quarter.
  • Adjusted net income per common share-diluted, a non-GAAP measure, of $0.46 for the quarter ended September 30, 2007.
  • Economic book value, a non-GAAP measure, of $12.44 per share at September 30, 2007.
  • GAAP net loss of $0.56 per share-diluted including a non-cash impairment charge of $25.5 million on the ABS-RMBS portfolio for the quarter ended September 30, 2007.
  • As of November 1, 2007, RCC had repurchased 263,000 shares at a weighted average price of $10.50.

The following schedules of reconciliations as of September 30, 2007 are included in this release:

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

RCC reported for the quarter ended September 30, 2007, adjusted net income, a non-GAAP measure, excluding the effect of a non-cash impairment charge, was $11.6 million, or $0.46 per share-diluted, compared to $0.33 per share-diluted for the third quarter of 2006. RCC reported for the nine months ended September 30, 2007 adjusted net income excluding the effect of a non-cash impairment charge, was $31.6 million, or $1.27 per share-diluted, compared to $1.01 per share-diluted for the same period in 2006.

RCC reported for the quarter ended September 30, 2007, GAAP net loss was $13.9 million, or $0.56 per share-diluted, as compared to net loss of $2.4 million, or $0.14 per share-diluted for the third quarter of 2006. RCC reported net income for the nine months ended September 30, 2007 was $5.4 million, or $0.22 per share-diluted, as compared to net income for the nine months ended September 30, 2006 of $8.8 million, or $0.51 per share-diluted. Net loss during the third quarter ended September 30, 2007 and the significant decrease in net income during the nine months ended September 30, 2007 was primarily the result of a non-cash charge of $25.5 million representing other-than-temporary impairment under GAAP of an ABS-RMBS portfolio held by Ischus CDO II, a securitization vehicle consolidated by RCC as of September 30, 2007, as required under GAAP. After reflecting this impairment, RCC has a remaining investment of $722,000 in the ABS-RMBS portfolio.

Book Value

RCC's economic book value per common share outstanding, a non-GAAP measure, at September 30, 2007 was $12.44. Economic book value is computed by adding back to GAAP book value any unrealized losses in stockholders' equity or charged through income that are in excess of RCC's maximum exposure in a consolidated investment. Under GAAP, RCC is required to absorb unrealized losses on investments held by certain of its consolidated entities, primarily RCC's consolidated securitization backed by ABS-RMBS, even if those losses are in excess of RCC's maximum exposure to loss, or RCC's retained investment in those securitizations. In addition, RCC added back unrealized losses on derivatives (cash flow hedges) that are associated with fixed-rate loans that have not been adjusted through stockholders' equity for market fluctuations. 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.

RCC's GAAP book value per common share at September 30, 2007 was $6.97 as compared to $13.33 at December 31, 2006, a 48% decrease, caused primarily by an unrealized loss, which is in excess of RCC's maximum risk of loss or its retained investment, on its ABS-RMBS portfolio. Total stockholders' equity was $174.3 million at September 30, 2007 as compared to $317.6 million at December 31, 2006. Total common shares outstanding were 25,017,966 at September 30, 2007 as compared to 23,821,434 at December 31, 2006.

Jonathan Cohen, CEO and President of RCC, commented, "The third quarter of 2007 will go down in history as one of the most difficult for financial companies here in the United States and elsewhere. Nonetheless, we performed well, generating $0.46 of adjusted net income and distributing $0.41 to our shareholders. We have converted from primarily a subordinate buyer of commercial real estate loans to an originator of senior secured whole loans and bank loans. With our ABS-RMBS exposure now written down to a de minimis amount, we are positioned to benefit from our match-funded vehicles that have a relatively low cost of funds. Our assets continue to perform and we continue to try to build franchise value in a dislocated marketplace. We are dedicated to maintaining and growing our dividend."

Additional financial results for the third quarter ended September 30, 2007 and recent developments include:

General

--  RCC's net interest income increased by $6.0 million, or 72%, to $14.3
    million for the quarter ended September 30, 2007, as compared to $8.3
    million for the same period in 2006.
--  RCC's total assets grew by $523.4 million during the nine months ended
    September 30, 2007, primarily in commercial real estate and commercial
    finance assets, as described below.


Commercial Real Estate

--  RCC continued to increase its investment in commercial real estate
    ("CRE") loans.  RCC produced new CRE loans, on a gross basis, of $88.0
    million during the third quarter ended September 30, 2007. The aggregate
    portfolio of CRE loans (net of sales, repayments and discounts) grew by
    $38.7 million to $930.4 million at September 30, 2007, from $891.7 million
    at June 30, 2007, not including future funding obligations of $11.2
    million.


The following table summarizes RCC's CRE loan origination activities and future funding obligations, at par, for the three months, nine months and 12 months ended September 30, 2007 (in millions, except percentages):

                       Three      Nine
                       Months     Months   12 Months   Floating   Weighted
                       Ended      Ended      Ended     Weighted   Average
                     September  September  September    Average    Fixed
                     30, 2007   30, 2007   30, 2007     Spread     Rate
                     ---------  ---------  ---------  ---------  ---------
Whole loans          $    62.8  $   360.3  $   476.5       2.72%      7.81%
Whole loans,
 future
 funding
 obligations              11.2       54.2       65.4        N/A        N/A
A notes                      -          -          -        N/A        N/A
B notes                      -          -       48.9       3.22%      7.58%
Mezzanine loans              -       95.3      136.0       2.64%      8.03%
CMBS                      14.0       90.5      120.6        N/A*      5.93%
                     ---------  ---------  ---------
New loans production      88.0      600.3      847.4
Payoffs                  (20.2)    (174.2)    (183.7)
Principal paydowns       (10.1)     (13.0)     (18.6)
Sales of CRE loans           -      (41.2)     (41.2)
Whole loans,
 future
 funding
 obligations             (11.2)     (54.2)     (65.4)
Sales of CMBS                -      (29.9)     (29.9)
                     ---------  ---------  ---------
Net - new loans           46.5      287.8      508.6
Discounts                 (7.8)     (13.5)     (17.9)
                     ---------  ---------  ---------
New loans, net of
 discounts           $    38.7  $   274.3  $   490.7
                     =========  =========  =========
-------------
*  Weighed average floating rate coupon of 6.87% at September 30, 2007.

Commercial Finance

--  RCC's bank loan portfolio ended the period with total investments of
    $952.0 million, at cost, with a weighted-average spread of three-month
    LIBOR plus 2.21%.  All of RCC's bank loan portfolio is match-funded through
    three CLO issuances with a weighted-average cost of three-month LIBOR plus
    0.47%.
--  RCC's commercial finance subsidiary ended the quarter with $82.8
    million, at cost, in direct financing leases and notes at a weighted-
    average rate of 8.68%.  RCC's leasing portfolio is match-funded through a
    secured term facility, which had a balance of $79.2 million as of September
    30, 2007 and a weighted-average interest rate of 6.40%.


Investment Portfolio

The table below summarizes the amortized cost and estimated fair value of the RCC's investment portfolio as of September 30, 2007, 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 estimated fair value of RCC's investment portfolio and the related dollar price, which is computed by dividing the estimated fair value by par amount (in thousands, except percentages):

                              Premium/           Fair   Unrealized
                   Amortized  discount   Fair    value    gains     Dollar
                     cost     to par     value   to par  (losses)   price
                   ---------- ------  ---------- ------  ---------  ------
September 30, 2007
   Floating rate
   -------------
ABS-RMBS           $  317,769  91.70% $  201,134  58.04% $(116,635) -33.66%
CMBS                      359 100.00%        357  99.44%        (2)  -0.56%
CMBS-private
 placement             54,850  93.32%     49,700  84.56%    (5,150)  -8.76%
B notes                79,781 100.06%     79,781 100.06%         -    0.00%
Mezzanine loans       142,327 100.08%    142,327 100.08%         -    0.00%
Whole loans           398,037  99.33%    398,037  99.33%         -    0.00%
Bank loans (1)        951,984 100.07%    915,678  96.25%   (36,306)  -3.82%
Other                  22,377  98.14%     17,521  76.85%    (4,856) -21.29%
                   ----------         ----------         ---------
  Total floating
   rate            $1,967,484  98.25% $1,804,535  90.12% $(162,949)  -8.13%
                   ==========         ==========         =========
   Fixed rate
   ----------
ABS-RMBS           $    6,000 100.00% $    2,700  45.00% $  (3,300) -55.00%
CMBS                   27,581  98.88%     23,802  85.33%    (3,779) -13.55%
CMBS - Private
 Placement             28,246  98.92%     25,571  89.55%    (2,675)  -9.37%
Other ABS               2,580  99.96%      2,232  86.48%      (348) -13.48%
B notes                56,107 100.18%     56,107 100.18%         -    0.00%
Mezzanine loans        81,141  94.48%     81,141  94.48%         -    0.00%
Whole loans            97,731  99.02%     97,731  99.02%         -    0.00%
Equipment leases
 and notes (2)         82,804 100.24%     82,605 100.00%      (199)   0.24%
                   ----------         ----------         ---------
  Total fixed rate $  382,190  98.45% $  371,889  95.79% $ (10,301)  -2.66%
                   ==========         ==========         =========
    Grand total    $2,349,674  98.28% $2,176,424  91.04% $(173,250)  -7.24%
                   ==========         ==========         =========
-------------
(1)  Fair value and unrealized gains (losses) includes a $196,000 provision
     for loan losses.
(2)  Fair value and unrealized gains (losses) includes a $199,000 provision
     for lease losses.

Liquidity

At November 6, 2007, RCC's liquidity consists of $50.0 million of restricted cash available for reinvestment in its six CDOs, $8.0 million of cash and cash equivalents, $5.3 million of restricted cash in margin call accounts and $10.8 million of available cash from its three year non-recourse secured financing facilities. RCC also has $199.4 million of unused capacity under its secured financing facilities, $38.3 million available to finance future funding commitments associated with real estate whole loans under Resource Real Estate Funding CDO 2007-1, Ltd. ("RREF CDO 2"), $23.4 million available under a secured term facility and $11.2 million of unused capacity under its unsecured revolving credit facility.

Capital Allocation

As of September 30, 2007, RCC had allocated its equity capital among its targeted asset classes as follows: 75% in commercial real estate loans, 24% in commercial bank loans and 1% in direct financing leases and notes.

About Resource Capital Corp.

Resource Capital Corp. 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 the 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 consolidated balance sheets, consolidated statements of operations and reconciliations of its estimated GAAP net (loss) income to adjusted net income, GAAP net (loss) income to estimated REIT taxable income and GAAP stockholders' equity to economic book value.

               RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS
          (in thousands, except share and per share data)
                                              September 30,  December 31,
                                                  2007           2006
                                              -------------  -------------
                                               (Unaudited)
ASSETS
  Cash and cash equivalents                   $      15,138  $       5,354
  Restricted cash                                    76,887         32,731
  Securities available-for-sale, at fair
   value                                            323,017        420,997
  Loans held for investment, net                  1,806,912      1,240,288
  Direct financing leases and notes, net             82,605         88,970
  Investments in unconsolidated entities              1,548          1,548
  Accrued interest receivable                        14,002          8,839
  Principal paydown receivables                         427            503
  Other assets                                        5,700          3,599
                                              -------------  -------------
    Total assets                              $   2,326,236  $   1,802,829
                                              =============  =============
LIABILITIES
  Borrowings                                  $   2,115,381  $   1,463,853
  Distribution payable                               10,257          7,663
  Accrued interest expense                           13,819          6,523
  Derivatives, at fair value                          8,571          2,904
  Accounts payable and other liabilities              3,910          4,335
                                              -------------  -------------
    Total liabilities                             2,151,938      1,485,278
                                              -------------  -------------
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;
   25,136,866 and 23,821,434 shares issued
   (including 357,382 and 234,224 unvested
   restricted shares)                                    25             24
  Additional paid-in capital                        357,184        341,400
  Deferred equity compensation                            -         (1,072)
  Accumulated other comprehensive loss             (143,166)        (9,279)
  Treasury stock, at cost; 118,900 and 0
   shares, respectively                              (1,280)             -
  Distributions in excess of earnings               (38,465)       (13,522)
                                              -------------  -------------
    Total stockholders' equity                      174,298        317,551
                                              -------------  -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $   2,326,236  $   1,802,829
                                              =============  =============
              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,
                            ----------------------  ----------------------
                               2007        2006        2007        2006
                            ----------  ----------  ----------- ----------
REVENUES
  Securities                $    8,768  $   16,248  $    24,072 $   48,673
  Loans                         37,125      19,905      100,117     46,625
  Leases                         1,856       1,589        5,667      3,391
  Interest income - other          769       1,406        2,080      4,788
                            ----------  ----------  ----------- ----------
  Interest income               48,518      39,148      131,936    103,477
  Interest expense              34,266      30,855       91,255     78,576
                            ----------  ----------  ----------- ----------
      Net interest income       14,252       8,293       40,681     24,901
OTHER REVENUE
  Net realized (losses)
   gains on investments            115      (8,314)         336     (8,853)
  Other income                     310         384          779        391
                            ----------  ----------  ----------- ----------
      Total revenues            14,677         363       41,796     16,439
                            ----------  ----------  ----------- ----------
OPERATING EXPENSES
  Management fees - related
   party                         1,298         917        5,357      3,147
  Equity compensation -
   related party                    94         798          717      1,620
  Professional services            772         480        2,005      1,266
  Insurance                        116         126          351        372
  General and
   administrative                  496         443        1,403      1,220
                            ----------  ----------  ----------- ----------
    Total operating
     expenses                    2,776       2,764        9,833      7,625
OTHER EXPENSES
  Provision for loan and
   lease losses                    326           -          326          -
  Asset impairments             25,490           -       26,277          -
                            ----------  ----------  ----------- ----------
    Total expenses              28,592       2,764       36,436      7,625
                            ----------  ----------  ----------- ----------
NET (LOSS) INCOME           $  (13,915) $   (2,401) $     5,360 $    8,814
                            ==========  ==========  =========== ==========
NET (LOSS) INCOME PER SHARE
 - BASIC                    $    (0.56) $    (0.14) $      0.22 $     0.51
                            ==========  ==========  =========== ==========
NET (LOSS) INCOME PER SHARE
 - DILUTED                  $    (0.56) $    (0.14) $      0.22 $     0.51
                            ==========  ==========  =========== ==========
WEIGHTED AVERAGE NUMBER OF
  SHARES OUTSTANDING -
  BASIC                     24,807,162  17,585,171   24,650,313 17,261,091
                            ==========  ==========  =========== ==========
WEIGHTED AVERAGE NUMBER OF
  SHARES OUTSTANDING -
  DILUTED                   24,807,162  17,585,171   24,910,848 17,388,566
                            ==========  ==========  =========== ==========
DIVIDENDS DECLARED PER
 SHARE                      $     0.41  $     0.37  $      1.21 $     1.06
                            ==========  ==========  =========== ==========
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     Nine Months Ended
                                    September 30,         September 30,
                                --------------------  ---------------------
                                  2007       2006       2007       2006
                                ---------  ---------  ---------- ----------
Net (loss) income - GAAP        $ (13,915) $  (2,401) $    5,360 $    8,814
Add:
  Asset impairments related to
   ABS-RMBS portfolio              25,490          -      26,277          -
  Net realized loss from sale
   of Agency RMBS portfolio             -      8,301           -      8,768
                                ---------  ---------  ---------- ----------
Adjusted net income, excluding
 non-cash charges               $  11,575  $   5,900  $   31,637 $   17,582
                                =========  =========  ========== ==========
Adjusted net income per
 share-diluted, excluding
 non-cash charges (1) (2)       $    0.46  $    0.33  $     1.27 $     1.01
                                =========  =========  ========== ==========
(1) During 2007, RCC began evaluating its performance based on several
    measures, including adjusted net income. Management views adjusted net
    income as a useful and appropriate supplements to net income and net
    income per share. The measure serves as an additional measure of RCC's
    operating performance because it facilitates evaluation of RCC without
    the effects of certain adjustments in accordance with accounting
    principles generally accepted in the U.S. ("GAAP") that may not
    necessarily be indicative of current operating performance. Adjusted
    net income should not be considered as an alternative to net income or
    cash flows from operating activities (each computed in accordance with
    GAAP). Instead, adjusted net income should be reviewed in connection
    with net income and cash flows from operating, investing and financing
    activities in RCC's consolidated financial statements, to help analyze
    how RCC's business is performing. 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 those of other
    REITs.
(2) Includes 137,623 and 135,419 of dilutive shares not used in the
    calculation of net loss per share - diluted for the three months ended
    September 30, 2007 and 2006, respectively, as the effect would have
    been anti-dilutive.
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     Nine Months Ended
                                    September 30,         September 30,
                                --------------------  --------------------
                                  2007       2006       2007       2006
                                ---------  ---------  ---------  ----------
Net (loss) income - GAAP        $ (13,915) $  (2,401) $   5,360  $    8,814
Adjustments:
  Share-based compensation to
   related parties                   (385)       798       (725)      1,620
  Incentive management fee
   expense to related parties
   paid in shares                    (417)         -          -         108
  Capital losses from the sale
   of securities
   available-for-sale                   -     10,875          -      12,286
  Asset impairments related to
   ABS-RMBS portfolio              25,490          -     26,277           -
  Other net book to tax
   adjustments                         90        (49)       139         713
                                ---------  ---------  ---------  ----------
Estimated REIT taxable income   $  10,863  $   9,223  $   31,051 $   23,541
                                =========  =========  ========== ==========
Amounts per share - diluted (2) $    0.44  $    0.52  $     1.25 $     1.35
                                =========  =========  ========== ==========
(1) RCC believes that a presentation of estimated REIT taxable income
    provides useful information to investors regarding its financial
    condition and results of operations 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 by 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 its 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) Includes 137,623 and 135,419 of dilutive shares not used in the
    calculation of net loss per share - diluted for the three months
    ended September 30, 2007 and 2006, respectively, as the effect would
    have been anti-dilutive.
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, 2007
                                                       --------------------
Stockholders' equity - GAAP                            $            174,298
Add:
  Unrealized losses recognized in excess of value at
   risk - ABS-RMBS portfolio                                        128,034
  Unrealized losses recognized in excess of value at
   risk - Derivatives                                                 8,825
                                                       --------------------
Economic book value                                    $            311,157
                                                       ====================
Shares outstanding as of September 30, 2007                      25,017,966
                                                       --------------------
Economic book value per share                          $              12.44
                                                       ====================
(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 our value
    because it facilitates evaluation of us without the effects of
    unrealized losses on investments in excess of our value at risk.
    Under GAAP, we are required to absorb unrealized losses on investments
    of certain of our consolidated entities, primarily our consolidated
    securitizations, even if those unrealized losses are in excess of our
    maximum value at risk, or our investment in those securitizations.
    Unrealized losses recognized in our financial statements, prepared in
    accordance with GAAP, that are in excess of our 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 our consolidated balance sheets,
    to help analyze our value to investors.  Economic book value is
    defined in various ways throughout the REIT industry. Investors should
    consider these differences when comparing our economic book value to
    that of other REITs.
(2) RCC adds back unrealized losses on derivatives (cash flow hedges) that
    are associated with fixed-rate loans that have not been adjusted
    through stockholders' equity for market fluctuations.

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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12th Floor
New York, NY 10019

1845 Walnut Street
18th Floor
Philadelphia, PA 19103
t. 212.506.3899



t. 215.546.5005
RSO (Common Stock)
ExchangeNYSE (US Dollar)
Price$9.35
Change (%) Stock is Down 0.14 (1.48%)
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