-- RCC reported REIT taxable income, a non-GAAP measure, of $11.4
million, or $0.46 per share-diluted for the quarter ended December 31,
2007.
-- RCC reported adjusted net income, a non-GAAP measure excluding the
effect of non-cash charges, of $10.7 million, or $0.43 per share-diluted
for the quarter ended December 31, 2007.
-- Dividend distribution of $0.41 per share for the quarter ended
December 31, 2007, up 8% from the fourth quarter of 2006 and unchanged from
the third quarter. RCC declared and paid dividends of $1.62 per common
share, for total dividends paid of $40.7 million (96% of estimated REIT
taxable income) for the year ended December 31, 2007.
-- RCC announced a dividend distribution of $0.41 per common share for
the quarter ended March 31, 2008, unchanged from the quarter ended December
31, 2007 and an increase of $0.02 per common share (5%) from the quarter
ended March 31, 2007.
-- Economic book value, a non-GAAP measure, was $12.25 per common share
as of December 31, 2007.
-- GAAP book value was $10.82 per common share as of December 31, 2007.
-- REIT taxable income, a non-GAAP measure, of $42.4 million or $1.71 per
share-diluted for the year ended December 31, 2007 as compared to $27.9
million or $1.57 per share-diluted for the year ended December 31, 2006, an
increase of $14.5 million (52%) and $0.14 per share-diluted (9%),
respectively.
-- RCC reported adjusted net income, a non-GAAP measure, excluding the
effect of asset impairments and other non-cash charges, of $42.7 million,
or $1.72 per share-diluted for the year ended December 31, 2007.
-- RCC reported GAAP net income of $0.14 per share-diluted for the
quarter ended December 31, 2007.
-- Paydowns on RCC’s bank loan portfolio were $44.0 million for the
quarter ended December 31, 2007, and $310.1 million for the year ended
December 31, 2007. Payoffs on RCC’s commercial real estate loan portfolio
were $74.9 million for the quarter ended December 31, 2007, and $249.1
million for the year ended December 31, 2007.
Jonathan Cohen, CEO and President of RCC, commented, "It is an
understatement to say that the second half of 2007 presented unparalleled
disruptions in the financial markets in the United States and abroad, and
this has affected every class of financial asset, principally and most
dramatically in the sub-prime mortgage market of the United States.
Despite these challenges, we performed well in 2007, generating $1.71 of
estimated REIT taxable income, a non-GAAP measure, and distributing $1.62
to RCC's shareholders, consistent with RCC's guidance of $1.60 to $1.65.
RCC completed its conversion from investing primarily in purchased
interests in subordinate commercial real estate loans to being an
originator of senior secured whole loans and bank loans. During the fourth
quarter, we deconsolidated a VIE and its related ABS-RMBS exposure and as
of February 2008, RCC's investment in this VIE has been reduced to $0. RCC
is positioned to benefit from its match-funded vehicles that have a
relatively low cost of funds. RCC wants to emphasize that, despite the
market disruptions, its assets continue to perform well as it endeavors to
maintain franchise value and its dividend payout in 2008."
The following schedules of reconciliations as of December 31, 2007 are
included in this release:
-- Schedule I - GAAP Net Income to Adjusted Net Income;
-- Schedule II - GAAP Net Income to Estimated REIT Taxable Income; and
-- Schedule III - GAAP Stockholders' Equity to Economic Book Value.
For the quarter ended December 31, 2007, RCC reported adjusted net income,
a non-GAAP measure excluding the effect of non-cash charges, of $10.7
million, or $0.43 per share-diluted, compared to $6.8 million, or $0.36 per
share-diluted for the fourth quarter of 2006. For the year ended December
31, 2007, RCC reported adjusted net income, excluding the effect of asset
impairments and other non-cash charges, of $42.7 million, or $1.72 per
share-diluted as compared to adjusted net income, excluding the effect of
the net realized loss from the sale of agency RMBS portfolio, of $24.4
million, or $1.36 per share-diluted for the same period in 2006. For the
fourth quarter ended December 31, 2007, RCC reported GAAP net income of
$3.5 million, or $0.14 per share-diluted, as compared to GAAP net income of
$6.8 million, or $0.36 per share-diluted for the fourth quarter of 2006.
RCC reported GAAP net income for the year ended December 31, 2007 of $8.9
million, or $0.36 per share-diluted, as compared to GAAP net income for the
year ended December 31, 2006 of $15.6 million, or $0.87 per share-diluted.
Book Value
As of December 31, 2007, RCC’s GAAP book value per common was $10.82.
Total stockholders’ equity was $271.6 million as of December 31, 2007 as
compared to $317.6 million as of December 31, 2006. Total common shares
outstanding were 25,103,532 as of December 31, 2007 as compared to
23,821,434 as of December 31, 2006.
As of December 31, 2007, RCC's economic book value per common share
outstanding, a non-GAAP measure, was $12.25. 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 Footnote 1 of Schedule
III). 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.
Additional financial results for the fourth quarter and year ended December
31, 2007 and recent developments include:
General
-- RCC's net interest income increased by $4.0 million, or 40%, to $14.1
million for the fourth quarter ended December 31, 2007, as compared to
$10.1 million for the same period in 2006. RCC's net interest income
increased by $20.2 million, or 6%, to $55.4 million for the year ended
December 31, 2007, as compared to $35.2 million for the same period in
2006.
-- RCC's total assets grew by $269.3 million for the year ended December
31, 2007, primarily in commercial real estate and commercial finance
assets, as described below.
Commercial Real Estate
-- RCC produced new commercial real estate ("CRE") loans, on a gross
basis, of $72.8 million during the fourth quarter ended December 31, 2007.
The aggregate net portfolio of CRE loans grew by $246.8 million to $902.9
million at December 31, 2007, from $656.1 million at December 31, 2006, not
including future funding obligations of $11.3 million.
The following table summarizes RCC's CRE loan origination activities and
future funding obligations, at par, for the three, six and 12 months ended
December 31, 2007 (in millions, except percentages):
Three Six 12
Months Months Months Floating Weighted
Ended Ended Ended Weighted Average
December December December Average Fixed
31, 2007 31, 2007 31, 2007 Spread Rate
-------- -------- -------- -------- --------
Whole loans $ 61.5 $ 124.3 $ 421.9 2.84% 7.81%
Whole loans, future
funding obligations 11.3 20.8 58.8 N/A N/A
A notes - - - N/A N/A
B notes - - - 2.78% 7.58%
Mezzanine loans - - 95.3 2.64% 8.04%
CMBS - 14.0 90.5 N/A* 5.94%
-------- -------- --------
New loans production 72.8 159.1 666.5
Payoffs (74.9) (95.1) (249.1)
Principal paydowns (1.4) (11.5) (14.4)
Sales of CRE loans - - (41.2)
Whole loans, future
funding obligations (11.3) (20.8) (58.8)
Sales of CMBS - - (29.9)
-------- -------- --------
Net - new loans (14.8) 31.7 273.1
Discounts (9.5) (17.4) (23.1)
-------- -------- --------
New loans, net of
discounts, net $ (24.3) $ 14.3 $ 250.0
======== ======== ========
-----
* Weighed average floating rate coupon of 5.94% at December 31, 2007.
Commercial Finance
-- RCC's bank loan portfolio ended the year with total investments of
$931.1 million, at amortized cost, with a weighted-average spread of one-
month and three-month LIBOR plus 2.24%. 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%.
-- RCC's commercial finance subsidiary ended the year with $95.0 million,
at cost, in direct financing leases and notes at a weighted-average rate of
9.43%. RCC's leasing portfolio is match-funded through a secured term
facility, which had a balance of $91.7 million as of December 31, 2007 and
a weighted-average interest rate of 6.82%.
Investment Portfolio
The table below summarizes the amortized cost and estimated fair value of
the RCC's investment portfolio as of December 31, 2007, 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 estimated
fair value of RCC's investment portfolio and the related dollar price,
which is computed by dividing the estimated fair value by par amount (in
thousands, except percentages):
Estimated
fair
value Change
less in
Amortized Dollar Estimated Dollar amortized dollar
cost price fair value price cost price
----------- ------ ----------- ------ --------- ------
December 31, 2007
Floating rate
CMBS $ 54,132 93.40% $ 41,524 71.65% $ (12,608) -21.75%
Other ABS 5,665 94.42% 900 15.00% (4,765) -79.42%
B notes (1) 33,570 100.10% 33,486 99.85% (84) -0.25%
Mezzanine loans (1) 141,894 100.09% 141,539 99.83% (355) -0.26%
Whole loans (1) 430,776 99.35% 429,699 99.10% (1,077) -0.25%
Bank loans (2) 931,101 100.00% 874,736 93.95% (56,365) -6.05%
----------- ----------- ---------
Total floating
rate $ 1,597,138 99.58% $ 1,521,884 94.88% $ (75,254) -4.69%
=========== =========== =========
Fixed rate
CMBS $ 28,241 98.95% $ 23,040 80.73% $ (5,201) -18.22%
B notes (1) 56,007 100.17% 55,867 99.92% (140) -0.25%
Mezzanine loans (1) 81,268 94.69% 80,016 93.23% (1,252) -1.46%
Whole loans (1) 97,942 99.24% 97,697 98.99% (245) -0.25%
Equipment leases
and notes (3) 95,323 100.00% 95,030 99.69% (293) -0.31%
----------- ----------- ---------
Total fixed
rate $ 358,781 98.49% $ 351,650 96.53% $ (7,131) -1.96%
=========== =========== =========
Grand total $ 1,955,919 99.37% $ 1,873,534 95.19% $ (82,385) -4.18%
=========== =========== =========
-----
(1) Estimated fair value of B notes, mezzanine loans and whole loans
includes a provision for loan losses of $3.2 million at December 31,
2007.
(2) Estimated fair value includes a $2.7 million provision for loan losses
at December 31, 2007.
(3) Estimated fair value includes a $0.3 million provision for lease losses
at December 31, 2007.
Liquidity
At March 5, 2008, RCC's liquidity consists of three primary sources:
-- cash and cash equivalents of $11.7 million, $6.9 million of restricted
cash in margin call accounts and $3.4 million of restricted cash related to
its leasing portfolio;
-- capital available for reinvestment in its five collateralized debt
obligation ("CDO") entities of $75.1 million, which is made up of $45.0
million of restricted cash and $30.1 million of availability to finance
future funding commitments on commercial real estate loans;
-- financing available under existing borrowing facilities of $14.8
million, comprised of $5.6 million of available cash from RCC's three year
non-recourse secured financing facility and $9.2 million of unused capacity
under its unsecured revolving credit facility. RCC also has $227.9 million
of unused capacity under its repurchase facilities which, however, require
approval of individual repurchase transactions by the repurchase
counterparties.
Capital Allocation
As of December 31, 2007, RCC had allocated its equity capital among its
targeted asset classes as follows: 74.9% in commercial real estate loans,
24.1% in commercial bank loans and 1.0% in direct financing leases and
notes.
About Resource Capital Corp.
RCC is a diversified real estate finance company that qualifies as a real
estate investment trust, or REIT, for federal income tax purposes. RCC's
investment strategy focuses on commercial real estate-related assets, and,
to a lesser extent, commercial finance assets. RCC invests in the
following asset classes: commercial real estate-related assets such as
whole loans, A-notes, B-notes, mezzanine loans and mortgage-related
securities and commercial finance assets such as other asset-backed
securities, bank loans, equipment leases and notes, trust preferred
securities, debt tranches of collateralized debt obligations and private
equity investments principally issued by financial institutions.
RCC is externally managed by Resource Capital Manager, Inc., an indirect
wholly-owned subsidiary of Resource America, Inc. (
-- fluctuations in interest rates and related hedging activities;
-- capital markets conditions and the availability of financing;
-- defaults or bankruptcies by borrowers on RCC's loans or on loans
underlying its investments;
-- adverse market trends which may affect the value of real estate and
other assets underlying RCC's investments;
-- increases in financing or administrative costs; and
-- general business and economic conditions that would impair the credit
quality of borrowers and RCC'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 RCC is subject, see Item 1A, "Risk Factors" included in its
annual report on Form 10-K and in other of its public filings with the
Securities and Exchange Commission.
RCC 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 RCC 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, RCC 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 RCC's consolidated balance sheets,
consolidated statements of income and reconciliations of its estimated GAAP
net income to adjusted net income, GAAP net income to estimated REIT
taxable income and GAAP stockholders' equity to economic book value,
supplemental information for commercial real estate loan portfolio
statistics and, supplemental information for bank loan portfolio
statistics.
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
December 31,
----------------------------
2007 2006
------------- -------------
ASSETS
Cash and cash equivalents $ 6,029 $ 5,354
Restricted cash 119,482 32,731
Investment securities available-for-sale,
pledged as collateral, at fair value 65,464 420,997
Loans, pledged as collateral and net of
allowances of $5.9 million and $0 1,766,639 1,240,288
Direct financing leases and notes, pledged
as collateral and net of allowance of
$0.3 million and $0 and net of unearned
income 95,030 88,970
Investments in unconsolidated trusts 1,805 1,548
Interest receivable 11,965 8,839
Principal paydown receivables 836 503
Other assets 4,898 3,599
------------- -------------
Total assets $ 2,072,148 $ 1,802,829
============= =============
LIABILITIES
Borrowings $ 1,760,969 $ 1,463,853
Distribution payable 10,366 7,663
Accrued interest expense 7,209 6,523
Derivatives, at fair value 18,040 2,904
Accounts payable and other liabilities 3,958 4,335
------------- -------------
Total liabilities 1,800,542 1,485,278
------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.001:
100,000,000 shares authorized;
no shares issued and outstanding - -
Common stock, par value $0.001:
500,000,000 shares authorized;
25,103,532 and 23,821,434 shares issued
and outstanding (including 581,493
and 234,224 unvested restricted shares) 25 24
Additional paid-in capital 355,205 341,400
Deferred equity compensation - (1,072)
Accumulated other comprehensive loss (38,323) (9,279)
Distributions in excess of earnings (45,301) (13,522)
------------- -------------
Total stockholders' equity 271,606 317,551
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,072,148 $ 1,802,829
============= =============
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
(Unaudited)
Three Months Years
Ended Ended
December 31, December 31,
---------------------- ----------------------
2007 2006 2007 2006
---------- ----------- ---------- ----------
REVENUES
Loans $ 37,292 $ 23,689 $ 138,078 $ 70,588
Securities 4,738 7,375 28,810 56,048
Leases 1,886 1,867 7,553 5,259
Interest income - other 625 428 2,554 5,180
---------- ----------- ---------- ----------
Interest income 44,541 33,359 176,995 137,075
Interest expense 30,460 23,311 121,564 101,851
---------- ----------- ---------- ----------
Net interest income 14,081 10,048 55,431 35,224
---------- ----------- ---------- ----------
OPERATING EXPENSES
Management fees - related
party 1,197 1,691 6,554 4,838
Equity compensation -
related party 848 812 1,565 2,432
Professional services 906 616 2,911 1,881
Insurance 115 127 466 498
General and
administrative 440 206 1,581 1,428
Income tax expense 76 67 338 67
---------- ----------- ---------- ----------
Total operating
expenses 3,582 3,519 13,415 11,144
---------- ----------- ---------- ----------
NET OPERATING INCOME 10,499 6,529 42,016 24,080
---------- ----------- ---------- ----------
OTHER (EXPENSES) REVENUES
Net realized (losses)
gains on sales of
investments (15,434) 225 (15,098) (8,627)
Gain on deconsolidation
of VIE 14,259 - 14,259 -
Provision for loan and
lease losses (5,885) - (6,211) -
Asset impairments - - (26,277) -
Other income 91 38 201 153
---------- ----------- ---------- ----------
Total expenses (6,969) 263 (33,126) (8,474)
---------- ----------- ---------- ----------
NET INCOME $ 3,530 $ 6,792 $ 8,890 $ 15,606
========== =========== ========== ==========
NET INCOME PER SHARE -
BASIC $ 0.14 $ 0.37 $ 0.36 $ 0.89
========== =========== ========== ==========
NET INCOME PER SHARE -
DILUTED $ 0.14 $ 0.36 $ 0.36 $ 0.87
========== =========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING -
BASIC 24,555,059 18,369,819 24,610,468 17,538,273
========== =========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING -
DILUTED 24,772,315 18,736,063 24,860,184 17,881,355
========== =========== ========== ==========
DIVIDENDS DECLARED PER
SHARE $ 1.62 $ 0.43 $ 1.62 $ 1.49
========== =========== ========== ==========
SCHEDULE I
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME
(in thousands, except per share data)
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Net income - GAAP $ 3,530 $ 6,792 $ 8,890 $ 15,606
Add:
Provision for loan and lease
losses (1) 5,885 - 6,211 -
Net realized loss related to
deconsolidation of VIE (2) 1,317 - 1,317 -
Asset impairments related to
VIE's - - 26,277 -
Net realized loss from the sales
of agency RMBS portfolio - - - 8,768
--------- --------- --------- ---------
Adjusted net income, excluding
non-cash charges (3) $ 10,732 $ 6,792 $ 42,695 $ 24,374
========= ========= ========= =========
Adjusted net income per share -
diluted, excluding non-cash
charges $ 0.43 $ 0.36 $ 1.72 $ 1.36
========= ========= ========= =========
(1) Non-cash charges for loan and lease losses
(2) Net realized loss related to the deconsolidation of a VIE is made up
of a gain of $14.3 million related to the deconsolidation of Ischus CDO II,
offset by a $15.6 million adjustment related to the write-down of RCC's
investment in Ischus CDO II. The adjustment of RCC's investment is
calculated as $27.0 million original investment less $10.7 million in
accumulated distributions less the $0.7 million estimated fair value of
the investment at the time of deconsolidation.
(3) During 2007, RCC began evaluating its performance based on several
performance measures, including adjusted net income in addition to net
income. Adjusted net income represents net income available to common
shares, computed in accordance with GAAP, before provision for loan and
lease losses, net loss on deconsolidation of VIEs, asset impairments and
net loss from sale of agency RMBS portfolio. These items are recorded in
accordance with GAAP and are typically non-cash items that do not impact
RCC's operating performance or ability to pay a dividend.
Management views adjusted net income as a useful and appropriate
supplement to GAAP net income (loss) because it helps us evaluate RCC's
performance without the effects of certain GAAP adjustments that may not
have a direct financial impact on RCC's current operating performance
and dividend paying ability. Management uses adjusted net income to
evaluate the performance of RCC's investment portfolios, ability to
manage its expenses and the dividend paying ability before the impact of
non-cash adjustments recorded in accordance with GAAP. RCC believes this
is a useful performance measure for investors to evaluate these aspects
of RCC's business as well. The most significant adjustments RCC excludes
in determining adjusted earnings are its provision for loan and lease
losses, asset impairments and net loss from the sale of agency RMBS
portfolio. Management excludes all such items from its calculation of
adjusted net income because these items are not economic charges or losses
which would impact RCC's current operating performance. However, by
excluding these significant items, adjusted net income reduces an
investor's understanding of RCC's operating performance by excluding:
(i) management's expectation of possible losses from RCC's investment
portfolio, and (iii) the net loss from exiting the agency RMBS market.
Adjusted net income, as a non-GAAP financial measurement, does not purport
to be an alternative to GAAP net income (loss), or a measure of operating
performance or cash flows from operating activities determined in
accordance with GAAP as a measure of liquidity. Instead, adjusted net
income should be reviewed in connection with net income (loss) and cash
flows from operating, investing and financing activities in RCC's
consolidated financial statements to help analyze management's expectation
of potential future losses from RCC's investment portfolio and other
non-cash matters that impact its financial results. Adjusted net income
and other supplemental performance measures are defined in various ways
throughout the REIT industry. Investors should consider these
differences when comparing RCC's adjusted net income to these other REITs.
SCHEDULE II
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME
TO ESTIMATED REIT TAXABLE INCOME (1)
(Unaudited)
RCC calculates estimated REIT taxable income, which is a non-GAAP
financial measure, according to the requirements of the Internal Revenue
Code. The following table reconciles net income to estimated REIT taxable
income for the periods presented (in thousands, except per share data):
Three Months Ended Years Ended
December 31, December 31,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Net income - GAAP $ 3,530 $ 6,792 $ 8,890 $ 15,606
Adjustments:
Share-based compensation to
related parties 225 (1,252) (500) 368
Incentive management fee expense
to related parties paid in
shares - 263 - 371
Capital loss carryover
(utilization)/losses from
the sale of securities (49) (662) (49) 11,624
Net unrealized loss on the
deconsolidation of VIE 1,317 - 1,317 -
Asset impairments related to
VIE's - - 26,277 -
Provisions for loan and lease
losses 3,153 - 3,153 -
Net book to tax adjustments for
the Company's taxable
foreign REIT subsidiaries 3,265 (643) 3,432 121
Other net book to tax adjustments (82) (101) (110) (152)
-------- -------- -------- --------
Estimated REIT taxable income $ 11,359 $ 4,397 $ 42,410 $ 27,938
======== ======== ======== ========
Amounts per share - diluted $ 0.46 $ 0.23 $ 1.71 $ 1.57
======== ======== ======== ========
(1) RCC believes that a presentation of estimated REIT taxable income
provides useful information to investors regarding its financial condition
and results of operations as this measurement is used to determine the
amount of dividends that RCC is required to declare to its stockholders in
order to maintain its status as a REIT for federal income tax purposes.
Since RCC, as a REIT, expects to make distributions based on taxable
income, RCC expects that its distributions may at times be more or less
than its reported income. Total taxable income is the aggregate amount of
taxable income generated by RCC and by its domestic and foreign taxable
REIT subsidiaries. Estimated REIT taxable income excludes the undistributed
taxable income of RCC's domestic taxable REIT subsidiary, if any such
income exists, which is not included in REIT taxable income until
distributed to RCC. There is no requirement that RCC's domestic taxable
REIT subsidiary distribute its income to RCC. Estimated REIT taxable
income, however, includes the taxable income of RCC's foreign taxable
REIT subsidiaries because RCC generally will be required to recognize and
report their taxable income on a current basis. Because not all companies
use identical calculations, this presentation of estimated REIT taxable
income may not be comparable to other similarly-titled measures of other
companies.
SCHEDULE III
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP STOCKHOLDERS' EQUITY
TO ECONOMIC BOOK VALUE (1) (2)
(in thousands, except per share data)
(Unaudited)
As of
December 31, 2007
-----------------
Stockholders' equity - GAAP $ 271,606
Add:
Unrealized losses - CMBS portfolio 17,810
Unrealized losses recognized in excess of value at
risk - interest rate swaps 18,040
-----------------
Economic book value $ 307,456
=================
Shares outstanding as of December 31, 2007 25,103,532
-----------------
Economic book value per share $ 12.25
=================
(1) Management views economic book value, a non-GAAP measure, as a useful
and appropriate supplement to GAAP stockholders' equity and book value per
share. The measure serves as an additional measure of RCC's value because
it facilitates evaluation of us without the effects of unrealized losses
on investments for which we expect to recover full par value at maturity
and on interest rate swaps, which we intend to hold to maturity, in excess
of RCC's value at risk. Unrealized losses recognized in RCC's financial
statements, prepared in accordance with GAAP, that are in excess of RCC's
maximum value at risk are added back to stockholders' equity in arriving at
economic book value. Economic book value should be reviewed in connection
with GAAP stockholders' equity as set forth in RCC's consolidated balance
sheets, to help analyze RCC's value to investors. Economic book value is
defined in various ways throughout the REIT industry. Investors should
consider these differences when comparing RCC's economic book value to
that of other REITs.
(2) RCC adds back unrealized losses on interest rate swaps (cash flow
hedges) that are associated with fixed-rate loans that have not been
adjusted through stockholders' equity for market fluctuations.
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(in thousands)
(Unaudited)
Loans and Leasing Investment Statistics
The following table presents information on RCC's non-performing
loans and leases and related allowances as of December 31, 2007 and
2006 (based on par value):
As of December 31,
--------------------
2007 2006
--------- ---------
Non-performing loans and leases $ 4,267 $ -
Non-performing loans and leases as a percentage of
total loans and leases 0.2% 0.0%
Allowance for loan and lease losses $ 6,211 $ -
Allowance for loan and lease losses as a percentage
of total loans and leases 0.3% 0.0%
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION, A NON-GAAP MEASURE
(in thousands)
(Unaudited)
The following table presents commercial real estate loan portfolio
statistics as of December 31, 2007 (based on par value):
Security type
Whole loans $ 532,276 62.7%
Mezzanine loans 227,597 26.8%
B Notes 89,448 10.5%
------------ ----------
Total $ 849,321 100.0%
============ ==========
Collateral type
Multifamily $ 263,503 31.0%
Office 200,870 23.7%
Hotel 205,637 24.2%
Flex 7,000 0.8%
Self-storage 6,267 0.7%
Retail 132,863 15.6%
Condo 13,281 1.6%
Other 19,900 2.4%
------------ ----------
Total $ 849,321 100.0%
============ ==========
Collateral location
Southern California $ 197,447 23.2%
Northern California 131,569 15.5%
New York 103,834 12.2%
Arizona 68,110 8.0%
Tennessee 31,952 3.8%
Florida 38,334 4.5%
Texas 40,487 4.8%
Colorado 27,972 3.3%
Washington 29,311 3.5%
Other states < $25M 180,305 21.2%
------------ ----------
Total $ 849,321 100.0%
============ ==========
RESOURCE CAPITAL CORP. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION, A NON-GAAP MEASURE
(in thousands)
(Unaudited)
The following table presents bank loan portfolio statistics by industry as
of December 31, 2007 (based on par value):
Industry type
Healthcare, education and childcare $ 107,438 11.5%
Diversified/conglomerate service 102,384 11.0%
Printing and publishing 61,811 6.6%
Broadcasting and entertainment 52,302 5.6%
Chemicals, plastics and rubber 50,673 5.4%
Hotels, motels, inns and gaming 50,531 5.4%
Retail stores 50,346 5.4%
Diversified/conglomerate manufacturing 41,378 4.4%
Oil and gas 36,912 4.0%
Utilities 34,736 3.7%
Telecommunications 33,078 3.6%
Beverage, food and tobacco 32,504 3.5%
Other 277,014 29.9%
---------- ---------
Total $ 931,107 100.0%
========== =========
The following chart describes equipment leases and notes by industry as of
December 31, 2007 (based on par value):
Industry type
Services $ 49,795 52.4%
Transportation, communications, electric, gas and
sanitary services 10,595 11.1%
Finance, insurance and real estate 8,341 8.8%
Retail trade 6,001 6.3%
Manufacturing 5,969 6.3%
Agriculture, forestry and fishing 4,463 4.7%
Construction 4,293 4.5%
Wholesale trade 3,068 3.2%
Other 2,505 2.7%
---------- ---------
Total $ 95,030 100.0%
========== =========
Contact Information: CONTACT: DAVID J. BRYANT CHIEF FINANCIAL OFFICER RESOURCE CAPITAL CORP. 1845 WALNUT STREET 10TH FLOOR PHILADELPHIA, PA 19103 215/546-5005 215/546-5388 (fax)