-- Capital Fundraising.
- In December 2009, Resource Real Estate Holdings, Inc. ("Resource
Real Estate") closed its real estate opportunity fund, which
focuses on acquiring discounted real estate assets and related
debt, having raised $41.4 million.
- LEAF Financial, Inc. ("LEAF") also closed LEAF Equipment Finance
Fund 4, L.P. in October 2009, having raised $125.7 million.
-- Resource Real Estate filed a $750.0 million registration statement with
the Securities and Exchange Commission on July 7, 2009 for Resource
Real Estate Opportunity REIT, Inc. of which Resource Real Estate will
be the external manager. Resource Real Estate recently filed a second
amendment to the originally filed registration statement.
-- Debt Reduction. As of December 31, 2009, the Company reduced its total
consolidated borrowings outstanding to $174.0 million from $608.7
million as of December 31, 2008, a decrease of $434.7 million (71%).
At December 31, 2009, borrowings include $124.9 million of borrowings
under a non-recourse credit facility at LEAF, $19.4 million of
corporate revolving debt, $13.2 million of senior notes, net of
discounts, and $16.5 million of other debt, of which $14.6 million is
in mortgage debt secured by the underlying properties.
-- Resource Capital Corp. Follow-On Offering. Resource Capital Corp
(NYSE : RSO ) ("RCC"), a real estate investment trust for which the
Company is the external manager and a shareholder, completed a public
offering of 10 million shares of its common stock at a price of $4.50
per share. RCC received net proceeds, after underwriting discounts but
before expenses, of $43.8 million. Since August 2009, RCC also added
an additional $13.9 million of capital through other issuances of its
common stock. The Company is paid a base management fee of 1.5% based
on RCC's equity.
-- Adjusted Revenues and Adjusted Operating Income - Non-GAAP Measures.
For the first fiscal quarter ended December 31, 2009, the Company
reported adjusted revenues of $22.9 million as compared to $33.2
million for the first fiscal quarter ended December 31, 2008. For the
first fiscal quarter ended December 31, 2009, the Company reported
adjusted operating income of $1.9 million as compared to $5.0 million
for the first fiscal quarter ended December 31, 2008. Adjusted
revenues and adjusted operating income excludes a $2.6 million pre-tax
fair value gain for the first fiscal quarter ended December 31, 2009 as
compared to the inclusion of $1.2 million of pre-tax fair value losses
for the first fiscal quarter ended December 31, 2008. A reconciliation
of the Company's total GAAP revenues and GAAP operating income to
adjusted revenues and adjusted operating income is included in
Schedule I to this release.
Assets Under Management
The following table details the Company's assets under management by
operating segment, which decreased by $4.2 billion (24%) from December 31,
2008 to December 31, 2009:
At December 31,
-------------------------------
2009 2008
--------------- ---------------
Financial fund management $ 10.4 billion $ 14.2 billion
Real estate 1.7 billion 1.7 billion
Commercial finance 1.2 billion 1.6 billion
--------------- ---------------
$ 13.3 billion $ 17.5 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 December 31, 2009, the Company's GAAP book value per common share was
$7.89 per share. Total stockholders' equity was $142.3 million as of
December 31, 2009 as compared to $141.2 million as of December 31, 2008.
Total common shares outstanding were 18,036,643 as of December 31, 2009 as
compared to 17,665,259 as of December 31, 2008.
Other Highlights for the First Fiscal Quarter Ended December 31, 2009 and
Recent Developments
-- The Company has reduced its borrowings to $174.0 million at December
31, 2009, a decrease of $17.4 million from September 30, 2009. This
decrease primarily reflects an $11.6 million reduction in borrowings on
LEAF's revolving warehouse credit facility and a $7.7 million reduction
on one of the Company's corporate revolving lines of credit.
-- The Company issued $18.8 million of senior notes in a private placement
to institutional investors in September and October 2009. The proceeds
were primarily used to reduce the Company's corporate borrowings on one
of its lines of credit.
-- Resource Real Estate completed fundraising for Resource Real Estate
Opportunity Fund L.P., ("RREI Opportunity Fund") a real estate
partnership focused on investing in discounted real estate and related
debt, having raised $41.4 million. In January 2010, RREI Opportunity
Fund acquired a 296 unit multifamily rental property in Houston, Texas.
-- Resource Real Estate Management, Inc., the Company's property
management subsidiary, increased the apartment units it manages to
13,127 at December 31, 2009 from 12,794 at December 31, 2008.
-- In January 2010, Resource Real Estate completed the sale of its
interest in a property in Minnesota, receiving net proceeds of
$811,000. As a result of the sale, this previously consolidated
entity will be deconsolidated thus further reducing the Company's
debt by $1.0 million.
-- LEAF entered into a vendor program relationship with the Life Safety
division of Honeywell to provide flexible financing solutions for
companies acquiring mass notification, fire, and life safety systems
and upgrades.
-- The Company's Board of Directors authorized the payment of a cash
dividend paid on January 29, 2010 in the amount of $0.03 per share on
the Company's common stock to holders of record at the close of
business on December 31, 2009.
-- RCC paid a cash dividend of $0.25 per common share for its fourth
quarter ended December 31, 2009.
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. 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 the securities to be offered by
Resource Real Estate Opportunity REIT, Inc. has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the
time the registration statement becomes effective. A written prospectus
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 revenues to adjusted
revenues and reconciliation of GAAP operating income to adjusted operating
income.
RESOURCE AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31, September 30,
2009 2009
------------- -------------
(unaudited) (as revised)
ASSETS
Cash $ 8,409 $ 26,197
Restricted cash 2,231 2,741
Receivables 852 1,358
Receivables from managed entities and
related parties, net 61,249 55,047
Investments in commercial finance - held
for investment, net 1,776 2,429
Investments in commercial finance - held
for sale, net 132,621 142,701
Investments in real estate, net 27,631 27,313
Investment securities available-for-sale,
at fair value 20,022 19,500
Investments in unconsolidated entities 14,420 16,241
Property and equipment, net 12,689 13,435
Deferred tax assets 45,552 45,656
Goodwill 7,969 7,969
Intangible assets, net 3,441 3,637
Other assets 11,738 11,616
------------- -------------
Total assets $ 350,600 $ 375,840
============= =============
LIABILITIES AND EQUITY
Liabilities:
Accrued expenses and other liabilities $ 32,107 $ 40,986
Payables to managed entities and related
parties 245 1,284
Borrowings 174,030 191,383
Deferred tax liabilities 2,046 2,046
------------- -------------
Total liabilities 208,428 235,699
------------- -------------
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; 27,761,974 and
27,757,849 shares issued, respectively
(including nonvested restricted stock of
531,603 and 552,461, respectively) 272 272
Additional paid-in capital 279,689 277,944
Accumulated deficit (22,040) (22,471)
Treasury stock, at cost; 9,193,728 and
9,213,665 shares, respectively (100,150) (100,367)
Accumulated other comprehensive loss (15,517) (15,560)
------------- -------------
Total stockholders' equity 142,254 139,818
Noncontrolling interests (82) 323
------------- -------------
Total equity 142,172 140,141
------------- -------------
Total liabilities and equity $ 350,600 $ 375,840
============= =============
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
December 31,
--------------------------
2009 2008
------------ ------------
REVENUES: (as revised)
Real estate $ 6,947 $ 6,890
Commercial finance 8,823 15,151
Financial fund management 9,652 9,919
------------ ------------
25,422 31,960
------------ ------------
COSTS AND EXPENSES:
Real estate 4,727 5,918
Commercial finance 4,575 7,449
Financial fund management 4,704 5,728
General and administrative 3,432 4,008
Loss (gain) on sales of leases and loans 582 (233)
Provision for credit losses 776 3,744
Depreciation and amortization 2,206 1,547
------------ ------------
21,002 28,161
------------ ------------
OPERATING INCOME 4,420 3,799
------------ ------------
OTHER (EXPENSE) INCOME:
Impairment losses on investment securities (929)
Recognized in other comprehensive loss 929
------------
Net impairment losses recognized in earnings - (4,923)
Interest expense (3,817) (8,399)
Other income, net 570 1,699
------------ ------------
(3,247) (11,623)
------------ ------------
Income (loss) from continuing operations before
taxes 1,173 (7,824)
Income tax provision (benefit) 585 (4,146)
------------ ------------
Income (loss) from continuing operations 588 (3,678)
Income from discontinued operations, net of tax - 75
------------ ------------
Net income (loss) 588 (3,603)
Add: Net loss attributable to the
noncontrolling interests 383 383
------------ ------------
Net income (loss) attributable to common
shareholders $ 971 $ (3,220)
============ ============
Basic income (loss) per share attributable to
common shareholders:
Continuing operations $ 0.05 $ (0.18)
Discontinued operations - -
------------ ------------
Net income (loss) $ 0.05 $ (0.18)
============ ============
Weighted average shares outstanding 18,689 18,221
============ ============
Diluted income (loss) per share attributable to
common shareholders:
Continuing operations $ 0.05 $ (0.18)
Discontinued operations - -
------------ ------------
Net income (loss) $ 0.05 $ (0.18)
============ ============
Weighted average shares outstanding 18,962 18,221
============ ============
Dividends declared per common share $ 0.03 $ 0.07
============ ============
Amounts attributable to common shareholders:
Income (loss) from continuing operations, net
of tax $ 971 $ (3,295)
Discontinued operations, net of tax - 75
------------ ------------
Net income (loss) $ 971 $ (3,220)
============ ============
RESOURCE AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
December 31,
------------------
2009 2008
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) attributable to common shareholders $ 971 $ (3,220)
Adjustments to reconcile net income (loss) attributable
to common shareholders to net cash used in operating
activities:
Net impairment losses recognized in earnings - 4,923
Depreciation and amortization 3,173 2,011
Provision for credit losses 776 3,744
Equity in (earnings) losses of unconsolidated
entities (3,405) 314
Distributions from unconsolidated entities 1,176 1,548
Loss (gain) on sale of leases and loans 582 (233)
Gain on sale of assets (244) (3)
Deferred income tax provision (benefit) 34 (1,084)
Equity-based compensation issued 1,120 1,204
Equity-based compensation received (375) (103)
Decrease (increase) in commercial finance investments -
held for sale 8,386 (23,443)
Change in operating assets and liabilities (13,431) (2,441)
-------- --------
Net cash used in operating activities (1,237) (16,783)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (118) (127)
Purchase of commercial finance assets held for
investment - (41,942)
Payments received on sale of commercial finance assets
- held for investment - 13,881
Purchase of loans and investments (1,640) (11,244)
Proceeds from sale of loans and investments 2,274 3,419
Principal payments received on loans - 2,024
Other (412) (3,320)
-------- --------
Net cash provided by (used in) investing activities 104 (37,309)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings 45,701 163,095
Principal payments on borrowings (62,326) (108,601)
Dividends paid (540) (1,234)
Decrease in restricted cash 510 2,268
Purchase of subsidiary stock held by a noncontrolling
stockholder - (264)
-------- --------
Net cash (used in) provided by financing activities (16,655) 55,264
-------- --------
(Decrease) increase in cash (17,788) 1,172
Cash at beginning of year 26,197 14,910
-------- --------
Cash at end of period $ 8,409 $ 16,082
======== ========
SCHEDULE I
RECONCILIATION OF GAAP REVENUES TO ADJUSTED REVENUES AND RECONCILIATION OF
GAAP OPERATING INCOME TO ADJUSTED OPERATING INCOME
(in thousands)
(unaudited)
Three Months Ended
December 31,
-------------------
2009 2008
-------- ---------
Revenues:
Real estate $ 6,947 $ 6,890
Commercial finance 8,823 15,151
Financial fund management 9,652 9,919
-------- ---------
Total revenues - GAAP 25,422 31,960
Adjustments:
Fair value adjustments (1) (2,570) 1,218
-------- ---------
Adjusted revenues (2) $ 22,852 $ 33,178
======== =========
Operating income - GAAP $ 4,420 $ 3,799
Adjustments:
Fair value adjustments (1) (2,570) 1,218
-------- ---------
Adjusted operating income (2) $ 1,850 $ 5,017
======== =========
(1) Reflects pre-tax fair value adjustments on investments reported under
the equity method of accounting.
(2) Management of the Company views adjusted revenues and adjusted
operating income, both non-GAAP measures, as useful and appropriate
supplements to revenues and operating income since they exclude fair
value adjustments related to current credit market conditions and are
not indicative of the Company's current operating performance.
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)