At November 30, At September 30,
2010 2009
----------------- -----------------
Financial fund management $ 10.3 billion $ 10.7 billion
Real estate 1.6 billion 1.7 billion
Commercial finance 0.8 billion 1.4 billion
----------------- -----------------
$ 12.7 billion $ 13.8 billion
================= =================
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 fiscal
year ended September 30, 2009.
Book Value
As of September 30, 2010, the Company's book value per common share was
$7.21. Total stockholders' equity was $132.0 million as of September 30,
2010 as compared to $139.8 million as of September 30, 2009. Total common
shares outstanding were 18,301,570 as of September 30, 2010 as compared to
17,991,723 as of September 30, 2009.
Highlights for the Fourth Fiscal Quarter and Fiscal Year Ended September
30, 2010 and Recent Developments
REAL ESTATE:
-- Fundraising: Resource Real Estate ("RRE") filed a $750.0 million
registration statement with the Securities and Exchange Commission
("SEC") on July 7, 2009 for Resource Real Estate Opportunity REIT, Inc.
("RRE Opportunity REIT"), for which RRE is the external manager.
The registration statement became effective in June 2010 and the
public offering broke escrow in September 2010. Through December 3,
2010, RRE Opportunity REIT has raised approximately $22.2 million.
Also, during the fiscal year ended September 30, 2010, Resource
Capital Corp. ("RCC") raised over $151 million in equity proceeds
through two public follow-on offerings and its dividend reinvestment
plan.
-- Significant Acquisitions: In September and October 2010, RRE purchased
four loans on behalf of RCC from the U.S. Department of Housing and
Urban Development for $37.4 million with an existing joint venture
partner. These loans are secured by multifamily rental properties
located in Washington DC, Willington and Mansfield Connecticut, and
Decatur Georgia. In connection with these purchases, the Company
received $377,000 in acquisition fees and will receive asset management
and property management fees in the future.
-- Property Management: Resource Real Estate Management, Inc., the
Company's property management subsidiary, increased the apartment units
it manages to 13,522 units at 50 properties as of September 30, 2010
from 12,794 units at 49 properties as of September 30, 2009.
LEASING:
-- Securitizations: Since May 2010, LEAF Financial Corporation ("LEAF"),
on behalf of an affiliate for which it manages leasing portfolios, has
completed four securitization transactions totaling $600 million, term
funded through the issuance of contract-backed notes. LEAF will
continue to service these securitization pools.
-- Financing: In September 2010, LEAF completed a short-term bridge
financing, pursuant to which it may borrow up to $21.5 million as it
originates equipment leases and loans.
FINANCIAL FUND MANAGEMENT:
-- Additional Management Engagements: In November 2010, a subsidiary of
Resource Financial Fund Management, Inc. ("RFFM") was awarded the
management contract for an existing $255 million third-party
collateralized debt obligation and will receive management fees in the
future. In September 2010, a subsidiary of RFFM entered into a
sub-advisory agreement to provide management and advisory services to
an unrelated third-party for a $400 million loan portfolio. In
connection with this agreement, the Company will receive advisory fees
in the future.
-- Increased Revenues. Financial fund management revenues increased 11%
to $8.8 million for the fourth fiscal quarter ended September 30, 2010
as compared to $7.9 million for the fourth fiscal quarter ended
September 30, 2009.
CORPORATE:
-- Decreased Borrowings: As of September 30, 2010, the Company reduced
its consolidated borrowings outstanding by $125.3 million, or 65%,
to $66.1 million from $191.4 million at September 30, 2009. This
decrease primarily reflects the repayment and termination of the
commercial finance credit facility, which had a $136.5 million balance
at September 30, 2009. At September 30, 2010, borrowings include
$20.8 million in non-recourse short-term bridge financing for
commercial finance, $14.1 million of corporate revolving debt,
$14.3 million of senior notes, net of a discount, and $16.9 million
of other debt, of which $13.5 million is in mortgage debt secured by
the underlying properties.
-- Dividends. The Company's Board of Directors authorized the payment
on October 29, 2010 of a $0.03 cash dividend per share on the Company's
common stock to holders of record as of the close of business on
October 19, 2010. RCC paid a cash dividend of $0.25 per common share
for its third quarter ended September 30, 2010.
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 and for outside investors in
the real estate, commercial finance and financial fund management 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. 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 Securities and Exchange Commission.
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 RRE Opportunity
REIT was declared effective by the SEC on June 16, 2010. A written
prospectus relating to these securities may be obtained by contacting
Chadwick Securities, Inc., 1845 Walnut Street, 10th 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, consolidated
statements of cash flows, and reconciliation of GAAP (loss) income from
continuing operations attributable to common shareholders to adjusted
income (loss) from continuing operations attributable to common
shareholders.
RESOURCE AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30,
------------------------
2010 2009
----------- -----------
(unaudited)
ASSETS
Cash $ 11,243 $ 26,197
Restricted cash 12,018 2,741
Receivables 1,671 1,358
Receivables from managed entities and related
parties, net 66,416 55,047
Investments in commercial finance - held for
investment, net 12,176 2,429
Investments in commercial finance - held for
sale, net - 142,701
Investments in real estate, net 27,114 28,923
Investment securities, at fair value 22,358 19,500
Investments in unconsolidated entities 13,825 16,241
Property and equipment, net 9,984 13,435
Deferred tax assets 43,703 45,656
Goodwill 7,969 7,969
Intangible assets, net - 3,637
Other assets 5,776 10,006
----------- -----------
Total assets $ 234,253 $ 375,840
=========== ===========
LIABILITIES AND EQUITY
Liabilities:
Accrued expenses and other liabilities $ 38,492 $ 40,986
Payables to managed entities and related parties 156 1,284
Borrowings 66,110 191,383
Deferred tax liabilities 411 2,046
----------- -----------
Total liabilities 105,169 235,699
----------- -----------
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; 28,167,909 and 27,757,849 shares
issued, respectively (including nonvested
restricted stock of 741,086 and 552,461,
respectively) 274 272
Additional paid-in capital 281,378 277,944
Accumulated deficit (37,558) (22,471)
Treasury stock, at cost; 9,125,253 and 9,213,665
shares, respectively (99,330) (100,367)
Accumulated other comprehensive loss (12,807) (15,560)
----------- -----------
Total stockholders' equity 131,957 139,818
Noncontrolling interests (2,873) 323
----------- -----------
Total equity 129,084 140,141
----------- -----------
$ 234,253 $ 375,840
=========== ===========
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Years Ended
September 30, September 30,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
(unaudited) (unaudited)
REVENUES:
Real estate $ 8,032 $ 8,156 $ 31,911 $ 25,417
Commercial finance 1,853 9,805 23,677 48,767
Financial fund management 8,783 7,930 33,140 33,344
---------- ---------- ---------- ----------
18,668 25,891 88,728 107,528
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Real estate 4,681 4,929 20,780 22,038
Commercial finance 4,346 5,115 18,164 25,179
Financial fund management 5,153 4,936 21,028 20,468
General and administrative 3,826 3,320 12,972 14,369
Loss (gain) on sale of
leases and loans 392 (238) 8,097 (628)
Impairment of intangibles 2,828 - 2,828 -
Provision for credit losses 1,795 2,959 5,209 8,604
Depreciation and
amortization 1,249 1,941 7,842 6,922
---------- ---------- ---------- ----------
24,270 22,962 96,920 96,952
---------- ---------- ---------- ----------
OPERATING (LOSS) INCOME (5,602) 2,929 (8,192) 10,576
---------- ---------- ---------- ----------
OTHER (EXPENSE) INCOME:
Total other-than-temporary
impairment losses on
investment securities (445) (577) (809) (8,539)
Portion recognized in other
comprehensive loss - - - -
---------- ---------- ---------- ----------
Net other-than-temporary
impairment losses
recognized in earnings (445) (577) (809) (8,539)
Loss on sale of loans and
investment securities, net - - (451) (11,588)
Interest expense (1,894) (3,242) (13,086) (20,199)
Other income, net 645 (68) 2,591 3,156
---------- ---------- ---------- ----------
(1,694) (3,887) (11,755) (37,170)
---------- ---------- ---------- ----------
Loss from continuing
operations before taxes (7,296) (958) (19,947) (26,594)
Income tax provision
(benefit) 2,155 (1,285) (2,650) (10,504)
---------- ---------- ---------- ----------
(Loss) income from
continuing operations (9,451) 327 (17,297) (16,090)
Income (loss) from
discontinued operations,
net of tax 625 (278) 622 (444)
---------- ---------- ---------- ----------
Net (loss) income (8,826) 49 (16,675) (16,534)
Add: Net loss attributable
to noncontrolling
interests 951 77 3,224 1,603
---------- ---------- ---------- ----------
Net (loss) income
attributable to
common shareholders $ (7,875) $ 126 $ (13,451) $ (14,931)
========== ========== ========== ==========
Basic (loss) income per
share attributable to
common shareholders:
Continuing operations $ (0.44) $ 0.02 $ (0.74) $ (0.78)
Discontinued operations 0.03 (0.01) 0.03 (0.03)
---------- ---------- ---------- ----------
Net (loss) income $ (0.41) $ 0.01 $ (0.71) $ (0.81)
========== ========== ========== ==========
Weighted average shares
outstanding 19,049 18,654 18,942 18,507
========== ========== ========== ==========
Diluted (loss) income per
share attributable to
common shareholders:
Continuing operations $ (0.44) $ 0.02 $ (0.74) $ (0.78)
Discontinued operations 0.03 (0.01) 0.03 (0.03)
---------- ---------- ---------- ----------
Net (loss) income $ (0.41) $ 0.01 $ (0.71) $ (0.81)
========== ========== ========== ==========
Weighted average shares
outstanding 19,049 19,158 18,942 18,507
========== ========== ========== ==========
Amounts attributable to
common shareholders:
(Loss) income from
continuing operations $ (8,500) $ 404 $ (14,073) $ (14,487)
Discontinued operations 625 (278) 622 (444)
---------- ---------- ---------- ----------
Net (loss) income $ (7,875) $ 126 $ (13,451) $ (14,931)
========== ========== ========== ==========
Dividends declared per
common share $ 0.03 $ 0.03 $ 0.09 $ 0.20
========== ========== ========== ==========
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended September 30,
------------------------
2010 2009
----------- -----------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (16,675) $ (16,534)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Loss on sale of loans and investment securities,
net 451 11,588
Net other-than-temporary impairment losses
recognized in earnings 3,637 8,539
Depreciation and amortization 12,088 8,876
Provision for credit losses 5,209 8,604
Equity in earnings of unconsolidated entities (4,870) (1,279)
Distributions from unconsolidated entities 5,104 6,128
Loss (gain) on sale of leases and loans 8,097 (628)
Gain on sale of assets (2,420) (642)
Deferred income tax benefits (1,733) (13,249)
Equity-based compensation issued 3,573 4,654
Equity-based compensation received (1,441) (867)
Decrease (increase) in commercial finance
investments - held for sale 17,603 (37,330)
Changes in operating assets and liabilities (1,542) (19,016)
----------- -----------
Net cash provided by (used in) operating
activities 27,081 (41,156)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (782) (335)
Payments received on real estate loans and real
estate 8,563 10,052
Investments in unconsolidated real estate entities (1,821) (4,694)
Purchase of commercial finance assets - held for
investment (11,771) (41,942)
Payments received on commercial finance assets -
held for investment - 46,246
Purchase of loans and investment (1,445) (19,290)
Proceeds from sale of loans and investment
securities 4,094 5,367
Principal payments received on loans - 4,061
----------- -----------
Net cash used in investing activities (3,162) (535)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings 103,401 438,897
Principal payments on borrowings (128,767) (395,905)
Repayment from managed entity on RCC lease
portfolio purchase - 4,500
Dividends paid (1,636) (3,560)
(Increase) decrease in restricted cash (9,277) 10,297
Other (2,594) (809)
----------- -----------
Net cash (used in) provided by financing
activities (38,873) 53,420
----------- -----------
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities - (2)
Financing activities - (440)
----------- -----------
Net cash used in discontinued operations - (442)
----------- -----------
(Decrease) increase in cash (14,954) 11,287
Cash, beginning of year 26,197 14,910
----------- -----------
Cash, end of year $ 11,243 $ 26,197
=========== ===========
RECONCILIATION OF GAAP (LOSS) INCOME FROM CONTINUING OPERATIONS
ATTRIBUTABLE TO COMMON SHAREHOLDERS TO ADJUSTED INCOME (LOSS) FROM
CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (1)
(in thousands, except per share data)
(unaudited)
Three Months Ended Years Ended
September 30, September 30,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
(Loss) income from continuing
operations attributable to
common shareholders - GAAP $ (8,500) $ 404 $ (14,073) $ (14,487)
Adjustments, net of tax:
Loss (income) from commercial
finance operations (2) 6,453 (246) 12,523 (2,258)
Deferred tax assets 3,006 (586) 3,008 (643)
--------- --------- --------- ---------
Adjusted income (loss) from
continuing operations
attributable to common
shareholders $ 959 $ (428) $ 1,458 $ (17,388)
========= ========= ========= =========
Adjusted weighted average
diluted shares outstanding (3) 19,450 18,654 19,290 18,507
========= ========= ========= =========
Adjusted income (loss) from
continuing operations
attributable to common
shareholders per common
share-diluted $ 0.05 $ (0.02) $ 0.08 $ (0.94)
========= ========= ========= =========
(1) Adjusted income (loss) from continuing operations attributable to
common shareholders presents the Company's operations without the
effect of its commercial finance operations. 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 during the fiscal year ended
September 30, 2010 separately from its commercial finance operations,
which have been severely impacted by a reduction in liquidity and lack
of availability of credit. Adjusted income (loss) from continuing
operations attributable to common shareholders should not be
considered as an alternative to (loss) income from continuing
operations attributable to common shareholders (computed in accordance
with GAAP). Instead, adjusted income (loss) from continuing
operations attributable to common shareholders should be reviewed in
connection with (loss) income from continuing operations attributable
to common shareholders in the Company's consolidated financial
statements, to help analyze how the Company's business is performing.
(2) Loss (income) from commercial finance operations consists of revenues
and expenses from commercial finance operations (including loss (gain)
from sale of leases and loans, impairment of intangibles, provision
for credit losses and depreciation and amortization) net of applicable
tax benefits and non-controlling interests.
(3) Dilutive shares used in the calculation of adjusted income from
continuing operations attributable to common shareholders per common
share-diluted includes an additional 401,000 and 348,000 shares for
the three months and fiscal year ended September 30, 2010,
respectively, which were not used in the calculation of GAAP loss from
continuing operations attributable to common shareholders per common
share-diluted for those periods.
Contact Information: Contact: Thomas C. Elliott Chief Financial Officer Resource America, Inc. One Crescent Drive, Suite 203 Philadelphia, PA 19112 215/546-5005 215/546-4785 (fax)