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Actionable news in RSO: RESOURCE CAPITAL Corp,

Resource Capital Corp. Reports Results for Three Months Ended March 31, 2016

Highlights and Significant Items

--  Adjusted Funds from Operations ("AFFO") of $0.47 per share-diluted
    (see Schedule I).
--  GAAP net income allocable to common shares of $0.31 per share-diluted.
--  Since the inception of our common stock repurchase program and through
    March 31, 2016, we have repurchased approximately 7.9% of our
    outstanding common shares.
--  RSO repurchased 196,000 Preferred B shares, which had an accretive
    impact to our common shareholders of $1.6 million, or $0.05 per
    share-diluted, during the three months ended March 31, 2016.
--  Net interest income increased $1.6 million, or 7.0%, as compared to
    the three months ended March 31, 2015.
--  On April 25, 2016, RSO liquidated RREF CDO 2006-1, a commercial real
    estate ("CRE") collateralized debt obligation ("CDO") vehicle, and
    received in exchange for its equity interest, collateral with a net
    realizable value of $66.3 million.
--  Common stock cash dividend of $0.42 per share.




Resource Capital Corp. RSO, +0.56% ("RSO" or the "Company"), a real estate investment trust, or REIT, whose investment strategy focuses on CRE assets, commercial mortgage-backed securities ("CMBS"), middle market loans, commercial finance assets and other investments, reported results for the three months ended March 31, 2016. All per share amounts stated in this release take into account the one-for-four reverse stock split effective on August 31, 2015 as though it were in full effect for all periods presented for comparison purposes.

First Quarter 2016 Results

--  RSO reported AFFO for the three months ended March 31, 2016 of $14.7
    million, or $0.47 per share-diluted as compared to $21.3 million, or
    $0.64 per share-diluted for the three months ended March 31, 2015. A
    reconciliation of GAAP net income (loss) to AFFO is set forth in
    Schedule I of this release.
--  GAAP net income (loss) allocable to common shares for the three months
    ended March 31, 2016 was $9.7 million, or $0.31 per share-diluted as
    compared to net income of $9.4 million, or $0.28 per share-diluted for
    the three months ended March 31, 2015.
--  On January 1, 2016, RSO adopted Accounting Standards Update 2015-02:
    Consolidation (Topic 810): Amendments to the Consolidation Analysis
    ("ASU 2015-02") as required. It was determined that RSO is no longer
    the primary beneficiary of the following variable interest entities
    ("VIEs"); and, therefore, they were deconsolidated: RREF CDO 2006-1,
    RREF CDO 2007-1, Apidos Cinco CDO, Pelium Capital Partners, L.P., and
    RCM Global, LLC. As a result of these deconsolidations, RSO will no
    longer reflect the underlying collateral (loans and securities) of
    those VIEs in its consolidated financial statements. Instead, RSO will
    prospectively reflect in its balance sheet its direct investments (the
    "retained investments") in the issued and outstanding securities of
    those VIEs. RSO's retained investments in RREF CDO 2006-1, RREF CDO
    2007-1, Apidos Cinco CDO are now accounted for as investment
    securities, available-for-sale and, as a result, are marked-to-market
    while the RSO's retained investments in Pelium Capital Partners, L.P.,
    and RCM Global, LLC are accounted for as equity method investments.
    RSO has elected to retrospectively reflect the deconsolidation of
    these entities on a modified basis, which resulted in a reduction to
    the beginning balance of retained earnings as of January 1, 2016, of
    $16.9 million, or $0.55 per common share. The reduction to retained
    earnings represents the effect of marking the investments to market as
    of the date of the required adoption of ASU 2015-02 and represents
    discounts to par due to illiquidity premiums and other market forces
    which are expected to be recovered over time as the investments
    approach their respective maturities. To reflect the impact of this
    expectation, we present a reconciliation from GAAP book value to
    economic book value in Schedule IV.




Additional highlights:

Commercial Real Estate

--  CRE loan portfolio of $1.5 billion, at carrying value, is comprised
    100% of senior whole loans as of March 31, 2016.
--  $1.4 billion, or 99%, of floating rate whole loans in the CRE
    portfolio have London Interbank Offered Rate ("LIBOR") floors with a
    weighted average floor of 0.27% as of March 31, 2016.
--  Interest income on whole loans increased by $3.3 million or 20.2%, to
    $19.4 million during the three months ended March 31, 2016 as compared
    to $16.1 million during the three months ended March 31, 2015. For
    comparison purposes, this excludes income in the 2015 period from our
    legacy CRE CDOs deconsolidated in Q1 2016.
--  Closed and funded $573.3 million of new whole loans in the 12 months
    ended March 31, 2016, with a weighted average yield of 5.38%,
    including amortization of origination fees.




The following table summarizes RSO's CRE loan activities and fundings of previous commitments, at par, for the three and 12 months ended March 31, 2016 (in millions, except percentages):

                                Three                  Floating
                                Months     12 Months   Weighted    Weighted
                                Ended        Ended      Average    Average
                              March 31,    March 31,   Spread(1)    Fixed
                                 2016         2016        (2)        Rate
                             -----------  -----------  ---------  ---------
New whole loans funded and
 originated                  $      38.9  $     573.3       5.20%        --%
Unfunded loan commitments           10.2         63.2
                             -----------  -----------
New loans originated                49.1        636.5
Payoffs (3)                        (24.4)      (340.2)
Previous commitments funded         17.3         48.3
Principal pay downs                   --         (1.5)
Unfunded loan commitments          (10.2)       (63.2)
                             -----------  -----------
Loans, net funded            $      31.8  $     279.9
                             ===========  ===========

(1)  Represents the weighted-average rate above the one-month LIBOR on loans
     whose interest rate is based on LIBOR as of March 31, 2016. $38.9
     million of loans originated during the three months ended March 31,
     2016 have LIBOR floors, with a weighted average floor of 0.21%.
(2)  Reflects rates on new whole loans funded and originated during the
     three months ended March 31, 2016.
(3)  CRE loan payoffs and extensions resulted in $207,000 of exit and
     extension fees earned during the three months ended March 31, 2016.



Legacy Commercial Real Estate CDO Liquidation

On April 25, 2016, RSO called and liquidated its investment in RREF CDO 2006-1. RREF CDO 2006-1 was RSO's first CRE CDO which closed on August 10, 2006 and was comprised of $345.0 million of assets at closing. RSO received the remaining collateral of $49.0 million, at par, in exchange for its remaining interest after paying off the CDO debt. In addition, RREF 2006-1 held an interest of $17.25 million, at par, in certain notes of RREF CDO 2007-1 and, as a result, the liquidation increased RSO's net investment in RREF 2007-1. RSO had deferred AFFO, representing cash gains on extinguishment of debt, of $21.4 million as of March 31, 2016. These cash gains will be recognized over subsequent periods as AFFO as RSO receives cash above its cost basis in the repurchased debt.

Commercial Finance & Middle Market Loans

--  RSO's middle market loan portfolio was $326.7 million, at carrying
    value, with a weighted-average spread of one-month and three-month
    LIBOR plus 8.60% at March 31, 2016. There was $153.0 million
    outstanding on RSO's senior secured credit facility used to finance
    middle market lending as of March 31, 2016.
--  Middle market loan payoffs of $105.1 million resulted in $2.6 million
    of prepayment fees earned during the three months ended March 31,
    2016.
--  RSO earned $402,000 of net fees through its subsidiary, Resource
    Capital Asset Management, during the three months ended March 31,
    2016.


The following table summarizes RSO's middle market loan activities and fundings of previous commitments, at par, for the three months and 12 months ended March 31, 2016 (in millions, except percentages):

                     Three
                     Months     12 Months              Weighted
                     Ended        Ended     Weighted    Average    Weighted
                   March 31,    March 31,    Average     All-in    Average
                      2016         2016     Spread(1)   Rate(2)     Yield
                  -----------  -----------  ---------  ---------  ---------
New loans funded
 and originated   $      50.1  $     179.7       9.00%      10.0%      9.70%
Unfunded loan
 commitments              3.6          8.2
                  -----------  -----------
New loans
 originated              53.7        187.9
Payoffs and sales
 (3)                   (105.1)      (149.8)
Previous
 commitments
 funded                   4.3         13.1
Principal pay
 downs                   (3.3)       (11.7)
Unfunded loan
 commitments             (3.6)        (8.2)
                  -----------  -----------
Loans, net funded $     (54.0) $      31.3
                  ===========  ===========

(1)  Represents the weighted-average rate above the one-month and three-
     month LIBOR on loans whose interest rate is based on LIBOR as of March
     31, 2016, excluding fees. Of these loans, $50.1 million have LIBOR
     floors with a weighted average floor of 1.00%.
(2)  Reflects rates on RSO's portfolio balance as of March 31, 2016,
     excluding fees.
(3)  Middle market loan payoffs resulted in $2.6 million of prepayment fees
     earned during the three months ended March 31, 2016.



Liquidity

At March 31, 2016, RSO's liquidity is derived from three primary sources:

--  unrestricted cash and cash equivalents of $71.4 million and restricted
    cash of $540,000 in margin call accounts;
--  capital available for reinvestment in two of RSO's CRE securitizations
    of $7.6 million; and
--  loan principal repayments of $222,000 that will pay down outstanding
    CLO note balances, as well as interest collections of $141,000. In
    addition, RSO had $195,000 in restricted deposits related to certain
    of its investments.




In addition, RSO has $251.1 million and $141.8 million, respectively, available through two term financing facilities to finance the origination of CRE loans and $75.7 million available through a term financing facility to finance the purchase of CMBS. RSO also has $72.0 million available through a middle market syndicated revolving credit facility to finance the direct origination of middle market loans and purchase of syndicated bank loans.

Equity Allocation

As of March 31, 2016, RSO had allocated its invested equity capital among its targeted asset classes as follows: 70% in CRE assets, 27% in commercial finance and middle market assets and 3% in other investments.

Book Value

As of March 31, 2016, RSO's book value per common share was $17.12, a decrease from $17.63 per common share at December 31, 2015. The decrease in book value is primarily attributable to the adoption of new consolidation accounting guidance effective January 1, 2016. Upon adoption, RSO deconsolidated five variable interest entities resulting in a reduction to the beginning balance of retained earnings of $16.9 million, or $0.55 per common share. RSO has provided a schedule on economic book value which adjusts for certain investments which RSO intends to hold to maturity and has recorded unrealized losses on the investments, in excess of RSO's value at risk (See Schedule IV). Total stockholders' equity at March 31, 2016, which measures equity before the consideration of non-controlling interests, was $788.7 million, of which $270.0 million was attributable to preferred stock. Total stockholders' equity at December 31, 2015 was $818.9 million of which $274.7 million was attributable to preferred stock.

Capital Transactions

During the three months ended March 31, 2016, RSO repurchased $7.3 million of its common stock (approximately 643,000 shares). Since the inception of the program through March 31, 2016, RSO has repurchased $33.2 million of its common stock (approximately 2.6 million shares), which represented approximately 7.9% of the outstanding common shares, at a weighted average price of $12.60 per share.

RSO repurchased 196,000 Preferred B shares, which had an accretive impact to our common shareholders of $1.6 million, or $0.05 per share-diluted, during the three months ended March 31, 2016.

In March 2016, RSO's board of directors approved a new securities repurchase program for up to $50.0 million of its outstanding securities.

Investment Portfolio

The following table summarizes the amortized cost and net carrying amount of RSO's investment portfolio as of March 31, 2016, classified by asset type:

                                               Net      Percent    Weighted
                                Amortized    Carrying      of      Average
                                   Cost       Amount   Portfolio    Coupon
                               ----------- ----------- ---------  ---------
As of March 31, 2016
Loans Held for Investment:
  CRE Whole loans(1)           $ 1,453,128 $ 1,451,635     63.75%      5.49%
  Middle market loans(4)           321,240     318,589     13.99%      9.69%
  Residential mortgage
   loans(5)                          1,704       1,693      0.07%      4.20%
                               ----------- ----------- ---------
                                 1,776,072   1,771,917     77.81%
                               ----------- ----------- ---------
Loans held for sale (2):
  Bank loans                           153         153      0.01%    N/A(3)
  Middle market loans                3,459       3,459      0.15%      8.50%
  Residential mortgage loans       122,541     122,541      5.38%      3.73%
                               ----------- ----------- ---------
                                   126,153     126,153      5.54%
                               ----------- ----------- ---------
Investments in Available-for-
 Sale Securities:
  CMBS-private placement            91,192      89,565      3.93%      5.14%
  RMBS                               2,033       2,070      0.09%      4.89%
  ABS                              208,213     208,554      9.16%    N/A(3)
                               ----------- ----------- ---------
                                   301,438     300,189     13.18%
                               ----------- ----------- ---------
Investment Securities-Trading:
  Structured notes                   5,994       3,886      0.17%    N/A(3)
  RMBS                               1,896          --        --%    N/A(3)
                               ----------- ----------- ---------
                                     7,890       3,886      0.17%
                               ----------- ----------- ---------
Other (non-interest bearing):
  Investment in unconsolidated
   entities                         74,356      74,356      3.27%    N/A(3)
  Direct Financing Leases(6)         1,179         714      0.03%      5.66%
                               ----------- ----------- ---------
                                    75,535      75,070      3.30%
                               ----------- ----------- ---------
Total Investment Portfolio     $ 2,287,088 $ 2,277,215    100.00%
                               =========== =========== =========

(1)  Net carrying amount includes allowance for loan losses of $1.5 million
     at March 31, 2016.
(2)  Loans held for sale are carried at the lower of cost or market.
(3)  There is no stated rate associated with these securities.
(4)  Net carrying amount includes allowance for loan losses of $2.7 million
     at March 31, 2016.
(5)  Net carrying amount includes allowance for loan losses of $11,000 at
     March 31, 2016.
(6)  Net carrying amount includes allowance for loan losses of $465,000 at
     March 31, 2016.



Supplemental Information

The following schedules of reconciliations and supplemental information as of March 31, 2016 are included at the end of this release:

--  Schedule I - Reconciliation of GAAP Net Income to Funds from
    Operations ("FFO") and AFFO.
--  Schedule II - Summary of General and Administrative Expenses.
--  Schedule III - Summary of Securitization Performance Statistics.
--  Schedule IV - Reconciliation of GAAP Stockholders' Equity to Economic
    Book Value.
--  Supplemental Information regarding loan investment statistics, CRE
    loans and middle market loans.




About Resource Capital Corp.

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

RSO is externally managed by Resource Capital Manager, Inc., an indirect wholly-owned subsidiary of Resource America, Inc. REXI, -0.49% an asset management company that specializes in real estate and credit investments.

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

Safe Harbor Statement

Statements made in this release may include forward-looking statements, which involve substantial risks and uncertainties. RSO's actual results, performance or achievements could differ materially from those expressed or implied in this release. The risks and uncertainties associated with forward-looking statements contained in this release include those related to:

--  fluctuations in interest rates and related hedging activities;
--  the availability of debt and equity capital to acquire and finance
    investments;
--  defaults or bankruptcies by borrowers on RSO's loans or on loans
    underlying its investments;
--  adverse market trends which have affected and may continue to affect
    the value of real estate and other assets underlying RSO's
    investments;
--  increases in financing or administrative costs; and
--  general business and economic conditions that have impaired and may
    continue to impair the credit quality of borrowers and RSO's ability
    to originate loans.




For further information concerning these and other risks pertaining to the forward-looking statements contained in this release, and to the general risks to which RSO is subject, see Item 1A, "Risk Factors" included in its...


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