PHILADELPHIA, PA, May 03, 2012 (MARKETWIRE via COMTEX) --Resource America, Inc. (NASDAQ: REXI) (the "Company") reported
adjusted income from continuing operations attributable to common
shareholders, a non-GAAP measure, of $726,000, or $0.04 per common
share-diluted, for the second fiscal quarter ended March 31, 2012 as
compared to an adjusted loss from continuing operations attributable
to common shareholders of $1.7 million, or $0.09 per common share
diluted, for the second fiscal quarter ended March 31, 2011. A
reconciliation of the Company's reported GAAP loss from continuing
operations attributable to common shareholders to adjusted income
(loss) from continuing operations attributable to common
shareholders, a non-GAAP measure, is included as Schedule I to this
release.
For the second fiscal quarter and six months ended March 31, 2012,
the Company reported a GAAP net loss attributable to common
shareholders of $2.3 million, or $0.12 per common share-diluted, and
$2.1 million, or $0.11 per common share-diluted, respectively, as
compared to $4.3 million, or $0.22 per common share-diluted, and $4.8
million, or $0.25 per common share-diluted, for the second fiscal
quarter and six months ended March 31, 2011, respectively.
Jonathan Cohen, CEO and President, commented, "The recent completion
of our transaction creating CVC Credit Partners demonstrates the
quality and value of our asset management platforms. We will
recognize a gain of approximately $53 million, received gross
proceeds of $25 million in cash, retained the right to collect
substantial incentive fees and own 33% of a world-class global credit
management business that we think will grow and prosper. Our other
platforms are also advancing robustly. In real estate, both Resource
Opportunity REIT and Resource Capital Corp. are growing and
performing well. We end our second quarter very strong -- our
businesses are doing well, we are growing, our balance sheet is in
excellent condition and we are exploring opportunities to leverage
those strengths to enhance shareholder value."
Assets Under Management
The following table details the Company's assets under management by
operating segment, which decreased by $636.0 million (5%) from March
31, 2011 to March 31, 2012:
At March 31, At March 31,
2012 2011
--------------- ---------------
Financial fund management $ 10.9 billion $ 11.4 billion
Real estate 1.6 billion 1.6 billion
Commercial finance 0.5 billion 0.7 billion
--------------- ---------------
$ 13.0 billion $ 13.7 billion
=============== ===============
A description of how the Company calculates assets under management is
set forth in Item 1 of the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2011.
Highlights for the Second Fiscal Quarter Ended March 31, 2012 and
Recent Developments
REAL ESTATE:
-- Fundraising: Resource Real Estate, Inc. ("RRE"), the Company's real
estate operating segment, has sponsored and is the external manager of
Resource Real Estate Opportunity REIT, Inc. ("RRE Opportunity REIT"),
which is a public non-traded real estate program. RRE Opportunity REIT
raised a record $10.6 million and $23.3 million during the month and
second fiscal quarter ended March 31, 2012. Through April 30, 2012,
RRE Opportunity REIT has raised approximately $112.9 million in total
capital.
-- Resource Capital Corp. ("RSO") Capital Raised: RSO raised an
additional $24.0 million through its dividend reinvestment program
during the second fiscal quarter ended March 31, 2012.
-- Second Quarter RRE Acquisitions: RRE made the following acquisitions:
-- In January 2012, on behalf of an RSO joint venture, a
non-performing note secured by a multifamily rental property
located in Colorado Springs, CO for $5.0 million. In connection
with this purchase, the Company received a $51,000 acquisition fee
and will receive asset management fees in the future.
-- In March 2012, on behalf of one of RRE's sponsored limited
partnerships, a multifamily rental property located in Columbia,
SC for $11.5 million. In connection with this purchase, the
Company received acquisition fees totaling $368,000 and will
receive both asset management and property management fees in the
future.
-- In March 2012, on behalf of RRE Opportunity REIT, a multifamily
rental property located in Houston, TX for $11.4 million. In
connection with this purchase, the Company received a $234,000
acquisition fee and will receive both asset management and
property management fees in the future.
-- In March 2012, on behalf of RRE Opportunity REIT, a non-performing
note secured by a multifamily rental property located in
Hermantown, MN for $10.3 million. In connection with this
purchase, the Company received a $217,000 acquisition fee and will
receive asset management fees in the future.
-- Disposition: In March 2012, RRE sold a $20.0 million multifamily
property in Suitland, MD for a joint venture with an existing partner,
in which RSO is a member. In connection with this sale, the Company
earned a promoted return of $1.2 million and a $144,000 disposition
fee.
-- Resolution of Equity Interest: In January 2012, RRE, along with an
existing joint venture partner, sold its interest in a multifamily
property in Cleveland, OH and received proceeds of $327,000.
-- Property Management: Resource Real Estate Management, Inc., the
Company's property management subsidiary, increased the apartment
units it manages to 16,513 units at 59 properties as of March 31, 2012
from 15,204 units at 55 properties as of December 31, 2011.
FINANCIAL FUND MANAGEMENT:
-- Creation of Global Credit Manager: In December 2011, the Company
entered into a definitive agreement with CVC Capital Partners
SICAV-FIS, S.A. ("CVC"), to create CVC Credit Partners, L.P. ("CCP"),
a newly-formed Cayman Islands limited partnership jointly owned by the
Company and CVC. CCP will be a global credit management business with
over $7.5 billion in assets under management and offices in both the
United States and Europe. On April 17, 2012, the Company closed on its
sale of 100% of the common equity interests of Apidos Capital
Management, LLC ("Apidos"). Pursuant to the sale and purchase
agreement and related agreements between the Company and CVC dated as
of December 29, 2011 (collectively, the "SPA"), the Company sold
Apidos in exchange for (i) $25.0 million in cash, (ii) a 33% limited
partner interest in CCP and its general partner. The Company is
retaining certain incentive management fees that may be collected in
the future relating to previously managed portfolios. The Company
anticipates that these fees will begin to be collected in 2013. CVC is
also contributing its existing credit manager, CVC Cordatus, to CCP.
COMMERCIAL FINANCE:
-- Lease Origination/Platform Growth: LEAF Commercial Capital, Inc.
("LEAF") continued to grow its lease origination and servicing
operations during the second fiscal quarter ended March 31, 2012.
-- Lease originations continue to trend upward, having increased by
159% and 26% during the second fiscal quarter ended March 31, 2012
as compared to the second fiscal quarter ended March 31, 2011 and
the first fiscal quarter ended December 31, 2011, respectively.
-- LEAF's commercial finance assets at March 31, 2012 increased by
40% from September 30, 2011.
-- LEAF continues to further expand its field sales presence to
provide dedicated support to its top-priority dealers. Highly
experienced industry experts were added to the Northeastern,
Midwestern, and Southern California market places. LEAF's field
sales team will work with key dealers and branch offices of its
national accounts by developing unique offerings and providing
support to build the relationships with those dealers.
-- LEAF launched its enhanced Cost Per Usage billing product and
announced that it has become a Gold Technology Partner of Digital
Gateway. The LEAF interface streamlines the process of
transferring asset and transactional data from the Digital Gateway
system, thereby reducing meter errors and accelerating the billing
process.
OTHER:
-- Corporate Credit Facility Modification: In January 2012, the Company
extended its existing $3.5 million revolving credit facility with
Republic Bank from December 2012 to December 2013.
-- Dividends: The Company's Board of Directors authorized the payment on
April 30, 2012 of a $0.03 cash dividend per share on the Company's
common stock to holders of record as of the close of business on April
20, 2012. RSO declared a cash dividend of $0.20 per common share for
its first fiscal quarter ended March 31, 2012.
Resource America, Inc. is a specialized asset management company that
uses industry specific expertise to evaluate, originate, service and
manage investment opportunities for its own account and for outside
investors in the real estate, financial fund management and
commercial finance sectors.
For more information, please visit our website at
www.resourceamerica.com or contact investor relations at
pkamdar@resourceamerica.com.
Statements made in this release include forward-looking statements,
which involve substantial risks and uncertainties. The Company's
actual results, performance or achievements could differ materially
from those expressed or implied in this release and its other reports
filed with the Securities and Exchange Commission. For information
pertaining to risks relating to these forward-looking statements,
reference is made to the section "Risk Factors" contained in Item 1A
of the Company's Annual Report on Form 10-K and in other of its
public filings with the Securities and Exchange Commission. The
Company undertakes no obligation to update or revise any
forward-looking statements to reflect new or changing information or
events except as may be required by law.
A registration statement relating to securities offered by RRE
Opportunity REIT was declared effective by the SEC on June 16, 2010.
A written prospectus relating to these securities may be obtained by
contacting Resource Securities, Inc., 2005 Market Street, 15th Floor,
Philadelphia, PA 19103.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy any of the securities described
herein, nor shall there be any sale of these securities in any state
or jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of any such state or jurisdiction.
The remainder of this release contains the Company's unaudited
consolidated balance sheets, consolidated statements of operations
and consolidated statements of cash flows and reconciliation of GAAP
loss from continuing operations attributable to common shareholders
to adjusted income (loss) from continuing operations attributable to
common shareholders.
RESOURCE AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, September 30,
2012 2011
------------- -------------
(unaudited)
ASSETS
Cash $ 9,918 $ 24,455
Restricted cash 628 20,257
Receivables 475 1,981
Receivables from managed entities and
related parties, net 51,329 54,815
Investments in commercial finance, net - 192,012
Investments in real estate 19,541 19,942
Investment securities, at fair value 16,483 15,124
Investments in unconsolidated entities 12,742 12,710
Property and equipment, net 3,160 6,998
Deferred tax assets, net 48,711 51,581
Goodwill - 7,969
Other assets 5,505 14,662
------------- -------------
Total assets $ 168,492 $ 422,506
============= =============
LIABILITIES AND EQUITY
Liabilities:
Accrued expenses and other liabilities $ 21,515 $ 40,887
Payables to managed entities and related
parties 1,311 1,232
Borrowings 28,132 222,659
------------- -------------
Total liabilities 50,958 264,778
------------- -------------
Commitments and contingencies
Equity:
Preferred stock, $1.00 par value, 1,000,000
shares authorized; none outstanding - -
Common stock, $.01 par value, 49,000,000
shares authorized; 28,811,012 and
28,779,998 shares issued, respectively
(including nonvested restricted stock of
417,155 and 649,007, respectively) 284 281
Additional paid-in capital 281,692 281,686
Accumulated deficit (51,290) (48,032)
Treasury stock, at cost; 9,314,218 and
9,126,966 shares, respectively (99,672) (98,954)
Accumulated other comprehensive loss (13,760) (14,613)
------------- -------------
Total stockholders' equity 117,254 120,368
Noncontrolling interests 280 37,360
------------- -------------
Total equity 117,534 157,728
------------- -------------
$ 168,492 $ 422,506
============= =============
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
-------------------- --------------------
2012 2011 2012 2011
--------- --------- --------- ---------
REVENUES:
Real estate $ 9,716 $ 6,258 $ 18,382 $ 13,132
Financial fund management 6,304 7,612 12,883 15,942
Commercial finance (1,240) 6,477 2,179 7,953
--------- --------- --------- ---------
14,780 20,347 33,444 37,027
--------- --------- --------- ---------
COSTS AND EXPENSES:
Real estate 7,407 6,088 14,599 11,549
Financial fund management 4,379 5,960 10,183 12,680
Commercial finance 230 3,693 2,193 7,966
Restructuring expenses 365 - 365 -
General and administrative 2,467 2,897 5,363 6,013
Gain on sale of leases and loans - (252) (37) (263)
Provision for credit losses 2,962 2,719 5,212 4,325
Depreciation and amortization 535 2,921 2,596 4,046
--------- --------- --------- ---------
18,345 24,026 40,474 46,316
--------- --------- --------- ---------
OPERATING LOSS (3,565) (3,679) (7,030) (9,289)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Gain on deconsolidation of LEAF - - 8,749 -
Loss on extinguishment of debt - - (2,190) -
Gain on sale of management
contract - - - 6,520
Gain on extinguishment of
servicing and repurchase
liabilities - 4,426 - 4,426
Gain (loss) on sale of
investment securities, net 5 97 63 (1,364)
Impairment loss recognized in
earnings (74) - (74) -
Interest expense (645) (4,167) (3,619) (6,536)
Other income, net 625 203 1,184 1,289
--------- --------- --------- ---------
(89) 559 4,113 4,335
--------- --------- --------- ---------
Loss from continuing operations
before taxes (3,654) (3,120) (2,917) (4,954)
Income tax benefit (1,323) (1,290) (1,169) (1,932)
--------- --------- --------- ---------
Loss from continuing operations (2,331) (1,830) (1,748) (3,022)
Loss from discontinued
operations, net of tax (16) (2,153) (36) (2,153)
--------- --------- --------- ---------
Net loss (2,347) (3,983) (1,784) (5,175)
Add: net loss (income)
attributable to noncontrolling
interests 39 (283) (339) 342
--------- --------- --------- ---------
Net loss attributable to common
shareholders $ (2,308) $ (4,266) $ (2,123) $ (4,833)
========= ========= ========= =========
Amounts attributable to common
shareholders:
Loss from continuing operations $ (2,292) $ (2,113) $ (2,087) $ (2,680)
Discontinued operations (16) (2,153) (36) (2,153)
--------- --------- --------- ---------
Net loss $ (2,308) $ (4,266) $ (2,123) $ (4,833)
========= ========= ========= =========
Basic and diluted loss per
share:
Continuing operations $ (0.12) $ (0.11) $ (0.11) $ (0.14)
Discontinued operations - (0.11) - (0.11)
--------- --------- --------- ---------
Net loss $ (0.12) $ (0.22) $ (0.11) $ (0.25)
========= ========= ========= =========
Weighted average shares
outstanding 19,437 19,355 19,575 19,213
========= ========= ========= =========
Dividends declared per common
share $ 0.03 $ 0.03 $ 0.06 $ 0.06
========= ========= ========= =========
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
March 31,
--------------------
2012 2011
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,784) $ (5,175)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 3,693 6,243
Provision for credit losses 5,212 4,325
Equity in earnings of unconsolidated entities (228) (1,944)
Distributions from unconsolidated entities 2,021 2,751
Gain on sale of leases and loans (37) (263)
(Gain) loss on sale of loans and investment
securities, net (63) 1,364
Impairment loss recognized in earnings 74 -
Gain on deconsolidation of LEAF (8,749) -
Loss on extinguishment of debt 2,190 -
Gain on sale of management contract - (6,520)
Extinguishment of servicing and repurchase
liabilities - (4,426)
Deferred income tax benefit (1,169) (3,065)
Equity-based compensation issued 817 1,401
Equity-based compensation received (164) (33)
Loss from discontinued operations 36 2,153
Changes in operating assets and liabilities (4,296) (1,047)
--------- ---------
Net cash used in operating activities (2,447) (4,236)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (95) (411)
Payments received on real estate loans and real estate 1,550 -
Investments in unconsolidated real estate entities (503) (419)
Purchase of commercial finance assets (18,483) (25,790)
Principal payments received on leases and loans 9,037 -
Cash divested on deconsolidation of LEAF (2,284) -
Proceeds from sale of management contract - 9,095
Purchase of loans and investments (736) -
Proceeds from sale of loans and investments 277 3,341
--------- ---------
Net cash used in investing activities (11,237) (14,184)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings 128,845 31,000
Principal payments on borrowings (123,924) (13,756)
Dividends paid (1,135) (1,105)
Proceeds from issuance of common stock - 1,853
Repurchase of common stock (955) -
Proceeds from issuance of LEAF preferred stock - 10,221
Preferred stock dividends paid by LEAF to RCC (188) -
Payment of debt financing costs (1,864) (1,075)
Increase in restricted cash (652) (3,518)
Other (411) -
--------- ---------
Net cash (used in) provided by financing activities (284) 23,620
--------- ---------
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities (569) 52
--------- ---------
Net cash (used in) provided by discontinued operations (569) 52
--------- ---------
(Decrease) increase in cash (14,537) 5,252
Cash at beginning of year 24,455 11,243
--------- ---------
Cash at end of period $ 9,918 $ 16,495
========= =========
SCHEDULE I
RECONCILIATION OF GAAP LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO
COMMON SHAREHOLDERS TO ADJUSTED INCOME (LOSS) FROM
CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (1)
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
--------------------
2012 2011
--------- ---------
Loss from continuing operations attributable to common
shareholders - GAAP $ (2,292) $ (2,113)
Adjustments, net of tax:
Loss from commercial finance operations (2) 2,785 370
Restructuring costs 233 -
Deferred tax assets - 49
--------- ---------
Adjusted income (loss) from continuing operations
attributable to common shareholders $ 726 $ (1,694)
========= =========
Adjusted weighted average diluted shares outstanding
(3) 20,355 19,355
========= =========
Adjusted income (loss) from continuing operations
attributable to common shareholders per common per
share-diluted $ 0.04 $ (0.09)
========= =========
(1) Adjusted income (loss) from continuing operations attributable to
common shareholders presents the Company's operations without the
effect of its commercial finance operations and restructuring costs.
The Company believes that this provides useful information to investors
since it allows investors to evaluate the Company's progress in both
its real estate and financial fund management segments for the three
months ended March 31, 2012 and 2011 separately from its commercial
finance operations. Adjusted income (loss) from continuing operations
attributable to common shareholders should not be considered as an
alternative to loss from continuing operations attributable to common
shareholders (computed in accordance with GAAP). Instead, adjusted
income (loss) from continuing operations attributable to common
shareholders should be reviewed in connection with loss from continuing
operations attributable to common shareholders in the Company's
consolidated financial statements, to help analyze how the Company's
business is performing.
(2) Loss from commercial finance operations consists of revenues and
expenses from commercial finance operations (including gains or losses
from the sale of leases and loans, provision for credit losses and
depreciation and amortization) net of applicable tax benefits and non-
controlling interests.
(3) Dilutive shares used in the calculation of adjusted income from
continuing operations attributable to common shareholders per common
share-diluted includes an additional 918,000 shares for the three
months ended March 31, 2012, which were antidilutive for the period
and, as such, were not used in the calculation of GAAP loss from
continuing operations attributable to common shareholders per common
share-diluted.
CONTACT:
THOMAS C. ELLIOTT
CHIEF FINANCIAL OFFICER
RESOURCE AMERICA, INC.
ONE CRESCENT DRIVE, SUITE 203
PHILADELPHIA, PA 19112
(215) 546-5005
(215) 640-6357 (fax)
SOURCE: Resource America, Inc.
