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.