Press Release

Printer Friendly Version View printer-friendly version
<< Back
Resource Capital Corp. Reports Results for Second Quarter Ended June 30, 2008
NEW YORK, NY, Aug 04, 2008 (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 second quarter ended June 30, 2008.

Financial Summary

--  REIT taxable income, a non-GAAP measure, for the three and six months
    ended June 30, 2008 was $9.4 million or $0.38 per share-diluted and $21.5
    million or $0.86 per share-diluted, respectively, as compared to $10.5
    million or $0.42 per share-diluted and $20.2 million or $0.81 per share-
    diluted for the three and six months ended June 30, 2007, respectively, a
    decrease of $1.1 million (10%) and an increase of $1.3 million (6%),
    respectively. RCC announced a dividend distribution of $0.41 per common
    share for the quarter ended June 30, 2008, unchanged from the quarters
    ended March 31, 2008 and June 30, 2007.
--  Adjusted net income, a non-GAAP measure excluding the effect of non-
    cash charges and non-operating capital transactions, of $9.3 million, or
    $0.37 per share-diluted for the quarter ended June 30, 2008 as compared to
    $10.6 million, or $0.43 per share-diluted for the quarter ended June 30,
    2007, a decrease of $1.4 million (13%).
--  Economic book value, a non-GAAP measure, was $11.34 per common share
    as of June 30, 2008.
--  GAAP book value was $9.90 per common share as of June 30, 2008.
--  GAAP net loss of $0.21 per share-diluted, including non-cash charges
    for loan and lease losses of $14.5 million or $0.58 per share-diluted, for
    the second quarter ended June 30, 2008.
--  Paydowns on RCC's bank loan portfolio were $25.5 million for the
    quarter ended June 30, 2008. Paydowns on RCC's commercial real estate loan
    portfolio were $164,000 for the quarter ended June 30, 2008.
--  As of July 31, 2008, short-term repurchase agreement borrowings were
    down to $880,000 from $7.6 million as of March 31, 2008.


Jonathan Cohen, CEO and President of RCC, commented, "With the exception of one loan which defaulted in the first quarter of 2008 that we fully reserved for this quarter, the credit quality of our loan portfolio appears to be stable in the current credit environment. We have increased our general reserves but feel confident that our portfolio quality is intact. Although our prepayments this quarter were virtually non-existent, we expect that prepayments will increase, based upon our conversations with several of our borrowers. As these prepayments occur, we will be able to continue to reinvest at very attractive spreads thereby increasing portfolio income and realizing exit fees. We also worked hard to eliminate all but $880,000 of short term recourse liabilities."

The following schedules of reconciliations as of June 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 second quarter ended June 30, 2008 and recent developments include:

General

--  RCC's net interest income decreased by $0.3 million, or 2%, to $13.3
    million for the second quarter ended June 30, 2008, as compared to $13.6
    million for the same period in 2007.


Commercial Real Estate

--  RCC produced new commercial real estate ("CRE") loans, on a gross
    basis, of $7.7 million during the second quarter ended June 30, 2008. The
    aggregate net portfolio of CRE loans grew by $12.1 million to $903.8
    million at June 30, 2008, from $891.7 million at June 30, 2007, not
    including future funding obligations of $17.9 million.


The following table summarizes RCC's CRE loan origination activities and future funding obligations, at par, for the three, six and 12 months ended June 30, 2008 (in millions, except percentages):

TABLE WITH 3 FOOTNOTES

Commercial Finance

--  RCC's bank loan portfolio ended the second quarter with total
    investments of $946.9 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 second quarter with
    $92.6 million, at cost, in direct financing leases and notes at a weighted-
    average rate of 9.23%. RCC's leasing portfolio is match-funded through a
    secured term facility, which had a balance of $85.8 million as of June 30,
    2008 and a weighted-average interest rate of 3.84%.


Book Value

As of June 30, 2008, RCC's GAAP book value per common share was $9.90. Total stockholders' equity was $250.3 million as of June 30, 2008 as compared to $271.6 million as of December 31, 2007. Total common shares outstanding were 25,282,632 as of June 30, 2008 as compared to 25,103,532 as of December 31, 2007.

As of June 30, 2008, RCC's economic book value per common share outstanding, a non-GAAP measure, was $11.34. 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 June 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):

                  Three                              Floating    Weighted
                  Months    Six Months  12 Months    Weighted     Average
                Ended June  Ended June  Ended June   Average      Fixed
                 30, 2008    30, 2008    30, 2008   Spread (1)   Rate (1)
                ----------  ----------  ----------  ----------  ----------
Whole loans     $      7.7  $     43.3  $    167.5        2.89%       7.81%
Whole loans,
 future funding
 obligations             -           -        17.9         N/A         N/A
B notes                  -           -           -        2.78%       7.57%
Mezzanine loans          -           -           -        2.61%       8.15%
CMBS                     -           -        14.0      N/A (2)       5.06%
                ----------  ----------  ----------
New loans
 production            7.7        43.3       199.4
Payoffs                  -       (11.4)     (106.4)
Principal
 paydowns             (2.4)       (4.5)      (16.1)
Whole loans,
 future funding
 obligations             -           -       (17.9)
Sales of CMBS            -       (10.0)      (10.0)
                ----------  ----------  ----------
Net - new loans        5.3        17.4        49.0
Other                  0.5         0.8         1.5
                ----------  ----------  ----------
New loans, net
 (3)            $      5.8  $     18.2  $     50.5
                ==========  ==========  ==========
(1) Reflects rates on our portfolio balance as of June 30, 2008.
(2) Weighted average floating rate coupon of 4.87% at June 30, 2008.
(3) The basis of new net loans does not include provisions on commercial
    real estate loans of $11.6 million for the three months ended June 30,
    2008, of $11.7 million for the six months ended June 30, 2008 and $14.8
    million for the 12 months ended June 30, 2008.

Liquidity

At July 31, 2008, RCC's liquidity consists of three primary sources:

--  unrestricted cash and cash equivalents of $7.1 million and restricted
    cash of $7.0 million comprised of $4.0 million in margin call accounts and
    $3.0 million related to its leasing portfolio;
--  capital available for reinvestment in its five collateralized debt
    obligation ("CDO") entities of $44.4 million, which is made up of $27.0
    million of restricted cash and $17.4 million of availability to finance
    future funding commitments on commercial real estate loans; and
--  financing available under existing borrowing facilities of $26.5
    million, comprised of $16.5 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 $83.4
    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 June 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. (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 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.

                                                           Net
                                                         carrying
                                     Net               amount less
             Amortized   Dollar    carrying    Dollar   amortized   Dollar
                cost     price     amount      price       cost     price
            ------------ ------  -----------   ------  -----------  ------
June 30,
 2008
Floating
 rate
CMBS -
 private
 placement  $     39,212  94.58% $    26,773    64.58% $   (12,439) -30.00%
Other ABS          5,665  94.42%         300     5.00%      (5,365) -89.42%
B notes (1)       33,545 100.03%      33,462    99.78%         (83)  -0.25%
Mezzanine
 loans (1)       130,132 100.04%     129,807    99.79%        (325)  -0.25%
Whole loans
 (1)             473,493  99.55%     472,309    99.31%      (1,184)  -0.24%
Bank loans
 (2)             946,917  99.59%     857,274(4) 90.16%     (89,643)  -9.43%
            ------------         -----------           -----------
  Total
   floating
   rate     $  1,628,964  99.48% $ 1,519,925    92.82% $  (109,039)  -6.66%
            ============         ===========           ===========
Fixed rate
CMBS -
 private
 placement  $     31,114  94.94% $    20,001    61.03% $   (11,113) -33.91%
B notes (1)       55,792 100.14%      55,652    99.89%        (140)  -0.25%
Mezzanine
 loans (1)        81,236  94.67%      68,374    79.68%     (12,862) -14.99%
Whole loans
 (1)              97,669  99.41%      97,425    99.17%        (244)  -0.24%
Equipment
 leases and
 notes (3)        92,597 100.00%      92,104    99.47%        (493)  -0.53%
            ------------         -----------           -----------
  Total
   fixed
   rate     $    358,408  98.16% $   333,556    91.35% $   (24,852)  -6.81%
            ============         ===========           ===========
    Grand
     total  $  1,987,372  99.24% $ 1,853,481    92.55% $  (133,891)  -6.69%
            ============         ===========           ===========
(1) Net carrying amount includes an allowance for loan losses of $14.9
    million at June 30, 2008, allocated as follows:  B notes ($0.2
    million), mezzanine loans ($13.2 million) and whole loans ($1.5
    million).
(2) Net carrying amount includes a $5.4 million allowance for loan losses
    at June 30, 2008.
(3) Net carrying amount includes a $493,000 allowance for lease losses at
    June 30, 2008.
(4) Bank loan portfolio is carried at amortized cost less allowance for
    loan loss.
                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                     (in thousands, except share data)
                                                    June 30,   December 31
                                                      2008         2007
                                                  -----------  -----------
                                                  (Unaudited)
ASSETS
  Cash and cash equivalents                       $    14,255  $     6,029
  Restricted cash                                      36,292      119,482
  Investment securities available-for-sale,
   pledged as collateral, at fair value                47,074       65,464
  Loans, pledged as collateral and net of
   allowances of $20.3 million and $5.9 million     1,798,504    1,766,639
  Direct financing leases and notes, pledged as
   collateral and net of allowances of
   $0.5 million and $0.3 million and net of
   unearned income                                     92,104       95,030
  Investments in unconsolidated entities                1,548        1,805
  Interest receivable                                   9,112       11,965
  Principal paydown receivables                            60          836
  Other assets                                          5,072        4,898
                                                  -----------  -----------
    Total assets                                  $ 2,004,021  $ 2,072,148
                                                  ===========  ===========
LIABILITIES
  Borrowings                                      $ 1,722,244  $ 1,760,969
  Distribution payable                                 10,440       10,366
  Accrued interest expense                              4,599        7,209
  Derivatives, at fair value                           12,833       18,040
  Accounts payable and other liabilities                3,557        3,958
                                                  -----------  -----------
    Total liabilities                               1,753,673    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; 25,282,632 and 25,103,532
   shares issued and outstanding (including
   491,195 and 581,493 unvested restricted
   shares)                                                 25           25
  Additional paid-in capital                          355,969      355,205
  Accumulated other comprehensive loss                (43,579)     (38,323)
  Distributions in excess of earnings                 (62,067)     (45,301)
                                                  -----------  -----------
    Total stockholders' equity                        250,348      271,606
                                                  -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $ 2,004,021  $ 2,072,148
                                                  ===========  ===========
                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
              (in thousands, except share and per share data)
                                (Unaudited)
                              Three Months Ended       Six Months Ended
                                   June 30,                June 30,
                            ----------------------  ----------------------
                               2008        2007        2008        2007
                            ----------  ----------  ----------  ----------
REVENUES
  Loans                     $   28,686  $   33,107  $   61,125  $   63,388
  Securities                     1,158       7,908       2,339      15,304
  Leases                         1,961       1,901       3,951       3,811
  Interest income - other          453         910       1,826       1,311
                            ----------  ----------  ----------  ----------
  Interest income               32,258      43,826      69,241      83,814
  Interest expense              18,924      30,222      42,072      56,989
                            ----------  ----------  ----------  ----------
    Net interest income         13,334      13,604      27,169      26,825
OPERATING EXPENSES
  Management fees - related
   party                         1,171       2,027       2,909       4,059
  Equity compensation-
   related party                   541         137         622         623
  Professional services            664         541       1,456       1,233
  Insurance expenses               170         114         298         235
  General and
   administrative                  343         324         698         736
  Income tax expense               138          26         167         171
                            ----------  ----------  ----------  ----------
    Total expenses               3,027       3,169       6,150       7,057
                            ----------  ----------  ----------  ----------
NET OPERATING INCOME            10,307      10,435      21,019      19,768
                            ----------  ----------  ----------  ----------
OTHER (EXPENSE) REVENUE
  Net realized gains
   (losses) on investments         102         152      (1,893)        222
  Asset impairments                  -        (788)          -        (788)
  Other income                      26          37          59          73
  Provision for loan and
   lease losses                (15,692)          -     (16,829)          -
  Gain on the
   extinguishment of debt            -                   1,750           -
                            ----------              ----------  ----------
    Total other (expenses)
     revenues                  (15,564)       (599)    (16,913)       (493)
                            ----------  ----------  ----------  ----------
NET (LOSS) INCOME           $   (5,257) $    9,836  $    4,106  $   19,275
                            ==========  ==========  ==========  ==========
NET (LOSS) INCOME PER SHARE
 - BASIC                    $    (0.21) $     0.40  $     0.17  $     0.78
                            ==========  ==========  ==========  ==========
NET (LOSS) INCOME PER SHARE
 - DILUTED                  $    (0.21) $     0.39  $     0.16  $     0.77
                            ==========  ==========  ==========  ==========
WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING -
 BASIC                      24,721,063  24,704,471  24,665,840  24,569,694
                            ==========  ==========  ==========  ==========
WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING -
 DILUTED                    24,721,063  24,944,162  24,922,340  24,891,686
                            ==========  ==========  ==========  ==========
DIVIDENDS DECLARED PER
 SHARE                      $     0.41  $     0.41  $     0.82  $     0.80
                            ==========  ==========  ==========  ==========
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   Six Months Ended
                                         June 30,            June 30,
                                    ------------------  ------------------
                                      2008       2007     2008       2007
                                    --------  --------- --------  ---------
Net (loss) income - GAAP            $ (5,257) $   9,836 $  4,106  $  19,275
Adjustments:
  Provision for loan and lease losses
   (2)                                15,692          -   16,829          -
  Realized loss on the sale of loans
   included in provision              (1,182)         -   (1,533)         -
  Asset impairments related to
   ABS-RMBS Portfolio                      -        788        -        788
  Capital losses on the sale of
   available-for-sale
   securities                              -          -    2,000          -
  Gain on the extinguishment of debt       -          -   (1,750)         -
                                    --------  --------- --------  ---------
Adjusted net income, excluding
 non-cash charges and
 non-operating
 capital transactions               $  9,253  $  10,624 $ 19,652  $  20,063
                                    ========  ========= ========  =========
Adjusted net income per share -
 diluted, excluding
 non-cash
 charges and non-operating
 capital transactions               $   0.37  $    0.43 $   0.79  $    0.81
                                    ========  ========= ========  =========
(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 June 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 June 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.
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   Six Months Ended
                                         June 30,            June 30,
                                    ------------------  ------------------
                                      2008      2007      2008      2007
                                    --------  --------  --------  --------
Net (loss) income - GAAP            $ (5,257) $  9,836  $  4,106  $ 19,275
Adjustments:
  Share-based compensation to
   related parties                      (392)     (345)     (539)     (340)
  Incentive management fee expense
   to related parties paid in
   shares                                  -       231         -       417
  Capital loss carryover
   (utilization)/losses from the
   sale of securities                      -         -     2,000         -
  Provisions for loan and lease
   losses unrealized                  11,629         -    11,685         -
  Net book to tax adjustments for
   the Company's taxable foreign
   REIT subsidiaries                   3,462       (15)    4,237       (34)
  Addback of GAAP loss reserve             -       856         -       856
  Other net book to tax adjustments        1       (45)        9        14
                                    --------  --------  --------  --------
Estimated REIT taxable income       $  9,443  $ 10,518  $ 21,498  $ 20,188
                                    ========  ========  ========  ========
Amounts per share - diluted         $   0.38  $   0.42  $   0.86  $   0.81
                                    ========  ========  ========  ========
(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 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
                                                              June 30, 2008
                                                              -------------
Stockholders' equity - GAAP                                   $     250,348
Add:
  Unrealized losses - CMBS portfolio                                 23,552
  Unrealized losses recognized in excess of value at risk -
   interest rate swaps                                               12,833
                                                              -------------
Economic book value                                           $     286,733
                                                              =============
Shares outstanding as of June 30, 2008                               25,283
                                                              -------------
Economic book value per share                                 $       11.34
                                                              =============
(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
    adjusted through stockholders' equity for market fluctuations.
                  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 June 30, 2008 and 2007 (based on par
value):
                                                          As of June 30,
                                                        ------------------
                                                          2008      2007
                                                        --------  --------
Non-performing:
  Loans and leases                                      $ 17,283  $      -
  Loans and leases as a percentage of total loans and
   leases                                                    0.9%        -%
Allowance for loan and lease losses:
  Specific provision                                    $ 15,494  $      -
  General provision                                        5,277         -
                                                        --------  --------
  Total allowance for loan and leases                   $ 20,771  $      -
                                                        ========  ========
  Percentage of total                                        1.1%        -%
                  RESOURCE CAPITAL CORP. AND SUBSIDIARIES
               SUPPLEMENTAL INFORMATION, A NON-GAAP MEASURE
                               (Unaudited)
The following table presents commercial real estate loan portfolio
statistics as of June 30, 2008 (based on par value):
Security type
  Whole loans                                                         65.3%
  Mezzanine loans                                                     24.6%
  B Notes                                                             10.1%
                                                                     -----
    Total                                                            100.0%
                                                                     =====
Collateral type
  Multifamily                                                         30.7%
  Hotel                                                               24.7%
  Office                                                              23.0%
  Retail                                                              16.1%
  Condo                                                                1.6%
  Flex                                                                 0.8%
  Self-storage                                                         0.7%
  Other                                                                2.4%
                                                                     -----
    Total                                                            100.0%
                                                                     =====
Collateral location
  Southern California                                                 25.2%
  Northern California                                                 15.5%
  New York                                                            10.5%
  Arizona                                                              8.2%
  Texas                                                                4.6%
  Florida                                                              4.3%
  Tennessee                                                            3.6%
  Washington                                                           3.5%
  Colorado                                                             3.4%
  Other states < $25M                                                 21.2%
                                                                     -----
    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 June 30, 2008 (based on par value):
Industry type
  Healthcare, education and childcare                                 10.8%
  Diversified/conglomerate service                                     9.1%
  Printing and publishing                                              5.9%
  Chemicals, plastics and rubber                                       5.7%
  Broadcasting and entertainment                                       5.7%
  Retail stores                                                        5.1%
  Automobile                                                           4.0%
  Leasure, amusement, motion pictures, entertainment                   4.0%
  Hotels, motels, inns and gaming                                      3.8%
  Utilities                                                            3.7%
  Oil and gas                                                          3.6%
  Finance                                                              3.5%
  Other                                                               35.1%
                                                                     -----
    Total                                                            100.0%
                                                                     =====
The following chart describes equipment leases and notes by industry as of
June 30, 2008 (based on par value):
Industry type
Services                                                              53.1%
Transportation, communications, electric, gas and sanitary services   10.6%
Retail trade                                                           9.2%
Finance, insurance and real estate                                     6.2%
Manufacturing                                                          5.7%
Construction                                                           4.9%
Agriculture, forestry and fishing                                      4.6%
Wholesale trade                                                        3.1%
Other                                                                  2.6%
                                                                     -----
    Total                                                            100.0%
                                                                     =====

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.

Investor News
New York and Philadelphia Locations
712 Fifth Avenue
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$9.69
Change (%) Stock is Up 0.05 (0.52%)
Volume140,099
Data as of 05/26/17 4:00 p.m. ET
Minimum 20 minute delay
Refresh quote