Resource America, Inc. Reports Operating Results for the First Quarter Ended March 31, 2015

PHILADELPHIA, PA--(Marketwired - May 7, 2015) - Resource America, Inc. (NASDAQ: REXI)

First Quarter 2015 Highlights

• Adjusted net income attributable to common shareholders of $2.2 million (see Schedule I)
  
  
• Increased gross assets under management by 16% to $20.6 billion since March 31, 2014
  
  
  • Gross real estate assets under management increased 36% to $3.6 billion
    
    
  • Gross financial fund management assets under management increased 12% to $16.3 billion
    
    
  • Net assets under management increased 20% to $10.0 billion
    
    
• Book value per common share of $7.39
  
  
• Repurchased 233,038 shares at $9.04
  
  

First Quarter 2015 Results

Resource America, Inc. (NASDAQ: REXI) (the "Company") reported adjusted net income attributable to common shareholders, a non-GAAP measure, of $2.2 million, or $0.10 per common share-diluted, for the three months ended March 31, 2015 as compared to adjusted net income attributable to common shareholders of $2.3 million, or $0.11 per common share-diluted, for the three months ended March 31, 2014. A reconciliation of the Company's reported GAAP net income attributable to common shareholders to adjusted net income attributable to common shareholders, a non-GAAP measure, is included as Schedule I to this release.

The Company reported GAAP net income attributable to common shareholders of $337,000, or $0.01 per common share-diluted, for the three months ended March 31, 2015 as compared to GAAP net income attributable to common shareholders of $990,000, or $0.04 per common share-diluted, for the three months ended March 31, 2014. 

Assets Under Management

The following table details the Company's gross assets under management by operating segment, which increased by $2.8 billion (16%) from March 31, 2014 to 2015 (in billions):

			March 31,
			2015			2014
Financial fund management			$	16.3		$	14.6
Real estate				3.6			2.6
Commercial finance				0.7			0.6
			$	20.6		$	17.8
	Net assets under management (1)		$	10.0		$	8.3

(1)	Net assets under management represents the proportionate share of assets managed by the Company after reflecting joint venture arrangements.

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 year ended December 31, 2014.

Highlights for the First Quarter Ended March 31, 2015 and Recent Developments

REAL ESTATE ASSET MANAGEMENT:

Equity Asset Management

Resource Real Estate Opportunity REIT, Inc. ("Opportunity REIT I"), a public non-traded real estate investment trust ("REIT") managed by the Company which specializes in acquiring and managing distressed real estate assets, had the following highlights:

• Increased total assets to $1.0 billion at March 31, 2015, an increase of $200.3 million, or 25%, from $814.3 million at March 31, 2014.
  
  
• Acquired $73.3 million of assets, placed or assumed financing of $39.2 million and disposed of $68.8 million of multifamily assets during the three months ended March 31, 2015.
  
  

Resource Real Estate Opportunity REIT II, Inc. ("Opportunity REIT II"), a public non-traded real estate investment trust ("REIT") managed by the Company, commenced its initial public offering in early 2014. Opportunity REIT II is offering up to $1.0 billion in common stock and specializes in acquiring multifamily rental properties and selected loans. Opportunity REIT II had the following highlights:

• Raised a record $91.0 million during the three months ended March 31, 2015 and a total of $178.6 million since inception.
  
  
• Acquired $36.5 million of assets during the three months ended March 31, 2015.
  
  

Debt Asset Management

Resource Capital Corp. ("RSO"), a publicly-traded REIT managed by the Company which focuses on commercial real estate assets, had the following highlights:

• Originated $156.8 million in new commercial real estate loans during the three months ended March 31, 2015.
  
  
• In January 2015, completed a $100.0 million public offering of its 8.00% convertible senior notes due 2020.
  
  
• In February 2015, completed a $346.2 million commercial real estate securitization that issued $282.1 million of floating-rate notes at a weighted average coupon of LIBOR plus 1.90%.
  
  

The following additional highlights contributed to our real estate asset management operations:

• The Company's real estate operating segment increased its gross assets under management at March 31, 2015 to $3.6 billion, an increase of $948.0 million, or 36%, from March 31, 2014.
  
  
• Real estate revenues increased 28% to $17.0 million, for the three months ended March 31, 2015 as compared to $13.3 million for the prior year period.
  
  
• Resource Real Estate Management, Inc., the Company's property management subsidiary, increased the apartment units it manages to 18,937 units as of March 31, 2015 from 18,509 units as of March 31, 2014.
  
  

FINANCIAL FUND MANAGEMENT:

Credit Asset Management

CVC Credit Partners, L.P. ("CCP"), the Company's global joint venture created in April 2012, closed Apidos CLO XX, Ltd. during the quarter. CCP has now closed CLOs issuing notes with a total par value of $6.8 billion. The Company has a 33% interest in this joint venture.

The following additional highlight contributed to our financial fund asset management operations:

• The Company's financial fund management operating segment increased its gross assets under management at March 31, 2015 to $16.3 billion, an increase of $1.7 billion, or 12%, from March 31, 2014.

CORPORATE/OTHER:

Share Repurchases

• The Company repurchased 233,038 of its shares during the first quarter ended March 31, 2015 at an average price of $9.04 per share.

Dividends

• The Company's Board of Directors authorized a cash dividend of $0.06 per share on the Company's common stock which was paid on April 30, 2015 to holders of record as of the close of business on April 16, 2015. 
  
  
• RSO's Board of Directors declared a cash dividend of $0.16 per common share for its three months ended March 31, 2015.
  
  

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, for its joint ventures, 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, or SEC. 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 SEC. 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 Opportunity REIT II was declared effective by the SEC on February 6, 2014. A written prospectus relating to these securities may be obtained by contacting Resource Securities, Inc., 1845 Walnut Street, 18th 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, consolidating statements of operations and reconciliation of GAAP net income attributable to common shareholders to adjusted net income attributable to common shareholders.

RESOURCE AMERICA, INC
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
					March 31,  2015				December 31,  2014
					(unaudited)
ASSETS
	Cash				$	24,909			$	27,542
	Restricted cash					798				725
	Receivables					714				636
	Loans and receivables from managed entities and related parties, net					26,787				30,303
	Investments in real estate, net					16,833				17,097
	Investment securities, at fair value					9,785				9,540
	Investments in unconsolidated loan manager					40,292				39,655
	Investments in unconsolidated entities					13,105				13,089
	Assets of consolidated variable interest entity ("VIE")-RSO:
		Cash and cash equivalents (including restricted cash)				244,129				202,043
		Investments, at fair value				313,840				296,506
		Loans				2,209,175				2,038,435
		Investments in real estate and unconsolidated entities				55,668				60,007
		Other assets				109,834				131,481
			Total assets of consolidated VIE-RSO			2,932,646				2,728,472
	Property and equipment, net					5,739				5,063
	Deferred tax assets, net					22,015				23,304
	Other assets					8,684				5,416
		Total assets			$	3,102,307			$	2,900,842
LIABILITIES AND EQUITY
Liabilities:
	Accrued expenses and other liabilities				$	21,631			$	22,279
	Payables to managed entities and related parties					2,165				3,015
	Borrowings					21,174				20,412
	Liabilities of consolidated VIE-RSO:
		Borrowings				1,924,932				1,717,132
		Other liabilities				57,207				57,561
		Total liabilities of consolidated VIE-RSO				1,982,139				1,774,693
			Total liabilities			2,027,109				1,820,399
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;34,975,726 and 34,489,568 shares issued (including nonvested restricted stock of 1,165,119 and 833,082), respectively					338				335
	Additional paid-in capital					308,877				308,134
	Accumulated deficit					(24,632	)			(23,663	)
	Treasury stock, at cost; 12,001,772 and 11,764,417 shares, respectively					(122,305	)			(120,182	)
	Accumulated other comprehensive loss					(1,139	)			(1,030	)
		Total stockholders' equity				161,139				163,594
	Noncontrolling interests					313				306
	Noncontrolling interests attributable to consolidated VIE-RSO					913,746				916,543
		Total equity				1,075,198				1,080,443
		Total liabilities and equity			$	3,102,307			$	2,900,842

RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
			Three Months Ended
			March 31,
			2015				2014
REVENUES:
Real estate (includes revenues of $2,752 and $2,683 related to RSO)			$	16,966			$	13,275
Financial fund management (includes revenues of $1,437 and $207 related to RSO)				5,137				7,075
Commercial finance (includes no revenues related to RSO)				(2	)			(99	)
				22,101				20,251
Revenues from consolidated VIE-RSO				24,361				25,245
Elimination of consolidated VIE-RSO revenues attributed to operating segments				(4,273	)			(2,880	)
	Total revenues			42,189				42,616
COSTS AND EXPENSES:
Real estate				11,499				8,875
Financial fund management				2,990				4,389
Commercial finance				579				103
General and administrative				3,297				3,154
Provision for credit losses				402				1,208
Depreciation and amortization				457				451
				19,224				18,180
Expenses from consolidated VIE-RSO				21,060				11,285
Elimination of consolidated VIE-RSO expenses attributed tooperating segments				(3,368	)			(2,819	)
	Total expenses			36,916				26,646
OPERATING INCOME				5,273				15,970
OTHER INCOME (EXPENSE):
Interest expense				(421	)			(483	)
Other income, net				(164	)			165
				(585	)			(318	)
Other income, net, from consolidated VIE-RSO				16,516				3,516
Elimination of consolidated VIE-RSO other income, net attributed to operating segments				11				18
				15,942				3,216
Income from continuing operations before taxes				21,215				19,186
Income tax provision				1,244				1,069
Income tax provision-RSO				1,847				16
Net income				18,124				18,101
Net loss attributable to noncontrolling interests				8				40
Net income attributable to noncontrolling interests of consolidated VIE-RSO				(17,795	)			(17,151	)
Net income attributable to common shareholders			$	337			$	990
Basic earnings per share:
Net income			$	0.01			$	0.05
Weighted average shares outstanding				22,965				20,252
Diluted earnings per share:
Net income			$	0.01			$	0.04
Weighted average shares outstanding				23,239				22,027

RESOURCE AMERICA, INC.

CONSOLIDATING STATEMENT OF OPERATIONS

(in thousands)

(unaudited)

 The following table presents the consolidating statement of operations for the first quarter ended March 31, 2015:

			RAI				RSO				Eliminations				Consolidated
REVENUES:
Real estate			$	16,966			$	--			$	--			$	16,966
Financial fund management				5,137				--				--				5,137
Commercial finance				(2	)			--				--				(2	)
				22,101				--				--				22,101
Revenues from consolidated VIE-RSO				--				24,361				--				24,361
Elimination of consolidated VIE-RSO revenues attributed to operating segments				--				--				(4,273	)			(4,273	)
	Total revenues			22,101				24,361				(4,273	)			42,189
COSTS AND EXPENSES:
Real estate				11,499				--				--				11,499
Financial fund management				2,990				--				--				2,990
Commercial finance				579				--				--				579
General and administrative				3,297				--				--				3,297
Provision for credit losses				402				--				--				402
Depreciation and amortization				457				--				--				457
				19,224				--				--				19,224
Expenses of consolidated VIE-RSO				--				21,060				--				21,060
Elimination of consolidated VIE-RSO expenses attributed to operating segments				--				--				(3,368	)			(3,368	)
	Total expenses			19,224				21,060				(3,368	)			36,916
OPERATING INCOME				2,877				3,301				(905	)			5,273
OTHER INCOME (EXPENSE):
Interest expense				(421	)			--				--				(421	)
Other income, net				314				--				(478	)			(164	)
Other income, net, from consolidated VIE-RSO				--				16,516				--				16,516
Elimination of consolidated VIE-RSO other income, net				--				--				11				11
				(107	)			16,516				(467	)			15,942
Income from continuing operations before taxes				2,770				19,817				(1,372	)			21,215
Income tax provision				1,244				1,847				--				3,091
Net income				1,526				17,970				(1,372	)			18,124
Net loss attributable to noncontrolling interest				8				--				--				8
Net income attributable to noncontrolling interests-RSO				--				(8,568	)			(9,227	)			(17,795	)
Net income attributable to common shareholders			$	1,534			$	9,402			$	(10,599	)		$	337

RESOURCE AMERICA, INC.

CONSOLIDATING STATEMENT OF OPERATIONS

(in thousands)

(unaudited)

 The following table presents the consolidating statement of operations for the first quarter ended March 31, 2014:

		RAI				RSO				Eliminations				Consolidated
REVENUES:
Real estate		$	13,275			$	--			$	--			$	13,275
Financial fund management			7,075				--				--				7,075
Commercial finance			(99	)			--				--				(99	)
			20,251				--				--				20,251
Revenues from consolidated VIE-RSO			--				25,245				--				25,245
Elimination of consolidated VIE-RSO revenues attributed to operating segments			--				--				(2,880	)			(2,880	)
Total revenues			20,251				25,245				(2,880	)			42,616
COSTS AND EXPENSES:
Real estate			8,875				--				--				8,875
Financial fund management			4,389				--				--				4,389
Commercial finance			103				--				--				103
General and administrative			3,154				--				--				3,154
Provision for credit losses			1,208				--				--				1,208
Depreciation and amortization			451				--				--				451
			18,180				--				--				18,180
Expenses of consolidated VIE-RSO			--				11,285								11,285
Elimination of consolidated VIE-RSO expenses attributed to operating segments			--				--				(2,819	)			(2,819	)
Total expenses			18,180				11,285				(2,819	)			26,646
OPERATING INCOME			2,071				13,960				(61	)			15,970
OTHER INCOME (EXPENSE):
Interest expense			(483	)			--				--				(483	)
Other income, net			737				--				(572	)			165
Other income, net, from consolidated VIE-RSO			--				3,516				--				3,516
Elimination of consolidated VIE-RSO other income, net			--				--				18				18
			254				3,516				(554	)			3,216
Income from continuing operations before taxes			2,325				17,476				(615	)			19,186
Income tax provision			1,069				16				--				1,085
Net income			1,256				17,460				(615	)			18,101
Net loss attributable to noncontrolling interests			40				--				--				40
Net income attributable to noncontrolling interests-RSO			--				(2,344	)			(14,807	)			(17,151	)
Net income attributable to common shareholders		$	1,296			$	15,116			$	(15,422	)		$	990

Schedule I
RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO
ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS (1)
(in thousands, except per share data)
(unaudited)
		Three Months Ended
		March 31,
		2015			2014
Net income attributable to common shareholders - GAAP		$	337		$	990
Adjustments, net of tax:
Income, net of eliminations, attributable to consolidation of RSO			1,197			306
Loss attributable to commercial finance			526			863
Deferred tax provision			151			161
Adjusted net income attributable to common shareholders		$	2,211		$	2,320
Adjusted weighted average diluted shares outstanding			23,239			22,027
Adjusted net income attributable to common shareholders per common per share-diluted		$	0.10		$	0.11

(1)

Adjusted net income attributable to common shareholders presents the Company's operations prior to the consolidation of RSO and without the effect of its commercial finance operations and deferred tax provision. 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, 2015 and 2014 separately from its commercial finance operations, RSO and deferred tax provision. Adjusted net income attributable to common shareholders should not be considered as an alternative to net income attributable to common shareholders (computed in accordance with GAAP). Instead, adjusted net income attributable to common shareholders should be reviewed in connection with net income attributable to common shareholders in the Company's consolidated financial statements to help analyze how the Company's business is performing.