Maryland | 1-32733 | 20-2287134 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of Incorporation) | File Number) | Identification No.) | ||
712 Fifth Avenue, 12th Floor New York, NY | 10019 | |||
(Address of principal executive offices) | (Zip Code) |
(d) | The exhibit furnished as part of this report is identified in the Exhibit Index immediately following the signature page of this report. Such Exhibit Index is incorporated herein by this reference. |
Resource Capital Corp. | ||||
/s/ David J. Bryant | ||||
Date: | May 2, 2016 | David J. Bryant Chief Financial Officer |
Exhibit No. | Description | |||
EX 99.1 | Press Release |
CONTACT: | DAVID J. BRYANT |
• | Adjusted Funds from Operations (“AFFO”) of $0.47 per share-diluted (see Schedule I). |
• | GAAP net income allocable to common shares of $0.31 per share-diluted. |
• | Since the inception of our common stock repurchase program and through March 31, 2016, we have repurchased approximately 7.9% of our outstanding common shares. |
• | RSO repurchased 196,000 Preferred B shares, which had an accretive impact to our common shareholders of $1.6 million, or $0.05 per share-diluted, during the three months ended March 31, 2016. |
• | Net interest income increased $1.6 million, or 7.0%, as compared to the three months ended March 31, 2015. |
• | On April 25, 2016, RSO liquidated RREF CDO 2006-1, a commercial real estate ("CRE") collateralized debt obligation ("CDO") vehicle, and received in exchange for its equity interest, collateral with a net realizable value of $66.3 million. |
• | Common stock cash dividend of $0.42 per share. |
• | RSO reported AFFO for the three months ended March 31, 2016 of $14.7 million, or $0.47 per share-diluted as compared to $21.3 million, or $0.64 per share-diluted for the three months ended March 31, 2015. A reconciliation of GAAP net income (loss) to AFFO is set forth in Schedule I of this release. |
• | GAAP net income (loss) allocable to common shares for the three months ended March 31, 2016 was $9.7 million, or $0.31 per share-diluted as compared to net income of $9.4 million, or $0.28 per share-diluted for the three months ended March 31, 2015. |
• | On January 1, 2016, RSO adopted Accounting Standards Update 2015-02: Consolidation (Topic 810): Amendments to the Consolidation Analysis ("ASU 2015-02") as required. It was determined that RSO is no longer the primary beneficiary of the following variable interest entities ("VIEs"); and, therefore, they were deconsolidated: RREF CDO 2006-1, RREF CDO 2007-1, Apidos Cinco CDO, Pelium Capital Partners, L.P., and RCM Global, LLC. As a result of these deconsolidations, RSO will no longer reflect the underlying collateral (loans and securities) of those VIEs in its consolidated financial statements. Instead, RSO will prospectively reflect in its balance sheet its direct investments (the "retained investments") in the issued and outstanding securities of those VIEs. RSO's retained investments in RREF CDO 2006-1, RREF CDO 2007-1, Apidos Cinco CDO are now accounted for as investment securities, available-for-sale and, as a result, are marked-to-market while the RSO's retained investments in Pelium Capital Partners, L.P., and RCM Global, LLC are accounted for as equity method investments. RSO has elected to retrospectively reflect the deconsolidation of these entities on a modified basis, which resulted in a reduction to the beginning balance of retained earnings as of January 1, 2016, of $16.9 million, or $0.55 per common share. The reduction to retained earnings represents the effect of marking the investments to market as of the date of the required adoption of ASU 2015-02 and represents discounts to par due to illiquidity premiums and other market forces which are expected to be recovered over time as the investments approach their respective maturities. To reflect the impact of this expectation, we present a reconciliation from GAAP book value to economic book value in Schedule IV. |
• | CRE loan portfolio of $1.5 billion, at carrying value, is comprised 100% of senior whole loans as of March 31, 2016. |
• | $1.4 billion, or 99%, of floating rate whole loans in the CRE portfolio have London Interbank Offered Rate (“LIBOR”) floors with a weighted average floor of 0.27% as of March 31, 2016. |
• | Interest income on whole loans increased by $3.3 million or 20.2%, to $19.4 million during the three months ended March 31, 2016 as compared to $16.1 million during the three months ended March 31, 2015. For comparison purposes, this excludes income in the 2015 period from our legacy CRE CDOs deconsolidated in Q1 2016. |
• | Closed and funded $573.3 million of new whole loans in the 12 months ended March 31, 2016, with a weighted average yield of 5.38%, including amortization of origination fees. |
Three Months Ended | 12 Months Ended | Floating Weighted Average Spread (1) (2) | Weighted Average Fixed Rate | ||||||||||
March 31, 2016 | March 31, 2016 | ||||||||||||
New whole loans funded and originated | $ | 38.9 | $ | 573.3 | 5.20 | % | — | % | |||||
Unfunded loan commitments | 10.2 | 63.2 | |||||||||||
New loans originated | 49.1 | 636.5 | |||||||||||
Payoffs (3) | (24.4 | ) | (340.2 | ) | |||||||||
Previous commitments funded | 17.3 | 48.3 | |||||||||||
Principal pay downs | — | (1.5 | ) | ||||||||||
Unfunded loan commitments | (10.2 | ) | (63.2 | ) | |||||||||
Loans, net funded | $ | 31.8 | $ | 279.9 |
(1) | Represents the weighted-average rate above the one-month LIBOR on loans whose interest rate is based on LIBOR as of March 31, 2016. $38.9 million of loans originated during the three months ended March 31, 2016 have LIBOR floors, with a weighted average floor of 0.21%. |
(2) | Reflects rates on new whole loans funded and originated during the three months ended March 31, 2016. |
(3) | CRE loan payoffs and extensions resulted in $207,000 of exit and extension fees earned during the three months ended March 31, 2016. |
• | RSO's middle market loan portfolio was $326.7 million, at carrying value, with a weighted-average spread of one-month and three-month LIBOR plus 8.60% at March 31, 2016. There was $153.0 million outstanding on RSO's senior secured credit facility used to finance middle market lending as of March 31, 2016. |
• | Middle market loan payoffs of $105.1 million resulted in $2.6 million of prepayment fees earned during the three months ended March 31, 2016. |
• | RSO earned $402,000 of net fees through its subsidiary, Resource Capital Asset Management, during the three months ended March 31, 2016. |
Three Months Ended March 31, 2016 | 12 Months Ended March 31, 2016 | Weighted Average Spread (1) | Weighted Average All-in Rate (2) | Weighted Average Yield | ||||||||||||
New loans funded and originated | $ | 50.1 | $ | 179.7 | 9.00 | % | 10.0 | % | 9.70 | % | ||||||
Unfunded loan commitments | 3.6 | 8.2 | ||||||||||||||
New loans originated | 53.7 | 187.9 | ||||||||||||||
Payoffs and sales (3) | (105.1 | ) | (149.8 | ) | ||||||||||||
Previous commitments funded | 4.3 | 13.1 | ||||||||||||||
Principal pay downs | (3.3 | ) | (11.7 | ) | ||||||||||||
Unfunded loan commitments | (3.6 | ) | (8.2 | ) | ||||||||||||
Loans, net funded | $ | (54.0 | ) | $ | 31.3 |
(1) | Represents the weighted-average rate above the one-month and three-month LIBOR on loans whose interest rate is based on LIBOR as of March 31, 2016, excluding fees. Of these loans, $50.1 million have LIBOR floors with a weighted average floor of 1.00%. |
(2) | Reflects rates on RSO's portfolio balance as of March 31, 2016, excluding fees. |
(3) | Middle market loan payoffs resulted in $2.6 million of prepayment fees earned during the three months ended March 31, 2016. |
• | unrestricted cash and cash equivalents of $71.4 million and restricted cash of $540,000 in margin call accounts; |
• | capital available for reinvestment in two of RSO's CRE securitizations of $7.6 million; and |
• | loan principal repayments of $222,000 that will pay down outstanding CLO note balances, as well as interest collections of $141,000. In addition, RSO had $195,000 in restricted deposits related to certain of its investments. |
Amortized Cost | Net Carrying Amount | Percent of Portfolio | Weighted Average Coupon | |||||||||
As of March 31, 2016 | ||||||||||||
Loans Held for Investment: | ||||||||||||
CRE Whole loans(1) | $ | 1,453,128 | $ | 1,451,635 | 63.75 | % | 5.49% | |||||
Middle market loans(4) | 321,240 | 318,589 | 13.99 | % | 9.69% | |||||||
Residential mortgage loans(5) | 1,704 | 1,693 | 0.07 | % | 4.20% | |||||||
1,776,072 | 1,771,917 | 77.81 | % | |||||||||
Loans held for sale (2): | ||||||||||||
Bank loans | 153 | 153 | 0.01 | % | N/A(3) | |||||||
Middle market loans | 3,459 | 3,459 | 0.15 | % | 8.50% | |||||||
Residential mortgage loans | 122,541 | 122,541 | 5.38 | % | 3.73% | |||||||
126,153 | 126,153 | 5.54 | % | |||||||||
Investments in Available-for-Sale Securities: | ||||||||||||
CMBS-private placement | 91,192 | 89,565 | 3.93 | % | 5.14% | |||||||
RMBS | 2,033 | 2,070 | 0.09 | % | 4.89% | |||||||
ABS | 208,213 | 208,554 | 9.16 | % | N/A(3) | |||||||
301,438 | 300,189 | 13.18 | % | |||||||||
Investment Securities-Trading: | ||||||||||||
Structured notes | 5,994 | 3,886 | 0.17 | % | N/A(3) | |||||||
RMBS | 1,896 | — | — | % | N/A(3) | |||||||
7,890 | 3,886 | 0.17 | % | |||||||||
Other (non-interest bearing): | ||||||||||||
Investment in unconsolidated entities | 74,356 | 74,356 | 3.27 | % | N/A(3) | |||||||
Direct Financing Leases(6) | 1,179 | 714 | 0.03 | % | 5.66% | |||||||
75,535 | 75,070 | 3.30 | % | |||||||||
Total Investment Portfolio | $ | 2,287,088 | $ | 2,277,215 | 100.00 | % |
(1) | Net carrying amount includes allowance for loan losses of $1.5 million at March 31, 2016. |
(2) | Loans held for sale are carried at the lower of cost or market. |
(3) | There is no stated rate associated with these securities. |
(4) | Net carrying amount includes allowance for loan losses of $2.7 million at March 31, 2016. |
(5) | Net carrying amount includes allowance for loan losses of $11,000 at March 31, 2016. |
(6) | Net carrying amount includes allowance for loan losses of $465,000 at March 31, 2016. |
• | Schedule I - Reconciliation of GAAP Net Income to Funds from Operations (“FFO”) and AFFO. |
• | Schedule II - Summary of General and Administrative Expenses. |
• | Schedule III - Summary of Securitization Performance Statistics. |
• | Schedule IV - Reconciliation of GAAP Stockholders' Equity to Economic Book Value. |
• | Supplemental Information regarding loan investment statistics, CRE loans and middle market loans. |
• | fluctuations in interest rates and related hedging activities; |
• | the availability of debt and equity capital to acquire and finance investments; |
• | defaults or bankruptcies by borrowers on RSO's loans or on loans underlying its investments; |
• | adverse market trends which have affected and may continue to affect the value of real estate and other assets underlying RSO's investments; |
• | increases in financing or administrative costs; and |
• | general business and economic conditions that have impaired and may continue to impair the credit quality of borrowers and RSO's ability to originate loans. |
March 31, 2016 | December 31, 2015 | ||||||
(unaudited) | |||||||
ASSETS (1) | |||||||
Cash and cash equivalents | $ | 71,403 | $ | 78,756 | |||
Restricted cash | 8,721 | 40,635 | |||||
Investment securities, trading | 3,886 | 25,550 | |||||
Investment securities available-for-sale, pledged as collateral, at fair value | 87,662 | 162,306 | |||||
Investment securities available-for-sale, at fair value | 212,527 | 45,782 | |||||
Loans held for sale ($122.5 million and $94.5 million at fair value) | 126,153 | 95,946 | |||||
Loans, pledged as collateral and net of allowances of $4.1 million and $47.5 million | 1,771,917 | 2,160,751 | |||||
Investments in unconsolidated entities | 74,356 | 50,030 | |||||
Derivatives, at fair value | 4,689 | 3,446 | |||||
Interest receivable | 10,788 | 14,009 | |||||
Deferred tax asset, net | 12,634 | 12,646 | |||||
Principal paydown receivable | — | 17,941 | |||||
Direct financing leases, net of allowances of $0.5 million and $0.5 million | 714 | 931 | |||||
Intangible assets | 25,511 | 26,228 | |||||
Prepaid expenses | 2,778 | 3,180 | |||||
Other assets | 12,540 | 22,295 | |||||
Total assets | $ | 2,426,279 | $ | 2,760,432 | |||
LIABILITIES (2) | |||||||
Borrowings | $ | 1,602,025 | $ | 1,895,288 | |||
Distribution payable | 17,125 | 17,351 | |||||
Accrued interest expense | 5,024 | 5,604 | |||||
Derivatives, at fair value | 2,742 | 3,941 | |||||
Accrued tax liability | 815 | 549 | |||||
Accounts payable and other liabilities | 10,912 | 10,939 | |||||
Total liabilities | 1,638,643 | 1,933,672 | |||||
EQUITY | |||||||
Preferred stock, par value $0.001: 10,000,000 shares authorized 8.50% Series A cumulative redeemable preferred shares, liquidation preference $25.00 per share,1,069,016 and 1,069,016 shares issued and outstanding | 1 | 1 | |||||
Preferred stock, par value $0.001: 10,000,000 shares authorized 8.25% Series B cumulative redeemable preferred shares, liquidation preference $25.00 per share 5,544,579 and 5,740,479 shares issued and outstanding | 6 | 6 | |||||
Preferred stock, par value $0.001: 10,000,000 shares authorized 8.625% Series C cumulative redeemable preferred shares, liquidation preference $25.00 per share 4,800,000 and 4,800,000 shares issued and outstanding | 5 | 5 | |||||
Common stock, par value $0.001: 125,000,000 shares authorized; 31,217,415 and 31,562,724 shares issued and outstanding (including 910,790 and 691,369 unvested restricted shares) | 31 | 32 | |||||
Additional paid-in capital | 1,217,493 | 1,228,346 | |||||
Accumulated other comprehensive income (loss) | (1,895 | ) | (2,923 | ) | |||
Distributions in excess of earnings | (426,935 | ) | (406,603 | ) | |||
Total stockholders’ equity | 788,706 | 818,864 | |||||
Non-controlling interests | (1,070 | ) | 7,896 | ||||
Total equity | 787,636 | 826,760 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 2,426,279 | $ | 2,760,432 |
March 31, 2016 | December 31, 2015 | ||||||
(unaudited) | |||||||
(1) Assets of consolidated Variable Interest Entities ("VIEs") included in the total assets above: | |||||||
Cash and cash equivalents | $ | — | $ | 95 | |||
Restricted cash | 7,986 | 39,061 | |||||
Investment securities available-for-sale, pledged as collateral, at fair value | — | 66,137 | |||||
Loans held for sale | 153 | 1,475 | |||||
Loans, pledged as collateral and net of allowances of $1.1 million and $42.8 million | 1,039,119 | 1,416,441 | |||||
Interest receivable | 4,185 | 6,592 | |||||
Prepaid expenses | 64 | 238 | |||||
Principal paydown receivable | — | 17,800 | |||||
Other assets | — | 833 | |||||
Total assets of consolidated VIEs | $ | 1,051,507 | $ | 1,548,672 | |||
(2) Liabilities of consolidated VIEs included in the total liabilities above: | |||||||
Borrowings | $ | 725,109 | $ | 1,032,581 | |||
Accrued interest expense | 635 | 923 | |||||
Derivatives, at fair value | — | 3,346 | |||||
Accounts payable and other liabilities | 44 | (117 | ) | ||||
Total liabilities of consolidated VIEs | $ | 725,788 | $ | 1,036,733 |
For the Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
REVENUES | |||||||
Interest income: | |||||||
Loans | $ | 34,112 | $ | 32,663 | |||
Securities | 4,798 | 4,052 | |||||
Leases | (54 | ) | 95 | ||||
Interest income - other | 1,241 | 832 | |||||
Total interest income | 40,097 | 37,642 | |||||
Interest expense | 15,771 | 14,902 | |||||
Net interest income | 24,326 | 22,740 | |||||
Dividend income | 17 | 16 | |||||
Fee income | (701 | ) | 1,170 | ||||
Total revenues | 23,642 | 23,926 | |||||
OPERATING EXPENSES | |||||||
Management fees - related party | 4,037 | 3,560 | |||||
Equity compensation - related party | 1,263 | 995 | |||||
Rental operating expense | — | 6 | |||||
Lease operating | 3 | 23 | |||||
General and administrative | 10,070 | 10,971 | |||||
Depreciation and amortization | 641 | 565 | |||||
Impairment losses | — | 59 | |||||
Provision (recovery) for loan and lease losses | 37 | 3,990 | |||||
Total operating expenses | 16,051 | 20,169 | |||||
7,591 | 3,757 | ||||||
OTHER INCOME (EXPENSE) | |||||||
Equity in earnings of unconsolidated subsidiaries | 2,222 | 706 | |||||
Net realized and unrealized gain (loss) on sales of investment securities available-for-sale and loans and derivatives | 4,828 | 13,967 | |||||
Net realized and unrealized gain (loss) on investment securities, trading | 145 | 2,074 | |||||
Unrealized gain (loss) and net interest income on linked transactions, net | — | 235 | |||||
(Loss) on reissuance/gain on extinguishment of debt | — | (900 | ) | ||||
(Loss) gain on sale of real estate | (3 | ) | (22 | ) | |||
Total other income (expense) | 7,192 | 16,060 | |||||
INCOME (LOSS) BEFORE TAXES | 14,783 | 19,817 | |||||
Income tax (expense) benefit | (763 | ) | (1,847 | ) | |||
NET INCOME (LOSS) | 14,020 | 17,970 | |||||
For the Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Net (income) loss allocated to preferred shares | (6,048 | ) | (6,091 | ) | |||
Excess of carrying value over redemption value of preferred shares redeemed | 1,611 | — | |||||
Net (income) loss allocable to non-controlling interest, net of taxes | 90 | (2,477 | ) | ||||
NET INCOME (LOSS) ALLOCABLE TO COMMON SHARES | $ | 9,673 | $ | 9,402 | |||
NET INCOME (LOSS) PER COMMON SHARE – BASIC | $ | 0.32 | $ | 0.29 | |||
NET INCOME (LOSS) PER COMMON SHARE – DILUTED | $ | 0.31 | $ | 0.28 | |||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC | 30,600,407 | 32,814,227 | |||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED | 31,038,095 | 33,076,104 |
For the Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Net income (loss) allocable to common shares - GAAP | $ | 9,673 | $ | 9,402 | |||
Adjustments: | |||||||
(Gains) losses on sales of property (1) | (21 | ) | 22 | ||||
FFO allocable to common shares | 9,652 | 9,424 | |||||
Adjustments: | |||||||
Non-cash items: | |||||||
Provision (recovery) for loan losses | 144 | 3,624 | |||||
Amortization of deferred costs (non real estate) and intangible assets | 3,170 | 2,867 | |||||
Amortization of discount on convertible senior notes | 709 | 316 | |||||
Equity investment (gains) losses | (1,411 | ) | (52 | ) | |||
Share-based compensation | 1,263 | 995 | |||||
Impairment losses | — | 59 | |||||
Unrealized losses (gains) on CMBS marks - linked transactions (2) | — | (235 | ) | ||||
Unrealized (gains) losses on trading portfolio | 65 | (1,164 | ) | ||||
Unrealized (gains) losses on FX transactions | (165 | ) | (659 | ) | |||
Unrealized (gains) losses on derivatives | (1,378 | ) | 1,075 | ||||
Loss on resale of debt | — | 900 | |||||
Change in mortgage servicing rights valuation reserve | 2,500 | 550 | |||||
Change in residential loan warranty reserve | 119 | — | |||||
Other adjustments | — | 399 | |||||
REIT tax planning adjustments | — | 317 | |||||
Cash items: | |||||||
Gains (losses) on sale of property (1) | 21 | (22 | ) | ||||
Gains (losses) on extinguishment of debt | — | 2,880 | |||||
Capital expenditures | — | — | |||||
AFFO allocable to common shares | $ | 14,689 | $ | 21,274 | |||
Weighted average shares – diluted | 31,038 | 33,076 | |||||
AFFO per share – diluted | $ | 0.47 | $ | 0.64 |
(1) | Amount represents gains/losses on sales of owned real estate as well as sales of joint venture real estate interests that were recorded by RSO on an equity basis. |
(2) | As the result of an accounting standards update adopted on January 1, 2015, RSO unlinked its previously linked transactions. |
Commercial Real Estate Lending | Commercial Finance | Middle Market Lending | Residential Mortgage Lending | Corporate & Other | Total | ||||||||||||||||||
Net income (loss) allocable to common shares - GAAP | $ | 16,578 | $ | 2,480 | $ | 7,836 | $ | (2,596 | ) | $ | (14,625 | ) | $ | 9,673 | |||||||||
Adjustments: | |||||||||||||||||||||||
(Gains) losses on sales of property (1) | (21 | ) | — | — | — | — | (21 | ) | |||||||||||||||
FFO allocable to common shares | 16,557 | 2,480 | 7,836 | (2,596 | ) | (14,625 | ) | 9,652 | |||||||||||||||
Adjustments to net income (loss) to reconcile AFFO: | |||||||||||||||||||||||
Non-cash items: | |||||||||||||||||||||||
Provision (recovery) for loan and lease losses | 68 | (30 | ) | 106 | — | — | 144 | ||||||||||||||||
Amortization of deferred costs (non real estate) and intangible assets | 1,239 | 474 | 233 | 1,189 | 35 | 3,170 | |||||||||||||||||
Amortization of discount on convertible senior notes | — | — | — | — | 709 | 709 | |||||||||||||||||
Equity investment (gains) losses | — | (1,411 | ) | — | — | — | (1,411 | ) | |||||||||||||||
Share-based compensation | — | — | — | 555 | 708 | 1,263 | |||||||||||||||||
Unrealized (gains) losses on trading portfolio | — | 65 | — | — | — | 65 | |||||||||||||||||
Unrealized (gains) losses on FX transactions | — | (165 | ) | — | — | — | (165 | ) | |||||||||||||||
Unrealized (gains) losses on derivatives | — | — | — | (1,196 | ) | (182 | ) | (1,378 | ) | ||||||||||||||
Change in mortgage servicing rights valuation | 2,500 | 2,500 | |||||||||||||||||||||
Change in residential loan warranty reserve | — | — | — | 119 | — | 119 | |||||||||||||||||
Cash items: | |||||||||||||||||||||||
Gains (losses) on sale of property(1) | 21 | — | — | — | — | 21 | |||||||||||||||||
Total AFFO adjustments | 1,328 | (1,067 | ) | 339 | 3,167 | 1,270 | 5,037 | ||||||||||||||||
AFFO allocable by segment | $ | 17,885 | $ | 1,413 | $ | 8,175 | $ | 571 | $ | (13,355 | ) | $ | 14,689 | ||||||||||
Weighted average shares – diluted | 31,038 | 31,038 | 31,038 | 31,038 | 31,038 | 31,038 | |||||||||||||||||
AFFO per share – diluted (by segment) | $ | 0.58 | $ | 0.04 | $ | 0.26 | $ | 0.02 | $ | (0.43 | ) | $ | 0.47 | ||||||||||
Contribution by percentage | 63.8 | % | 5.0 | % | 29.2 | % | 2.0 | % | |||||||||||||||
Allocation | $ | 0.30 | $ | 0.02 | $ | 0.14 | $ | 0.01 |
(1) | Amount represents gains/losses on sales of owned real estate as well as sales of joint venture real estate interests that were recorded by RSO on an equity basis. |
For the Three Months Ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
General and administrative expenses: | ||||||||
Corporate | $ | 3,986 | $ | 4,784 | ||||
Residential Mortgage Lending | 6,084 | 6,187 | ||||||
Total | $ | 10,070 | $ | 10,971 |
Name | Cash Distributions | Annualized Interest Coverage Cushion | Overcollateralization Cushion | |||||||||||||||||
Three Months Ended March 31, | Year Ended December 31, | As of March 31, | As of March 31, | As of Initial Measurement Date | ||||||||||||||||
2016 | 2015 | 2016 (1) (2) | 2016 (3) | |||||||||||||||||
Apidos Cinco CDO (4) | $ | 983 | $ | 6,336 | $ | 4,908 | $ | 20,185 | $ | 17,774 | ||||||||||
RREF CDO 2006-1(4) | $ | 1,039 | $ | 3,451 | $ | 2,015 | $ | 72,736 | $ | 24,941 | ||||||||||
RREF CDO 2007-1(4) | $ | 414 | $ | 6,102 | $ | 109 | $ | 76,544 | $ | 26,032 | ||||||||||
RCC CRE Notes 2013 | $ | 1,192 | $ | 9,129 | N/A | N/A | N/A | |||||||||||||
RCC 2014-CRE2 (5) | $ | 3,325 | $ | 15,826 | N/A | $ | 43,587 | $ | 20,663 | |||||||||||
RCC 2015-CRE3 (6) | $ | 2,942 | $ | 9,186 | N/A | $ | 14,530 | $ | 20,313 | |||||||||||
RCC 2015-CRE4 (7) | $ | 2,975 | $ | 3,291 | N/A | $ | 9,397 | $ | 9,397 | |||||||||||
Moselle CLO S.A. (8) | $ | 183 | $ | 29,099 | N/A | N/A | N/A |
(1) | Interest coverage includes annualized amounts based on the most recent trustee statements. |
(2) | Interest coverage cushion represents the amount by which annualized interest income expected exceeds the annualized amount payable on all classes of securitization notes senior to the Company's preference shares. |
(3) | Overcollateralization cushion represents the amount by which the collateral held by the securitization issuer exceeds the maximum amount required. |
(4) | Apidos Cinco CDO, RREF CDO 2006-1, and RREF CDO 2007-1 were deconsolidated as a result of the new consolidation accounting guidance adopted effective January 1, 2016. |
(5) | Resource Capital Corp. 2014-CRE2 has no reinvestment period; however, principal repayments, for a period ending in July 2016, may be designated to purchase loans held outside of the securitization that represent the funded commitments of existing collateral in the securitization that were not funded as of the date the securitization was closed. Additionally, the indenture contains no interest coverage test provisions. |
(6) | Resource Capital Corp. 2015-CRE3 closed on February 24, 2015; the first distribution was in March 2015. There is no reinvestment period; however, principal repayments, for a period ending in February 2017, may be designated to purchase loans held outside of the securitization that represent the funded commitments of existing collateral in the securitization that were not funded as of the date the securitization was closed. Additionally, the indenture contains no interest coverage test provisions. |
(7) | Resource Capital Corp. 2015-CRE4 closed on August 18, 2015; the first distribution was in September 2015. There is no reinvestment period; however, principal repayments, for a period ending in September 2017, may be designated to purchase loans held outside of the securitization that represent the funded commitments of existing collateral in the securitization that were not funded as of the date the securitization was closed. Additionally, the indenture contains no interest coverage test provisions. |
(8) | Moselle CLO S.A. was acquired on February 24, 2014 and the reinvestment period for this securitization expired prior to the acquisition. In the fourth quarter of 2014 the Company began to liquidate Moselle CLO S.A. and, by January 2015, all of the assets were sold. |
As of March 31, 2016 | |||
Total stockholders equity per GAAP (1) | $ | 788,706 | |
Preferred stock equity | (269,977 | ) | |
Stockholders' equity allocable to common shares | 518,729 | ||
Add: | |||
Deconsolidation of RREF CDO 2006-1 (3) (4) | 1,024 | ||
Deconsolidation of RREF CDO 2007-1 (3) (4) | 10,130 | ||
Deconsolidation of Apidos Cinco CDO (3) (4) | 5,362 | ||
Net unrealized losses - investment securities available-for-sale and derivatives (5) | 1,991 | ||
Economic book value | $ | 537,236 | |
Shares outstanding | 30,306,625 | ||
Economic book value per share | $ | 17.73 |
(1) | Book value allocable to common shares is calculated as total stockholders' equity of $788.7 million less preferred stock equity of $270.0 million as of March 31, 2016. |
(2) | Management views economic book value, a non-GAAP measure, as a useful and appropriate supplement to GAAP stockholders' equity and book value per share. This serves as an additional measure of RSO’s value because it facilitates evaluation of RSO without the effects of unrealized losses on investments and derivatives, for which we expect to recover net realizable value at maturity, in excess of RSO’s value at risk. Unrealized losses that are in excess of RSO’s maximum value at risk and unrealized net discounts on loans and securities 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 RSO’s consolidated balance sheets, to help analyze RSO’s value to investors. Economic book value is defined in various ways throughout the REIT industry. Investors should consider these differences when comparing RSO’s economic book value to that of other REITs. |
(3) | Effective January 1, 2016, RSO deconsolidated RREF CDO 2006-1, RREF CDO 2007-1 and Apidos Cinco CDO upon the adoption of new accounting guidance. RSO retains investment securities and preferred interests in the CDO vehicles, which RSO accounts for as investments securities, available-for-sale. The reduction to retained earnings of $16.9 million represents the effect of marking these investments to market as of the date of the required adoption and represents discounts to par due to illiquidity premiums and other market forces and are expected to be recovered over time as the investments approach their respective maturities. |
(4) | RSO will recognize the excess of all cash flows attributable to the beneficial interest estimated at the date of the required adoption over the fair value of the investment (the accretable yield) at January 1, 2016, as interest income over the life of the beneficial interest using the effective interest method. The cash flows are subject to changes in prepayment speeds and potential impairments of the underlying investments, which would have an impact on the net realizable value and future income. These assumptions are reviewed quarterly. |
(5) | RSO adds back unrealized net accretion of securities that will be accreted into interest income over the lives of the securities using the effective interest method, adjusted for the effects of estimated prepayments. If the investment is purchased at a discount or at a premium, the effective interest is computed based on the contractual interest rate increased for the accretion of a purchase discount or decreased for the amortization of a purchase premium. The effective interest method requires RSO to make estimates of future prepayment rates for its investments that can be contractually prepaid before their contractual maturity date so that the purchase discount can be accreted, or the purchase premium can be amortized, over the estimated remaining life of the investment. The cash flows are subject to changes in prepayment speeds and potential impairments of the underlying investments, which would have an impact on the net realizable value and future income. These assumptions are reviewed quarterly. |
March 31, 2016 | December 31, 2015 | |||||||
Allowance for loan losses: | ||||||||
Specific allowance: | ||||||||
Commercial real estate loans (1) | $ | — | $ | 40,274 | ||||
Bank loans (1) | — | 1,282 | ||||||
Middle market loans | — | — | ||||||
Total specific allowance | — | 41,556 | ||||||
General allowance: | ||||||||
Commercial real estate loans | 1,493 | 1,565 | ||||||
Middle market loans | 2,651 | 3,939 | ||||||
Residential mortgage loans | 11 | 11 | ||||||
Total general allowance | 4,155 | 5,515 | ||||||
Total allowance for loans | $ | 4,155 | $ | 47,071 | ||||
Allowance as a percentage of total loans | — | % | 2.1 | % | ||||
Loans held for sale: (2) | ||||||||
Bank loans | $ | 153 | $ | 1,475 | ||||
Middle market loans | 3,459 | — | ||||||
Residential mortgage loans | 122,541 | 94,471 | ||||||
Total loans held for sale | $ | 126,153 | $ | 95,946 |
(1) | As a result of the deconsolidation of RREF CDO 2006-1, RREF CDO 2007-1, and Apidos Cinco CDO on January 1, 2016, the loans in these CDO vehicles are no longer carried on our consolidated balance sheet. |
(2) | Loans held for sale are presented at the lower of cost or fair value. |
Security type: | ||
Whole loans | 100.0 | % |
Total | 100.0 | % |
Collateral type: | ||
Multifamily | 48.0 | % |
Office | 22.1 | % |
Retail | 19.5 | % |
Hotel | 10.4 | % |
Total | 100.0 | % |
Collateral location: | ||
Texas | 31.0 | % |
Northern California | 13.2 | % |
Southern California | 11.5 | % |
Georgia | 8.5 | % |
Florida | 6.4 | % |
North Carolina | 5.7 | % |
Colorado | 3.3 | % |
Nevada | 2.9 | % |
Pennsylvania | 2.4 | % |
Minnesota | 2.2 | % |
Maryland | 2.1 | % |
Other | 10.8 | % |
Total | 100.0 | % |
Industry type: | ||
Diversified/Conglomerate Service | 15.0 | % |
Healthcare, Education, and Childcare | 13.2 | % |
Hotels, Motels, Inns, and Gaming | 11.6 | % |
Telecommunications | 9.2 | % |
Buildings and Real Estate | 6.7 | % |
Beverage, Food and Tobacco | 6.3 | % |
Leisure, Amusement, Motion Pictures, Entertainment | 5.9 | % |
Insurance | 5.3 | % |
Personal Transportation | 5.1 | % |
Banking | 4.5 | % |
Structure Finance Securities | 3.2 | % |
Home and Office Furnishings, Housewares, and Durable Consumer Products | 3.1 | % |
Personal, Food, and Miscellaneous Services | 3.0 | % |
Finance | 2.7 | % |
Diversified/Conglomerate Manufacturing | 2.2 | % |
Cargo Transport | 1.9 | % |
Oil and Gas | 1.1 | % |
Total | 100.0 | % |