Resource Capital Corp. Reports Results for Three Months and Year Ended December 31, 2014
(firmenpresse) - NEW YORK, NY -- (Marketwired) -- 02/25/15 -- Resource Capital Corp. (NYSE: RSO)
(NYSE: RSO) , a real estate investment trust, or REIT, whose investment strategy focuses on commercial real estate assets, commercial mortgage-backed securities ("CMBS"), commercial finance assets and other investments, reported results for the three months and year ended December 31, 2014.
AFFO for the three months and year ended December 31, 2014 was $21.7 million, or $0.17 per share-diluted and $94.9 million, or $0.73 per share-diluted, respectively, as compared to $17.2 million, or $0.14 per share-diluted and $88.6 million, or $0.74 per share-diluted for the three months and year ended December 31, 2013, respectively. A reconciliation of GAAP net income to AFFO is set forth in Schedule I of this release.
GAAP net income allocable to common shares for the three months and year ended December 31, 2014 was $6.9 million, or $0.05 per share-diluted, and $44.0 million, or $0.34 per share-diluted, respectively, as compared to a net loss of $948,000, or $(0.01) per share-diluted and net income of $39.2 million, or $0.33 per share-diluted for the three months and year ended December 31, 2013, respectively.
Jonathan Cohen, CEO and President of Resource Capital Corp., commented, "In 2014 we originated a record amount of commercial real estate loans, exceeding $775 million. That production generates high-teens or better returns on equity through our ability to securitize the loans with excellent execution. We have securitized in excess of $1 billion of loans in the last fourteen months, which reflects marketplace recognition of our ability to produce at these levels and maintain high credit quality. Also, Northport Capital, our middle market corporate lending platform, closed in excess of $265 million of new investments in 2014, its first full year in operation. We continue to see robust loan origination pipelines and look forward to growing our lending operations and recurring interest income in 2015."
Commercial Real Estate
CRE loan portfolio is comprised of approximately 94% senior whole loans as of December 31, 2014, as compared to 90% at December 31, 2013.
RSO closed $664.8 million of new whole loans in the last 12 months with a weighted average yield, including pro-rated loan origination fees, of 5.73%.
On February 24, 2015, RSO closed a $346.2 million CRE securitization backed by self-originated commercial mortgage loans, its third securitization in the trailing 14 month period. The securitization issued $282.1 million of non-recourse, floating-rate notes at a weighted average cost of LIBOR +190 basis points. RSO retained the subordinate notes and the preferred shares in the transaction.
The following table summarizes RSO's CRE loan activities and fundings of previous commitments, at par, for the three months and year ended December 31, 2014 (in millions, except percentages):
CMBS
During the year ended December 31, 2014, RSO purchased $73.2 million, par value, of CMBS which were partially financed by 30-day repurchase contracts with a repurchase value of $52.6 million. In addition, RSO purchased $15.4 million, par value, of CMBS which were financed by RSO's Wells Fargo repurchase facility and were AAA-rated by one or more ratings agencies.
Commercial Finance
RSO closed a $125.0 million syndicated credit facility to support the anticipated growth of its middle market lending platform. At December 31, 2014, $113.5 million was outstanding on the facility.
RSO's middle market loan portfolio at the end of the fourth quarter of 2014 was $250.1 million, at amortized cost, with a weighted-average spread of one-month and three-month LIBOR plus 7.78% at December 31, 2014.
RSO's bank loan portfolio, including asset-backed securities ("ABS"), corporate bonds, including certain loans held for sale was $323.2 million, at amortized cost, with a weighted-average spread of one-month and three-month LIBOR plus 3.63% at December 31, 2014. RSO's bank loan portfolio was completely match-funded through two CLO issuances.
RSO, through its subsidiary Resource Capital Asset Management, earned $5.1 million of net fees during the year ended December 31, 2014.
The following table summarizes RSO's middle market lending portfolio loan activities and fundings of previous commitments, at par, for the three months and year ended December 31, 2014 (in millions, except percentages):
Corporate
RSO sold approximately 57,000 and 388,000 shares of its 8.50% Series A Cumulative Preferred Stock at a weighted average price of $24.12 and $23.82, and with a liquidation preference of $25.00 per share, for net proceeds of $1.4 million and $9.0 million for the three months and year ended December 31, 2014, respectively, pursuant to an at-the-market program.
RSO sold approximately 867,000 and 2.1 million shares of its 8.25% Series B Cumulative Preferred Stock at a weighted average price of $22.99 and $23.02, and with a liquidation preference of $25.00 per share, for net proceeds of $19.4 million and $47.5 million for the three months and year ended December 31, 2014, respectively, pursuant to an at-the-market program.
RSO issued 4.8 million shares of its 8.625% Series C Cumulative Redeemable Preferred Stock, at a price of $24.2125 per share, with a liquidation preference of $25.00 per share, for net proceeds of $116.2 million in June 2014.
RSO sold approximately 935,000 and 5.5 million shares of common stock through its DRIP program, resulting in $4.9 million and $30.3 million in proceeds for the three months and year ended December 31, 2014, respectively.
The table below summarizes the amortized cost and net carrying amount of RSO's investment portfolio as of December 31, 2014, classified by interest rate and by asset type (in thousands, except percentages):
At January 31, 2015, after paying our fourth quarter 2014 common and preferred stock dividends, our liquidity is derived from three primary sources:
unrestricted cash and cash equivalents of $188.5 million, restricted cash of $680,000 in margin call accounts and $203,000 in the form of real estate escrows, reserves and deposits;
capital available for reinvestment in one of our CRE CDO's of $250,000 and one of our CRE securitizations of $2.7 million, all of which is designated to finance future funding commitments on CRE loans; and
loan principal repayments of $33.1 million that will pay down outstanding CLO note balances as well as interest collections of $3.2 million.
In addition, RSO has $134.3 million and $173.8 million available through two term financing facilities to finance the origination of CRE loans and $74.5 million available through a term financing facility to finance the purchase of CMBS. RSO also has $11.5 million available through a middle market syndicate facility to finance the direct origination of middle market loans and purchase of syndicated bank loans.
As of December 31, 2014, RSO had allocated its invested equity capital among its targeted asset classes as follows: 67% in CRE assets, 29% in commercial finance assets and 4% in other investments.
As of December 31, 2014, RSO's book value per common share was $5.07, a decrease from $5.41 per common share at December 31, 2013. Total stockholders' equity, which is a measure of equity before consideration of non-controlling interests, was $935.5 million of which $271.7 million was attributable to preferred stock at December 31, 2014. Total stockholders' equity was $773.9 million of which $99.2 million was attributable to preferred stock at December 31, 2013. The decrease in book value per common share of $0.34 was due to dividends paid on common stock of ($0.80), partially offset by net income allocable to common shares of $0.34 and net adjustments through other comprehensive income of $0.15.
The following schedules of reconciliations or supplemental information as of December 31, 2014 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 Securitization Performance Statistics.
Supplemental Information regarding loan investment statistics, CRE loans, bank loans and middle market loans.
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 commercial finance investments.
RSO is externally managed by Resource Capital Manager, Inc., an indirect wholly-owned subsidiary of Resource America, Inc. (NASDAQ: REXI), an asset management company that specializes in real estate and credit investments.
For more information, please visit RSO's website at or contact investor relations at .
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 Annual Report on Form 10-K and the risks expressed in other of its public filings with the Securities and Exchange Commission.
RSO 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 RSO 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, RSO 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 RSO's unaudited consolidated balance sheets, unaudited consolidated statements of income, reconciliation of GAAP net income to FFO and AFFO, summary of securitization performance statistics and supplemental information regarding RSO's CRE loan, bank loan and middle market loan portfolios.
The Company evaluates its performance based on several performance measures, including funds from operations, or FFO, and adjusted funds from operations ("AFFO") in addition to net income. The Company computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts as net income (computed in accordance with GAAP), excluding gains or losses on the sale of depreciable real estate, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization, and after adjustments for unconsolidated/uncombined partnerships and joint ventures.
AFFO is a computation made by analysts and investors to measure a real estate company's operating performance. We calculate AFFO by adding or subtracting from FFO the impact of non-cash accounting items as well as the effects of items that we deem to be non-recurring in nature. We deem transactions to be non-recurring if a similar transaction has not occurred in the past two years, and if we do not expect a similar transaction to occur in the next two years. We adjust for these non-cash and non-recurring items to analyze our ability to produce cash flow from on-going operations, which we use to pay dividends to our shareholders. Non-cash adjustments to FFO include the following: impairment losses resulting from fair value adjustments on financial instruments; provisions for loan losses; equity investment gains and losses; straight-line rental effects; share based compensation expense; amortization of various deferred items and intangible assets; gains on sales of property that are wholly owned or owned through a joint venture; the cash impact of capital expenditures that are related to our real estate owned; and REIT tax planning adjustments, which primarily relate to accruals for owned properties for which we made a foreclosure election and adjustments to tax estimates with respect to the final resolution of foreclosed property when it is listed for sale. In addition, we calculate AFFO by adding and subtracting from FFO the realized cash impacts of the following: extinguishment of debt, reissuances of debt, sales of property and capital expenditures.
Management believes that FFO and AFFO are appropriate measures of the Company's operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs. Management uses FFO and AFFO as measures of its operating performance, and believes they are also useful to investors, because they facilitate an understanding of the Company's operating performance after adjustment for certain non-cash items, such as real estate depreciation, share-based compensation and various other items required by GAAP, and capital expenditures, that may not necessarily be indicative of current operating performance and that may not accurately compare the Company's operating performance between periods.
While the Company's calculations of AFFO may differ from the methodology used for calculating AFFO by other REITs and its AFFO may not be comparable to AFFO reported by other REITs, the Company also believes that FFO and AFFO may provide the Company and its investors with an additional useful measure to compare its performance with some other REITs. Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to GAAP net income as an indicator of the Company's operating performance or as an alternative to cash flow from operating activities as a measure of its liquidity.
The following table reconciles GAAP net income to FFO and AFFO for the periods presented (unaudited) (in thousands, except per share data):
The following table sets forth the distributions made and coverage test summaries for each of our securitizations for the periods presented (in thousands):
The following table presents information on RSO's impaired loans and related allowances for the periods indicated (based on amortized cost):
The following table presents commercial real estate loan portfolio statistics as of December 31, 2014 (based on par value):
The following table presents bank loan portfolio statistics by industry as of December 31, 2014 (based on par value):
The following table presents middle market loan portfolio statistics by industry as of December 31, 2014 (based on par value):
CONTACT:
David J. Bryant
Chief Financial Officer
Resource Capital Corp.
712 Fifth Ave, 12th Floor
New York, NY 10019
212-506-3870
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Datum: 26.02.2015 - 01:00 Uhr
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