NEW YORK, NY, Nov. 2, 2009 (Marketwire) --
NEW YORK, NY -- (Marketwire) -- 11/02/09 -- Resource Capital Corp. (NYSE: RSO)
Third Quarter Highlights
-- Net Operating Income of $0.30 per share-diluted
-- Common stock cash dividend of $0.30 per share
-- Resource Capital Corp. repurchased $14.52 million of its corporate
notes for $1.8 million, or at an 88% discount to par, for a gain of
$12.7 million
-- Resource Capital Corp. had $82.8 million of liquidity at September 30,
2009
-- Resource Capital Corp. had $75.2 million of loans repaid or settled
Resource Capital Corp. (NYSE: RSO) ("RCC" or the "Company"), a real estate investment trust whose investment strategy focuses on commercial real estate ("CRE") loan assets and, to a lesser extent, commercial finance assets, reported results for the third quarter ended September 30, 2009.
Other Highlights
-- Net operating income for the three and nine months ended September 30,
2009 was $7.2 million, or $0.30 per share-diluted and $27.0 million, or
$1.11 per share-diluted, respectively, as compared to $10.2 million, or
$0.41 per share-diluted and $31.3 million, or $1.26 per share-diluted, for
the three and nine months ended September 30, 2008, respectively, a
decrease of $3.0 million (29%) and $4.3 million (14%), respectively.
-- GAAP net income for the three months ended September 30, 2009 of
$11.5 million, or $0.47 per share-diluted, as compared to GAAP net income
for the three months ended September 30, 2008 of $88,000, or $0.00 per
share-diluted. The three month period in 2009 includes provisions for loan
and lease losses of $4.6 million, other-than-temporary impairment charges
on investment securities held to maturity of $895,000 and net unrealized
losses on bank loans held for sale of $1.7 million and a gain on the
extinguishment of debt of $12.7 million, or a total of $0.23 per
share-diluted. The three month period in 2008 includes provisions for loan
and lease losses of $11.0 million and a gain on loan settlement of
$574,000, or a total loss of ($0.42) per share-diluted.
-- GAAP net loss for the nine months ended September 30, 2009 of
$5.8 million, or ($0.24) per share-diluted, as compared to GAAP net income
for the nine months ended September 30, 2008 of $4.2 million, or $0.17 per
share-diluted. The nine month period in 2009 includes provisions for loan
and lease losses of $32.6 million, net unrealized losses on bank loans held
for sale of $12.6 million, other-than-temporary impairment charges of
$6.6 million and a gain on the extinguishment of debt of $19.6 million, or
a total loss of ($1.32) per share-diluted. The nine month period in 2008
includes provisions for loan and lease losses of $27.8 million, gain on a
loan settlement of $574,000 and a gain on the extinguishment of debt of
$1.8 million, or a total loss of ($1.02) per share-diluted.
-- REIT taxable income, a non-GAAP measure, for the three and nine months
ended September 30, 2009 was $3.5 million, or $0.14 per share-diluted, and
$14.9 million, or $0.61 per share-diluted, respectively, as compared to
$9.4 million or $0.38 per share-diluted and $30.9 million or $1.24 per
share-diluted for the three and nine months ended September 30, 2008,
respectively, a decrease of $5.9 million (63%) and $16.0 million (52%),
respectively.
-- RCC announced a dividend of $0.30 per common share for the quarter
ended September 30, 2009, $7.5 million in the aggregate, paid on October
27, 2009 to stockholders of record as of September 30, 2009.
-- Economic book value, a non-GAAP measure, was $9.47 per common share as
of September 30, 2009.
-- GAAP book value was $6.80 per common share as of September 30, 2009.
-- RCC completely paid off its non-recourse repurchase facility funding
CRE loans which had a balance of $3.3 million as of June 30, 2009.
Jonathan Cohen, CEO and President of RCC, commented, "Although these are very tough times in the real estate business, we are content overall with our portfolio. We have been able to (i) buy down our basis through purchases of our CDO bonds at significant discounts, (ii) purchase CMBS AAA rated bonds cheaply where we expect par recoveries, (iii) continue to pay a meaningful cash dividend, and (iv) position ourselves to build value in our portfolio. All this being said, we are continuing to asset manage our portfolio aggressively -- make long term smart decisions and continue to look for opportunistic situations."
Additional financial results for the third quarter ended September 30, 2009 and recent developments include:
General
-- RCC's net interest income decreased by $351,000, or (3%), to $13.3
million for the three months ended September 30, 2009, as compared to
$13.6 million for the same period in 2008.
Commercial Real Estate
-- RCC funded commitments on existing CRE loans on a gross basis of
$4.1 million during the three months ended September 30, 2009.
-- RCC bought commercial mortgage-backed securities ("CMBS") of $34.5
million par value, for a weighted average price of $58.42 during the third
quarter ended September 30, 2009. The net discount of $14.3 million
improved the collateralization on its CRE collateralized debt obligations
("CDO") and these purchases provide a yield of approximately 9.8%.
The following table summarizes RCC's CRE loan origination activities and future funding obligations, at par, for the three, nine and 12 months ended September 30, 2009 (in millions, except percentages):
Three Months Nine Months 12 Months Floating Weighted
Ended Ended Ended Weighted Average
September 30, September 30, September 30, Average Fixed
2009 2009 2009 Spread (1) Rate (2)
------------ ------------ ------------ --------- ---------
Whole loans
(3) $ 4.1 $ 35.0 $ 40.4 2.92% 7.92%
------------ ------------ ------------
New loans
production 4.1 35.0 40.4
Sale of
real
estate
loans - (29.8) (29.8)
Payoffs - (7.0) (25.2)
Principal
paydowns (20.1) (36.8) (38.9)
------------ ------------ ------------
New loans,
net (4) $ (16.0) $ (38.6) $ (53.5)
============ ============ ============
(1) Represents the weighted average rate above the London Interbank Offered
Rate ("LIBOR") on loans whose interest rate is based on LIBOR as of
September 30, 2009.
(2) Reflects rates on RCC's portfolio balance as of September 30, 2009.
(3) Includes fundings of previous commitments on transitional loans of
$4.1 million for the three months ended September 30, 2009,
$11.3 million for the nine months ended September 30, 2009 and
$16.8 million for the 12 months ended September 30, 2009.
(4) The basis of new net loans does not include provisions for losses on
CRE loans of $4.2 million for the three months ended September 30,
2009, $18.3 million for the nine months ended September 30, 2009 and
$18.7 million for the 12 months ended September 30, 2009.
Commercial Finance
-- RCC's bank loan portfolio ended the third quarter with total
investments of $910.6 million, at amortized cost, with a weighted-average
spread of one-month and three-month LIBOR plus 2.59%. 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%. During the three months ended September 30, 2009, RCC received
$55.1 million in bank loan paydowns and repayments. At September 30, 2009,
RCC had $37.0 million of cash available for reinvestment in its three bank
CLOs combined.
Book Value
As of September 30, 2009, RCC's GAAP book value per common share was $6.80. Total stockholders' equity was $169.4 million as of September 30, 2009 as compared to $186.3 million as of December 31, 2008. Total common shares outstanding were 24,895,409 as of September 30, 2009 as compared to 25,344,867 as of December 31, 2008. The net decrease in RCC's stockholders' equity of $16.9 million was primarily the result of increased provisions for loan and lease losses of $32.6 million, losses on RCC's bank loan portfolio of $12.6 million, combined with a decrease in the value of marked-to-market securities of $9.4 million, which was partially offset by an increase in the value of interest rate swaps of $16.2 million and a gain on the extinguishment of debt of $19.6 million.
As of September 30, 2009, RCC's economic book value per share, a non-GAAP measure, was $9.47. 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 Note 1 of Schedule II in this release). 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 RCC's investment portfolio as of September 30, 2009, 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):
Net carrying
Net amount less
Amortized Dollar carrying Dollar amortized Dollar
cost (3) price amount price cost price
---------- ------ ---------- ------ --------- ------
September 30, 2009
Floating rate
CMBS-private
placement $ 32,063 100.00% $ 11,712 36.53% $ (20,351) -63.47%
B notes (1) 26,500 100.00% 26,314 99.30% (186) -0.70%
Mezzanine loans (1) 129,107 100.00% 128,091 99.21% (1,016) -0.79%
Whole loans (1) 410,107 99.94% 396,863 96.71% (13,244) -3.23%
Bank loans (2) 862,840 97.52% 781,251 88.30% (81,589) -9.22%
Bank loans held
for sale (3) 15,103 87.06% 15,103 87.06% - -%
Asset-backed
securities held-
to-maturity (4) 32,624 91.23% 16,844 47.10% (15,780) -44.13%
---------- ---------- ---------
Total floating
rate 1,508,344 98.21% 1,376,178 89.60% (132,166) -8.61%
---------- ---------- ---------
Fixed rate
CMBS - private
placement 59,194 77.34% 28,887 37.74% (30,307) -39.60%
B notes (1) 55,122 100.07% 54,736 99.36% (386) -0.71%
Mezzanine loans (1) 81,333 94.78% 68,275 79.57% (13,058) -15.21%
Whole loans (1) 79,500 99.71% 78,940 99.00% (560) -0.71%
Equipment leases
and loans (5) 3,105 100.03% 2,205 71.04% (900) -28.99%
---------- ---------- ---------
Total fixed rate 278,254 92.67% 233,043 77.61% (45,211) -15.06%
---------- ---------- ---------
Grand total $1,786,598 97.30% $1,609,221 87.64% $(177,377) -9.66%
========== ========== =========
(1) Net carrying amount includes an allowance for loan losses of
$28.4 million at September 30, 2009, allocated as follows: B notes
($0.5 million), mezzanine loans ($14.1 million) and whole loans
($13.8 million).
(2) The bank loan portfolio is carried at amortized cost less allowance for
loan loss and was $831.9 million at September 30, 2009.
